samchain/econo-pairs-v1 huggingface dataset:
MONETARY POLICY REPORT PRESENTATION BEFORE THE FINANCE COMMISSION OF THE HONORABLE SENATE OF THE REPUBLIC  Mario Marcel Governor Central Bank of Chile 1 April 2019    The Monetary Policy Report of March 2019 can be found at http://www.bcentral.cl. I. Introduction  Mister President of the Senate’s Finance Commission, Senator Ricardo Lagos-Weber, Senators members of this Commission, ladies, gentlemen, I am grateful for your invitation to present the vision of the Board of the Central Bank of Chile on recent macroeconomic developments, their prospects and the implications for monetary policy. This vision is contained in detail in the Monetary Policy Report (IPoM) of March 2019, released this morning. These antecedents provide the background for the decision adopted by the Board at the Monetary Policy Meeting last Friday. At that Meeting, we decided unanimously to keep the Monetary Policy Rate (MPR) at 3%. At the same time, we noted that, in line with the lower level of inflation and its outlook, it would be necessary to maintain the monetary stimulus for a longer period, taking a break in the process of MPR normalization that began last October. To the extent that the economy continues on the foreseen path, this process should be resumed in the medium term to ensure the convergence of inflation within the policy horizon. This decision is coherent with the analysis and baseline projection scenario that I will share with you now.

8  Figure 1 Accumulated inflation, February - December 2018  Evolution of CPI and CPIEFE inflation (1) (2)  (percent)  (annual change, percent)  CPI  2.5  CPIEFE  2.5  2.0  2.0  1.5  1.5  4.5  4.0  4.0  3.5  1.0  1.0  4.5  3.0  3.0  2.5  2.5  2.0  2.0  1.5 0.5  0.5 0.0  Basket Basket 2013 2018  Basket 2013  Basket 2018  1.5  CPIEFE  1.0  0.0  3.5  CPI  1.0  0.5  0.5  0.0  0.0 18  Abr. Jul. Oct.  19  (1) As from January 2019 the lines use the new indexes with annual base 2018=100, so they are not strictly comparable with earler figures. (2) Blue (red) diamonds show the annual CPI (CPIEFE) variation using the 2013=100 basket. As from February 2018, they show the annual change that is obtained by splicing the 2013=100 basket series with the monthly variations in the 2018=100 basket. Sources: Central Bank of Chile and National Statistics Institute (INE). Source: National Statistics Institute (INE). Figure 2 Exchange rate and goods EFE (annual change, percent)  6  30  5  25  4  20 TCN (right axis)  3  goods EFE (*)  2  15 10  1  5  0  0  -1  -5  -2  -10  -3  -15 16  16 Jul.
It should be a tool of last resort, to be used only when there is a clear risk of deflation. With a long-lasting, very accommodative monetary policy, side effects and risks emerge. And while pursuing price stability is the main objective, we also have to keep in mind the costs – and not only the benefits – of our monetary policy measures. What danger does the row between Rome and Brussels over the Italian budget present for the country’s banking system? As a banking supervisor it’s not our task to comment on political discussions or decisions with regard to the budgets and fiscal stances of individual countries. Banks have to acknowledge changes and risks in the macroeconomic environment they operate in. And if these changes are relevant, we as supervisors adapt our assessment of banks’ risk profiles, too. Overall, the Italian banking system has become more resilient and banks are better equipped to deal with uncertainties than they were before. What do you see as the top priority for banking supervision in the coming months and years, in Italy and elsewhere? Among other topics, there is still further work to do on non-performing loans. They will keep us busy for the coming years. The cleaning up of banks’ balance sheets should be pushed through as quickly as possible. This is not specific to Italy. All banks should do their utmost to improve their resilience in sunny times when the economic cycle is on the upside.

