samchain/econo-pairs-v1 huggingface dataset:
There must be a much greater focus than in the past on return on capital and on the generation of shareholder value rather than on pursuit of size and market share for its own sake. This is something in which we all have an interest. It is important for the stability of the world financial system and for the economic development of the Asian region that the banks of the world’s second largest economy are fully restored to health and can resume their major role in financial intermediation at home and abroad. I wish you therefore all the best in your efforts. As I mentioned earlier, the Japanese banks have been and will remain an important part of the financial system in Hong Kong. They also of course have a similar role to play in relation to Mainland China. I am aware that the Japanese banks felt particularly disappointed and aggrieved at the collapse of Gitic and the subsequent debt problems that afflicted other Mainland window companies. I do not intend to go over the past history of this episode that is hopefully now coming to an end. But it is possible to see some good coming out of it if it helps, as I hope it will, to restore financial discipline within China. It has also served as a useful reminder to both domestic and foreign banks in Hong Kong not to engage in name lending and not to rely on implicit guarantees.

While this presence may have diminished over the last two years, Hong Kong remains an important market for the Japanese banks and I am sure that you will continue to demonstrate your commitment in the years to come. BIS Review 65/2000  4
One type of argument concerns the fact that many central banks cut their rates as far as possible in connection with the crisis and were forced to go on to more unorthodox and untried means of conducting monetary policy. When monetary policy was delegated to independent central banks, this was during a period when there was in principle only one instrument – the policy rate – at the central bank’s disposal. Unlike, for instance, taxes, the policy rate was regarded as something that could be delegated to “technocrats” who have not been popularly elected. But with the monetary policy conducted by a number of central banks after having cut their policy rates as far as possible, the situation has become much more complicated. Many of the measures implemented are considered to border on fiscal policy and then it is less evident that the central bank can act entirely independently of the political system. Some people say that the financial crisis led to a “creeping politicization” of monetary policy.3 Another type of argument focuses on the expanded role that many people assume central banks will gain in future, and in some areas have already gained, with regard to attempting to prevent future crises – in the new policy area known as macroprudential supervision. According to law, the Riksbank is to “promote an efficient payments system”, but this very general wording is not linked to any specific instrument that can be used for this purpose.

The sub-region came into the new millennium with a combined gross domestic product (GDP) of $ 80 billion, representing about 10 percent of the GDP of Spain and against a backdrop of high unemployment, it is not surprising that income per capita averages 386 US dollars for our sub-region one of the lowest in the world. In addition, virtually all the countries are burdened by a huge debt overhang. Indeed, only two of the 15 countries of ECOWAS are not classified among the highly indebted poor countries (HIPC). Ladies and Gentlemen, I do not intend to spoil your day with depressing statistics about the economic performance of the sub-region as this would be tantamount to showing you only one side of the coin. The more pleasant face of this coin shows a sub-region parading some of the world’s leading exporters of crude oil, diamonds and gold, as well as abundant maritime resources. Many of our countries also perform well in the global market for other commodities, including cocoa, cotton and groundnuts. However, when the abundant resource-endowment of the sub-region is set against its pandemic poverty, we see a development paradox that challenges scholars and policy makers alike. Several reasons have been advanced for this state of affairs. They include inappropriate macroeconomic policies, weak institutions, weak executive capacity, weak legal institutions, and severe exogenous and endogenous factors. Time will not permit me to dwell on the relative contribution of each of these factors to the overall poor economic performance.
Simon Potter: Implementing monetary policy with the balance sheet Keynote remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the ECB Workshop on "Money markets, monetary policy implementation and central bank balance sheets", Frankfurt am Main, 6 November 2017. * * * I would like to thank Deborah Leonard for her assistance in the preparation of these remarks, and colleagues in the Federal Reserve System for numerous insightful comments and suggestions. I’d like to thank the European Central Bank (ECB), both for inviting me to give this keynote address and for organizing this conference on money markets, monetary policy implementation, and central bank balance sheets. I’d also like to congratulate all of the presenters and discussants, whose engaging research and critiques help to foster a deeper understanding of some of the many policy implementation issues central bankers face as we digest past challenges and prepare for future ones. This conference comes as several major central banks reached milestones using their balance sheets as active tools for providing monetary policy accommodation. The ECB just announced it will extend its bond purchasing program but scale back the pace of purchases starting next year. The Bank of England completed purchases under its Gilts and Corporate Bond Purchases schemes and confirmed an upcoming close to the drawdown period for its Term Funding Scheme.

