samchain/econo-pairs-v1 huggingface dataset:
It is almost self-evident that monetary policy could have been better if the decision-makers had been aware that these shocks would happen when they made their decision. It is often equally self-evident that it was not possible to foresee the shocks at the time the decision was made. The relevant question is therefore primarily whether monetary policy could have been better given the information on the state of the economy and other factors that the central bank had access to when the decisions were made. How then should an ex ante evaluation of monetary policy be carried out? I believe that we must take flexible inflation targeting seriously. For a central bank that conducts flexible inflation targeting it is important, as I mentioned earlier, to choose a policy rate path so that the forecasts for inflation and resource utilisation "look good" in terms of stabilising both inflation and the real economy and, in the event of conflicting objectives, entail a reasonable  2  The loss function should be minimised under commitment in a timeless perspective in order to be consistent over time. The former Deputy Governor of Norges Bank, Jarle Bergo, has discussed this in a pedagogical manner in the speech ”Interest rate projections in theory and practice”, 26 January 2007, www.norgesbank.no. For a more technical approach see, for example, Malin Adolfson, Stefan Laséen, Jesper Lindé and Lars E.O. Svensson (2008), "Optimal Monetary Policy in an Operational Medium-Sized DSGE Model", www.larseosvensson.net.

Muhammad bin Ibrahim: Some thoughts on the new economy Speech by Mr Muhammad bin Ibrahim, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Malaysian Institute of Economic Research’s (MIER) 30th Anniversary Dinner, Kuala Lumpur, 26 September 2016. * * * Distinguished Guests, Ladies and Gentlemen, I am honoured to speak here at the Malaysian Institute of Economic Research’s (MIER) 30th Anniversary Dinner. I would like to commend MIER on the institute’s continuous efforts in expanding economic knowledge, and the commitment to research over the past 30 years. Today, we meet at a time where the global economy is becoming increasingly dynamic and challenging, underpinned by complex global interlinkages and shifting trends. The challenges posed to policymakers are immense. The rapidly evolving world also necessitates swift, yet pragmatic policies in order for us to remain ahead of the competition. Against this backdrop, a deep understanding of the core issues is absolutely critical in supporting evidence-based policy responses; not only to manage risks but also to better leverage on opportunities. Tonight, I will be sharing some thoughts about this “new world economy” that we are in, and along the way, share some policy insights and research ideas for the many economists and policy thinkers in this room. Global macroeconomic environment is becoming increasingly challenging The periods of strong global growth have become something of a distant memory to us. Global growth for the past 5 years has averaged 3.5%, well below the pre-crisis average of 5.1%.
19 Đ Đ To support technological adoption and innovation in the financial sector, MAS introduced the FinTech Regulatory Sandbox.Đ The sandbox is also a regulatory innovation for MAS, where we support financial institutions and fintech players to experiment with innovative financial products or services in a live environment, within well-defined boundaries.Đ Upon successful experimentation and exit of the sandbox, entities will then have to comply fully with the relevant regulatory requirements. 20 Đ Đ The sandbox has been well received.Đ Since its launch three years ago, MAS has provided guidance to more than 250 firms, and received more than 60 applications to experiment in the sandbox. iSTOX, a private market platform  leveraging on DLT and owering the trading of tokenised private securities, is the first market operator to enter MAS’ sandbox. 21 Đ Đ The approach that we have adopted requires an extensive review of each application. This is necessary as each sandbox is customised to facilitate meaningful experiments, with appropriate safeguards to contain the consequences of failure. We have learnt along the way that for certain types of activities regulated by MAS, risks can be well managed within certain specific boundaries. Hence, we launched an enhanced version of the regulatory sandbox, Sandbox Express, to complement the current sandbox approach, in August this year. For a start, we have owered three activities under Sandbox Express, including the activity of establishing or operating an organised market, which may be of interest to WFE members.