Not all banks have done all of the work we would like them to do. Some are well under way, and some still need to do much more. Some observers are disappointed that a male candidate – Italy’s Andrea Enria – will take over as head of ECB Banking Supervision from Danièle Nouy next year, rather than Irishwoman Sharon Donnery. How did you feel about the news? I hope that our ratio of women in central banking, as well as in banking supervision, will increase. I’m convinced that diversity in management positions is an intelligent idea to pursue. 2/2  BIS central bankers' speeches
We will allow greater foreign bank participation in Singapore’s domestic financial system in a way that strengthens financial stability and that encourages foreign banks to deepen their roots in Singapore. MAS will make several refinements to the QFB programme: (i) We will require existing QFBs that are important to the domestic market to locally incorporate their retail operations. The key objective for requiring local incorporation is to strengthen depositor protection. One indicator of importance to the domestic market will be the share of domestic deposits. MAS is also evaluating other factors that may be relevant to individual QFBs and will consult them on the criteria for requiring local incorporation. Not every QFB needs to be locally incorporated. (ii) A very small number of QFBs may become significantly rooted in Singapore over time. For these significantly rooted QFBs, MAS will consider granting an additional 25 places of business, of which up to 10 may be branches, as part of an overall package negotiated with the home countries of these QFBs which are free trade agreement (“FTA”) partners with Singapore. This will bring the total to 50 places of business for such QFBs. Being significantly rooted entails both additional privileges as well as responsibilities to contribute to the stability of the Singapore financial system. 4  BIS central bankers’ speeches  A significantly rooted bank will be determined by both qualitative and quantitative attributes.

Jean-Pierre Roth: What to expect from monetary policy? Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the International Center for Monetary and Banking Studies (ICMB), Geneva, 25 November 2003. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  A number of current issues, such as the weakness of the economy and the new National Bank Law, raise the question as to what we can expect from monetary policy. With regard to the stability of consumer prices, the answer is relatively simple. The goal of price stability is at the very top of the Swiss National Bank’s priority list. Since both inflation and deflation are monetary phenomena over the long term, the SNB can and will guarantee price stability in future too. Expectations of monetary policy are considerably lower when it comes to regulating economic activity. Economic activity in Switzerland is strongly dependent on growth abroad. Inflation does not bring about long-term economic growth. Stable prices, however, are the best precondition for sustained growth. A goal of price stability automatically ensures a degree of stability in the economy. Because of uncertainty and time lags, however, fine-tuning the economy is an impossible task. Speculative bubbles in the real estate and equity markets have been an increasing source of macroeconomic instability during the past two decades.
It may be that Sweden, Denmark and the UK will have to discuss their future relationship to the euro at the same time as the euro area expands to include half a dozen new countries. The Central and Eastern European countries will also have to weigh the long-term gains of adopting the euro against the risks of asymmetric shocks. The advantages for these countries are perhaps even clearer than for Sweden. Particularly substantial gains may arise from increased financial integration through the euro. Thanks to the fact that banks from EU countries have acquired large sections of the banking system in eastern Europe, the financial sector there has been able to evolve relatively quickly. But the new Member States’ financial systems are still rather undeveloped, with credits in relation to GDP of between one-eighth and one-quarter of that in the euro area. Sweden’s Baltic neighbour Estonia is one example of how currency integration can help the financial system to evolve. The Estonians have pegged their currency to the euro for over a decade and are keen to quickly take the step into monetary union. Their banking system is owned by Swedish-Nordic banks and credit volumes are growing by 20-30 per cent a year - most of which is denominated in euro. In some countries, the euro can also help to cement the macroeconomic discipline that is still a relatively new phenomenon there.

There are national and international arguments for a country to adhere to the Core Principles. The domestic argument is the one of avoiding or reducing the impact of bank problems, not least because they are costly to the macro economy. While the Principles are not intended to prevent single banks from failures, effective regulation and supervision should reduce potential risks and make them easier to identify at an early stage. The international argument for compliance is that other countries will require this before they open their financial markets. The fear of contagion, implying that problems of one country spread into others, remains strong. Conducting an evaluation of compliance towards the Core Principles is especially helpful when a country is in a stage of modernising its financial sector, such as Sri Lanka. The result of the evaluation will identify weaknesses and can serve as a guide to reform measures. It is also the experience of other countries that the result of the evaluation may be a useful tool for the supervisory authority in convincing the politicians of needed legal and regulatory amendments. Conclusions I have touched upon a number of aspects of supervision, all in one way or another related to lessons learned during the last ten years. I shall make no attempt to summarise, just return to my first point that a high quality, risk-oriented and flexible supervision will create credibility for the financial sector 7  BIS Review 66/2000  and make it prosper.
However, expectations according to forward rates were much lower than the Riksbank’s repo rate path in the longer run. The total deviation between the repo rate path and forward rates can also be seen on the far right in Figure 3. Figure 5 The repo rate path and market expectations in April 2010 Per cent  Note. Market expectations are based on forward rates. “Before” are the closing rates on the day before the repo rate path was published. “After” are the closing rates on the day it was published. Prospera’s survey covers money market participants. Sources: Reuters EcoWin, TNS SIFO Prospera and the Riksbank. The real repo rate path How expansionary is the monetary policy that follows on from the Riksbank’s repo rate path? One way to gain an idea of this is to look at the development of the real interest rate. The real interest rate is the most important for the development of the real economy, as it is the interest rate on which consumption and investment decisions are based. It is defined as the nominal interest rate minus expected inflation. The Riksbank also publishes forecasts for the real repo rate in its Monetary Policy Reports. 8  BIS Review 85/2010  Figure 6 shows the Riksbank’s forecast from the April Monetary Policy Update together with different measures of market participants’ expected real repo rate. 8 Let us begin by looking at the Riksbank’s forecast for the real repo rate.

