samchain/econo-pairs-v1 huggingface dataset:
8 An exit from the krone market may be tight when many investors seek to shift out of krone positions at the same time. This can trigger a considerable depreciation of the krone, as experienced in autumn 2008. On the other hand, Norwegian securities can be perceived as safe havens because the associated credit risk is perceived to be low. Experience has also shown that international turbulence can in periods lead to an appreciation of the krone. A krone that is too strong can over time result in inflation that is too low and growth that is too weak. In that case, monetary policy measures will be taken. In Norway, the key policy rate is the relevant instrument. We still have room for manoeuvre in interest rate setting – in both directions. Foreign exchange interventions are not in principle an instrument suited to influencing the krone exchange rate over a longer period. It would only be relevant should the krone exchange rate move significantly out of line with that deemed reasonable in relation to the underlying fundamentals of the Norwegian economy, and should developments at the same time threaten the credibility of the inflation target. In addition, the interest rate weapon must have already been exhausted. Over the past decade, inflation has been low and stable. This shows that monetary policy has functioned effectively. Transparency about the response pattern and key policy rate forecasts reinforce the impact of monetary policy.

This has led to a considerable expansion of its balance sheet. The chart shows the wide swings in central bank balance sheets since the 2008 financial crisis. Expansion of central bank balance sheets has been particularly rapid in the UK, the US and Switzerland and somewhat more moderate in the euro area. As I mentioned earlier, the purpose of balance sheet policy is to stimulate the economy by lowering interest rates and funding costs in a situation where the key rate is close to zero. Central banks themselves emphasise that the positive effects of balance sheet policy are uncertain – and the effects must be weighed against possible problems. 6 There are four factors that can be highlighted here: First, it may be difficult for central banks to exit the markets once they have built up large bond holdings, and this would require considerable portfolio adjustments for households, firms and banks. Postponing a reversal of the measures could generate expectations that interest rates will remain very low for too long a period after the economy has recovered. This could in turn generate expectations of high inflation further ahead. Indeed, the connection between inflation and the money supply constitutes the second challenge. When a central bank purchases securities or provides longer-term loans to banks, the monetary base, i.e. banks’ deposits at the central bank, increases. There is no direct relationship between the monetary base and inflation.
John C Williams: The right tools for our time Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the International Economic Symposium co-hosted by the Deutsche Bundesbank and NABE, Eltville, 10 May 2022. ***  As prepared for delivery Good afternoon. I'm so pleased to be here with you today. We've waited a long time to gather in person. And I think we can all agree that meeting in this charming location was worth the wait. For most visitors, Eltville is renowned for its wine and roses. But for economists, it's a place to convene for weighty discussions on monetary policy. Given the events happening around the world today, there is much to discuss. We are meeting at a time of significant economic challenges and uncertainties. Inflation has reached levels not seen in decades, both in the United States and in many other countries. And recent events-including the war in Ukraine, lockdowns in China, and other supply disruptions related to the ongoing Covid-19 pandemic-are exacerbating near-term inflationary pressures and uncertainty about the global economic outlook. The challenge for monetary policy today is clear: to bring inflation down while maintaining a strong economy. This, of course, is at the heart of the Federal Reserve's dual mandate of price stability and maximum employment. Although the task is difficult, it is not insurmountable. We have the tools to return balance to the economy and restore price stability, and we are committed to using them.