Instead, the FOMC’s approach promotes the use of the federal funds rate as the active monetary policy instrument—an instrument with which it has much greater experience, likely helping to minimize the risk of an error in the early and still-vulnerable stages of the economy’s recovery.40 Running down the balance sheet passively, in a gradual and predictable manner, once normalization of short-term interest rates is well underway puts the balance sheet’s normalization in the background. The stock view of central bank purchase programs holds that given an expected path of the portfolio, the pace of actual changes in the portfolio should have little direct effect on asset prices. Assuming markets anticipate a gradual unwind in the portfolio, asset prices would adjust gradually over time. Nevertheless, central banks may wish to mitigate any possible risk that flow effects associated with overly fast flows of securities into private hands interfere with monetary policy implementation or disrupt market functioning. A conservative feature in the Fed’s approach is therefore a one-year transition period during which gradually rising redemption caps are phased in, thus allowing financial markets and the U.S. Treasury time to adjust to the Fed’s declining market presence. These design features likely enhance overall program effectiveness. However, this outcome is traded off against a more rapid achievement of balance sheet normalization—something some policymakers might hold as a desirable objective. For example, they might see a smaller balance sheet as one that offers greater capacity for using asset purchases more fully again in the future.
The reason why I have chosen a European focus is simply that there are already institutional arrangements in place which can be used as a platform for bringing us closer to the goal of supra-national supervisory frameworks. In my view though, the underlying challenges of financial integration are of a global nature. Therefore, even if it may not be possible to achieve the same solutions outside Europe, it should be of wider international interest to at least move in the direction of enhanced cooperation between supervisory authorities. I hope that I have been saying here today can serve as inspiration for further discussions on this issue. Considering that financial integration is already widespread and that the process of revising present regulatory structures will most certainly be demanding and protracted, we need to get to work. Returning to what I said in the beginning, history shows us the importance of having proper regulatory structures in place. Therefore, it would be highly unfortunate if the appropriate measures have not been taken before the next major financial crisis occurs. For once, it would be encouraging to see pre-emptive policy actions rather than a crisis being the catalyst for such actions. Thus, in the same way as the international community is facing increasing challenges to cope with the negative externalities in the environmental area, the financial regulators have to face the consequences of financial integration.

We’ve done this by passing the rise in both export and import prices through the UK’s input:output tables and used the same definition of tradables and non-tradables as before. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  higher output in the tradable sector. There is less room to raise output but more of an incentive to add to that capacity.   Third, and despite these incentives, growth of overall business investment in the UK was relatively weak last year. Early official estimates say it shrank slightly in the year to Q4, by around 1%. (This compares with positive growth of 2% or so in the Euro area.) And although those estimates are particularly prone to revision, the various survey indicators also subsided in 2016 (Chart 12). This last point is the critical one. The world economy is looking better than it has done for some time. Against this backdrop, and given the existing capacity constraints, the fall in sterling provides a powerful incentive to invest in the UK’s tradable sector. All else equal, it would make sense for existing exporters to expand; for domestic-facing firms to think about entering new markets; and for multinationals to shift production to the UK. Yet some caution would also be understandable. All else is not equal. While much is at stake, no-one can be sure about the eventual outcome of the Brexit negotiations.
José De Gregorio: The Monetary Policy Report and the Financial Stability Report Presentation by Mr José De Gregorio, Governor of the Central Bank of Chile, before the Finance Commission of the Honorable Senate of the Republic, Santiago de Chile, 20 June 2011. *  *  *  The Monetary Policy Report of June 2011 and the Financial Stability Report of the first half of 2011 are available at http://www.bcentral.cl. Introduction Mr. President of the Finance Committee of the Senate, Senator Eduardo Frei, senators. I am grateful for the invitation of this Committee to the Board of the Central Bank of Chile to share our views on the recent macroeconomic and financial developments, their prospects and implications for monetary and financial policy making. These are contained in detail in the Monetary Policy Report (IPoM) of June 2011 and in the Financial Stability Report (IEF) of the first half of 2011. The March IPoM stated that our economy was facing important challenges. In particular, it configured a scenario where inflation could post significant increases in the following months. We then said that the duty of monetary policy was to withdraw the monetary stimulus in a timely manner, in order to ensure that the inflationary pressures we were seeing and, especially, the risks we faced, would not alter the convergence of inflation to the threepercent target. Consistently, the Board acted preventively and raised the monetary policy interest rate (MPR) by 150 basis points between March and May this year, taking it above levels forecast by the market.

