samchain/econo-pairs-v1 huggingface dataset:
And it used its balance sheet to keep money market rates, which served as an anchor for rates in the wider economy, close to its policy rate. 6  The rest is monetary history. Ten years on, central banks now use a much wider range of tools than just the policy rate in setting monetary policy. Once Bank Rate hit 0.5% in March 2009, which at the time was seen as its effective lower bound, the MPC turned to what were then thought of as unconventional monetary policy tools to stimulate demand and help bring inflation back to target. These tools used our balance sheet in new and different ways. And together they account for a large part of the increase in the size of the Bank’s balance sheet. 5  As part of the MPC’s continuing efforts to make our thinking more transparent, we published our estimate of excess supply (or slack) in the economy for the first time in the May 2018 Inflation Report. 6 The last Bank Rate change to follow this practice was arguably the 50bp cut on October 8th 2008. I say arguably because this cut was itself unconventional: it was coordinated across the major central banks and, due to differing international schedules, actually took place early on a Wednesday afternoon rather than the usual Thursday at noon.

Your Excellency, from this, it is clear that the current strengthening of the Kwacha has been caused mostly by changes in economic fundamentals. I recognise the concerns by some of our exporters of non-traditional commodities that they are losing external competitiveness. I wish to point out that not all has been lost as a result of the appreciation of the Kwacha. Some non-traditional exporters have benefited through, among other things, the reduction in the cost of capital goods and imported raw materials. In addition, may I mention the fact that the exchange rate alone does not determine external competitiveness of exports. Exporters should look at those areas in their production processes where they can attain efficiency gains and improve productivity. These efforts need to be complemented by Government through directing investment in infrastructure and structural reforms, including labour  BIS Review 72/2006  3  laws, so as to reduce the cost of doing business in Zambia. On its part, the Bank of Zambia will carry out its function of smoothing the movements in the exchange rate in a way that would not compromise the low inflation objective. At this point, Your Excellency, Distinguished Ladies and Gentlemen, allow me to humbly say once again that I am deeply honoured to be invited to address you on this occasion. I thank you for your attention. 4  BIS Review 72/2006
Firstly, due to the phenomenal rise in reserve holdings of central banks, in our region, and secondly, due to the intensive public scrutiny that reserve management has attracted as a result of the significant increase of foreign reserves in the national wealth of countries in our region. The drivers of this sharp rise in reserves are many. High commodity prices, increase of exports of natural resources, and increased remittances, have been among the main contributors to this situation. Consequently, many countries have been able to systematically accumulate large foreign exchange reserves over the past few years, and, in a way, reserve accumulation is now possible, not only for the wealthy industrialized countries, but for the so-called developing countries as well. 4. However, these reserve accumulation has not been without pain. In fact, developing countries, being those still requiring improvements in their domestic infrastructure and other systems, have found that the increasing of their foreign exchange reserves has resulted in a huge opportunity cost. This is particularly so because the funds collected in the form of foreign exchange have been generally applied to acquire low risk, low-return investments, mostly in fixed income securities in industrialized countries. This situation has indirectly led to such funds being used to fund the huge fiscal deficits of several Western countries, or the expansion plans of their large corporations, instead of being utilized for domestic infrastructure, which, on most occasions have been funded with high cost loans from those very same countries.

Ajith Nivard Cabraal: Foreign exchange reserve management Inaugural address by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, at the SAARCFINANCE seminar on Foreign Exchange Reserve Management, organised by the Centre for Banking Studies of the Central Bank of Sri Lanka, Colombo, 15 August 2008. *  *  *  Deputy Governors, Director of the CBS, My dear friends, 1. I am pleased to participate at the opening ceremony of this SAARCFINANCE seminar on foreign exchange reserve management. I also welcome all participants to this course and extend to the participants from the central banks of our neighboring countries, our resource persons from BIS, Deutsche Bank group, Citigroup and Reserve Bank of India, a very warm welcome to our country as well. 2. At the 17th SAARCFINANCE Governors’ meeting held in Washington in April 2008, it was decided to organize a seminar in foreign exchange reserve management. It was also decided that the Centre for Banking Studies (CBS) in Sri Lanka, with its over 26 years of experience in training and developing financial sector professionals, together with the International Operations Department of the CBSL, should host this seminar, so as to provide a forum within the region to discuss the latest challenges facing the managers of sovereign reserves at present. 3. My dear friends, foreign exchange reserve management has gained increased importance in Central bank activities in the recent past, due to two factors.
As virtual banks are not allowed to operate physical branches, they will have to come up with innovative ways to offer attractive and competitive banking services. This is likely to force existing banks to consider how to further upgrade their services, and better make use of technology in their offerings. The result, I hope, will be a more innovative and globally competitive banking sector in Hong Kong, offering customers more diversified and efficient services. Technology use is a means to an end 20. Last but not least, we should bear in mind that the use of technology is a means to an 2/5  BIS central bankers' speeches  end, and not an end by itself. Most people appreciate new technology for what it can do to improve their lives. They don’t really care whether the algorithms or the chips are amazingly innovative. To achieve wide adoption, any innovation has to offer users a “unique value proposition”. In plain language, the consumer wants to know “what can it do for me?” 21. Take mobile payment as an example. This has rapidly taken off for retail payment in Mainland China and some other places. In Hong Kong and other markets, people already use credit cards and e-payment systems like Octopus, so mobile payments will grow more slowly. The point is that mobile payment technology is only the means to an end. The Hong Kong consumer will ask: “what can it do for me?”.