The case of the Italian banks has illustrated just how complex it is to combine the resolution regime laid down in the Bank Recovery and Resolution Directive (BRRD) with the State aid framework for orderly liquidation. In addition, confidence in the Single Resolution Fund (SRF) and its capacity to intervene has to be bolstered. The setting-up of a common backstop, as mentioned in the European Commission’s communication of 11 October, is a promising avenue, which could take the form of a credit line granted by the ESM. Furthermore, the issue of the liquidity of the newly resolved entities – mainly the “good banks” – is not sufficiently clearly addressed: liquidity support by public sources beyond what can legitimately be expected from the Eurosystem should be clarified. Second, consistency in the legal framework and requirements: faced with the accumulation of new and “separate” requirements, we need to adopt a holistic and consistent approach in order to avoid a prudential overload. In particular, the TLAC requirement resulting from the new international framework requires a consistent adaptation of the European minimum requirement for own funds and eligible liabilities (MREL). In the same vein, the consequences of an internationally-agreed Basel III package – if and when it comes – should be carefully taken into account, as it would lead to increased risk-weighted assets, which will in turn impact the MREL.
However, cuts in the price of a certain product can have an impact on average consumer prices during a period of time, in the same way as when the developments in digital technology make some products cheaper. From this perspective, increased imports from China and other Iow-wage countries can have a directly dampening effect on inflation in the short and medium-terms. 14 There are probably reasons why the idea of lowering the inflation target has been put forward mainly in Sweden. Swedish inflation fell to low levels somewhat earlier than inflation in many other countries. Another important piece of the puzzle is that the low inflation is not considered to reflect a particularly poor development of the Swedish economy. It is therefore likely that one begins looking for other explanations for the low inflation. And if one then decides on the explanation that this is largely a matter of structural trends and that an inflation rate that is persistently below 2 per cent is compatible with a reasonable development of the real economy, it appears both possible and logical to lower the target. This is roughly the way I believe the reasoning works. ...but they do not determine inflation This method of reasoning may intuitively appear reasonable, but I think it disregards a couple of important circumstances. Both globalisation and digitisation are underlying structural trends that can have a dampening effect on inflation. But even if this effect may continue over a long time, it is essentially temporary.

I also believe that it may be difficult to raise the target in a situation where inflation undershoots the target significantly, particularly if the central bank has cut the policy rate to the “near zero lower bound”, that is, the level at which may countries are now. Here there is rather a risk that the increase will be perceived as a more or less desperate and in the worst case not particularly credible measure to obtain a little additional help getting out of a difficult situation. Apart from the best time to change the inflation target being in a relatively normal situation, I would also think it would be easier if several central banks did it at the same time. 16  For a definition of secular stagnation and a summary of empirical evidence and policy implications, see Rawdanowicz et al (2014). 17  See, for example, Krugman (2014). 18  See, for example, Hamilton et al (2015) and Rogoff (2015), who say that the world is in the adjustment phase of an unusually large debt cycle, a “debt supercycle”. See also the debate between Bernanke (2015) and Summers (2015). 8  BIS central bankers’ speeches  Financial crisis has affected the central banks’ analysis and working methods I have given some examples of questions that will probably continue to be argued in the international discussion of how inflation-targeting may need to be adapted and modified.
I don't want to throw out any potentially relevant information on arbitrary grounds. Consistent with this approach, when asked about the role monetary aggregates play in my policy thinking at a recent Treasury Select Committee hearing, I sought to steer a course between recognising that monetary developments can – and often do – offer important insights into the outlook for the economy and monetary policy, but at the same time noting that money is not a 'summary statistic' that alone can or should determine monetary policy decisions. Monetary developments need to be incorporated into a wider assessment of the economic outlook, such as the MPC forecast that we publish regularly in the Monetary Policy Report. The importance attached to money in that context will vary over time and depend on interactions with other variables. For example, last year the likelihood of stronger consumption spending by households as we recovered from the pandemic  5/8  BIS - Central bankers' speeches  could be assessed by evaluating the 'monetary overhang' – the stock of household bank deposits held in excess of what might have been expected on the basis of historical norms – that was accumulated during lockdown. The same thinking applies to any macroeconomic or market information. In principle, it should be considered relevant to the extent that it informs well-designed monetary policy actions.

Would it be acceptable to use tax-payers money to refund foreign depositors at a larger scale? This might pose problems both for the home and host country. The wide divergence of national systems clearly needs attention. Potential solutions might include increased co-operation and harmonisation regarding fees and entry and exit rules. Crisis management. National central banks have national mandates in extending emergency liquidity assistance. In a future integrated European financial market, the mandate of the lender of last resort will not be as clear-cut. How should this function be organised when the largest banks might be systemically important in several EU member countries? There will also be banks that are very important in one country while being completely insignificant in a European context. Another issue is whose interest a national supervisor will protect in a crisis involving a cross-border banking group strictly its own national interest (the case now) or the interest of all member countries where the group might have operations? Conclusions These issues, or challenges, are essentially political. They are about how to share the risks and costs of financial integration. And as long as these challenges are left unaddressed they constitute political barriers to integration. We all say we want financial integration but as usual, nothing comes for free. Financial integration brings some difficult issues for authorities and politicians. Public authorities will have to rethink their roles and priorities.
While these frictions may vary over time, they should generally do so only slowly. 7 The pull of IOER should also be affected by the quantity of reserves in the system. An increase in bank reserves that increases bank assets makes regulatory leverage ratios more binding, raising the shadow marginal cost of bank balance sheets. It also accentuates the competitive frictions I described above, and reduces individual bank demand for additional reserves. 8 As a result, as the level of reserves declines during normalization, marginal balance sheet costs should fall, competitive frictions should lessen, and the demand for additional reserves from individual banks should increase. These factors should strengthen the magnetic attraction of IOER and pull the fed funds rate and other market rates up toward – and at some point equal to or above – the IOER rate. However, excess reserves will remain plentiful for some time, and while that’s the case the FOMC intends to use an ON RRP facility and other tools as needed to complement IOER in controlling the fed funds rate. 9 When the Desk conducts ON RRPs, as in its current testing program, it sells Treasury securities held in the SOMA with an agreement to buy them back the next business day at a pre-determined price. This leaves the size of the SOMA portfolio unchanged, but shifts some of the liabilities on the Fed’s balance sheet from bank reserves to reverse repos.

