samchain/econo-pairs-v1 huggingface dataset:
THE BATTLE FOR RELEVANCE*  Assalam-o-Alaikum and a very good morning to you all. It gives me great pleasure to welcome you today to this international banking conference. I would like to start by expressing my deepest gratitude to His Highness the Amir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah for his patronage of this conference. It is the guidance and wise leadership of His Highness that has enabled us to build one of the region’s safest and most robust financial systems, which has played a vital role in the development of our economy. I would like to thank all the honorable governors of central banks, heads of regulatory authorities, heads of financial institutions and other distinguished guests for joining us today. And I am grateful to all the distinguished speakers who are participating in this event, our local banks who have partnered with us to support this conference and my dedicated colleagues at the Central Bank of Kuwait (CBK) for their efforts in organizing this conference. The banking industry has enjoyed exceptional growth over the past half century, and despite some shortcomings, it has played a critical role in supporting economic growth around the world. During normal times, one would expect banks to continue operating as they have in the past, with perhaps a greater focus on product innovation or operational efficiency. But we are not living in normal times.

This is why we have taken an ambitious experimental approach to a CBDC: we are currently in the process of finalising our programme of experiments on an “interbank” or “wholesale” CBDC, to test whether and how it could improve the performance, speed, transparency and security of transactions between major financial players, especially for crossborder payments. In parallel, the Banque de France is closely involved in the investigation phase launched by the Eurosystem in July for the retail digital euro, which would be used by the general public in everyday payments. However, a CBDC is not the only, or indeed the most urgent instrument we need to use. 2/5  BIS central bankers' speeches  We also regard regulation as a priority, because the smooth functioning of our payment system depends, first and foremost, on a regulatory framework that is clear, fair (“same activity, same risk, same rule”) and balanced – in other words capable of encouraging innovation and at the same time maintaining the stability of our payment system. This is why we have welcomed and are supporting the proposed Markets in Crypto-Assets (MiCA) regulation and the Digital Operational Resilience Act (DORA), presented in September 2020 – even though there is still room for progress on these texts in order to reconcile pragmatism and flexibility with the necessary requirements in terms of risk control and the prevention of regulatory arbitrage. Moreover, other regulatory changes will have to be introduced which are also very important.
  Are capital flow restrictions better conceived as a temporary or permanent measure? On the one hand, temporary measures might better reflect the need to respond with exceptional measures only in exceptional circumstances. On the other, nesting capital restrictions within a pre-agreed framework could improve the credibility and predictability of these measures among international investors.   Should differing rules of the game apply to different sources of capital inflow (foreign direct investment versus portfolio flows versus banking flows)? And should different rules apply to flows of different maturity (short versus long–term)? Different sources and types of capital are believed to behave very differently during capital upswings and downturns (IMF (2011)). It would be odd for public policy to ignore those behavioural differences. 8  BIS central bankers’ speeches    What are the respective roles of capital restrictions and macro-prudential policy? At present, the two are viewed rather differently, with views on capital restrictions mixed, while macro-prudential policies are increasingly the consensus. Yet these two sets of tool may differ more in detail than in principle. Macro-prudential policies may also have a role to play in moderating credit growth in the source of capital surges – the advanced economies.   What are the respective roles of capital restrictions and financial market deepening as responses to the BFSP problem? One policy option for emerging economies is to strengthen and deepen their domestic capital market infrastructure, so that it is better able to absorb and intermediate incoming foreign capital.

