samchain/econo-pairs-v1 huggingface dataset:
Ravi Menon: Future of finance jobs Opening remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, and Chairman of the Institute of Banking and Finance, at the Launch of the Study on Future of Finance Jobs, Singapore, 23 April 2019. * * * Mrs Josephine Teo, Minister for Manpower, members of the IBF Council, ladies and gentlemen, welcome to IBF. IBF will be turning 45 this year. It is hard to imagine the financial sector today without the IBF. Not all countries have the equivalent of an IBF. Fewer still have as strong a collaboration as we do here in IBF – among financial institutions and between financial institutions and the regulator. And all for a common cause that has been consistent for the last 45 years – to equip the professionals in our financial sector to do their jobs better, and to make the Singapore financial centre more competitive IBF began life in much simpler times. Its primary aim in the 1970s through the 1990s was to provide training for the financial sector professionals. In the 2000s, IBF shifted its focus to setting competency standards and facilitating skills development for the industry. Looking to the future, the jobs and skills landscape in the financial industry is a lot more complex and uncertain. Technology is transforming finance – the way financial services are produced, distributed, and consumed. This means that jobs in financial services will also be transformed.

Furthermore, if market expectations of upside currency gains persist, it could invite even more capital inflows, along with greater pressures on the exchange rate and higher chances of imbalance buildups in the future. For the real economy, it may delay some of the necessary adjustments. Finally, FX intervention is not costless. We have to fund the intervention with local interest rates that are higher than what we would earn from our international reserves. 2  BIS central bankers’ speeches  Experiences have also shown that, even after a large appreciation of the currency, capital inflows could still seep in and fuel speculative activities in markets such as real estate and equity. To help deal with specific pockets of the economy showing signs of potential bubbles, macro-prudential measures could be used. A recent example is the risk-weights adjustment related to the loan-to-value (LTV) ratio of loans made to property purchases. While macro-prudential measures aim to help lessen the effects of capital that has already flowed into the economy, capital account regulations can be used to deal directly with the size and type of incoming and outgoing flows. With an aim of creating more balanced capital flows, the Bank of Thailand has continued to liberalize our capital outflows, while on the inflow side we at times resort to tighter regulations when the situation deems necessary. Implementing a capital account regulation, or less of it, requires a delicate balancing act.
A monetary policy that “leans against the wind” may contribute to greater stability in the longer term, as the purpose of trying to prevent financial imbalances from building up is that they should not cause problems with financial or macroeconomic stability at some point in the future. Most people agree that monetary policy should not have the main responsibility for preventing financial imbalances, but that this should rest on micro- and macroprudential policy and a well-designed regulatory framework. A central issue is, however, what support to prudential policy and the regulatory framework monetary policy needs to provide so that they can fulfil their tasks. 5 I do not believe it is possible to completely ignore financial stability when conducting monetary policy. Different views in research and among central banks There is on the one hand a growing research-related literature on whether central banks should “lean against the wind” – or conduct “prudential monetary policy”, as it is sometimes called and which perhaps is a more telling term. 6 There is on the other hand a more practical policy discussion.

Concerning the intensive debate about the Riksbank’s policy, my conclusion was that it can be useful to have a system where the monetary policy remit and policy objective are reviewed at regular intervals, as is currently the case in for example Canada. This would create better understanding and legitimacy for the monetary policy conducted and clarify that the central bank actually only performs the remit it has been given. I also believe it can be a way to counteract the forces that seem to exist in many parts of the world to make central banks less independent. As regards the decline in cash use, there are not so many conclusions to draw as yet. What we can say for certain is that an e-krona would affect the conditions for monetary policy quite substantially, more or less regardless of how it is designed. It is wise that many countries are examining the scope for introducing e-money, as one of the lessons that after all can be learnt from developments in Sweden is that cash use in society can decline very rapidly. These were the experiences and reflections I wanted to share with you. Perhaps the conclusions I draw are not that spectacular. But I would like to believe that the observations and experiences that we practitioners and economic policy decisionmakers make in our day jobs, so to speak, slowly but surely help to enhance the level of our collective knowledge. My hope is that this could at least be a small contribution to this development.
“The Role of Finance and Banking for the Prosperity of Asia” Speech by Dr. Veerathai Santiprabhob Governor of the Bank of Thailand IIF lunch seminar during the 50th Anniversary ADB Annual meeting 6 May 2017, Yokohama, Japan Mr. Timothy Adams, President of the Institute of International Finance, IIF fellows, distinguished guests, ladies and gentlemen, A very good afternoon to you all. I am honoured to be here today and be a part of this remarkable event celebrating the 50th anniversary of the Asian Development Bank. I would like to thank the Institute of International Finance for hosting this lunch seminar and for inviting me to share with you my thought. Throughout the past five decades of the Asian Development Bank, the ADB has been a trusted development partner of the public and private sectors in Asia. Its lending packages, technical assistance along with policy dialogues have been tailored to specific needs of member countries, and have helped reduce poverty and laid foundations for inclusive and sustainable growth in Asia. Evidently, the number of people living in extreme poverty has fallen markedly across Asia throughout the past decades. Half a century is an important milestone. It is an opportune time to look back and look forward. My topic for today is “The role of Finance and Banking for the Prosperity of Asia”.

