samchain/econo-pairs-v1 huggingface dataset:
This is not to say that the board should actually formulate these policies itself. That can be left to management. But the policies should certainly be approved by the board. As to whether we are placing too much burden on the non-executive directors, it should be recognized that being a director of a bank does involve heavy responsibilities. Moreover, the criminal sanctions in the Banking Ordinance apply to all directors, whether they are executive or non-executive. We acknowledge that it may not be an easy task to find non-executive directors with the right skills and degree of independence. We have therefore reconsidered our original recommendations on the number of independent directors to some extent, particularly in relation to restricted licence banks and deposittaking companies, and we are prepared to give institutions which do not already comply more time to do so if necessary. Finally, on the complaint that we are perhaps being too intrusive, I would point to our statutory responsibilities under the Banking Ordinance to ensure that institutions operate with integrity, prudence and competence and that individual directors are fit and proper. Concern about corporate governance falls squarely within these responsibilities. However, let me stress that this is not an area where we would want to take a narrow legalistic position. We are anxious to work closely with the banking industry to arrive at a mutually acceptable approach to corporate governance which is appropriate to the particular circumstances of Hong Kong.

This commitment has been made, for example, in public statements from Governor Andrew Bailey here here and here and Sarah John, the Bank’s Chief Cashier, here  , from myself  . 5. The NPA is a multi-year project which will allow for real-time payments, be able to handle increasing payment volumes. It will include the rules and standards that make up various payment types, allowing the market to create new products and services as well as allowing for the development of new overlay services. 6. Open Banking’s joint regulatory oversight committee consists of the FCA, PSR, CMA and HM Treasury. 7. See for example early stage use-cases of DLT for supply chain finance reported in UCL’s Centre for Blockchain Technologies report ‘DLT in the Supply Chain  ’. 8. As set out in Money creation in the modern economy | Bank of England the majority of money in the modern economy is created by commercial banks making loans. 9. The umbrella term ‘stablecoin’ has been used to describe a range of instruments with quite different characteristics. In particular, they may be backed by a range of financial assets, commodities or unbacked cryptoassets (which in some cases are supported by algorithmic protocols). The robustness of those backing assets and the wider safeguards for guaranteeing stability of value vary significantly across the products labelled as stablecoins. 10. See for example the Libra White Paper and related Diem technical papers 11. As set out in the Regulatory Initiatives Grid  . . 12.
For my family, it was real. For many communities and regions it was a blight, social every bit as much as economic. Across the country, it depressed the everyday lives of millions of adults, some of whose sons and daughters I knew as friends. And it was a blight that affected not one generation, but many. It was that experience as a teenager that led me to commit to economics, and to public service, as a way to understand, and perhaps try and correct, that economic and social blight. And more than thirty years on, those are the same reasons I remain committed to better understanding, and perhaps hoping to improve a fraction, the functioning of the economy to this day. Those wrenching developments in the UK labour market in the early 1980s have been repeated throughout history, since at least the Industrial Revolution. The cycles and shifts in  BIS central bankers’ speeches  1  jobs and wages, and attempts to moderate them, are as old as civilisation itself. Today’s cycles and shifts in the labour market are, in some respects, an echo of that past. As in the past, technology is changing the quantum and nature of work, displacing some jobs while creating others. As I will discuss, through each of the Industrial Revolutions innovation has disrupted the number and nature of jobs. Often, it has led to a so-called “hollowing out” of mid-skilled workers and a widening wage gap across the economy. Yet, in other respects, this time may be different.

