samchain/econo-pairs-v1 huggingface dataset:
 While it is helpful to ask what might be the most adverse consequences of any decision taken, possible tail outcomes need to be balanced in a judicious and pragmatic way against more likely outcomes. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  I see these elements as being embodied in the so-called risk management approach to the formulation of monetary policy, which has been embraced by many central bank policymakers.17  At a practical level, in recent years this approach has acknowledged the need for monetary policy to be cognisant of uncertainties and risks stemming from (say) the lower bound on policy rates or the threat of a liquidity trap, while at the same time recognising that policy considerations cannot ignore the implications of decisions should the trap be avoided and inflation rise over the medium term. 18  The former aspect of risk management has justified a more aggressive response to downside shocks to price stability as the lower bound drew closer. Our discussions in the MPC now also address the latter aspect of the risk management approach: how policy should evolve as inflation rises and those asymmetric risks stemming from the lower bound recede. In undertaking this discussions, the risk management approach entails judgement and pragmatism. Engineering is not enough. The inevitable subjectivity of these judgements re-introduces some art into the science of monetary policy.

The process runs as follows: Domestic interest rates at the longer end of the maturity spectrum tend to become more closely correlated with the global rate, or the rate of the largest trading partner, and less correlated with the domestic policy rate. This means that monetary transmission tends to go increasingly through the exchange rate channel, which is only a problem, however, if the exchange rate behaves badly. Unfortunately, there is a lot of evidence to suggest that it does. Uncovered interest rate parity (UIP) does not hold except over long horizons. Interest rate differentials give rise to widespread carry trading, which is by nature a bet against UIP. Exchange rates  BIS central bankers’ speeches  1  thus diverge from fundamentals for protracted periods, followed by sharp corrections. So the exchange rate often seems to be as much a source of shocks and instability as a tool for adjustment and stabilisation. Ultimately, these cycles can take the boom-bust form and, in extreme cases, can result in serious financial instability or crisis. The research on this phenomenon is still ongoing, but there is a lot of evidence to suggest that the problem would not disappear even if macroeconomic policies in the traditional sense were perfect. This process was important in the Icelandic episode. The capital inflows were driven by the traditional push and pull factors.
The Western governance concept including the appointment of an independent director in the Board of Directors, the introduction of an Audit Committee, and other new initiatives to improve the governance structure, have helped to address some of the problems of the past —but only to a limited extent. Unfortunately, there have been some actual practices in the Western corporate world which are contrary to the intended ideals of good governance. The notorious examples of Enron and WorldCom are all too well-known, notwithstanding the fact that both corporations had Boards of Directors established in accordance with the Western concept of good governance. Yet both eventually faced severe financial difficulties. As I see it, there are two critical aspects of the Western practices which may potentially lead to serious financial difficulties for the firm. The first is that the Chairman and the CEO is one and the same person. The second is the practice of allowing company stock options to be part of the compensation for company Directors. Allow me to elaborate. A CEO is by designation the Chief of Management, responsible for achieving the best possible performance of the company. This means maximizing profits, increasing growth and market share, expanding business lines, and doing all that it takes to maximize the company’s share value. On the other hand, the Board of Directors has to oversee the operations of Management, ensuring that they operate well within the bounds of acceptable risks in order to ensure business continuity.

M R Pridiyathorn Devakula: Efficiency enhancements and risk management Remarks by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the Asian Bankers’ Seminar, Bangkok, 16 March 2006. *  *  *  Distinguished Guests, Fellow bankers, Ladies and Gentlemen, Today’s seminar covers wide-ranging topics of interests to the banking community ranging from efficiency enhancements to risk management needed to achieve sustainable business growth. While these issues are topical and useful to bankers, I believe that one cannot simply reduce risks by relying on risk management process alone. An effective risk management system has to be supported by proper governance of the bank’s Management and its Board of Directors. One of the painful lessons of the 1997 crisis was that improper governance practices at the Board level were amongst the root causes of the downfall of too many financial institutions. Back then, it was not unusual for banks to lend to related parties with close connections to their owners, directors, and management without the proper credit analysis. Board members of banks often neglected their responsibilities to blow the whistle against these imprudent activities. Many Board members also did not have adequate and timely access to the necessary information to detect such misdeeds so that appropriate actions could be taken to prevent the resultant damages. The concept of “governance” as understood in Western society and now introduced into our business organizations, including financial institutions, has served as a good starting point to rectify some of the root causes of the crisis.
A healthy banking sector is crucial for economic growth because banks and other parts of the financial system play a key role in determining how savings are allocated among competing projects and users of credit. If households and businesses cannot get credit on reasonable terms, then the economy sputters. To underline this point, the Fed and Treasury did not intervene during the recent crisis to save the financial system (and with it, some big financial firms) for its own sake. We intervened because a collapse of the financial system would have done irreparable harm to Main Street. With the limited tools at hand, we made our choices (often between unattractive options) with the goal of supporting the economy, households and small businesses. A well-functioning financial system is also crucial in fostering economic development. History shows that substantial risks to the economy come from a persistently weak banking sector. Economists have debated whether healthy banks drive real economic growth, or vice-versa, but a wealth of recent evidence suggests that the causality runs at least partly from banks to growth, and not just the other way around. So, from my perspective, getting Puerto Rico’s banking system back onto solid footing is “job one” for supporting growth here. Preparing Puerto Rico to benefit from recovery in the world economy Of course, that isn’t the whole story. Growth may also be impeded by factors that are specific to particular regions or policies.