Figure 8  CPI inflation (*) (annual change, percent)  CPIX1 inflation (*) (annual change, percent)  10  10  10  10  8  8  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -2  -2  -4  -4  -4  -4  07  09  11  13  07  IPoM Mar.2011  09  11  13  Report Jun.11  (*) Gray area, as from second quarter 2011, shows forecast. Sources: Central Bank of Chile and National Statistics Institute. BIS central bankers’ speeches  11  Figure 9 MPR and expectations (percent) 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 07  08  MPR  09  EES June 2011  10  11  FOS June 2011 (*)  12  13  Forward, Report June 2011  (*) FOS considers survey of first half of the month. Source: Central Bank of Chile.
Second: In order to reap the benefits of new technology, enterprises must be able to make rapid changes in their workforces. 9 However, at a more fundamental level, growth and restructuring capacity is closely linked to the level of skills in a population. European surveys indicate that there is a high level of science and technology skills among the adult population. 10 Surveys among pupils and students do not provide an equally positive picture. A report from the Norwegian Mathematics Council shows that the level of mathematical skills among new university students has declined markedly in recent years. 11 Even the top performing students score considerably lower than earlier. This is illustrated here as the percentage of correct answers in arithmetic and percent calculation, but we find similar scores for other mathematical skills. Norway is taking an economic risk in allowing the skills level to decline. But – to take a brighter view of this: We have after all experienced that negative trends can be reversed in very important areas of society. Our most important resource is our labour force. The employment rate is high in Norway. This is because many wish to participate in working life, and the vast majority find a job. However, the Norwegian labour market also has its weak points. The annual number of person-years worked is lower in Norway than in the US and the rest of Europe.

The implementation of Basel II will pose a challenge to the entire  BIS Review 42/2006  1  financial community, while for the newly emerging economies this process will be a serious test since their banking systems are very much open. The discussion of the common supervisory framework also brings forward the question as to what extent the high rates of growth of credit for the private sector, globally, and in many of the dynamically developing countries, in particular, poses a risk to financial stability and how much supervisory policy could be used as a tool for solving this problem. The process of financial sector globalisation, which I already mentioned, raised for many countries the issue of choosing between either following a national monetary policy or joining a monetary union and carrying monetary policy to a supranational level. The experience of a successful realisation of the Economic and Monetary Union in Europe, as well as the experience of the countries from the area of the Frank are a good practical example for all of us about the potential advantages and challenges associated with a country's participation in a monetary union. Taking monetary policy to a supranational level is inevitably related to providing greater independence for the national central banks and delegating certain powers at a supranational level. In the democratic world, the independence of conducting policy on the part of central banks is inseparably linked to the higher degree of their transparency and reporting.
The second risk that may arise after we have left the EU, is the related but perhaps more prosaic issue of the flexibility of the UK’s regulatory framework and allocation of responsibilities within it – the division of tasks between Parliament, Government and the regulatory authorities. Much of our financial sector legislation and regulation has been made at the EU level. This has increasingly taken the form of extremely detailed EU primary and secondary legislation directly applicable in Member States.4  This approach has been justified as necessary in the EU by the need to prevent divergences between member states. The cost, however, as some have observed, is an over complex and rigid regulatory framework.5 As a preparatory step for Brexit, Parliament has ‘onshored’ EU legislation and regulation and also the allocation of responsibilities that lie behind it. At some point, post Brexit, we will, I think, need to address this rigidity and hard wiring of detail to ensure we have a coherent, effective and flexible regulatory system with appropriate accountability. How we do that will have an impact on how we address risks, at firm and at system level, in a fast changing financial system. Financial stability post-Brexit With that nod to the future, I will leave Brexit - for today at any rate – and turn to the examination question you have set for today – financial stability post Brexit. I would like to focus on the question of debt.

