samchain/econo-pairs-v1 huggingface dataset:
Chart 7 shows how this has affected the rate of inflation in goods prices in the UK, which has picked up significantly in recent years – whether measured in terms of manufactured products at the factory gate or the goods which enter into the consumer basket. Chart 7 – UK goods price inflation Annual percentage change in prices 10 Manufactured goods producer prices 8  CPI goods inflation  6 4 2 0 -2 -4 1997  1999  2001  2003  2005  2007  2009  2011  Source: ONS One of the key challenges facing the MPC and other monetary authorities around the world is judging how far this surge in energy and commodity prices has yet to run and how farreaching its consequences might be. The tendency so far in many countries, including the  BIS central bankers’ speeches  7  UK, has been to treat this phenomenon as a series of one-off shocks. But the driving force behind it – strong growth in Asia and other emerging market economies – is proving quite persistent – as Chart 8 shows. Chart 8 – Emerging market growth remains strong Annual percentage growth rates of real GDP 10  Advanced Economies *  8  Emerging & Developing Economies *  6 4 2 0 -2 -4 1990  1992  1994  1996  1998  2000  2002  2004  2006  2008  2010  2012  *: 2011 and 2012 growth rates are IMF forecasts.

Until the early 2000s, energy consumption in the advanced OECD economies and in the non-OECD developing and emerging market economies rose at a similar rate, with the OECD economies accounting for the majority of demand. In the wake of the strong growth in the 2000s, this position has been reversed with the non-OECD now the dominant contributor to world energy demand. For example, China’s share of global oil consumption has risen from 6% to 11% in the past decade alone.4  4  6  International Monetary Fund (2011)  BIS central bankers’ speeches  Chart 6 – Global primary energy consumption Million tonnes oil equivalent 6500 OECD  6000  Non-OECD 5500 5000 4500 4000 3500 3000 2500 2000 1980  1983  1986  1989  1992  1995  1998  2001  2004  2007  Source: BP Statistical Review 2010 This pattern of upward pressure on energy and commodity prices has been particularly noticeable since the mid-2000s and it has had a significant influence on inflation in many countries – particularly affecting the prices of goods. The so-called “China effect”, through which the shift of production to low cost countries held down the prices of global manufactures and traded goods in the late 1990s and the first half of the 2000s, has given way to a period of higher global inflation, driven by rising energy and commodity prices.
Sterling’s recent depreciation will give a further impulse to import prices; and so, other things being equal, may stretch out the period of uncomfortably high inflation, endangering inflation expectations. Moreover, there remains a risk of continuing inflation impulses from the persistence of imbalances in the global economy. Global inflation, global imbalances and the international monetary regime The rate of nominal expansion in much of the emerging market world has remained brisk. From our point of view, up until recently that seemed to add to the upward impetus to commodity prices, exacerbating the upward pressure on our firms’ costs. Of course, part of the rise in commodity prices over the past few years is explained by a profound structural shift as the world economy is joined by large, rapidly developing economies which are increasingly energy intensive. In addition, nominal demand has probably played a role recently. Some EMEs have exchange rates that are fixed, more or less, to the US dollar, and so have been importing a monetary easing, which they hardly needed, as the FOMC cut the Fed funds rate to address domestic US circumstances. In other countries, there has also been less than complete sterilisation of the monetary effects of exchange rate intervention. Absent offsetting policy action, eventually the nominal expansion permitted will be dissipated in rising inflation and so an appreciation in real exchange rates.