To improve our understanding of the Puerto Rican economy, the New York Fed has joined a group of local businesses – including some represented here – to sponsor and fund a household survey, undertaken by the Center for the New Economy, our hosts today, to benchmark Puerto Rican consumer finances. As of today, the data have been collected and Fed economists are collaborating with the CNE to provide technical assistance, to make the results of this study public and to make these data available for further research. To help businesses and government in Puerto Rico, we have also been providing technical assistance to Puerto Rico’s new Institute for Statistics. We recognize the importance of this work and applaud its efforts to improve Puerto Rico’s inflation measures, national income accounting and business activity measures, just to name a few. All of these activities, from monetary policy and financial regulation to fostering community development and economic literacy and measurement, complement and reinforce each other. Our policy actions are most effective when people understand how financial markets work. Our decisions are always better when we are well informed about the concerns of families and businesses. Thus, outreach to the region and communities we serve is an important part of my job. Thank you for your kind attention. I would be happy to take a few questions. 6  BIS Review 18/2010
If asset prices have been driven up to unsustainable levels that do not correspond to the underlying fundamentals, we are faced with a special kind of problem. We know from experience that speculative asset price bubbles eventually burst. When they do, collateral values will fall and balance sheets deteriorate, potentially threatening the stability of the banking system. To avoid this kind of development, the central bank needs to closely monitor the potential for excessive credit growth and the possibility of asset price bubbles building up. It seems that historically the forming of speculative price bubbles has been closely linked to an excessive expansion of credit. But we need to operationalise both the concept “excessive” and the difficult concept of an asset’s “fundamental value”. As history has shown us, judging to what extent rising asset prices reflect strong fundamentals, rather than the “irrational exuberance” of investors, is easier said than done. Nevertheless, certain important risks related to asset prices need careful watching in today’s world. The first risk is that imprudent lending could fuel unwarranted asset price increases - as so often in the past. Although there is little evidence to date of a general lowering of credit standards, credit growth has been very rapid and loans to finance equity purchases have risen sharply in some countries. BIS Review 65/2000  4  Ensuring that investors are not sheltered from the consequences of their sometimes misguided investments is important for maintaining prudent lending standards.

Whereas the value of the UK  5  Foreign reserves held by EME central banks as a whole are about 60% (close to $ trillion) higher than needed for conventional precautionary reasons to cover short-term external debt. 6  Morgan Stanley, "Sovereign Wealth Funds and Bond and Equity Prices", 31 May 2007. 7  That said, the assets held by sovereign wealth funds are highly concentrated, with around 70% of total assets held by the five largest funds. So the largest sovereign wealth funds could have an impact on some markets especially smaller ones such as other EMEs. 8  Also, a number of central banks from countries with large current account deficits have been willing throughout the current liquidity crisis to lend to international banks, including UK ones, at longer, three-to-twelve month, maturities. BIS Review 31/2008  3  market for public debt securities is only 3.3% of the global market, UK equities account for 7½% of the value of global equities. The rapid growth in sovereign wealth funds is also a fillip for London as a leading international financial centre. SWFs and transparency The main doubts concern their objectives and how far their investments will be driven only by financial returns. Public sector owners might have other objectives including national political interests, such as, accessing military technology, controlling strategic resources or markets, and influencing public opinion. 9 There are often complaints that sovereign wealth funds lack transparency. Decoded, this is a request for reassurance about their investment policies.
For instance, Eurosystem staff 15 calculated that imports of goods from low-wage economies reduced euro area CPI inflation through direct effects and increased competition by 0.16 percentage points per year in the last two decades, although this is thought to be an upper bound. There is also debate as to whether globalisation has contributed to reducing the sensitivity of inflation to domestic output shocks; in other words, to a flatter Phillips curve. In general, ECB calculations show that more integrated economies have a flatter Phillips curve, and, as a consequence, a higher monetary policy sacrifice ratio . However, there is  11  Fo rbes, K. (2019). “Inflation dynamics: dead, dormant or determined abro ad? ”. Bro oking Papers o n Economic Activity, Fall. 12  Bianchi, J. and A. Civelli (2015). “Glo balization and inflation: Evidence fro m a time-varying VAR”. Review o f Eco no mic Dynamics, 18(2), pp.406-433. 13  Fo rbes, K. (2019). “Inflation dynamics: dead, dormant or determined abro ad? ”. Bro oking Papers o n Economic Activity, Fall; and Attinasi, M. A. and M. Balatti (2021). “Glo balization and its implications for monetary po licy”. ECB Economic Bulletin, Issue 4. 14  Kamber, G. and Wo ng, B. (2020). ”Global facto rs and trend inflatio n". Journal o f International Eco nomics, vo l. 122, 103265. 15  ECB Wo rk Stream o n Glo balization (2021). "The Implications o f Glo balisation for the ECB Mo netary Po licy Strategy". Occasio nal Paper no . 263.