Besides, as technology advancement permeates into all businesses, all lifestyles, and all sectors, if we also could ensure that households and small businesses that make up the majority of our economic agents can practically apply and benefit from the new technology, while being aware of its associated risks, then we could significantly raise their standards of living. Ladies and gentlemen, That brings me to the end of my talk today. To aspire for a better standards of living for all citizens of Asia for the next half century and more, we, all of us, must collectively do our part to ensure inclusive and sustainable growth. In so doing, banks and financial institutions, as the blood vessels of our economy, have important roles to play to prevent the blood from being infected as well as to ensure the well-functioning of our blood circulation for more productive, better immuned, and more inclusive economies in Asia. Thank you very much for your kind attention. 6
In other words, some trade-off between inflation and output has become possible and lambda has become relevant. As I mentioned earlier, the period of inflation targeting can be divided into pre- and post-crisis periods. During the Great Moderation, the economy’s supply capacity grew at a steady pace, and, for the most part, 15  In New Keynesian models, the slope of the Phillips Curve is related to the deep parameters governing the frequency with which firms are assumed to be able to re-optimise their prices, following the formalisation of Calvo (1983). See Calvo, G (1983), “Staggered prices in a utility-maximising framework”, Journal of Monetary Economics, 12. 9  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches  9  deviations of inflation from target reflected temporary disturbances to demand that were expected to drive output and inflation in the same direction (Chart 1). 16  Generally, monetary policy faced few trade-offs; divine  coincidence largely ruled. The crisis brought shocks both to demand and supply, higher inflation and large shortfalls in output and employment. The era of divine coincidence was over and the MPC had to balance a series of challenging trade-offs (Chart 2). What can be learned about lambda from this era? Taking these trade-offs at face value suggests a value of lambda of between 0.1 and 0.2 for the inflation targeting period as a whole, on the basis of data outturns 17  (Chart 6) and on the basis of MPC forecasts (Chart 7).

Over the  16  same period, unemployment averaged 7.6%, with a  14  standard deviation of 2.8%. Soon after the adoption of  12  inflation targeting, unemployment fell by one  10  percentage point and its standard deviation was cut in  8 6  half. The volatility in economic growth rate in the  4  1970s and 1980s was also one-and-a-half times  2 -6  -4  -2  6 8 Output gap (%) Source: Bank calculations. Inflation is the annual growth rate of the retail price index (RPI) until 1975, and the annual growth rate of the retail price index excluding mortgage interest payments (RPIX) after 1975. The output gap is the percentage deviation of quarterly GDP from its trend, where the trend is measured by a Hodrick-Prescott filter. 0  0  2  4  higher than after the adoption of inflation targeting. In sum, high, volatile inflation likely contributed to a higher natural rate of unemployment and poor supply side performance. Once the UK adopted inflation targeting and granted  operational independence to the Bank, consistent with the theory of constrained discretion, the UK moved towards a better equilibrium characterised by low, stable and predictable inflation, and relatively stable employment. Moreover, by successfully anchoring inflation expectations around the target, inflation targeting helped lower UK borrowing costs for households and businesses, and has allowed monetary policy to promote short-run stabilisation of the economy.
Additionally, we are confronting new risks, in the face of international tensions related to Iran’s nuclear situation and its impact on the oil market. These sources of uncertainty are beyond our control. Therefore, our role as policymakers in emerging countries is to preserve flexibility and space for policies that will enable us to respond to and buffer the financial and real effects that those risks pose on our economies. Over the last years we have gained credibility, flexibility and space to implement a macroeconomic and financial policy framework that will help us smooth out the economic cycle. This framework rests on four pillars. First, monetary policy management is based on a flexible inflation-targeting regime, conducted by an autonomous central bank and supported by a floating exchange rate system. Second, a fiscal policy that is accountable and predictable thanks to a structural balance rule. The significant amount of savings accumulated during the run-up of copper prices was a crucial factor in bolstering the resilience of the Chilean economy and in providing a countercyclical fiscal boost. Third, a high degree of commercial and financial integration with the rest of the world. Finally, a sound financial system, with globally integrated, well capitalized, and adequately-regulated banks. These elements allowed us to be less affected by the Great Recession than by previous episodes. In Chile, the effects of the world slowdown of the second half of 2011 and the financial turbulences coming from Europe have so far been limited.