The repo rate path also has significance for developments in long-term rates, although other factors than expected repo rates, such as international events, may have significance in the development of long-term interest rates. Figure 1 Interest rates at different maturities in Sweden Per cent  Note. The interest rates refer to treasury bills and government bonds. Sources: Reuters EcoWin and the Riksbank. Greater openness and clarity from the Riksbank creates better conditions to govern expectations in the corporate and household sectors. The publication of a repo rate path can be regarded as a contribution to this. Any forecast for the Swedish economy made by any reasonable type of model also generates a forecast for the repo rate. So why should one  2  See, for example, Michael Woodford (2005): “Central Bank Communication and Policy Effectiveness”, paper presented at the conference Inflation Targeting: Implementation, Communication and Effectiveness, Sveriges Riksbank. 2  BIS Review 85/2010  then “hide the most central forecasting variable”, as my Executive Board colleague Lars Svensson put it. 3 A particular advantage in publishing one’s own repo rate path is the opportunity to describe alternative scenarios for future economic developments and the consequences they would have for monetary policy. This has made it easier for market participants and households to judge how we Executive Board members will act with regard to the repo rate depending on the different alternative paths for growth and inflation. The Monetary Policy Report shows alternative scenarios, not merely for economic developments, but also for the repo rate.
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The aim is not only to cement global economic recovery, but also to counter the backtracking seen in inequality and poverty as a result of this pandemic and to jointly tackle the common structural challenges derived from digitalisation and the fight against climate change. And this without forgetting the need to strengthen pre-emptive and common response mechanisms to systemic crises like the present one. In this respect, the G20 resolutions reached to respond to the impact of the crisis on lowincome economies via debt-relief measures are praiseworthy; but consensus must now be forged to address the situation which middle-income countries are also facing (a category in which a good number of the Ibero-American community countries fit), with limited room for manoeuvre in their national policies. With these same objectives, international institutions must complement and improve coordination with regional institutions and mechanisms, which may be more effective in providing solutions for countries that share a common institutional framework or similar economic structures. Following this introduction, allow me to move on to the first panel of the Conference, which will focus on analysing the role of monetary policy in the context of the pandemic.
There is nothing unfair in comparing Italy to Spain in June and July 2012. The situation was very similar. We were very close, we were on the edge…  The situation was the same and the two countries took two different paths. Spain decided to take an EU programme for the banks, whereas Italy committed itself to making it on its own. Do you think that decision explains the divergence between the two countries since then? Again, I don’t want to make a direct comparison. The situation in Spain in 2012 was different – the government had an absolute majority in Parliament, we were lucky in that. And the clean-up of banks in Spain was far-reaching. It was not easy; it was bloody, I can assure you. But we did it and, after that, we were able to deal with an issue like Banco Popular. That was not easy, either. Then, Spain gained a lot of competiveness because of labour market reforms. Those are the two factors. But I don’t want to make a comparison with Italy. I am only focusing on Spain now. By 2013 Spain had started to grow again, and it has outperformed its peers for the last five or six years. So do you think frontloading that effort paid off? Yes, I think so. In Spain there was a government with an absolute majority, but even then we had a difficult time, politically speaking, after that.