Bastiat opined, “There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.”14 The same might be said of regulators. As regulators grapple with implementation of the voluminous Dodd–Frank reform act, the unforeseen must be taken into account. The law of unintended consequences is always lurking in the shadows. To get regulatory reform right, we have a lot of “foreseeing” to do. One can envision, for example, that the potential cumulative impact of the many regulations demanded by Dodd–Frank will be to artificially raise the cost structure of the non-too-big-tofail depository institutions. Imposition of the new requirements and restrictions risks creating new economies of scale in banking generated by the costs of regulatory compliance, many of which could be fixed costs not fully proportional to bank size. To the extent that a large scale becomes necessary to absorb the regulatory cost associated with reform, Dodd–Frank could intensify the tendency toward bank consolidation, resulting in a more concentrated industry, with the largest institutions predominating even more than in the past. Such an outcome would appear to me contrary to the stated spirit and goal of the act. A more consolidated industry would only magnify the challenge of dealing with systemically important institutions and offsetting their historically elevated too-big-to-fail status.
First, modern ATMs can more safely dispense notes of a physical quality that as the issuing authority I would not wish to see in circulation (for example, heavily soiled notes). This is a mundane point, but the latest ATMs are harder to jam, unlike their predecessors. On the whole, financial institutions do not dispense what we regard as unfit notes, even though their ATMs might be able to do so, but as the issuing authority we now have to pay more attention to ensuring that this does not happen. The second development represents the connection between the physical quality of notes and denominational mix. We have most difficulty getting our low denomination note, the £ into circulation. The main reason for this problem is that few ATMs dispense £ The link to quality comes about because once our £ enter circulation, they stay in circulation and exchange hands more times before they return into the wholesale cash distribution system for fitness sorting, and thus can be taken out of circulation as unfit or re-circulated as a fit note. Put simply, since there are relatively few £ notes entering circulation they stay in circulation and are not banked and fitness sorted as regularly as they should be. Chart 9 illustrates this problem. It shows over the last nearly fifteen years the trend in how many times per year on average banknotes of each denomination are processed through the wholesale cash centre fitness sorting process.

Pending the enactment of the new legislation, the Central Bank too issued as far back as 2001, ‘Know Your Customer’ (KYC) guidelines to all banks and urged adherence when dealing with clients and counterparties. We cannot however be satisfied with the results because it is unlikely that terrorism activity in particular, on the scale that has been unleashed in Sri Lanka, could have taken place if these measures to combat terrorism financing and money laundering had in fact been effective. We believe, the measures introduced have only marginally deterred terrorism financing from delivering such ill-gotten funds to destabilize our country, particularly before 9/11/2001. As many know, Sri Lanka has been crying foul for many years about fund raising for terrorism, taking place in many countries, where the funds were used to procure and supply weapons to wage terrorist activity in our country. Sadly, our pleas were not taken too seriously. But the world took greater note of this scourge after 9/11/2001. Fortunately for us, post 9/11, anti money laundering and terrorism financing measures were pursued with vigour at international level and these processes have been evolving rapidly in recent years. The international community has witnessed the use of increasingly sophisticated methods to curtail the move of illicit funds through the financial systems across the globe. Sri Lanka, naturally, was keen to support this global effort and soon established a comprehensive legal and institutional framework for anti-money laundering and combating the financing of terrorism.
The way in which the Riksbank can manage this type of risk when making monetary policy decisions is, in principle, to make changes in the interest rate sooner or later than would otherwise be assessed as the most appropriate timing, given the “normal” forecasts for inflation and the real economy. It is hoped that such a policy will contribute to a smoother adjustment process for house prices and help to avoid a more abrupt correction. One example of when this type of reasoning has been applied is at the monetary policy meeting in February. We then chose to raise the interest rate by 0.25 percentage points, which was also in line with market expectations, despite the fact that the forecasted inflation path showed the rate as being at the lower edge of the target margin two years ahead, and low for the majority of the forecast period. The inflation forecast as such could therefore have warranted delaying a few months before raising the rate. It is important to realise that this type of decision with preventive interest rate changes does not mean the inflation target has been “downgraded” or that we now have a special target for house prices. The reason is that we believe it is the best way to safeguard that we have been set to safeguard – stable prices while avoiding large fluctuations in the real economy. I do have some understanding for those who consider this type of consideration to mean that monetary policy becomes “discretionary”.