So far this year, it has bought currency for 30 b.kr., as opposed to 21 b.kr. over the same period in 2014. If it maintains that pace, it will buy more currency in 2015 than in 2014. As a result, the reserves exceed the outstanding foreign-denominated loans taken to finance them – by 65 b.kr. as of the end of February. But we mustn’t rest on our laurels; we need sizeable reserves as we prepare to lift the capital controls. I mentioned uncertainty surrounding the estimation of potential FX outflows once the controls are lifted. But one thing is certain: if the failed banks’ estates were given a green light tomorrow and could convert all of their krónur to foreign currency, and the same happened with the offshore overhang, there is no way we could safeguard stability, let alone bolster confidence, except perhaps after a long time has elapsed. The Central Bank of Iceland has designed a model intended to assess the impact of various developments in the balance of payments over a long horizon, including capital account liberalisation measures. When applied to this instance, the model reveals that our entire foreign exchange reserves would be wiped out – and more besides – if they were used to shore up the exchange rate. This would never be done, of course, and therefore the currency would depreciate sharply.
It has also been entrusted with other basic functions, such as conducting foreign-exchange operations consistent with the exchange rate policy established, holding and managing the official foreign-exchange reserves of the Member States, and promoting the smooth operation of payment systems. Since 2014, under Article 127(6) of the TFEU and Council Regulation (EU) No 1024/2013 (the “SSM regulation”), the ECB is responsible for specific tasks relating to the prudential supervision of banks located in the participating Member States. The ECB performs these functions within the framework of a Single Supervisory Mechanism made up of the ECB and the national competent authorities, as explained in Part 2 of this Annex. Finally, the ECB has the exclusive right to authorise the issue of banknotes in the euro area, to compile and produce statistics in collaboration with the NCBs in the performance of their functions, and to issue reports on consultations on legislative initiatives of the EU or of the national authorities concerning its sphere of competence. The organisation of the Eurosystem is based on the principle of decentralisation. Decision-making is centralised, while the implementation of decisions is decentralised. In practice, the NCBs perform almost all operational tasks of the Eurosystem: they conduct the monetary policy operations and, as agents of the ECB, manage its foreign reserve holdings, provide payment and securities settlement facilities and ensure the manufacture, issue and post-issue handling of euro banknotes. They also collect statistics for the ECB, collaborate with the ECB on translation and the production of publications and contribute to economic analysis and research.

So far, with robust cushions, Thailand has fared well from external shocks compared to other Emerging Market economies. This does not mean we can be complacent. 6  BIS central bankers’ speeches  Our country is in need of reforms to address long-term structural problems, similar to having a more powerful engine, enabling us to reach our destination faster. Fortunately, though, our economy is currently equipped with strong buffers, similar to a robust suspension system in a car, smoothing our ride through bumpy roads. Ladies and Gentlemen, Let me assure you that the Bank of Thailand will do our part to ensure a stable and resilient macroeconomic landscape. We will accommodate changes, especially those in the financial system, which will put Thailand on a stronger footing and in a more competitive position. I am confident that Thailand will ride forward with the much more powerful engine it deserves. Thank you very much for your attention. BIS central bankers’ speeches  7
Daily trading on the New York Stock Exchange (NYSE) went from two million shares a day in the early 1960s to twelve million by the end of the decade. Meanwhile, stock trades continued to be settled by the physical delivery of engraved stock certificates between brokerage firms. As trading volumes soared, the post-trading industry could not keep up with the paper blizzard. By 1968, the NYSE was forced to close every Wednesday for six months to catch up with the paperwork. It then reduced its official operating hours for a further six months to enable its 4 member brokerage firms to keep pace with the trading volumes. Technology subsequently caught up. A second example is “Black Monday” when, on 19 October 1987, stock markets crashed all over the world. That day, the Dow Jones Industrial Average dropped by over 22%. One factor that increased the severity of this market crash was the difficulty people faced in obtaining reliable information. The record trading volumes on Black Monday – three times the daily average – overwhelmed many systems. As the Brady Report put it: “On the NYSE, for example, trade executions were reported more than an hour late, which … caused confusion among traders. Investors did not know whether limit orders had been executed or whether 5 new limits needed to be set.” In the years since 1987, both trading and post-trade technology have come a long way. Today, trading algorithms buy and sell hundreds of thousands of times in a single second, leading to increased trading volumes.