The interlinkages between financial institutions amplify risk in the financial system. In our assessments, it is important to be aware of any build-up of systemic risk. Residential mortgages provide a good illustration of the difference between the individual risk for a bank and systemic risk. Even during the 1990s banking crisis, Norwegian banks’ losses on residential mortgages were low. Today’s low risk weights for residential mortgages provide strong incentives for banks to extend these mortgage loans. However, housing market fluctuations, which go hand in hand with shifts in saving behaviour, are nonetheless a source of business cycle fluctuations and substantial losses when banks have to write off loans to firms selling goods and services to households. 8  BIS Review 131/2009  The Norwegian housing market is vulnerable. Both a high level of tax incentives for house ownership and a large volume of adjustable-rate mortgages contribute to wide fluctuations in activity and prices. 8 The rise in house prices in the past two decades has also been very strong compared with countries where housing bubbles have burst. To finance strong growth in residential mortgages, banks have to rely to a great extent on borrowing, thereby increasing their vulnerability to a liquidity squeeze. Thus, low risk weights for residential mortgages also lead to higher liquidity risk in the banking system as a whole. It is important to be aware of the similarities between developments in the Norwegian housing market and bank lending and developments in the countries most severely affected by the crisis.
It provides lessons on channels of transmission, basic tradeoffs across objectives, and the effectiveness of policy responses.3 The channels of macroeconomic and financial transmission among open and interdependent economies occur through the current account of the balance of payments, the capital account, or both. From the vantage point of the domestic economy, there are three main channels of transmission: the exchange rate; the external demand; and the interest rate or risk-premia channel. The last can be more broadly defined as the financial conditions channel. The intensity of transmission of spillovers will depend on the monetary policy, currency policy and the real and financial openness of the economy being affected by external developments. Other relevant characteristics include the flexibility of labor and product markets; the depth, safety and soundness of the financial system; and the economy’s position as an international creditor or debtor. The Mundell-Fleming framework suggests that a country with a high degree of capital mobility and a flexible currency will be in a favorable position to use monetary policy to attain its internal growth and inflation objectives. When foreign interest rates increase and financial conditions tighten, changes in relative prices brought about by currency fluctuations can help to absorb the external shocks. The positive expenditure switching effect from currency depreciation improves the trade balance and supports demand.