The high inflation rate was partly explained by rising energy prices, but prices of certain other goods had also been raised more quickly than before. Our assessment was that inflation would not change very much over the coming year and would then gradually increase as economic activity improved and there was a rise in the rate of wage increase. Our forecast was that inflation would be on target a couple of years ahead, on the assumption that monetary policy gradually became less expansionary in line with market expectations in June. International statistics received over the summer indicate that economic prospects look more favourable now than we had assumed in June. The signals regarding the US economy are mixed, however, and some indicate that growth will be weaker than expected next year. However, the picture for the euro area and other parts of the world is that developments have been slightly stronger than assumed in our earlier forecasts. With regard to the Swedish economy, the national accounts for the second quarter have confirmed our assessment in June that growth would remain strong. The statistics show that GDP growth during the second quarter was actually higher than our forecast. However, the development in the number of hours worked and the number of persons employed was weaker than expected, which reflected the fact that productivity growth had been much higher than anticipated. The new indicators received point to continued stable economic activity and to an improvement in the labour market in future.
1  2  These global pipes fulfill three functions :   international payments systems enable money to move at the click of a mouse – and incidentally mean that central bankers are no longer at risk of getting their heads blown off trying to effect cross border payments;    international securities settlement enables the ownership of financial assets to change hands quickly and safely, often without the movement or amendment of any physical documentation of ownership; and,    central clearing systems enable participants in international financial markets to manage the counterparty risks in financial contracts that can last for decades. “Clearing” of financial activity has a number of meanings. I am here referring to central clearing, to the central counterparties (CCPs) that manage the risks of financial contracts rather than to the clearing of payments. 3  Three points are worth highlighting about this global plumbing. First, it is true that it is almost entirely private sector built and owned either by their users or as independent profit-maximising companies. 1  Based on Bank of England calculations, using data from 23 jurisdiction. Data from Bank for International Settlements, ‘Statistics on payment, clearing and settlement systems in the CPMI countries: Figures for 2015’. December 2016. http://www.bis.org/cpmi/publ/d155.pdf 2 I have excluded Trade Repositories from this list; the Bank does not supervise Trade Repositories. 3 Financial sector participants in a network will have both claims on each other and liabilities to each other.

Clearing in its simplest and original form simply refers to mechanisms for adding up each member’s claims and liabilities to the other members before settlement so only the net amount is paid or owed. The earliest clearing houses were places where banks literally put the receipts recording their respective claims and liabilities on the table at the end of the day so they could be netted off against each other. Such clearing mechanisms still operate in some payment systems though the most important payment systems that settle the highest value payments nowadays operated by central banks work on a gross basis in real time to reduce risk. (Real-time gross settlement of high value payments allows immediate, final and irrevocable settlement of obligations across central bank accounts.) However, we still talk of payments in a currency ultimately ‘clearing’ across the books of the central bank of that currency, for example as in ‘dollar clearing’ across the books of the New York Fed. Central clearing, however, does not mean the clearing inherent in payment systems but the infrastructure that allows financial market participants to manage the risks they face from their counterparties in financial contracts that can last for months or even decades.
Not only are government finances in considerably better condition than they were earlier (in fact, Sweden is one of the relatively few EU countries, which, according to the EU Commission can be expected to have a budget deficit in 1997 that complies with Maastricht targets with a margin), but also Sweden has a large current account surplus and the inflation forecasts are positive. Despite that, the krona has depreciated by 6 to 7 per cent in effective terms since October last year. How should monetary policy handle such a situation? We can use ‘open-mouth operations’ and inform the markets and other players of our assessment of what has been happening. Maybe this can influence developments in some measure. If the krona’s downward trend cannot be stopped, it will eventually have an effect on demand -- something the Riksbank has to take into account when the instrumental rates are decided. Accordingly, a depreciating exchange rate is an important factor that can affect the estimate of future inflation and thus the direction of monetary policy. Target Variable To conclude, I intend to discuss a few issues that have to do with the design and interpretation of the price stability objective. The line of argument I am going to take can hardly be perceived as controversial. Even with the general support for a price stability objective that has been achieved, a number of questions of a more practical nature concerning how monetary policy should be implemented remain.

The Exchange Rate In small, open economies, the exchange rate has an important influence on inflation. At the same time, it is a variable that has fluctuated considerably in recent years for reasons which have not always been easy to foresee and interpret. How changes in the exchange rate should be handled in practical policy depends above all on how lasting a change in the exchange rate is judged to be. More enduring changes that have an effect on inflation forecasts obviously have to be taken into account In order to decide on the duration and what is a reasonable reaction, one normally has to know what brought about the change. Several different cases can be discerned: A nominal change in the exchange rate can be a result of a change in the real equilibrium exchange rate. This case is in principle simple to manage since it normally does not lead to a changed picture of inflation and thereby does not occasion any specific policy measures. Changes in the real equilibrium exchange rate have not been an especially common reason for changes in the exchange rate in recent years, at any rate since the krona fell in connection with the changeover to a flexible exchange rate in 1992. A change in the nominal exchange rate may also have to do with a change in the long-term view of the steadfastness in economic policy, or what is termed credibility.
Unlike other countries, where credits extended to the private sector reduced in certain periods after the crisis, in Macedonia credit flows were constantly growing and currently credits are 1.5 times higher than before the crisis. The average credit growth from 2008 to 2014 was almost 6% which is well above the average for the region of about 1.8%, and certainly above the average for the Euro-zone, where lending decreases. Credit growth accelerated particularly in 2014, and in November this year it was close to 10% on an annual basis. The fact that the banking system is in excellent condition, with a capitalization rate of over 16%, with high liquidity and low reliance on external funding sources, explains the current room for lending. We expect the solid credit support to continue in the medium term, supporting growth. What are our expectations for the economic growth in the period ahead? Although foreign demand suffers downward adjustments, our estimates for the growth of the domestic economy in the next period point to solid performances. Considering the solid economic growth that is already certain to take place in 2014, and the assessments for further support of the growth through foreign and public investment, our estimates point to an economic  2  BIS central bankers’ speeches  growth of 4.1% in 2015 and its acceleration to 4.5% in 2016.

