samchain/econo-pairs-v1 huggingface dataset:
Monetary policy: containing inflation in a restructuring economy Let me start with monetary policy framework. I will cover two areas: •  First, the continued relevance of the exchange rate in our monetary policy framework. •  Second, the calibration of monetary policy responses within this framework. Relevance of exchange rate as the instrument of monetary policy MAS’ exchange rate-centred monetary policy framework was formalised in the early 1980s. While other central banks sought to control money supply or interest rates, MAS has chosen to focus instead on the exchange rate as its monetary policy tool to keep inflation in check. The exchange rate-centred framework has served Singapore very well for over three decades. As I mentioned earlier, Singapore has had one of the best inflation records in the world despite enjoying one of the fastest rates of economic growth. BIS central bankers’ speeches  3  Let us quickly recall why the exchange rate is MAS’ chosen tool of monetary policy. Singapore is a small and extremely open economy. Total exports and imports of goods are each well in excess of 100% of GDP. •  Imports make up 40% of domestic consumption; the exchange rate is thus a powerful tool to moderate the impact of foreign price changes on domestic inflation. •  Exports are the chief driver of economic growth; and the exchange rate, as a key factor affecting export demand, is thus also an effective means for managing aggregate demand and hence overall inflationary pressures.

Both create uncertainty, misallocate resources, discourage productive investment, and ultimately drag down economic growth. Third, asset prices have important feedback loops with consumer prices. Rapidly rising asset prices raise general inflation expectations and also directly affect rentals and accommodations costs that go into the consumer price index. Fourth, asset purchases financed by excessive borrowing on the expectation of future capital gains undermine financial prudence. If households or corporates build up leverage during periods of low interest rates, they will be vulnerable when interest rates normalise. What can central banks or governments do about asset bubbles or the leverage cycle? An oft-cited reason for not doing anything is that we cannot reliably determine whether asset prices have overshot fundamentals or whether leverage has reached unsustainable levels. But the issue is not whether we can establish if there is an asset bubble or not. The issue is whether the rise in asset prices is creating negative spillover effects on the economy or whether a future sharp reduction in asset prices will lead to instability or serious dislocations. If the assessment is that it would, we have to act proactively to moderate prices now. And  6  BIS central bankers’ speeches  this has indeed been the approach taken by MAS and the government with respect to property prices. How macroprudential policies have been applied Singapore applied macroprudential tools as early as 1996, to help cool an overheated property market.
- A successful CBDC should be attractive enough to be used by households and firms in their everyday payments. However, it should avoid the above-mentioned risk of excessive shifts from bank deposits to CBDC accounts, which would involve unwanted bank disintermediation and a possible destabilization of the financial system. A balance must be found to meet both goals. -  This could imply for example both a zero remuneration of CBDC (i.e. similar to cash) and a 3/4  BIS central bankers' speeches  limit to CBDC accounts holdings. Under such a scheme, the CBDC is likely to be used for daily payments, while households and firms would not be able to hoard large amounts of CBDC for investment or risk-aversion motives. A second model would involve no limit on CBDC holdings amount, but a differentiated remuneration rate beyond a certain threshold (a so-called “tiered CBDC remuneration”), which would disincentivize large CBDC holdings. - Whatever the model chosen, with its own benefits and drawbacks, it may have impacts on monetary policy implementation. I already mentioned the potential effect on the liquidity position of the banking system. Another question relates to how a new remuneration rate should be articulated with the current key policy interest rates and whether there could be a case for changing some CBDC parameters together with central bank key policy rates. In any case, CBDCs should be designed so as to not constrain nor influence in any way central bank monetary policy decisions and desired stance. 3.