(a) Excluding Saudi Arabia due to unavailability of data. (b) Weighted averages use each country’s equity market capitalisation as weights. (c) Numbers may differ slightly to those in the text due to rounding. 20  BIS central bankers’ speeches
It won't be a "cliff decision": a realisation phase will instead aim at preparing gradually and with experiments for a possible issuance by 2027. In a complementary manner, since 2020, the Banque de France and the BIS Innovation Hub have been conducting experiments on a wholesale CBDC, which attracts less public interest but has strong business cases. Today, I say this to commercial banks: don't be afraid! If a CBDC is needed and decided as a matter of public interest, don't oppose it. But participate actively in setting its designing, its parameters and mode of operation. There is no question of disintermediating existing or future private financial players. Money has for centuries been a positive and innovative partnership between public and private players. Notwithstanding our sometimes unwarranted old fashioned image, we central banks are keen to continue succeeding in our innovator's role with the private sector, not work against it. All economic agents need an anchor that guarantees the trust in the value of money, and central banks are the only ones fully able to preserve it. * ** To conclude, we are about halfway through a fascinating bildungsroman that has already offered many surprises, and will probably offer many more. As a committed reader and even stakeholder in this novel, I strongly hope that the plot overall unravels in the consistent way I described earlier.

The Bank’s sermons on the storms ahead would have had more influence if at the same time a collection plate was passed round the congregation so that money was available in the event that the church roof had to be replaced. But a macro prudential regime also has a key role to play in the downswing phase of the cycle. Since 2008, credit conditions have tightened, jeopardising the recovery and, in turn, threatening renewed losses for banks. By allowing banks to draw on their macro prudential capital buffers, while credit conditions remain tight, the system is counter-cyclical. In other words, a credible macro prudential regime could help forestall both excessive exuberance and unnecessary caution. By altering the pressure on the financial brakes according to circumstances, regulation, far from being an inflexible foe, would become a flexible friend. This type of regulatory regime, and its objectives and tools, are largely untried and untested. But that is not a reason for not trying and not testing. The Financial Policy Committee will be a first. Over the next few years we will put in place a framework for financial stability to  BIS Review 84/2010  3  parallel that for monetary stability. We need both. As we have seen, one without the other is not enough.
This is the last lesson I will refer to: globalisation has brought many benefits but, even if the right things have been done in one quarter, if others generate problems, such problems ultimately also affect those who did not create them and that is why we must respond to them. The turbulence on international financial markets has led some markets on which Spanish banks usually obtained additional financing, for instance the private fixed-income and securitisation markets, to dry up abruptly. The malfunctioning of these markets has affected everybody since investors, disillusioned with the complex products I mentioned earlier, have not wished to take the time to discriminate properly between different products. Whatever the case may be, the difficulties in gaining access to wholesale financing have posed a considerable management challenge. To date, the response of Spanish banks has been appropriate, partly because the structure of their liabilities is such that the wholesale financing raised in recent years, at a higher cost, has been predominantly with longer maturities, which now affords them greater freedom; and partly because they have been able to resort to alternatives, such as shorter-dated financing to cover their funding needs. These alternative ways of obtaining financing are somewhat temporary in nature, which is consistent with the high degree of uncertainty prevailing at present and which will conceivably not persist over time. Naturally, the potential impact of this situation on banks' financial position, and therefore on the Spanish economy, will largely hinge on the duration of the bout of turbulence.

The pertinent question to ask, therefore, is whether or not prudential regulation amplifies this natural behaviour by financial market participants. Before analysing the elements of procyclicality that Basel II and international accounting standards may contain, it should be stressed that this set of rules includes numerous positive  4  BIS Review 62/2008  elements. Basel II will entail, and is in fact entailing, notable progress in the management of the risks credit institutions face. Had Basel II been in force some years back, many of the dysfunctions currently lying behind the turbulence would not have taken place. Moreover, international accounting standards, and in particular the financial reporting standards adopted in 2005 by the European Union, contribute to the common goal of a single financial market, since it appears reasonable that companies operating in a single area should be subject to the same accounting rules. Returning to procyclicality, I must remind you that this was a very significant debate during the period Basel II was being prepared. Insofar as capital requirements are more sensitive to risk, it is reasonable to believe that procyclicality is greater, requiring less capital when things go well and more capital when they go badly. The Basel Committee on Banking Supervision was mindful of this and that is why the new regulatory framework for capital includes elements that mitigate it, both under Pillar 1 and under Pillar 2.
It is not the MPC’s job to control house prices, any more than it is our job to control share prices or the exchange rate; but just as we would not ignore the wider economic effects of a high exchange rate or a boom in the stock market, so we cannot, and do not, ignore the influence of soaring house prices on consumer spending and hence on the overall pressure of demand. Much attention has been paid to the historically high level of house prices relative to earnings, and what this might mean for the future path of house prices. A less discussed question - of more interest to you - is how much influence the current strength of the housing market is having on household spending; and what impact a weakening in the housing market might have on consumers. 2  BIS Review 41/2004  Healthy as household spending has been in the last few years, there has not a consumer boom on anything like the scale of the late 80s, when house prices last took off. Since early 1998, house prices have risen sharply relative to incomes; but household spending has only grown broadly in line with incomes. A buoyant housing market may still have had some influence on spending; and spending and house prices may have been influenced by some of the same factors. But spending and house prices do not seem to have moved together as closely as they have done in the past.