8 Đ Đ These factors underpin the promising economic prospects in ASEAN, with the corresponding need for regional enterprises to raise capital to support their growth. 9 Đ Đ Looking ahead, these are opportunities to be harnessed both within ASEAN and globally, and exchanges as well as clearing houses need to innovate and remain relevant to all stakeholders.Đ I will now speak about three key trends, the opportunities they present, and what MAS is doing to support the Singapore financial services industry in these areas. Trend 1: Catalysing Sustainable Finance for Growth 10 Đ Đ The first trend is growth in sustainable finance. This is increasingly an area of both concern as well as interest to financial players, especially millennial investors. 11 Đ Đ The estimated financing needs to support the greening of Asian economies are high. China has estimated that it will require $ billion of investments annually to achieve its green policy goals under its 13th Five Year Plan while ASEAN will need an estimated $ billion in green investments annually through 2030 [5] . 12 Đ Đ Sustainable finance is still at a nascent stage but we are seeing increasing focus from financial institutions to develop new environmental, social and governance (“ESG”)-related products. Similarly, with increased investor demand and awareness for sustainable financial products, exchanges like yourselves can look to expand and support product owerings that will meet the needs of socially and environmentally conscious enterprises and investors.Đ 13 Đ Đ One such area of growth is in green bonds.
This analysis concludes that the risks of refinancing and exchange rate volatility for companies are limited, either because of the type of creditor (matrices of foreign investors), loan maturities or the absence of significant currency mismatches. Additionally, it should be kept in mind that an important part of the group of companies that report to the Financial Market Commission have investments abroad that are financed with debt taken in Chile. Therefore, analyzing Chile’s external debt as a proportion of GDP can be distorting, because part of the added value is produced outside the country. Using of financial indicators such as assets and net worth is more recommended for a financially more integrated economy such as Chile and a modern productive sector (Figure 11). 8  And, the flexible exchange rate plays a role in cushioning external shocks in Chile, unlike other emerging countries, precisely because both the corporate and the financial sectors have adequate hedging—and are monitored by their respective regulators on a permanent basis. In fact, since the adoption of exchange rate flexibility in 1999, the Chilean economy has lived through several periods of significant peso depreciation, like in 2008, 2013 and 2015, without causing any problems of mismatching in the corporate sector with dollar-denominated debt. In this way, our inflation-targeting monetary policy framework, floating exchange rate and deep financial markets are the key pillars of our country's macroeconomic design.

In fact, those that surrender most of their monetary autonomy or maintain restrictions on cross-border capital flows need not feel immediate pressure to appreciate. But those that have come further along the liberalization road have to face a different kind of challenge. In our case, the Bank of Thailand has sought a balanced approach to managing capital flows under flexible exchange rate. We also undertake concomitant reforms in the area of financial system and market development. These initiatives are closely related and progress in one requires progress in the others. In building a resilient economy, prudent fiscal and monetary policy does help. As an automatic stabilizer, flexible exchange rate also helps. BIS Review 104/2007  3  Ladies and Gentlemen, Hot money, or indeed large inflows in general, can fuel asset prices and encourage excessive risk-taking behavior. Central banks may wish to counter that excess in the interest of financial stability. If the central bank chooses to maintain a high interest rate stance, the pressure on the currency to appreciate will likely mount. Since these challenges require significant ability for the domestic economy to adjust flexibly, the solution package we seek must help reduce the distortions in our economies. Allowing the competitive pressure and incentive to operate is undoubtedly the best way to foster investment in physical and human capital, as well as innovation and risk-taking, all of which are crucial to long-term productivity growth. They are also crucial for a flexible and resilient economy. But policy and regulations still have a role to play.
To see why, imagine a bank whose expected future profits, and hence market capitalisation, have slumped. If this erosion of profits is sufficiently material, conversion at the highest trigger occurs. Upon triggering, a chunk of that bank’s debt converts into equity, automatically recapitalising the bank and providing it with an extra equity cushion. This equity infusion ought to help restore market confidence in the bank’s soundness. If the first conversion does not do the trick, or if the profits shock is sufficiently large, there are other rungs in the ladder. Lower triggers provide a graduated safety net. As these triggers are pulled, converting CoCos offer progressively greater stuffing for the cushion. This is a double boon. It confers the benefits of (contractually pre-agreed contingent) equity. But knowledge of the graduated safety net ought also to help stabilise investors’ confidence in the bank. Under this capital structure, banks’ insurance contract would be fundamentally different than at present. Instead of equity being provided at haste under stress, the safety net would extend automatically in advance. And instead of being provided by the state ex post, insurance would come from private creditors ex ante. Timely self-insurance would replace laggardly public insurance. There would be prompt corrective action. But it would operate on autopilot, using a contractual, market-based navigation system. 12  For example, Flannery (2010), Flannery and Perotti (2011), Duffie (2011), Calomiris and Herring (2011). 13  Alternatively, there could be graduated tranches of CoCos operating with a single trigger.