I will highlight today three dimensions to consider, among many others, in case the introduction of CBDC is decided: liquidity configuration, policy rates and access to central bank balance sheet. 1. First potential impact: the launch of CBDCs could affect monetary implementation through a change in the liquidity situation of the banking system. - While the design of the CBDC should ensure that any risk of sudden large shifts from bank deposits to CBDC would be avoided, it could still substitute a limited part of retail deposits, through an increase of what we call in central banking jargon “autonomous factors”, i.e. an item not linked to monetary policy but affecting the liquidity situation of the banking system. - This could in turn imply that the central bank – depending on its preferred liquidity position – provides additional liquidity through refinancing operations and/or asset purchases. In case of collateralized refinancing operations, collateral availability would also need to be checked to accommodate the operations. While it is very much a speculative thought at this stage, liquidity-providing or liquidityabsorbing operations would need to remain available at any time to ensure that central banks can choose to operate in the monetary policy implementation framework they choose, even in the case of the launch of a CBDC. 2. Second: the chosen remuneration scheme, as well as possible limits, are key parameters for the usage of CBDC that also need to be assessed for the monetary policy framework.
During the so-called Great Moderation in the15 years or so prior to the financial crisis, there was a close relationship between changes in Bank Rate and the growth of GDP. Indeed, my colleague Ben Broadbent, in his former life as a city commentator, used to draw attention to the startling correlation between the behaviour of the MPC and movements in growth implied by business surveys.7 The self-same surveys that are currently pointing to quarterly GDP growth of around 1%, a rate which in the past would have signalled the MPC was likely to tighten policy. That type of relationship during the Great Moderation is perhaps not that surprising. During much of that period, the economy was close to balance and the job for monetary policy – absent worrying longer-term trends or significant cost or price shocks – often boiled down to keeping GDP growth close to trend. But this time is different. We start with significant slack in the economy: the level of GDP is still below its pre-crisis level; there are almost one million more people unemployed. We need to see a sustained period of robust growth before the economy moves back into anything resembling balance. Linking the future path of monetary  6  The Committee can’t remain entirely agnostic since its forecast for inflation will be affected by its judgement of the degree of economic slack and the speed with which that slack is likely to close as the economy grows.

The credibility provided by the inflation target is a prerequisite for monetary policy to be able to respond so aggressively to the fallout from the crisis. And with inflation being above target almost consistently over this period, it is hard to argue that monetary policymakers have somehow been fixated by inflation. But the forward guidance provided by the MPC makes that support explicit. The primary objective of monetary policy remains the 2% inflation target. The sanctity of that objective is guarded by the two price stability knockouts. But subject to those knockouts and the knockout pertaining to financial stability, our guidance clearly signals the Committee’s intention to maintain a highly stimulatory stance of policy until the economy returns to something closer to normality. Abstracting from the precise details of the thresholds and knockouts, the message to businesses and families should be clear. The MPC intends to keep interest rates low until we have seen a sustained period of strong growth, rising incomes and higher employment, as long as that does not pose risks to either price stability or financial stability. To be clear: that is no different to the approach underlying our policy over the past five years. But forward guidance provides a framework and a language in which that intention can be made plain. A closely related issue is the policy trade-off currently faced by the MPC.
I hope more Islamic financial institutions will join over 700 shared services and outsourcing companies currently operating in Malaysia based on the country's proven political, social and economic stability, IT and physical infrastructure, deep pool of skilled work force, liberal foreign exchange rules, proficiency in languages and government continued commitment 1 . At this stage, I wish to inform that Malaysia has developed a credible, robust and effective anti money laundering and counter the financing of terrorism or AMLCFT regime. A group of international assessors had in early 2007 assessed Malaysia's AMLCFT regime, both at the financial and non-financial sectors as well as on the conventional and Islamic financial institutions. This assessment is based on the new and more robust FATF or Financial Action Task Force 40+9 Recommendations. So far, globally, 40 countries have been evaluated based on this new FATF Assessment Template. The assessment on Malaysia was ratified at the APG's (Asia Pacific Group on Money Laundering) July 2007 Annual Meeting in Perth. 1  A.T. Kearney's ranked Malaysia as the 3rd most attractive outsourcing centre, after India and China, in the Global Services Location Index for three years (2004, 2005 and 2007. There was no ranking in 2006). Frost and Sullivan ranked Malaysia as the 5th most attractive SSO location after India, China, Ireland and Singapore in 2007. Frost and Sullivan identified Malaysia's niche areas in the energy, finance and logistic sectors. BIS Review 129/2007  5  The full report on the assessment on Malaysia is published in the APG's website www.apgml.org.