The Labuan IBFC's competitiveness will be further enhanced through a revision of the pricing structure pertaining to incorporation and maintenance fee charges. There will be an annual reviews and prices will be revised in response to competitive market developments. The Labuan IBFC will also leverage on the national strategy of the Malaysian Islamic Financial Centre by promoting Syariah-compliant trusts and foundation. These products will complement Islamic financial products and services already available in Kuala Lumpur. Efforts will also be taken to further develop Labuan's captive insurance business which has enjoyed commendable growth over the years. Conclusion Ladies and Gentlemen, The establishment of Labuan as an international offshore financial centre in 1990 was indeed a bold step in its time. We are now seeing the payoffs from this initiative. With the transformation of Labuan as an International Business and Financial Centre, our ambition will be taken further. The new name signals that Labuan is ready to take on the much broader and larger role. The new name also represents a commitment. A commitment for the future. To demonstrate this commitment, the Government and the regulators have put in place the supportive and enabling environment to promote a more connected and more cost effective environment. Continued initiatives will also be taken to remove any impediments and obstacles to a more efficient delivery system and to advance forward the Labuan IBFC. 2  BIS Review 10/2008  The responsibility for ensuring the ambitions of the Labuan IBFC to be realised, is however, a shared responsibility.
And the Australian terms of trade have risen by 40% since 2000, providing a substantial boost to the growth rate of real incomes. Nothing could be more damaging to the prospects of developing and developed countries alike than the abandonment of further trade liberalisation. But protectionist sentiments are abroad again, even with high employment rates around the world. In Europe they are concealed as cries for “national champions”; in Latin America as populism; in the United States as complaints about unfair competition. But the damage that protectionism can wreak is clear – the experience of the Great Depression should be enough to ring alarm bells. If that is to be avoided and we are to maintain widespread support for an open international trading system, it is in all our interests to establish clear rules for what we will and won’t do in areas where our  2  BIS Review 126/2006  decisions affect stability elsewhere. And if those commitments are to be upheld, we will need international institutions. The role of international institutions was thrown into sharp relief last week by the visit to Beijing of the new US Secretary of the Treasury, Hank Paulson, and a high-level team for a “strategic economic dialogue” with the Chinese Government.

Because the cost of abolishing institutions is high, the number of international groupings and institutions has proliferated in recent years. Many of them tread on each others toes. As a result, the IMF, World Bank and OECD, have all been bruised. Duplication of roles is wasteful of time, money and focus. Each institution should have one very clear remit, and focus on it. Of course, countries which play a role in one institution but not in another will have an incentive to build up the role of the former at the expense of the latter. So it is up to the member countries to limit the battle for turf. There are few examples where all these principles appear to have been followed. The World Trade Organisation has been an effective umpire of countries’ commitments about trade restrictions and comes close. But the example of the WTO highlights the importance, above all else, of clear commitments from nation states themselves. The failure of countries to conclude a multilateral trade round since the WTO was formed more than a decade ago is worrying. The Doha round has continued past its expected completion date and only a brave commentator would forecast eventual success. The fault does not lie with the WTO. Instead, it reflects the fact that national governments have not been willing to make the necessary commitments. BIS Review 126/2006  3  4. What do those principles mean for the IMF? With those principles in mind, I want to consider the challenge of reforming the IMF.
As I mentioned earlier, the HKMA has the honour of chairing the EMEAP Working Group to lead the initiative. This began in 2002 and in June of the following year, EMEAP launched ABF1. ABF1 invests in a basket of US dollar-denominated bonds issued by sovereign and quasi-sovereign issuers in eight EMEAP markets - China, Hong Kong, Indonesia, Korea, Malaysia, the Philippines, Singapore and Thailand. It was a small but significant step forward. Think about it for a moment: eleven very different economies of different sizes, with different economic structures and stages of economic and social development, co-operating for the first time to set up a bond fund and lay the foundation for promoting the development of regional and domestic bond markets in the Asian region. 9. The next, bigger step was ABF2, which extends the concept to bonds denominated in Asian currencies. There are two parts to this: the Pan-Asia Bond Index Fund (PAIF) and eight Single-Market Funds. The PAIF is a single bond fund investing in sovereign and quasi-sovereign local currencydenominated bonds issued in the eight EMEAP markets, while the Single-Market Funds invest in similar bonds issued in the individual markets. So far, the PAIF and three Single-Market Funds in Hong Kong, Malaysia and Singapore have been listed. The remaining five Single-Market Funds will also be offered to the public within the next couple of months. I am glad to see that the ABF Hong Kong Fund has been well received by the market, growing by over 40% since its listing in June this year.