Rachel Lomax: Staying ahead of the curve - remarks on recent UK monetary policy Speech by Ms Rachel Lomax, Deputy Governor of the Bank of England, to the Annual Luncheon of the British Hospitality Association, London, 1 July 2004. *  *  *  It is a great pleasure to be here today. Judging by the capacity crowd, the businesses you represent are in pretty good spirits. What better way to start than by thanking you for your excellent hospitality. And what better place to celebrate an important double anniversary. Because that’s what today is, for me. It is exactly a year since I joined the Bank of England as Deputy Governor for Monetary Policy. And it is forty years, almost to the day, since I started my first job. I was a waitress: in a famous seaside town - the one that’s noted for fresh air and fun. It wasn’t much of a job. But then I wasn’t much of an employee, having no marketable skills, but plenty of attitude. I learnt how to carry several plates at the same time and a lot of interesting new words; and the job paid for a memorable holiday in Greece. Looking back on it, I’m sorry I left without giving notice: though I’m not sure my boss was. My work habits have improved immeasurably since those far off days. And so I think has British hospitality. The ‘eating out experience’ has certainly been transformed.
Increasingly, wealthy investors the world over are looking to spread the risks and enhance the overall returns on their investment portfolios. We are seeing this search for diversification and improved returns on investment amongst sophisticated investors from the Middle East and Asia. It provides an opportunity for markets in Asia and the Middle East which can offer wealthy investors with higher expected returns at acceptable risk. The demand side of the financial equation in our two regions is equally compelling. First, there are unprecedented demand for funds to finance infrastructure projects, across the region. In Southeast Asia alone, about $ 461 billion is expected to be spent over the next 15 years to upgrade infrastructure. This is not even looking at China and India. Likewise in the Middle East - the reconstruction of Iraq and Qatar’s infrastructural plans are each expected to cost $ 100 billion. Second, besides infrastructure finance, we are seeing huge growth potential in the consumer finance sector in our two regions. It is driven by a rapidly expanding middle-class, who want better housing, cars and other big-ticket items like middle classes anywhere else in the world. For instance, India’s “consuming class” will rise from the current 30% of households to 40% by 2010. Similarly in China, the “middle class” is set to double over the next 5 years. Facilitating greater financial flows between Asia and Middle East Financial services are therefore growing rapidly in Asia and the Middle East.