13  All speeches are available online at www.bankofengland.co.uk/news/speeches  13  This perhaps illustrates that the risk to financial stability from monetary policy may come not so much from the use of monetary policy tools to stimulate demand. Rather, it may come from the risk that in a low for long world monetary policy does not or cannot respond sufficiently vigorously to shocks to avoid macro-economic tail events that would severely stress a less resilient financial sector and more leveraged real economy. Perhaps the most important lesson we learned from the crisis is that financial stability is a necessary condition for macro-economic and monetary stability. Over longer time horizons there is no trade-off between the two.27  But there is also some truth in the converse. Financial stability depends in part on effective demand management. It can be severely tested by macro-economic tail events even when the financial sector itself is not the source of the shock. Policy responses  Taken together, therefore, a low for long world is likely to be a more challenging environment for financial stability. The first and, in my view, most important policy conclusion to draw from this is the need for active and powerful macro-prudential institutions and policy. Effectively used, in relation to both lender and borrower balance sheets, it can constrain risk taking or ensure that higher risk is accompanied by greater resilience.
But let me be clear: There is a natural tendency for policymakers to pull back on accommodation too early before the real rate of interest has fallen to low enough levels. Such errors happened in 1937 when the Fed prematurely withdrew accommodation. This was documented in Milton Friedman and Anna Schwartz’s 1971 book, A Monetary History of the United States. More recently, the Bank of Japan made the same mistake. Therefore, it is essential that the Fed clearly commit to a policy action that is measurable against our goals. Policy projections and a monetary policy framework Regardless of whether such explicit forward guidance is adopted, the effectiveness of monetary policy can be enhanced by clear communication of the Fed’s ultimate goals and of the strategies that it will use to achieve those goals. The minutes from the December FOMC meeting, which were released last Tuesday, noted that the Committee discussed two initiatives to enhance our communications about monetary policy. First, we agreed to begin publishing participants’ projections for the appropriate path for the federal funds rate and qualitative information about their outlooks for the Fed’s balance sheet in our quarterly Summary of Economic Projections (or SEP). Second, we discussed formulating a consensus statement on the Committee’s longer-run goals and monetary policy strategies. Until now, participants have provided forecasts for real GDP growth, the unemployment rate and inflation, but not the policy assumptions that underlie these projections.

The forecasts were made under each participant’s unspecified views of appropriate policy, which is defined in true Fedspeak as: “the future path of policy that each participant deems most likely to foster outcomes for economic activity and inflation that best satisfy his or her interpretation of the Federal Reserve’s dual objectives of maximum sustainable employment and stable prices.”  BIS central bankers’ speeches  5  Being more explicit about appropriate policy can clear up a lot of uncertainty. For example, suppose inflation were running higher than we would like, and the economic projections in the SEP showed it coming down over the next couple of years. In the absence of information on participants’ policy projections, the public would not know whether the FOMC thought inflation would simply come down on its own or whether it thought that a monetary tightening would be required to reduce inflationary pressures. Including policy projections will help clarify such judgments. In my opinion, this is a substantial, first-order improvement in policy communications, and this greater clarity may have significant additional value for improving how the economy operates. Expectations of the future path for policy and the degree of uncertainty surrounding those expectations are key determinants of private borrowing rates and other asset prices. These play an important role in the spending and saving decisions of households and businesses.
They’re driven by demographic changes and slow productivity growth, which are unlikely to reverse any time soon. Low r-star implies that many central banks will be grappling with the challenges of life near the 1/4  BIS central bankers' speeches  ZLB, which is why it’s so critical to consider how the ZLB alters strategies related to monetary policy. Monetary Policy Near the ZLB And that’s exactly the question we looked at around 20 years ago. In a paper and subsequent FOMC briefing in January 2002, my colleague Dave Reifschneider and I evaluated the effects of the ZLB on the macro economy and examined alternative monetary policy strategies to mitigate the effects of the ZLB.3 This work highlighted a number of conclusions based on model simulations.4 In particular, monetary policy can mitigate the effects of the ZLB in several ways: The first: don’t keep your powder dry—that is, move more quickly to add monetary stimulus than you otherwise might. When the ZLB is nowhere in view, one can afford to move slowly and take a “wait and see” approach to gain additional clarity about potentially adverse economic developments. But not when interest rates are in the vicinity of the ZLB. In that case, you want to do the opposite, and vaccinate against further ills. When you only have so much stimulus at your disposal, it pays to act quickly to lower rates at the first sign of economic distress. This brings me to my second conclusion, which is to keep interest rates lower for longer.