This pattern is embodied in the MPC’s forecasts, with wages projected to outpace productivity in the next few years (Chart 31). Put differently, growth in unit wage costs is expected to pick up and the labour share to rise fairly sharply (Chart 32). That path is certainly plausible if cyclical factors are the key drivers of the low labour share. But there may be alternative forces at play. If substitutability between labour and capital is higher than in the past, labour’s bargaining power and share of income might be commensurably lower, as we have seen across a number of countries before and after the crisis. So how different might the MPC’s projections look if the labour share was, say, flat rather than rising over the next few years? Charts 32 and 33 show the path of wage growth and inflation that would imply. Wage growth is weaker, averaging around 3¼% rather than 4½% at the year three point. So too is consumption given weaker take-home pay, though this is largely offset by stronger company profits and higher investment, leaving aggregate output little altered. The upshot is a materially lower path for inflation than contained in November’s Inflation Report: inflation reaches around 1.6% at the two-year horizon and remains around these  12  BIS central bankers’ speeches  levels. That would put the balance of risks squarely towards a more protracted undershoot of the inflation target, even without any downdraught from external prices and demand.
This was evident in several periods, the early nineties, the mid-nineties, and the outflows during 1997-1998, and in the current period following the de-leveraging by financial institutions in the advanced economies. In the early days of the Bank, policy actions were focused on the management of liquidity in the financial system through the imposition of statutory and liquidity reserve requirements,  BIS Review 12/2009  1  and through prescription of interest rates and portfolio restrictions, including ceilings on lending. Further progress and sophistication in the financial sector, the deepening of the financial markets and the growing influence of capital flows, resulted in the reliance on interest rate and other market-based instruments for monetary policy. Further, with the increased role of expectations, greater clarity in policy signals became desirable. Thus in 2004, the New Interest Rate Framework was implemented, in which the Overnight Policy Rate became the new policy rate, thereby enhancing the efficiency of the monetary transmission mechanism. The new framework has also served as a catalyst for efficient pricing of financial products and services by banking institutions. A key issue for monetary policy in an open economy like Malaysia has been in maintaining a flexible exchange rate and monetary independence in the face of increasingly large capital flows. To better manage surges in capital flows which have become more prevalent, the range of market-based instruments for monetary policy operations has been widened.

As a small, open economy, Sweden must in principle accept the international real interest rate as a given. Monetary policy is not able to affect the real interest rate to any great extent in the longer run, but it affects inflation and inflation expectations. In recent years, the IMF and other forecasters have revised down their forecasts for GDP on several occasions. If one looks at real interest rates, these began to fall even before the financial crisis and real interest rates have also fallen during periods of higher growth. Opinions differ with regard to the causes of this slowdown. The more pessimistic line talk about secular stagnation, where savings have increased and willingness to invest has declined as a result, for instance, of the composition of the population, of growing income gaps and weak technological innovations. This has in turn pushed down the interest rate level compatible with normal resource utilisation. The other more optimistic line say that remaining effects from the global financial crisis, such as deleveraging and increased political uncertainty, explain the slowdown but that these effects are transitory. 1  1  See Deputy Governor Henry Ohlsson’s speech on 18 March 2016 “Decision today, consequences far into the future”, for a longer review. BIS central bankers’ speeches  1  Lower real interest rates and inflation But it is not merely real interest rates that have fallen. In recent years, inflation has also shown a downward trend.
This means that we are often forced to raise the rate, despite the fact that the inflation rate is below the target at the point in time when the decision is made. Conversely, interest rate reductions may be motivated even when the inflation rate is above the target level. As we all know, since the end of last year, the unexpectedly severe slowdown in the US economy has led to a downward revision in the assessment of Swedish production growth over the next two years. However, according to the assessment published by the Riksbank earlier, the most serious consequence of the slowdown will be that almost all of the resources within the Swedish economy will be occupied. If this is realised, one could say that the USA-led economic slowdown is, in a way, a welcome development in Sweden. The information on the Swedish and international economies that has been received in recent months does not give reason to change the assessment of the economic slowdown in Sweden. However, the signals are rather mixed and there is still considerable uncertainty. The downside risks with regard to international growth still remain. Despite the fact that growth has so far developed largely in line with our earlier assessments, price increases have been slightly greater than we had estimated. The krona has also continued to develop weakly. However, the wage agreements that have been signed so far appear to be in line with the earlier assessments.

