samchain/econo-pairs-v1 huggingface dataset:
4  BIS central bankers’ speeches  Existing models, then, do not tell us why stability today may come at the expense of instability tomorrow. Perhaps we should heed the advice of Ricardo Caballero, who has written that “macroeconomic research has been in ‘fine-tuning’ mode within the local maximum of the dynamic stochastic general equilibrium world, when we should be in ‘broad-exploration’ mode”. 14 So let me now move into broad exploration mode and give three examples in which a trade-off between monetary and financial stability might arise, and which could in theory justify a policy of aiming off the inflation target in order to reduce the risk of future financial instability, before I turn to whether such a policy would have been appropriate before the crisis. The first is where misperceptions about future incomes persist and are embodied in key prices, such as the exchange rate and long-term interest rates. Households, businesses, and banks can all make big mistakes when forming judgements about the future, and make spending decisions today which they will come to regret when their true lifetime budget constraints are revealed. There is no mechanism for ensuring that misperceptions about the sustainable level of spending are corrected quickly. It may take many years before those beliefs are invalidated by experience. So an equilibrium pattern of spending and saving can emerge that is stable temporarily but not sustainable indefinitely. And misaligned prices may reinforce mistaken beliefs if people are using market prices to extract signals about future incomes and consumption opportunities.

First, it led to bank supervision becoming the responsibility of an increasing number of central banks. Second, the focus on systemic stability led to the emergence of macroprudential supervision as an explicit concept and task for which naturally central banks have become responsible. In Bulgaria the monetary regime can be viewed as a rather traditional one, the primary objective of the BNB being to maintain price stability through ensuring the stability of the national currency. For more than 20 years now, our regime has been based on the operation of the currency board. The BNB also conducts micro- and macroprudential policies. As a matter of fact, well before the recent global crisis we designed and applied countercyclical macroprudential measures, even though the term ‘macroprudential’ was still not being used. Many other countries in the region, subject to massive capital inflows at the time, did the same. Therefore, the BNB’s tasks and responsibilities, as we see them today, are an outcome of decades of evolution. And this reflects, and is consistent with, the long-term developments of central banks’ mandates globally. It can be argued from a historical perspective that changes in these mandates follow common evolutionary paths which are often shaped by crises, such as the global one in 2007/2008. The financial stability focus That led to reassessing the importance of financial stability as a policy objective of central banks. Before the 2007/2008 global crisis, central banks focused on price stability as their primary objective.
This need not be the case. 17. Let us in Singapore together build a financial industry:    that is economically purposeful: generating real value-added and good jobs    that is socially redeeming: creating opportunities for individuals and enterprises; and    that is ethically sound: acting with integrity at all times. Finally, we thank our international partners 18. At our genesis in 1971, we had no experience in central banking or financial supervision. We learnt much from other central banks – like the Bank of England, Bank Negara Malaysia, and the Reserve Bank of Australia. 2  BIS central bankers’ speeches  19. The IMF seconded to MAS a generous array of advisers, from whom we learnt core skills in banking supervision and economic research. I still recall the IMF’s Article IV Consultations of twenty years ago, when I was a young economist in MAS. To many of us, they were the best tutorials in macroeconomic analysis that we have ever had. 20. Being part of the community of central bankers at the BIS was another way in which we learnt from the rest of the world. We continue to benefit to this day from the collegial spirit of Basel, working together to craft international standards, and co-operating in cross border supervision. Conclusion 21.