At the same time, companies were shifting from just-in-time to just-in-case supply chain management systems. Similarly, the European Investment Bank’s Investment Survey 9 found that half of US companies and one-third of EU ones have reacted to the recent trade disruptions by focusing more on the domestic market. Meanwhile, the McKinsey survey of supply chain leaders worldwide10 found that, last year, 81% of firms adopted dual-sourcing strategies for raw materials (up from 55% in 2021). In other words, the response seems to be moving more in the direction of increased diversification – in terms of suppliers and final demand, and both internally and externally rather than reshoring, at least for the time being. This diversification may, in fact, generate greater macroeconomic stability and less volatility. Second, and linked to the above, countries (including China and the United States) have started to prioritise safety over efficiency. 8  Lagarde, C. (2022). “A new glo bal map: Euro pean resilience in a changing wo rld”. Keyno te speech at the Peterson Institute fo r Internatio nal Eco nomics, April. 9  Euro pean Investment Bank Investment Survey, 2022. 10  Alicke, K., E. Barriball, T. Fo ster, J. Mauho urat and V. Trautwein (2022). Taking the puls e of s hifting s upply chains. McKinsey. 4  A case in point is the “friend-shoring” concept as a strategic objective in the United States, while Europe aims to double its share of global semiconductor production to 20% by 2030. Companies are also reacting.
The actual build-up of the Fund may span a short generation. The Fund will thereafter enter a new phase. With lower revenues from oil and gas activities, it will no longer receive capital transfers from the government. When oil and gas revenues cease to provide the government with economic rent, only the annual real return on the Fund can be used on a permanent basis. In the mid-1990s, oil prices were around USD 20 per barrel and revenues were set aside. This year the oil price must be over USD 50 per barrel to generate sufficient oil revenues to make transfers to the Fund. We must be prepared for wide variations in oil prices, and the first year without transfers of oil revenues – but rather withdrawals – may be approaching. BIS Review 44/2010  7  Increase in equity share Under the Fund’s investment strategy, more equities are purchased when equity prices fall and fewer when prices rise. Thus, the Fund purchased a large volume of equities in the period from 2001 to 2003 and during 2008 and 2009. As a result the Fund currently holds a little more than 1¾ per cent of listed European equities and roughly 1 per cent of all listed equities. The Fund’s stock holdings are spread across different countries, sectors and regions. In the early days of the Fund, the benchmark portfolio was restricted to investments in Western Europe, North America, Japan, Brazil and a limited number of countries from all over the world.