In the light of these developments, the Executive Board decided at its monetary policy meeting on 26 April to leave the repo rate unchanged at 4 per cent. I would like to spend the rest of my time here discussing the conditions for economic growth in the near future – both here in Sweden and abroad. The American economy is a decisive factor There is still great uncertainty over how quickly confidence in the American economy will return and what spread effects this will involve for the rest of the world. The slowdown in the American economy was preceded, as we know, by a long and pronounced economic boom. Great optimism over future growth prospects, based mainly on expectations of gains in efficiency from IT, led to a substantial increase in investment, a strong growth in consumption and rising share prices over several years. The growth in investment and rise in share prices were particularly strong in IT-related sectors. The high level of domestic demand could not be met with American goods and services, but spilled over to create a considerable deficit on the current account over several years. At the same time, there was a strong expansion of credit. Both households and companies have greatly increased their level of indebtedness, while rising asset prices have increased household wealth. This development has been reflected in a considerable deficit in savings.
These would include reforming the treatment of debt under corporate income tax, and advances in the capital markets union project that would help provide for the integration and development of capital markets in the EU. The growth of equity markets can afford various benefits to the business sector and the economy in general. The resort to equity funding strengthens the soundness of firms’ balance sheets, given that a greater proportion of these capital instruments reduces firms’ vulnerability to adverse shocks such as an increase in interest rates or a decline in revenues.8  8  See, for example, A. Kraus and R. H. Litzenberger, (1973): “A State-Preference Model of Optimal Financial Leverage”, Journal of Finance. 28: 911–922. 8  Conclusions  I should like to conclude by pointing out that the COVID-19 pandemic has prompted an unprecedented economic contraction in Spain and in other economies. Non-financial corporations have been seriously affected, although the forceful measures adopted by the national and supranational economic authorities have prevented the materialisation of a wave of defaults stemming from short-term liquidity problems. However, some firms have seen their solvency impaired as a result of a decline in their revenues and an increase in their debt. The current phase of the crisis, marked by an incomplete and uneven economic recovery, warrants continuing public support to firms. Nonetheless, these policies should be adjusted so as to focus more on firms in sectors that continue to be severely affected by the crisis, and through means other than the accumulation of greater debt.

But for system wide financial stability, we also need to think about the effects not just on individual banks, but collectively on the financial system. In this context I would like to touch briefly on four issues: procyclicality; overall capital; financial consolidation; and consistency of the capital framework for other financial intermediaries. (a)  Procyclicality  On the first I will be very brief indeed; the implications of risk sensitive capital requirements over the financial cycle is a subject which I and other commentators have raised on a number of occasions. But it is extremely relevant to a debate on systemic risk. It is a clear example of how rational and indeed prudent behaviour by individual banks – raising capital, including cutting back on credit granted if no other route is possible, in the light of perceived heightened risk – could collectively be damaging to the system. Some academics are indeed criticising the risk-sensitive capital requirements that we already have for market risk, on similar grounds. In the Asian crisis, for example, VaR measures of market risk, and their associated capital requirements, increased extremely sharply, leading banks to enforce loss limits which in turn exacerbated price falls. But I am not aware that anyone is suggesting that risk insensitive capital measures are the answer – they are associated with much more obvious and damaging pitfalls. Rather we need to ensure that, in so far as we can, we avoid sudden perceptions of changed risk.
At the beginning of the year 2017, our country faced several challenges and uncertainties. Nevertheless, supported by the proactive stabilisation policy measures adopted by the Central Bank and the government, we have moved steadily towards achieving overall stability of the economy. But we do not want to be complacent with the achievements so far, and we acknowledge that several challenges continue to weigh down on the overall macroeconomic performance of the country. Therefore, we need to work hard in order to restore the stability of the economy on a permanent basis in order to create an enabling environment to raise the living standards of our people, and we believe that the policies outlined in the Road Map will help us in this endeavour. In the meantime, we require broad based reforms and commitment to enhance the country’s growth potential if we are to become an enriched nation as envisaged in the government’s vision. As the agent for macroeconomic stability, the Central Bank will always work hand in hand with the government to enhance economic growth through maintaining low and stable inflation and ensuring financial system stability. We believe that our future policy directions and actions set out in the Road Map will serve as guidance for you to plan ahead and to formulate and align your actions in line with broad policies of the economy. We would also like to note that we will be prepared to introduce new policies and measures not in the Road Map, as warranted by dynamic macroeconomic conditions and market developments.

In the domestic context, the economy continues to face relatively low consumption and private investments and an absent stimulus by the public sector resulting from the orientation of the fiscal policy towards maintaining long-term stability of the public debt. BIS central bankers’ speeches  1  On the other hand, the banking and financial system remains sound and liquid and capital indicators are at relatively satisfactory levels. The activity of the banking sector continues to be strongly supported by the increase of publics’ deposits. Banks have reinforced their capital position to boost resilience against risks arising from banking operations. As at the end of June 2012, the capital adequacy ratio stood at 15.6%. Credit developments, however, remain a problem that is subject to the performance of economic activity and expectations for the future. Slowdown of economic activity and decline of demand for investments and consumption by businesses and households are determinants of private sector credit and credit quality performance. On their side, banks have evidently increased their prudence as regards lending. Periodic stress tests show that the banking sector is resilient and can withstand any adverse events to economic performance. However, we are aware that the banking industry is facing difficult challenges. Besides recovery of economic activity and confidence for the future, improvement of credit quality requires also the completion of legal issues to enable and facilitate collateral execution.
The interest rate is a blunt and unsuitable instrument for achieving financial stability and it thus makes little sense to assign the objective of financial stability to monetary policy. However, it may make sense to assign the objective of financial stability to the central bank, if the central bank is given control of the appropriate supervisory and regulatory instruments. The fact that financial-stability policy and monetary policy are different does not mean that there is no interaction between them. Similarly, monetary policy and fiscal policy are distinct policies but both have an impact on inflation and resource utilisation. The interaction between monetary policy and financial-stability policy has to be considered. Monetary policy affects asset prices and balance sheets and can thereby affect financial stability. Financial-stability  being smaller after the crisis. In Europe, Canada and the Nordic countries, commercial banks dominate the financial sector. 4  BIS Review 118/2010  policy directly affects financial conditions, which affect the transmission mechanism of monetary policy. This motivates more research on how to incorporate financial conditions into the standard models of the transmission mechanism used by central banks. The outcome might very well be that financial conditions are considered to play a larger role in the transmission mechanism and as indicators of future inflation and resource utilisation. If so, central banks would end up responding more to financial indicators, in the sense of adjusting the policy rate and policy-rate path more to a given change in a financial indicator.