Ravi Menon: Monetary Authority of Singapore at forty Welcome address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at MAS 40th Anniversary Dinner, Singapore, 28 November 2011. *  *  *  Prime Minister, Lee Hsien Loong Deputy Prime Minister and Chairman MAS, Tharman Shanmugaratnam Distinguished guests, ladies and gentlemen, Staff and management of MAS are delighted to welcome you to our 40th anniversary celebrations. 1. one. An anniversary is a good time to thank all those who made the journey a successful  First, we thank the past leaders and staff of MAS 2. Economic and financial stability that Singapore has enjoyed over last 40 years is result of tireless efforts of generations of MAS officers. 3. The pioneers, led by our first Chairman, Mr Hon Sui Sen, and first Managing Director, Michael Wong Pak Shong, laid the foundations for an integrated central bank and financial regulator while navigating a turbulent global environment – the collapse of Bretton Woods, global recession, and double-digit inflation. 4. With Dr Goh Keng Swee as Chairman at the start of the 1980s and Mr Lim Kim San and Mr Yong Pung How as Managing Directors, MAS adopted the exchange rate as the principal tool of monetary policy, at a time when the conventional tools were monetary aggregates and interest rates. 5.
For incumbent players, this represents an existential challenge, and innovation is the only effective response. This digital revolution also means we have to strengthen our methods of regulation to deal with the Bigtechs, which are now an unavoidable feature of the market but are still on the margins of existing regulation. We need cross-border cooperation, but also cooperation that is cross-field, with authorities in competition, data protection and cybersecurity. The FSB, BIS and OECD should muster forces on this. Cyber risk, in particular, is more than ever in the spotlight, with the accelerating digitalisation of services and increased use of teleworking. In parallel, European banks must unite resolutely in the field of payments, and rapidly develop a shared offering: there is no alternative to the EPI, European Payment Initiative. This digital revolution is also putting creative pressure on our supervisory practices. Let me reiterate here that Fintechs are very welcome in the French financial landscape, and have the right to an open and attentive dialogue with the ACPR, including in the Fintech-Innovation Unit created in 2016. Artificial intelligence is providing fertile experimental ground for our interactions. In fact, the ACPR is organising its first techsprint on 30 June and 1 July this year. This friendly competition will invite participants to invent tools to explain the algorithms of tomorrow, using credit risk models. The call for applications is being published today on the ACPR website, and I invite all players in the field of AI to take part.

The measures needed to respond to these issues can only be effective at the European level. Not everything is working well in Europe and it begs a discussion. Italy, as a founding member of the EU and as the third economy of the euro area, needs to be part of it. What do you think of the proposals for reform made by Macron? I don’t want to comment on what the French President says. He has sparked a debate on the future of Europe, and every country should get involved. If European leaders focus only on domestic politics, this inward-looking attitude can only make Europe weaker. A return to the previous era of globalisation without barriers is unlikely, isn’t it? This is indeed unlikely. And that’s good news, since the reason we are experiencing problems today is that globalisation didn’t deliver on its promises. As Tommaso Padoa-Schioppa once said: “Those people who complain that we won’t get back to the pre-crisis path forget that it was the very path that led to that crisis”. We are currently undergoing a very disorderly transition and there is a temptation to turn to nationalist ideas, when one of the great successes to emerge in the aftermath of the Second World War was the creation of an international order based on trust. Change is needed; for instance, we were naive about opening up international financial flows.
Although foreigners, including non-EU nationals, are present in all sectors and at all levels, their employment has increased mainly in professional and administrative support services, and not as is sometimes claimed, in sectors characterised by lower skill levels. The increased employment of foreign nationals across occupations has enabled organisations to grow and venture in new areas. A sudden reversal of this pattern could stall activity in several sectors. Efforts to upgrade the country’s infrastructure should therefore be complemented by measures that prevent a disorderly depletion of foreign human resources and enhance the skills of Maltese nationals. *** Favourable economic developments, although easing somewhat, are expected to continue to buttress financial stability. Lending volumes remain supportive of interest income but pressures on margins persist due to the low interest rate environment. Notwithstanding, profitability remains a challenge for traditional banking models such as those of our banks. In fact, though still comparing favourably with their European peers, the profitability of domestic banks has been slimming. In addition to the limitations on their ability to generate more interest income, banks have to contend with ‘no-fee’ alternative products being developed by fintech players which operate with a lower cost base and hail from a less intrusive regulatory environment. Concurrently, banks are facing a more rigorous and intrusive supervisory approach coupled with more rigorous standards of Anti Money Laundering and Combating the Financing of Terrorism. This is absolutely necessary and has our full and active support.