Now I wish to update on the progress of the MIFC. Malaysia is still the largest sukuk market commanding over 60% of the global sukuk market. For the year ended 2008, new sukuk issuance in Malaysia was the highest globally at over 36 percent. Currently there are 9 Islamic fund management companies that have been approved by SC to set up business. Within the MIFC community, there are also 14 Islamic banks with international currency business units (ICBU) and three international Islamic banks (IIB). To further entrench the Islamic financial market, the government has recently announced a number of liberalisation policies to enhance global linkages and accelerate the realisation of the MIFC agenda. The announcement includes the offering of two mega Islamic banks licences, where they will predominantly be wholesale Islamic banks undertaking to a large extent international Islamic financial business. Furthermore, two family Takaful licences are being offered. For the existing Islamic banks, the government is giving flexibility to increase the foreign equity participation to 70% of shareholding. Furthermore, 5 foreign legal firms will also be allowed to set-up operation in Malaysia. Today, with signing of the memorandum of participation marks the beginning of a new chapter in Islamic finance. I would encourage each stakeholder, particularly Bursa, to exploit the vast potentials of this new entity and take this opportunity to enhance research and product development capacities.
13  And it has increased the sensitivity of domestic inflation to global inflationary pressures while 14  reducing its responsiveness to changes in domestic slack. Research by the BIS indicates that a doubling  in the share of imported intermediates in GDP causes the importance of global factors for domestic inflation to double as well. 15  Consistent with that, research at the Bank of England indicates that each 1 percentage  point increase in the import intensity of consumption reduces the sensitivity of inflation to domestic slack by 1 per cent, and that the strength of this effect varies with the ease with which producers can switch between imported intermediates and domestic alternatives. 16  Monetary policy makers must take the effects of intermediate trade into account since, unlike commodity shocks, import price changes take time to work through supply chains into final goods prices and therefore affect inflation at the policy-relevant horizon. 17  Labour markets provide a third channel through which globalisation affects domestic inflation. To be clear, globalisation is far from the only factor that has been affecting labour markets in recent decades – and 13  Auer, R, Levchenko, A and Sauré, P (2017), ‘International inflation spillovers through input linkages’, NBER Working Paper No. 23246. A shock that raises inflation by 1 percentage point in the rest of the world is found to raise domestic producer price inflation by (PPI) 0.2pp on average across the countries in the sample.

For example, a country’s long-term growth is determined by developments in the quantity of labour and real capital and technological progress. The best that monetary policy can do is, as I have already observed, to indirectly contribute to favourable economic developments by ensuring that inflation is kept low and stable and that financial stability is good. Although it might be tempting, it is therefore meaningless – and often counter-productive or even damaging – to give the central bank the task of "creating" growth or employment. If one tries to affect growth and employment by systematically keeping interest rates low and increasing liquidity in the economy, or by allowing public sector projects to be financed directly by the central bank, the profits will be only short term. Inflation will rise in a way that will sooner or later become difficult to control – the nominal anchor will loosen – while developments in the real economy risk being poorer than they would have been otherwise. I believe that it is correct to claim that a lack of insight and excessive  5  See, for instance, Bernanke, B.S., (2006), ”The Benefits of Price Stability”, Remarks at The Center for Economic Policy Studies and on the occasion of the 75th Anniversary of the Woodrow Wilson School of Public and International Affairs, Princeton University, February 24. 6  See, for instance, Bernanke, B.S., (2004), “The Great Moderation”, Remarks at the Meetings of the Eastern Economic Association, Washington, DC, February 20.
We are working together with law enforcement agencies and are now focusing on public awareness. About a month ago, we launched a joint project with Yandex – the microfinance organisations on our register are marked with a special symbol in the search results so that it is easier to understand whether a given microfinance institution is legal or not. Moreover, this year saw Mir cards issued on a large scale. In Russia, they are accepted by all payment terminals and ATMs. The issue is proceeding at a good pace: over 10.6 million cards have already been issued. In the last month and a half alone, over 2 million cards were issued. Mir is a competitive system and offers all the services on the domestic market that the public are used to after using international payment systems. Our strategic objective in the coming years is ensuring Mir cards are accepted internationally, firstly within the Eurasian Economic Union. We are making progress in this area with our partners in the Eurasian Economic Union. Last week, the first cross-border transactions using Mir cards were carried out with Armenia’s ArCa payment system. This is the first project we have undertaken to organise equal intersystem interaction. (I believe the citizens of the two countries will benefit from new financial opportunities. I would like to express my gratitude to the Central Bank of Armenia and the management team of the ArCa payment system for their incredibly effective collaboration and promotion of this project).

If however action were needed on financial stability, this would be effected chiefly through temporary liquidity instruments, which would not conflict with the increase in interest rates needed to ensure price stability. II. A plea for more focused multilateral cooperation Be they energy price pressures or financial spill-overs, the challenges currently faced by central banks require more than individual actions – they call for strong and effective multilateral impetus. I say it here in Washington, during the IMF Spring Meetings. However, the tide has been turning the other way since the Russian invasion of Ukraine. As geopolitical rifts deepen and trust fades, it is becoming more and more difficult for the G20 to deliver on its mandate, despite remarkable efforts from the Indonesian and now the Indian presidency. We need to find pragmatic ways forward to overcome deadlocks in global action and adapt to the new realities. Alternatives to multilateral cooperation, such as regionalism, “minilateralism”, ii or “polylateralism” iii can usefully supplement it. Working on smaller scales, or relying on non-state actors could help achieve breakthroughs. Yet they cannot replace it. They lack the global reach of international state cooperation.iv Hence my call for a focused or pragmatic multilateralism. v The principle is simple: rather than pursuing an exaggerated ambition, focus at present multilateral efforts on a few selected global issues, where there are clear common interests.