John C Williams: Living life near the ZLB Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the 2019 Annual Meeting of the Central Bank Research Association (CEBRA), New York City, 18 July 2019. * * * As prepared for delivery Accompanying slides of the speech. My wife is a professor of nursing, and she says one of the best things you can do for your children is to get them vaccinated. It’s better to deal with the short-term pain of a shot than to take the risk that they’ll contract a disease later on. I think about monetary policy near the zero lower bound—or ZLB for short—in much the same way. It’s better to take preventative measures than to wait for disaster to unfold. Today I’m going to talk about three things: first, the heightened relevance of the ZLB for monetary policy; second, the strategies designed to mitigate the effects of the ZLB in an economic downturn; and finally, why these strategies are so important for achieving our monetary policy goals. I’ve already referred to monetary policy several times. So, before I go any further, I need to give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee or others in the Federal Reserve System.
It is possible to direct part or all of a failing bank’s business to a private sector purchaser after a sale process has been undertaken. Second, it is possible for the Bank of England to take control of part or all of a bank’s business through a bridge bank controlled and owned by the Bank. A special bank administration procedure can be used in combination with a partial property transfer or bridge bank. This administration procedure is broadly the same as a conventional administration save for the very important difference that the administrator has a statutory objective to support the transferred business with any infrastructure left in the insolvent rump. Finally, under the SRR provisions, it is possible to take a bank into temporary public ownership. For this approach, the Treasury would be in the lead, and there is a higher test of systemic importance to be passed (there must be a serious threat to financial stability) for this approach to be used. As I have indicated, the SRR contains important roles for all of the authorities. The FSA is responsible for triggering the SRR by determining, broadly, that a bank no longer meets its threshold conditions for authorisation, and there is no reasonable prospect of it taking actions to correct the situation within an acceptable timeframe. The FSA is also responsible for approving the transfer of business to another institution that it authorises.

This was the case with Barings, in which I was also heavily involved. There is therefore nothing new about bank resolution. Why have a resolution regime for banks? Why do we need a special resolution regime for banks? The first reason is that at the point when actions have to be taken to deal with a bank in difficulty, there will inevitably be a considerable amount of uncertainty about how bad that bank’s problems are. This is because the scale of the problem will depend on how the future unfolds. But we will know at that point that if the authorities don’t act, the problems of the institution will quickly get much worse, and a deposit run may well ensue. The second reason for a special resolution regime is that the process of resolution itself must not add to the uncertainty and loss of confidence. Put  BIS Review 157/2009  1  simply, it has to be fast and decisive. Most bank resolutions happen over weekends. My overwhelming guiding principle is that by no later than first thing on Monday morning we must be able to tell depositors that their money is safe and its new home is …… There is a simple test of this – the answer to the depositor’s question “Is my money safe?” must be yes – no hesitation or qualification can be added. Normal corporate insolvency procedures are therefore inadequate for banks for a number of reasons.
Several proposals have been put forward in the public debate – among other things, there have been calls for a tax deduction to subsidise certain domestic services, as well as calls for a reduction in compensation levels to increase people’s willingness to take lower-paid jobs. Other solutions being discussed are lower income taxes for low-income and middle-income employees, a reduction in employers’ contributions and a cut in payroll taxes. These are important political issues, but issues that we at the Riksbank do not have any obvious reason to take a stance on. The way the whole economy functions has of necessity changed since the post-war period and it is unlikely that the current economic policy regime with a floating exchange rate and inflation target can deliver both 2 per cent inflation and an unemployment rate equivalent to the levels we had then. During the post-war period we had a unique expansion in public sector employment and very high demand pressures, something that was not sustainable in the long run and that is not possible with free movement of capital, an inflation target and an independent Riksbank. BIS Review 84/2005  7

One such platform is the Malaysia International Islamic Financial Centre (MIFC) initiative that comprises a community network of the country’s financial and market regulators, including Bank Negara Malaysia (Central Bank of Malaysia), Securities Commission Malaysia, Labuan Financial Services Authority and Bursa Malaysia (Kuala Lumpur Stock Exchange); Government ministries and agencies together with industry participation from the banking, takaful, capital market institutions, human capital development institutions and professional services companies which are participating and working collaboratively in the field of Islamic finance. The creation of International Islamic Liquidity Management Corporation (IILM) recently was the outcome of the High Level Taskforce on Liquidity Management that was formed by the Islamic Financial Services Board (IFSB). It is a  BIS Review 151/2010  1  collaborative effort to develop a liquidity framework that can provide widely acceptable liquidity solutions to Islamic financial institutions, to promote better liquidity management. IILM will be an issuer of Shariah compliant financial instruments that are highly liquid and tradable in the secondary financial market. This is an important infrastructure capacity building since it would expand the scope of business for Islamic finance globally and was achieved through collaborative effort. Another initiative is the creation of a Sukuk Investment Fund – foreign currency funds to be disbursed to selected Islamic Fund Management Companies (IFMCs) to invest primarily in foreign currency sukuk issued out of Malaysia.