But those strains have also been exacerbated by an unexpected breakdown in the technology for liquidity insurance provided by central banks. For well over a century, throughout industrialised world there has in effect been something akin to a Social Contract between the banking system and the authorities. The banking system is permitted to profit from undertaking leveraged maturity transformation in the course of intermediating the liquid savings of depositors into illiquid loans to households, firms and others. In doing so, commercial banks provide liquidity insurance, whether via demand deposits or committed lines of credit. They can do this because their deposit liabilities are  BIS Review 38/2008  3  money, which puts them at the heart of the payments system and is what makes them special; banks are at the heart of a monetary economy. In return, the authorities respond with a combination of prudential supervision, to contain the risks that banks run; deposit insurance, to protect savers; and liquidity insurance from the central bank. Smaller commercial banks can try to buy liquidity insurance from their larger brethren. Large banks cannot realistically do the same. But there is no cast iron guarantee that asset markets will remain liquid in all conditions. So since Bagehot’s day, central banks have stood ready to provide unlimited liquidity against good collateral at a rate that is higher than the normal market rate.
The Government Petroleum Fund thus serves as a buffer against swings in the oil price, and thereby stabilises the krone exchange rate. The Norwegian economy may nevertheless be exposed to disturbances of a type that cannot be absorbed by the Petroleum Fund. In the future, fluctuations in the value of our currency will probably be more in line with the fluctuations observed in other countries. The exchange rate will vary. The increase in labour costs is important when Norges Bank’s assesses the outlook for price inflation and sets interest rates. Since 1997, labour costs have increased annually by between 5 and 7 per cent. In spite of this, consumer price inflation has been close to 2½ per cent over the past few years. The krone exchange rate has appreciated as a result of a wider interest rate differential between Norway and other countries. Combined with low growth abroad and increased trade with low-cost countries such as China, this led to a slower rise in import prices. In Norway, Voluntary Export Restraints on clothing have been removed and tariffs on clothing have been reduced considerably. In the EU and the US, a similar tendency has not been seen to the same extent. This may explain why prices for clothing have fallen in Norway relative to the EU and the US. However, there is still a long way to go before restrictions on clothing imports to Norway are entirely dismantled.

Henceforth, the real return on the Government Petroleum Fund shall be used over the central government budget. Central government petroleum revenues shall continue to be transferred to the Government Petroleum Fund and invested abroad. Monetary policy in Norway is oriented towards low and stable inflation. Since March 2001 the inflation target is set at 2½ per cent. When monetary policy is oriented towards stabilising inflation, it also contributes to stabilising aggregate demand and output. The inflation target is the nominal anchor for the Norwegian economy. Low inflation is the objective and the interest rate is the instrument. If it appears that inflation with unchanged interest rates will be higher than 2½ per cent, the interest rate will be increased. If it appears that inflation with unchanged interest rates will be lower than 2½ per cent, the interest rate will be lowered. Low and stable inflation will be a fixed feature of economic developments. This is something that the social partners, businesses, borrowers and investors in property and securities can take as a given. From 1986, changes in the exchange rate or the prospect of changes in the exchange rate had implications for interest rates. A stable krone exchange rate was the nominal anchor. In Norway, this has been reflected in wage determination because labour cost developments among trading partner countries have been an important reference. Exchange rates between major international currencies fluctuate widely. The US dollar has appreciated by more than 30 per cent since 1995.