As national authorities we are all convinced that our national discretions are worth fighting for and we take pride when they are included in the final drafts. Perhaps we should ask ourselves more often whether our discretions are motivated by a fundamental need or just deep-rooted tradition or, even worse, our unconscious caving in to special interest groups. I realise this might be naïve but why not take this opportunity of change and think new instead of designing EU regulation on the basis of existing, often imperfect, national regulation. The need for a common rule book for big cross-border banking groups is often raised by the industry. In principle, we are sympathetic to this wish. If a common rule book means “just” common rules we are certainly moving in that direction. One of the main objectives of the Committee of European Banking Supervisors (CEBS) is to promote convergence of supervisory rules and practices. However, in the sense of common or centralised decision making by authorities, I think it is still far away from coming true. As long as the implementation and interpretation of directives and rules is done on a national level it will take time before we have a common rule book. Still, the aim should be to eliminate or reduce as much as possible these differences. Remaining differences in supervisory practices between countries should be clearly disclosed in order to improve the predictability of the EU regulatory system – which is another area where the CEBS is doing important work.
So, we target some key initiatives specifically to low- and moderate-income groups. Here on Long Island there are pockets that suffered greatly in the recession. In Nassau County, communities in Hempstead, Baldwin, Roosevelt and New Hyde Park have a foreclosure rate over four times the national average. The same holds true for parts of Brentwood, Central Islip and Patchogue, in Suffolk County. We have worked hard to help neighborhoods that face high foreclosure rates. Over the past three years, my staff has come to Long Island to meet with housing counselors and legal services practitioners. We have provided housing advocates with the latest information on mortgage conditions, via mortgage briefs, roundtables, presentations and newsletters. We have now developed an online resource that shows delinquency and foreclosure conditions in neighborhoods each month. We believe that this site will be a useful complement, aiding the work of housing counselors and other parties seeking to help these communities. To share what we learn about our diverse District, we have a website, with detailed information about the region. I invite you to visit newyorkfed.org to explore our highly localized maps and information on small business, credit and housing conditions and even the latest job openings at the New York Fed. Finally, and crucially, in the aftermath of the financial crisis, we are working with our colleagues in Washington, D.C., and at other agencies to help put the nation’s financial system on a firmer footing.

While the underlying core inflation rate, that strips out volatile food and energy prices, has been somewhat higher than expected a few months back, it appears that the annual rate of core inflation2 has peaked and we expect it to begin to decline later this year.3 Finally, inflation expectations, which play an important role in the inflation process, remain well anchored. By this I mean that people expect that the rate of inflation will continue to be relatively low for some time to come. Regional economic conditions So how is the recovery proceeding in the state and the region? As I mentioned, the New York Fed produces indexes that help us track economic activity in the region. Based on these measures, the economic recovery got underway in both New York State and New York City in late 2009, and economic activity has continued to expand through early 2012. The New York Fed also conducts the monthly Empire State Manufacturing Survey to monitor conditions for regional manufacturers. The most recent survey, for which a number of Long Island firms participated, points to continued expansion in manufacturing activity throughout the first quarter of 2012 and heightened optimism about the general business outlook. Recently released employment revisions indicate that the economic recovery has taken hold on Long Island. But there still is a long way to go. Employment on the island declined by a little over 4 percent in the downturn – a steep drop, to be sure, but only about two-thirds of the decline that occurred nationally.
However, there are lessons and experiences on many different levels and my intention is instead to apply the more unpretentious strategy of “starting in my own backyard”. More specifically, what I intend to do is to review three aspects concerning developments in Sweden since the financial crisis, give my personal reflections on them and indicate what lessons I think there are to learn. Such a review need not be as self-indulgent and provincial as one might fear, but should be of rather general interest. There are clear links between developments in Sweden and the current international debate on monetary policy. Furthermore, Sweden has for some reason often been one of the first countries to face various new situations that have had to be dealt with. And even though other countries have yet to encounter the challenges already faced by the Swedish economy, they may have to do so sooner or later. 3 The three aspects I would like to discuss are the following: •  The Riksbank is one of relatively few central banks that have explicitly used the policy rate to try to counteract the build-up of financial imbalances – a policy that is usually called “leaning against the wind”. It is probably the only central bank that has had to abandon this policy, temporarily at least, in order to focus fully on the inflation target.

Once a monetary policy framework has been in force for long enough, the benefits of it tend no longer to be so obvious. In addition, if developments have been favourable, as has been the case since inflation targeting was introduced, it is easy for demands and expectations to rise. It is also easy to place greater focus on the drawbacks, which exist in all frameworks. For example, it is not so difficult to communicate that high and variable inflation is bad, as was the case when inflation targeting was introduced in the early 1990s. But when memories of those problems have faded, it is not as easy to convey that an inflation target is also supposed to prevent inflation being too low, that is, the importance of there not only being common expectations in society as to how much prices and wages will rise, but also that these expectations are anchored far enough above zero. Although this argument – that the inflation target should be sufficiently high – is crucial, it is after all also relatively abstract. There are above all two relationships that I think make it important to maintain confidence in the inflation target of 2 per cent – which is what our policy in recent years has aimed to do – and which indicate that the target should not be lower. One is that the conditions for wage formation to effectively allocate resources in the economy can deteriorate when average inflation is too low.
The proportion of BAME employees is around 17%, greater than the proportion for the UK as a whole. Representation at senior management remains much lower at 5%, but is increasing. 56  Walton and Spencer (2009). 57  Page (2010). 58  Davies (2015)  59  Resolution Foundation (2015)  60  Although around half of that reflects the fact that there is a greater proportion of women working part time than men. 61  European Women on Boards (2016)  10  BIS central bankers’ speeches  Like many other organisations, the Bank has sought to support diversity through a range of diversity networks covering, among other things, gender, ethnicity, LGBT, mental health, disability, caring and some of the main religions. One of my responsibilities is as Executive Sponsor of the Bank’s Ethnic Minority Network. This Network has put in place some valuable new initiatives to support greater ethnic diversity across the Bank over recent years, including reciprocal mentoring schemes and an Afro-Caribbean Scholarship Programme which funds students through university. The Bank has also recently signed up to UPstanding – an initiative to showcase BAME professionals working in the US, UK and Ireland. Plainly, there is further to go along these identity-based dimensions of diversity, in the Bank and more broadly. But there is wind in society’s sails, as well as in the Bank’s, on these dimensions of diversity, which gives good grounds for optimism about the future.