Your input has been valuable in designing the strategies and approach to advance VBI as a key thrust in propelling the Islamic finance industry further forward. Today, I would like to share some of my thoughts on the concept of value-based intermediation. I will begin by giving an account of the achievements of our industry within the past decades. I will then touch on the role of VBI as a catalyst for growth with positive impact and the call for Islamic finance to lead the way in realising the visions and objectives of VBI. Islamic finance in Malaysia has evolved and grown by leaps and bounds over the last 30 years. Today, we have a well-developed and regulated Islamic finance industry. There are diverse industry players, both local and foreign. Prior to 2000, there were only two Islamic banks and two takaful operators in the country with total market share and takaful penetration rate of less than 5%. Islamic banking assets have now grown to capture more than a quarter of the total banking system while the takaful sector has increased its penetration rate to 14.6% of the population. This is indeed very good progress. In the sukuk segment, Malaysia is also the market leader with market share of more than 50% in sukuk outstanding since year 2000. On the Bank’s part, the Islamic Financial Services Act 2013 was introduced to modernise our regulatory and legal framework in adapting to changing needs of the industry.
Paul Fisher: The Financial Regulation Reform agenda – what has been achieved and how much is left to do? Speech by Mr Paul Fisher, Executive Director for Supervisory Risk Specialists and Regulatory Operations of the Bank of England and Deputy Head of the Prudential Regulation Authority (PRA), at Richmond, the American International University, London, 30 September 2015. *  *  *  It is now 8 years since the start of the great financial crisis, and 7 years since the collapse of Lehman Brothers and AIG in the United States, followed by the bailing out of HBoS and RBS in the UK. The consequences were not limited to the financial sector – the economic recession that followed in much of the developed world was both deep and prolonged. This naturally created an imperative for changes to the regulation of the financial system to prevent the same thing happening again in future. Since I became Deputy Head of the Prudential Regulation Authority (the PRA) in June 2014, I have been asked a number of times to comment on how far the regulatory reform agenda has advanced. How close are we to ending “too big to fail”? How much more regulatory change can one expect?

And no system should be static, since regulation will need to evolve alongside the business. Will these reforms prevent future financial crises? Almost certainly not. Financial crises have been around for thousands of years (we know that the Romans had them for example) and can be caused by all sorts of unexpected, unpredictable events, including natural catastrophes. We have to assume there will be crises in future. But what the reforms should have done is made the financial system, and its component parts, much more resilient in the face of shocks. Fewer firms should fail, fewer still in a disorderly fashion. Financial instability is therefore less likely and hence there should be greater continuity of financial services. And in consequence of a more resilient financial sector, the wider economy should be able to better withstand shocks with less detrimental effects on unemployment, output or price changes. Has too big to fail been ended? Not yet. The policies being put in place should, however, take us a considerable way towards that objective. It will certainly be a lot easier to handle a major financial firm failure once they are in force. It should be much less likely that public money is required to underpin financial stability in future. Has there been over regulation? The honest answer is: quite possibly, but no one can be sure. This question has many aspects – have there been some reforms that are unnecessary given others?
In short, some hard work has been done in the euro area to unwind imbalances and to reinforce governance. But there is still a lot more hard work to do. Maintaining the current momentum of reform is essential for putting the euro area on the path back to stability. Fragmentation in monetary policy transmission Let me now turn to the measures being taken by the ECB. 2  BIS central bankers’ speeches  The confidence crisis and the process of adjustment across the euro area has weighed on short-term growth and dampened inflationary pressures. To maintain price stability, the ECB has lowered its interest rates to historically low levels. But before August this year, our low interest rates were not reaching companies and households evenly across the euro area. In some countries, interest rate reductions were being fully passed on. In others, lending rates barely declined. And in a few countries, they had actually risen. This divergence happened because banks in some countries had found it increasingly expensive to obtain funding from market sources. They therefore could not pass on the lower interest rates to their customers. This meant that monetary policy was unable to support the real economy in these countries. Smaller companies were affected the most, as was clear from our surveys of SMEs. And as companies in the euro area are very dependent on bank loans for financing, some economies were being forced into a damaging cycle. Economic activity was weakening. Public finances were deteriorating.

Financial union is essential in a single currency area where cross-border capital flows can lead to credit booms and other imbalances – and where the negative effects of a bust can spread rapidly to other members. One essential part of financial union is a single banking supervisor. As you know, the European Commission has recently proposed that the new supervisor should be based at the ECB. This is important to ensure consistency across the euro area and to prevent regulatory capture. Day-to-day tasks, however, would remain with national supervisors who have the competence and resources to implement them. But financial union does not have to imply the pooling of deposit guarantee schemes, an issue that I know is of concern in this country. Organising and funding deposit guarantee schemes can remain a national responsibility, with comparable effectiveness. In the longer term, all four pillars are equally important. They are the bedrock for the enormous potential of the single currency for Europe’s citizens. Completing economic and monetary union would give citizens greater security against any future crisis. It would create the foundations for sustainable growth and employment. For all citizens of the euro area, it is therefore essential that Europe’s leaders stay on course. Thank you for your attention. BIS central bankers’ speeches  5