That might not matter were the consequences limited to the party-goers. But they are not. When the party ends, some innocent bystanders may lose their homes altogether. Moreover, the party-goers aren’t just deposit-taking banks. A wide range of financial institutions, including investment banks, monoline insurers, even hedge funds, have the potential to cause significant damage to the rest of the economy in the wake of their demise. Are they all to be helped to get home safely when the party ends? If so, will they all be regulated in the same way as banks? If not, how can we limit the potential cost to the taxpayer? Add to this the problem that many of these institutions are global in scope, but the responsibility for both regulation and rescue remains firmly at national level, and you can see why policy-makers get headaches as bad as the party-goers’. No individual bank, or indeed the authorities, can easily find a way out of this because their incentives are to continue in the same manner. There is, therefore, no point blaming anyone for the outcomes. But together we have to find an answer. Of course, excessively strict and detailed regulation would mean that there were no parties worth going to and the economy as a whole would suffer from a suppressed and inefficient financial sector.
Still, the high level of annual inflation today is largely due to the significant depreciation of our currency in recent quarters. On the output side, third-quarter figures showed GDP and domestic demand growing less than forecasted. In addition, fourth-quarter figures at hand show no signs of significant recovery. Thus, we foresee that achieving higher output growth rates will take longer than we thought last September. On aggregate, the international scenario has changed little since our last IPoM. Perhaps the most significant development has been the sharp fall in the oil price in the past months, whose effects have begun to show in prices and will intensify in the near future. Meanwhile, although risk perceptions have increased and we had an important volatility episode in October – which vanished soon – no significant changes are observed in terms of global growth. At home, we completed a process of reducing the monetary policy interest rate (MPR), that took it from 5 to 3 percent between October 2013 and October 2014. This sharp reduction led the MPR to quite expansionary territory, in line with the economic slowdown already mentioned. Funding costs in the domestic market have declined significantly, with mortgage loan rates nearing their all-time lows. Notwithstanding, business and household expectations have deteriorated throughout the year and are now clearly pessimistic, influencing downward this year’s growth and slowing further the recovery foreseen for 2015.

Figure 10 Companies' financial indicators (percent) 120  9  100  8  80  7  60  6  40  5  20  4 07  08  09  Debt/GDP (1)  10  11  12  13  14.III  Profitability of SVS companies (2)  (1) Based on firm-level information. 2007 and 2008 figures estimated using aggregate data. (2) Profits accumulated in 12 months before financial expenses and taxes on total assets of nonfinancial SVS companies. Source: Central Bank Chile based on Achef, SBIF, SII, and SVS data. BIS central bankers’ speeches  13  Figure 11 New home prices and office-space vacancy rate (Metropolitan region) (index, 2008 average = 100; percent) 150  12  140  10  130  8  120  6  110  4  100  2  90  0 08  09  10  Housing prices CChC  11  12  13  14  Office-space vacancy rate  Source: Central Bank of Chile based on Global Property Solutions and CChC data. Figure 12 Household indebtedness and financial burden (percent of disposable income) 60  18  55  16  50  14  45  12  40  10 06  07  08  09  Debt-to-income  10  11  12  13  14  Financial-burden-to-income  Source: Central Bank of Chile based on SBIF, SuSeSo, and SVS data.
Today’s flexible inflation targeting regime establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. The fiscal policy authorities can thus internalise the monetary policy response pattern. This is only natural, since the mandate for monetary policy was laid down by the Government and the Storting. In other words, the proper framework is in place for delegating interest rate decisions, but the central bank’s response pattern must be known, so that the fiscal authorities can take this into account. Game situations that may arise with an independent central bank with an inflation target are further discussed in Leitemo (2000) and in Steigum (2000). Norges Bank analyses the inflation outlook three times a year in its Inflation Report. The Executive Board discusses the economic outlook at a separate meeting three weeks before the Inflation Report is presented. The following day, the Executive Board summarises its discussions and assesses the consequences for monetary policy for the next four months. This assessment constitutes an important internal reference when the Executive Board later makes a decision regarding the interest rate. It will also provide the basis for our external communication through speeches and the media. The key rate is assessed by the Executive Board every sixth week. Monetary policy decisions are announced in a press release followed by a press conference.

Against this backdrop, consumer price inflation, with an unchanged key rate of 6.5 per cent and an unchanged krone exchange rate from the average exchange rate for the second quarter, was projected at 2¾ per cent from the summer of 2004. 1  Cf. Cournot-Nash equilibrium in game theory  2  2 Cf. Stackelberg equilibrium in game theory  4  BIS Review 59/2002  Projections showed that price inflation could be lower than 2½ per cent in the short run. If we had tried to reach the inflation target in the short term, i.e. strict inflation targeting, we would have lowered the key rate. We know that would probably imply a weaker krone and higher inflation. A more pronounced increase in interest rates than the increase we actually implemented would then probably have been necessary in a year’s time. This would have led to unnecessary fluctuations in output and employment. Nor did concerns about stabilising output and employment warrant an easing of monetary policy. Had we placed greater emphasis on these variables, i.e. a strict output target, monetary policy should have been tighter and the interest rate higher to prevent a borrowing and spending spree, resulting in wider variations in the inflation. On the basis of an overall assessment, the key rate was raised by 0.5 percentage point to 7 per cent at the monetary policy meeting that same day.