The expertise has proven rather useful for many of our staff and, at times, was provided as on-  BIS central bankers’ speeches  1  the-job training, for example, FSVC experts joined the Bank of Albania’s Supervision Department inspectors in their on-site examinations. I am confident that these qualities of FSVC’s assistance will be maintained in the future. A result of this fruitful cooperation is our shared commitment to extend it to the medium run. The parties have been in constant contact to identify the fields for future cooperation and I reckon that this process is being finalized in terms of project design and relevant details on development methodology and expected results. A preliminary assessment reveals that the scope of our future cooperation has expanded. Projects will continue to serve the objective for ongoing supervision capacity building in the fields of improvement of contingency plans, implementation of latest amendments to international banking supervision standards, risk assessment and improvement of regulatory requirements for responsible management by banking and financial institutions. The assistance may be expanded to include underlying standards for payment systems and use of e-money, thus laying the grounds for the adoption of relevant requirements arising from EU directives. The cooperation of the FSVC with ADIA will focus on the implementation of the Strategic Development Plan 2012–14 and will address, more concretely, the modernization of the IT infrastructure and reporting system as well as other ancillary processes.
In spite of the brisk primary and secondary market activities in a few stock exchanges in the region, capital markets, in particular the bond market, remain rather underdeveloped. There is much more to be done, therefore, to further develop the financial markets by the regional jurisdictions. The second part of the conference title - 'The New Frontier' - also contains an important message. Globalisation and the revolution in information technology have fundamentally altered the dynamics of international finance. Such changing dynamics raise concerns among many of us about the manner in which a sizable portion of gross savings in Asia finds its ways into financial obligations of the developed markets before they are recycled back to Asia. As the capital inflows into the region tend to be more volatile, the recycling process may have implications on monetary and financial stability in the region. Another aspect of the dynamics of international finance is contagion. World interest rates have until recently stayed at record lows. In search of higher yields, hedge funds and other institutional investors have scoured the world for assets generating higher returns, driving up asset prices and driving down credit spreads. As the interest rate outlook has become uncertain, fund managers may be reassessing the risks of emerging market assets, as reflected in the recent correction in world equity and commodity prices. A sudden exit of capital could leave those economies with weaker financial systems even weaker, with spillover effects on other parts of the region.

This is not only the case for economies like ours here in Hong Kong where financial services constitute a substantial proportion of GDP, but equally for economies that rely on other sectors, be they manufacturing, mining, or agriculture, for the bulk of economic activity. There are many reasons for this. First, a well-functioning financial system helps allocate capital to the most productive individuals, firms, and sectors through the process of intermediation between households that engage in savings and entrepreneurs who require funds to carry out investment projects. Second, broad financial markets permit risk sharing and diversification, thereby reducing the exposure of investors to idiosyncratic risks. Third, structured financial products allow the transfer of risk to entities that are most capable of bearing it. This makes it possible for economic agents to offload risks that they are not well equipped to deal with and specialize in activities which constitute their comparative advantage. Last but not least, a financial system makes it possible to shift purchasing power across time as individuals build up financial assets while they are working to sustain a comfortable living standard in retirement. Considerable progress has been made by many regional economies in revamping and strengthening the financial markets since the Asian financial crisis. However, there is still a general lack of diversity in the channels of financial intermediation, with a significant over-reliance on the banking system.