On the economic side, uncertainties heightened because of both external and internal factors. The impending threat of global imbalance became even more pronounced. The dwindling confidence in the US dollar continued, which brought about massive capital inflows into the region, resulting in an across-the-board currency appreciation. At the same time, rising oil prices continued to put pressure on inflation during the first half of 2006. Consumer and investor confidence, meanwhile, was clouded by lingering political uncertainties that brought about delays in consumption and investment decisions, as well as in government spending. As domestic demand weakened, export became the main driver of the Thai economic growth. Despite the negative environment, the overall economic performance was quite satisfactory. The economy proved to be resilient, as the growth momentum continued while overall economic stability improved. Regarding internal stability, headline inflation came down from a peak of 6 percent in the second quarter of 2006 to 3.3 percent in the last quarter and to 2.3 percent in February this year. Core inflation fell from its peak of 2.9 percent in April 2006 to 1.4 percent in February – well within our target range. Overall external stability remained sound. The current account turned into surplus since August and registered a surplus of 1.2 billion US dollars in December 2006, or an overall surplus of 1.5 percent of GDP for the year 2006. Meanwhile, reserves to short-term debt also rose further.
Tommaso Padoa-Schioppa and Romano Prodi were among those who, in the early 2000s, highlighted the inefficiencies and potential issues that the introduction of a monetary union without common supervision could entail. Despite their prescient analysis, their original calls for greater coordination among national authorities fell short of the kind of arrangement that was needed to address this structural flaw. As the crisis later demonstrated, the much greater degree of integration brought about by the BU proved to be the most effective response to the crisis, as well as to the preservation of the euro. Ultimately, as many viewed it when it was launched 20 years ago, the Euro project has been the catalyst for further reform and integration. As far as the banking sector is concerned, the BU has contributed to loosening the bank-sovereign nexus and it should give rise to a more integrated banking system. However, so far, the greater level of institutional integration of the BU has not been accompanied by greater cross-border activity in the banking sector. The absence of crossborder mergers is seen by many as evidence that we still have a long way to go in terms of market integration and diversification. In my view, the lack of cross-border mergers can be partially explained by the over-capacity of the financial sector in Europe. Indeed, the benefits from synergies, potential cost-cutting and efficiency gains are mainly observed in mergers between same-country institutions, due to the greater redundancies in branches and central services.

Likewise, as supervisors we should strive to avoid financial crises, by applying supervisory tools to mitigate risk accumulations as well as reinforcing banks’ management capabilities; but, at the same time, we should work with a longer-term perspective to complete the institutional framework, in case a crisis still occurs. Thank you. 5/5
This would involve “territorial” countries deciding to resolve financial institutions headquartered in their own jurisdictions on a universal basis. (A possible example of this approach in the recent crisis was the FDIC’s resolution of United Commercial Bank, which involved a “purchase and assumption” 5 that extended to the Chinese subsidiary and the Hong Kong branch following coordination amongst the authorities in the US, China and Hong Kong.) A “modified” form of universalism would involve host authorities choosing to defer to and cooperate with a resolution brought by the home country authorities, provided that certain conditions held. Separate insolvency proceedings might be employed by host countries, but allowing the proceeds to be remitted to the home country, “lead” resolution. Variations might be needed for subsidiaries and branches. Subsidiaries are distinct legal entities, but they too can have worldwide creditors and claims. So it would all need to be within some kind of joined-up whole. At a high level, the preconditions for something like this might include: (1)  equitable treatment of all creditors regardless of their jurisdiction, because if creditors in host countries were likely to be penalised in a resolution brought by the home country authorities, host authorities would have a strong incentive to ring-fence;  (2)  broad harmonisation of resolution regimes across the major jurisdictions.