This sector, which directly contributes to a significant 5.3% of gross value added and provides for the livelihood of over 11,600 employees, is in good health. This is attested by the positive assessments from major rating agencies and the IMF as recently as last year. These conclusions are also corroborated by the results of the CBM’s stress tests which regularly feature in our publications. So let us all rise to the occasion, and work towards preserving the sustainability and reputation of our sector. *** Inequalities are of two broad types: legacy inequalities and inequalities that are consequences of present social and economic developments. Gender inequalities have roots deep in the past. Today’s faster economic growth, however, does bring with its own risk of social shocks. The risk of higher inequality is a case in point. As already announced in my previous IFS address, the Bank has begun to develop a social research capability that focuses on studying inequalities of both types. This is a new experience for the Central Bank of Malta and we are striving, within the limits of available resources, to produce high quality empirically based results by the first quarter of next year. We are, however, striving to go beyond producing knowledge. In our efforts to promote inclusiveness and diversity in the Bank itself, we have made modest but significant steps forward.
A 2020 BIS Study – which I had the honour of chairing – explored the impact of EAs on market functioning, focusing on FX markets. It found that the rapid rise of EAs in FX markets was driven by the electronification of these markets and their concomitant fragmentation across a multitude of new fast-paced electronic trading venues. According to the study, before the COVID-19 pandemic, FX execution algorithms already accounted for 10–20% of global FX spot trading (approximately 200 to 400 billion US dollars in daily turnover). With the further rise of digitalisation, their use is expected to grow, potentially altering market dynamics. 11 In fragmented, fast-paced FX markets, execution algorithms have many advantages. They process new information quickly and they direct orders simultaneously across multiple trading venues. This helps traders to navigate fragmented markets and to optimise trade 9  Sébastien P. Kraenzlin, Christoph Meyer and Thomas Nellen (2020), ‘COVID-19 and regional shifts in Swiss retail payments’, SNB Working Papers series, 2020-15. 10 Yuriy Gorodnichenko, Tho Pham and Oleksandr Talavera (2021), ‘The Voice of Monetary Policy’, NBER Working Papers series, 28592. 11 BIS (2020), ‘FX execution algorithms and market functioning’, Markets Committee Papers, No. 13. Page 8/10  execution. EAs can improve the matching of supply and demand, which in turn reduces trading costs and helps to mitigate market impact. In addition, EAs help to increase operational efficiency, which is one reason their popularity has grown during the pandemic.

At the same time, monetary policy can be used to smooth fluctuations in activity around the growth trend. But I should emphasise that this presupposes that the central bank is committed to price stability and that its policy is perceived as credible. With low inflation, moreover, the economy will function more efficiently. It is important, I believe, to realise that price stability’s status as the monetary policy objective does not imply a lower priority for growth and employment as economic policy’s overall objectives. Rather than being an impediment, low inflation creates good conditions for growth. In order for this to be combined with low unemployment, the labour market must also function properly. Monetary policy with an explicit inflation target Since the move to a flexible exchange rate in the autumn of 1992, monetary policy in Sweden has been conducted with an explicit inflation target. The Swedish target for the rate of inflation, which is appraised in an annual perspective and expressed in terms of the consumer price index, is 2 per cent. The target is surrounded by a band of ±1 percentage point, which serves among other things as a buffer for temporary effects on inflation. I should like to mention some factors which illustrate how the Riksbank works on the construction of monetary policy with an inflation target. As monetary policy is characterised by long and variable lags, the policy needs to be forward-looking and based on an inflation forecast.
Andrew Haldane: Halfway up the stairs Article by Mr Andrew G Haldane, Executive Director of the Bank of England, published in Central Banking Journal, 5 August 2014. *  *  *  “Halfway up the stairs Isn’t up, And it isn’t down. It isn’t in the nursery, It isn’t in the town.” AA Milne, Halfway Down (1924) It is the 25th anniversary of Central Banking. So it is a good time to be asking some big questions of central banking. How have central banks evolved over the last quarter of a century? How has the crisis affected that evolution? And what lies in prospect for them over the next 25 years? AA Milne’s 1924 poem, Halfway Down, is a fitting description of the position central banks find themselves in today. During the past 25 years or more, central banks’ mandates and instruments have moved upwards in steps. They have ascended the stairs. But where this leaves central banks today is not entirely comfortable. Halfway up the stairs is neither up nor down, neither nursery nor town. That begs a natural question about “where next” for central banks over the next quarter-century. Ascending the stairs History will show the 20th century to have been an unprecedented boom period for central banking. At the start of that century, central banks were relatively few in number. For those that did exist, their responsibilities were heavily constrained.