Although the initial effects of the Ukrainian crisis are perceived as limited to the affected countries and countries in their region, further deterioration of the situation could lead to expansion of the second-round adverse effects globally, particularly in the case of disrupted production/transport of gas and oil and escalation of the sanctioning and counter-sanctioning measures, which would especially violate global trade and financial flows. On the other hand, a more severe turmoil in the Middle East could lead to significant disruptions in oil production and consequently, to a sharp rise in oil prices. The probability of lower growth of the Chinese economy in the short run, as a result of significant adjustments on the real estate market also poses a risk to global growth. From the perspective of emerging economies, major risk factor is the time and the pace of increase of the Fed’s policy rate. Namely, if for some reason (such as a revision of the assessment of capacity utilization in the US economy) the Fed’s policy rate increases faster than the expectations of market participants, it would increase the volatility of the financial markets and would trigger capital outflows, especially from the vulnerable emerging economies. Such outflows and pressures on the exchange rates of emerging countries could also be caused in the event of adverse economic and geopolitical developments in global terms, which would lead toward increased global risk aversion and resorting to “safe” assets.
The results of this appropriate policy mix, which placed the burden of the response to the crisis on the shoulders of the SNB, can be seen in the remarkable accounts of the Swiss general government: public surpluses in both 2009 and 2010 (+0.8% and +0.2% relative to GDP, respectively) and a reduction of the debt level to less than 40% of GDP.11 One reason for the misperception is probably the view, propagated by the academic literature on the subject, that central bank interventions in foreign exchange markets are geared to achieving an exchange rate target and that they are generally unsuccessful at doing so. As has been repeatedly emphasised, this was not the objective for the SNB in 2009–2010.12 The SNB’s objective was to provide appropriate monetary conditions to the Swiss economy. A given exchange rate level in that context may be maintained for a limited time period, but it is subject to review as macroeconomic conditions evolve. And as the SNB’s experience in 2009 demonstrates (illustrated in Chart 7), influencing the exchange rate level temporarily is feasible and makes sense at the zero lower bound when the traditional monetary policy instrument is exhausted. III. Conclusion: how to judge whether interventions were successful? All actions by the SNB have to be considered in the light of its mandate. The primary goal is to ensure price stability, while taking due account of the overall economic situation. In this way monetary policy contributes to creating an environment that fosters prosperity and economic growth.

Another important area is to raise the professional standards of the industry that reflects the highest standards of professional conduct, knowledge and competence. In this regard, the grand design of the industry, the Financial Sector Blueprint, clearly emphasized on the need to develop talents across all levels of an institution, spanning from the entry level to senior management and the board of directors. Indeed, a holistic talent development and management is a good example of an initiative that combine art with science which a visionary institution must be able to master to achieve its goals. The second imperative is the ability of the industry to effectively leverage on technology to build strong, innovative and competitive businesses. This includes developing a deep understanding of how changes in technology impact people’s lives and transforming how consumers and investors behave and view the value proposition of businesses. For instance, mobile phone penetration in Asia alone makes up 52 per cent of total global penetration. The highly developed telecom markets of Asia with 3.6 billion people across Asia having mobile phones spread across a diverse range of markets, capitalising on mobile data/wireless broadband services would mostly likely chart the way of the future. Growth across Asia in high speed access to the internet by mobile wireless devices has been largely driven by highly competitive markets combined with a general population who are prepared to embrace new mobile technologies.