With over half of total trade in Asia being intra-regional trade, and with this proportion still on an increasing trend, economies in the region are becoming increasingly interdependent among themselves, arguably more so than each of them depends on the developed economies in Europe and America. By comparison, the degree of financial integration in Asia is disproportionately low. For example, all of the Asian economies have probably lent more individually to the United States than they have collectively to other Asian economies. 4. Whether we like it or not, we now find ourselves in the unenviable position of holding a substantial part of our savings in the financial liabilities of an economy that does not save, fearing that a diversification of a small part of such holdings might lead to a sharp fall in the value of the rest, thus shooting ourselves in the foot. We also find ourselves somewhat stuck with recycling a large part of our savings through the developed markets back into the region in a much more volatile form, occasionally creating havoc in our monetary and financial systems. 5. We find ourselves - we are told - contributing to the global imbalance by saving too much and spending too little, although those that tell us pay little attention to the fact that we do have typhoons and heavy rains, earthquakes and tsunamis, and we need to ensure that we are able to help ourselves as much as possible in case of need.
To date, 109 approved projects have received financing worth RM1.5 billion by 22 banks, of which 17 projects are receiving financing worth RM300 million from six Islamic banks . For the first 9 months of 2013, 33 companies received approved financing facilities totaling RM416 million. The  2  BIS central bankers’ speeches  approval rate for the financing has also improved from 54% in December 2012 to 59% in September 2013, reflective of the positive reception of financial institutions towards green technology financing. The recipients of the financing facilities operate in a broad range of green technology sub-sectors that covers energy, buildings, transportation and water and waste management. This financing initiative has also contributed to increasing employment, with the generation of nearly 1,400 jobs. The additional allocation of RM2.0 billion of the GTFS therefore presents an opportunity for financial institutions, including Islamic banks to further expand financing into this new and exciting area of growth. Strong potential for Islamic finance to support green technology This brings me to my next point – the role of Islamic finance in contributing towards a diverse and robust financing ecosystem for green ventures. In the Quran, verses 11 to 14 of Al-Fajr emphasise the need to care for the environment and the forms of life that Allah has created on this earth that includes proper usage of natural resources.

The principles of these contracts can foster the spirit of entrepreneurship and promote due diligence and proper management of funds by the entrepreneur whom will benefit from the Islamic bank’s expertise in profit generation and financial management. The contracts also strengthen the fiduciary duty of Islamic banks as manager of the business venture and help to align its focus on longer term value creation. Islamic banks ought to further explore the possibility of using Mudarabah and Musharakah contracts to finance SMEs involved in green technology. However these contracts carry different sets of risks, therefore, it is important for Islamic banks to build its capacity in terms of talent and risk management capabilities to understand and manage new risks peculiar to the profit and loss sharing contracts. There is a need to adopt strong governance, transparency and disclosure practices to meet the due diligence requirements for determining the viability of business and investment proposals. In Malaysia, the recently enforced Islamic Financial Services Act 2013 is an important milestone in providing an enabling environment to spur more risk-sharing transactions. This new legislation promotes certainty to the legal and regulatory treatment of Islamic financial transactions by providing legal recognition to the contractual requirements in accordance with the Shariah. There will also be issuance of Shariah and operational standards of each Shariah contract that provides greater clarity and transparency, therefore facilitating effective risk and profit sharing activities to take place. We aim to issue the relevant Shariah standards before the end of 2013.