And with it, central banks had taken another significant step. At the same time as monetary policy discretion was being granted, constraints were being placed around it. These were a necessary part of democratic accountability. These constraints included government-set success criteria – for example, inflation targets. In the jargon, many monetary policy regimes became characterised by instrument-independence but target-dependence. They combined rules with discretion – hence “constrained discretion”. Yet as significant was the accompanying shift in central bank transparency. This was seen as a necessary concomitant of delegated power. A century ago, the prevailing central bank ethos allegedly came from the then-Bank of England (BoE) governor, Montagu Norman: “never apologise, never explain”. Then, secrecy and mystique were believed to be key weapons in central banks’ armoury. Media appearances were rare. Central bank actions were confined to the back pages of newspapers, if at all. At the BoE, the aim was to keep the Bank out of the press and the press out of the Bank. With independence granted, all that changed. Politicians and the public demanded explanations – and sometimes apologies – for policy choices. Policy meetings were preannounced and minuted. And regular publications, such as inflation reports and financial stability reports, set out the analyses underpinning these decisions. Media appearances and newspaper articles began to appear. Central banks moved from the back to the front pages of newspapers. Journalists were no longer locked out, but instead ushered in for press conferences. Another step up the stairs had been taken.
Monetary policy steers inflation in the medium and long term and can in addition contribute to smoothing fluctuations in output and employment. The central government budget – growth in government expenditure – influences the real krone exchange rate and the size of the internationally exposed sector in the long term. The fiscal rule – the fiscal policy guidelines – enhances the predictability of petroleum revenue spending in the Norwegian economy even when the budget from one year to the next is used to stabilise economic developments and even when the automatic stabilisers are allowed to operate. A fairly steady phasing-in of petroleum revenues over time curbs the impact on the krone and reduces the risk of abrupt and sizeable structural shifts between the international exposed and sheltered sectors. In this way, the framework contributes to more stable expectations concerning, among other things, developments in the krone exchange rate and competitiveness. BIS Review 60/2009  1  The krone floats and fluctuates somewhat, and has shown a tendency to appreciate in favourable times and fall in value in response to negative shocks. Nonetheless, budgetary policy and the petroleum fund mechanism contribute to stability in the krone. This can be seen clearly when comparing movements in the krone in recent years with currencies of other open economies with substantial exports of raw materials, such as Australia and New Zealand. The economic turnaround in Norway occurred just over a year ago. House prices had started to fall, growth in consumption subsequently came to a halt and housing starts declined.

Pursuant to Chapter 1, § 3 of the Act on Norges Bank and the Monetary System, “the Bank shall inform the ministry when, in the opinion of the Bank, there is a need for measures to be taken by others than the Bank in the field of monetary, credit or foreign exchange policy”. 2  BIS Review 60/2009  On the basis of this provision, Norges Bank, in a letter of 6 October to the Ministry of Finance, took the initiative to establish a swap arrangement. In a letter of 18 December, we also proposed measures to strengthen banks’ solidity. The chart shows events and the measures and proposals at the initiative of Norges Bank. A critical period was the end of September and the beginning of October with the collapse of the investment bank Lehman Brothers, the savings bank Washington Mutual and the insurance company AIG. The extensive measures that have been implemented have worked. The difference between Norges Bank’s key rate and the money market rate – the premium – has narrowed, but is still higher than prior to the crisis. The flow of interbank liquidity appears to have been restored to some extent, but the money market is still segmented and the central bank an important meeting place. Even if premiums in the money market and credit market have been high and volatile, the changes in central bank key rates have fed through to money market rates.
In his report submitted to the Government on establishment of the Central Bank, he stated as follows. I quote “the broad powers given to the Central Bank of Ceylon under the draft bill in Part II of this report are commensurate with the magnitude of this responsibility. The Bank should not be hampered by rigid limitations which might prevent it from fulfilling its purpose. When a new central bank is being established it is impossible to predict the course of its development. This will depend upon the environment within which it works and upon those who, determine its policies. Many of its powers may go unused for long periods, because they are designed for particular situations, some of which may never arise. Others are intended for use only in crises or to forestall a crisis, but prudence dictates that they be included now, so that they will be at hand in case of need. It would be foolhardy to assume, with the record of the war – and depression – induced economic crises of the last 30 years plainly before us, that the Ceylon economy will somehow escape such crises in the future. The safer assumption is the one underlying the drafting of the present bill: it is better in an uncertain economic world to be prepared for any eventuality. Many features of the draft bill have been developed in the Western Hemisphere. Others are found in one form or another in central banking legislation within the Commonwealth.

These days, some people are concerned about the fall of this international reserve. Some complain that the reserve contains funds mobilized by the Government through foreign borrowing and not from net receipts from trade. Those views are subject to various technical arguments. What the Central Bank does is; it buys excess foreign exchange in the market and sells out of its reserve to meet the deficit in the market in order to maintain the exchange rate at a desirable level, given the relevant economic circumstances. If the reserve falls short of desired level, the Central Bank has the standard arrangements to replenish it. This reserve at $ 7 billion at present is adequate to pay for four months of imports or 70% of the country’s short-term foreign borrowing if the necessity arises. The reserve is there for use in rainy days, not for showing off imaginary visits of a country living within its means. Fifth, Supply of payments and settlements services Economic transactions are essentially the receipts and payments made through cash and non-cash methods. Non-cash payments such as cheques and fund transfers need systems to ensure that the payment is received by the due receivers. The Central Bank maintains cheque clearing through LankaClear system. That is why you get your cheque realized on the same day, if deposited before 12.00 noon. Further, all fund transfers among the banks are cleared and settled through the Central Bank’s RTGS system. In the RTGS, the Central Bank provides intra-day funding to deficit banks to settle payments.