To accomplish this, we have a team dedicated to going out into the region to gather economic intelligence and to help our communities develop programs to support local economic development. Let me speak a little further about our work analyzing local economic conditions and how we use this work to help our stakeholders. We have developed a number of analytical tools to track the regional economy. To get the most up-to-date read on economic conditions in our District as possible, we conduct two monthly business surveys. Our Empire State Manufacturing Survey gives a real-time read on manufacturing conditions in New York State, while our Business Leaders Survey allows us to track economic activity across the tri-state region in the broader services sector. We also conduct regular polls of small businesses in our area to better understand their evolving situation and needs. In addition, we publish monthly indexes of economic activity for New York State, New York City and New Jersey. We also monitor the financial health of households through our quarterly Household Debt and Credit Report and track the state of school finances in our region. But economic data can only tell you so much. It is also imperative that we engage with people in our region to see the broader picture behind the facts and figures. To this end, I regularly travel to various parts of our District to hear firsthand about local economic conditions and to get a sense of the issues and concerns facing businesses and residents.
Page 10 of 18  15  16  6 3  Figure 3 Inflation indicators (*) (annual change, percent)  6  6  5  5  Services CPI  4  4  services EFE  3  3 CPI  2  2  1  CPIEFE  Goods CPI  1  0  0  -1  -1  goods EFE  14  15  16  17  18  19  (*) As from January 2019, the new 2018=100 annual base indexes are used, so they are not strictly comparable with earlier figures. Sources: Central Bank of Chile and National Statistics Institute (INE). Figure 4 Non-mining GDP (real annual change, percent)  6  6  5  5  Trend  4  4  Potential  3  3  2  2 Actual (moving annual average)  1  1  0  0 13  14  15  16  17  Source: Central Bank of Chile.

An issue that has been widely discussed in the last two years is whether other parts of the world would be able to avoid a recession despite the weak development of the US economy, that is if so-called decoupling could arise. We can now note that the rest of the world is following in the wake of the United States into an economic downturn and the debate on decoupling has faded. Measures to counter the crisis Sweden has so far been able to manage the problems caused in the financial system by the global financial crisis. The Swedish banks are profitable and have substantial buffers following a number of good years. They have not granted loans as hastily as the banks in the United States and they have not been exposed to any great extent to the type of financial products that have been part of the problem. The TED spreads have not been as large as in the United States and the euro area. The interbank market for overnight loans has functioned well in Sweden throughout the crisis, unlike in many other countries. But the Swedish banks have nevertheless experienced problems with funding and this has required that a number of measures be taken by Swedish authorities. The Riksbank has implemented a large number of measures to safeguard financial stability and mitigate the negative effects of the financial crisis. These measures have largely related to the provision of liquidity.
20 To limit the impact of FX reserve accumulation on the domestic money supply, most central banks sterilise their intervention through the issuance of bonds. The fiscal cost of FX reserve accumulation can be calculated as the difference between the interest paid on the sterilisation instrument and the interest received on FX reserve assets, which are typically low-yielding, low-risk foreign government bonds. The IMF estimated this wedge to be around 200 bps on average. It can crowd out domestic investment as central bank sterilisation bonds compete for domestic savings. 21 The increased demand for safe assets driven by this desire for safety – which Ben Bernanke christened a ‘savings glut’ – helped drive down the equilibrium interest rate, the interest rate central banks must deliver in order to balance demand with supply and so achieve stable inflation. 15  All speeches are available online at www.bankofengland.co.uk/speeches  15  Augmenting the Bank of England’s Capital Flows-at-Risk framework with the major structural changes in the global financial system materially changes the Bank’s assessment of the quantum of Capital Flows-at-Risk when there are push shocks.

23  Kose, M, Prasad, E and Taylor, A (2010), Thresholds in the process of international financial integration, Journal of International Money and Finance. 24 The G20 has previously discussed these issues, for example see Report of the G20 Eminent Persons Group on Global Financial Governance (October 2018) and G20 Action Plan on the Development of Local Currency Bond Markets (July 2013) 25 Coman, A, Lloyd, S (forthcoming) In the Face of Spillovers: Prudential Policies in Emerging Economies. 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  Chart 17: The impact of macroprudential policy on Capital Flows-at-Risk Probability density 0.10  Average macro-prudential stance  0.08 0.06 0.04  Tighter macro-prudential stance  0.02 0.00  -8  -6  -4  -2  0  2  4  6  8  10  12  14  16  18  Capital flows as a % of GDP Sources: IMF, Cerutti et al (2015) and Bank staff calculations Notes: Chart shows conditional distributions of capital flows to EMEs under an average macro-prudential stance and a one standard deviation tighter macro-prudential stance, as measured by Cerutti et al. (2014). The unconditional distribution differs from others in the speech given data on macro-prudential actions only starts in 2001 rather than in 1996 as the rest of our data. See chart 5 and annex for further details.