It has provided all relevant private and public stakeholders with a voice in the process - from the SNB to large banks with an international focus, to smaller and regional institutes. The twelve year history of the Swiss repo market illustrates this principle at work. At the end of the 1990s, commercial banks, financial infrastructure providers and the SNB collaborated  7  It consists of four elements: i) the electronic trading platforms, SIX Swiss Exchange and Eurex (derivatives); (ii) the central counterparty SIX x-clear; (iii) the securities settlement system SECOM; and (iv) the payment systems, Swiss Interbank Clearing (SIC) and euroSIC. Also directly integrated are the central counterparties, London Clearing House (LCH) and Eurex Clearing, as well as the euroSIC payment system. 8  Cf. “International Capital Market Association: European repo market survey.” Number 18, conducted December 2009, published March 2010. p. 10. Cf. also BIS, “CPSS: Strengthening repo clearing and settlement arrangements,” published September 2010., pp. 10–12. BIS central bankers’ speeches  3  closely to develop the repo market. The resulting electronic Eurex Repo trading platform9 standardised repo transactions. Crucially, since 1999 the Eurex Repo trading platform has been linked to the SECOM securities settlement system, which is connected to the SIC realtime gross-settlement payment system. Not only does this make straight-through processing possible, the system also sets itself apart by integrating central bank repos and interbank repos on the same platform.
In this context, an exact definition of the responsibilities of the SNB and FINMA is of central importance for optimal macroprudential supervision and regulation. The revised Memorandum of Understanding between the SNB and FINMA is an important step in this direction. Secondly, to ensure that the institutions involved can optimally carry out the roles assigned to them, it is also important to give them the right tools. In concrete terms, this means that the SNB would, for example, need to have more extensive information about the stability of financial institutions – regarding their risk exposure, interdependences, etc. – or it would require specific instruments enabling it to take the right decisions when implementing macroprudential policy. Thirdly, the crisis made it clear that closer international cooperation between regulatory authorities is vital. Functioning international coordination mechanisms are required to counter future crises earlier and more effectively. International cooperation is the only way to check undesirable developments on the globalised financial markets. BIS Review 121/2010  5  Conclusion Ladies and gentlemen, the stable economic growth and low inflation of the last two decades could not prevent the emergence of vast imbalances in the global financial system, as the financial and economic crisis clearly showed. Such massive economic shocks are bound to have an impact on how central banks work. Nevertheless, ensuring price stability remains our top priority. The crisis made it evident that central banks have an effective set of instruments that can be used to mitigate the negative impact of financial crises.

Developments in other countries are just as important for the krone as developments in the Norwegian economy. Capital flows freely and flows can change rapidly. This can spill over to exchange rates and interest rates as well as output and employment. There is a cost involved for businesses in hedging against fluctuations in the krone. A krone that is stable - but too strong - also entails social costs in the form of low activity. Likewise, a krone that is stable - but too weak - is a source of high inflation. Norway is running a current account surplus as a result of sizeable oil and gas exports. Owing to high oil prices, the current account surplus is rising this year. An increase in the current account surplus will normally result in higher net demand for the domestic currency. In Norway, however, the additional foreign exchange revenues that accrue to the Norwegian state as a result of high oil prices will be invested in foreign securities through the Government Petroleum Fund. As a result, they will not have a direct impact on the balance in the Norwegian foreign exchange market. Oil companies hold a large share of their financial capital in foreign currency, and higher revenues in these companies therefore results in an increase in capital outflows. The effects of changes in the current account on net demand for the Norwegian krone can be illustrated by adjusting the basic balance for transfers to the Petroleum Fund and oil companies’ estimated cash surplus.