Asia is reducing its dependence on manufactured exports as the main driver of growth, and Middle East is seeking to reduce its dependence on energy exports. Both regions are strengthening their social, transport and economic infrastructures as they diversify their economies. The examples are all around us, like India and Indonesia’s major energy and transport infrastructure plans, Bahrain’s Financial Harbour project, and Qatar’s Education City. Finally, the appetite for prosperity is unshakeable among our younger generations. Young people all across our regions can see what economic growth brings, for their families and themselves, and for their communities. Whether their quest is for material or spiritual fulfilment, young people know instinctively that economic growth and better jobs will help them fulfil their needs. They want to move ahead, to educate themselves, and to give whole communities pride in what they can achieve - in science, in business and in culture. These aspirations of our young are probably the biggest positive for our regions. They will also bring us together over the long haul. BIS Review 47/2005  1  High savings will be increasingly intermediated within Asia and the Middle East On the financial side of things, the fundamentals are also solid in both our regions. First, the supply of savings in Asia and the Middle East is higher than in any other region of the world. Savings rates in Asia are expected to remain in the region of 35-40% of GDP for some years to come.
This has reduced business cost pressures and thus overall inflation. Third, the tighter monetary policy stance has nudged the level of output closer to its potential, thus preventing the economy from overheating. The positive output gap is projected to narrow from nearly 4% of potential GDP in 2010 to around 1% this year. MAS’ policy stance has begun to yield results. Both CPI-All Items inflation and MAS Core Inflation have eased from their recent peaks. •  CPI-All Items inflation has fallen from 5.5% in Q3 2011 to 4.0% in Q1 2013. •  At 1.6% in the first quarter of this year, MAS Core Inflation is running at nearly half the pace seen a year ago. BIS central bankers’ speeches  5  But there is no room for complacency. The pace at which business costs are passed through to consumer prices could pick up in the latter half of this year. MAS will remain vigilant in ensuring that the recent gains in controlling inflation are sustained. Macroprudential policies: augmenting monetary policy to promote economic and financial stability Let me move on now to macroprudential policy. This is the new buzzword in central banking circles. It has not been much referred to in Singapore, but we have been applying macroprudential policies for some time now. I will describe now the workings of macroprudential policies in Singapore, explaining why they are necessary in our context, and how they have been applied.

As I mentioned before, experience has shown, that in the long run, it is very difficult to maintain soft exchange rate pegs with the free movement of capital across borders. Iceland shares this experience with many other countries during the post-liberalisation face. The response to this has been the observed tendency to adopt hard pegs in the form of monetary unions or currency boards or to go in the direction of floating. As so many other countries, Iceland adopted the second route. This was done in March 2001 by a joint declaration by the government and the Central Bank. The principal objective as stated in the declaration, is to keep inflation as close as possible to 2½ per cent. Should inflation deviate from this target by more than 1½ percentage points in either direction, the Bank is to provide the government with a written public account explaining what caused this deviation, how the Bank intends to respond and how long it expects that it will take for inflation to return to within the targeted inflation limits. In the wake of this declaration, the Icelandic Parliament adopted a new legislation on the Central Bank, giving it one overriding goal, i.e. price stability, and full independence to use its instruments to achieve it. The new framework was immediately subjected to a baptism of fire. Overheating in the economy and the fall of the króna had rekindled inflation.
There have been sporadic exceptions, usually in times of crisis. One example is the coordinated interest-rate cut made by a number of central banks, including the Riksbank, on 8 October 2008, during the financial crisis. But as I said, these are exceptions. However, recently there have been discussions as to whether more international monetary policy coordination is needed even under more normal circumstances.26 In brief, the background is that the ongoing integration of the global financial markets means that large volumes of capital can be quickly moved to where the return is expected to be relatively higher. One of the driving forces behind these capital flows could be the policy conducted in large, leading countries. These flows can make it difficult to conduct monetary policy in the  26  See, for example, Eichengreen, et al. (2011), Caruana (2012) and Rajan (2014). BIS central bankers’ speeches  13  recipient countries and may have consequences for the economic and financial stability there. Some therefore feel they see a motive for international coordination of monetary policy. It should be emphasised that the debate being conducted has largely concerned emerging markets and the problems that have arisen there.27 However, the mechanisms as such are a matter of principle and advanced economies are also affected to varying degrees, particularly if they are small and open. My view is that Sweden is no exception. Interest rates are now determined to a large extent directly or indirectly by the conditions on the global financial markets.

Given the current aggregate household debt, interest expenditure would increase by SEK 30 billion.22 Households’ disposable incomes, which are expressed in a simplified manner as the result of salaries after tax plus capital incomes minus interest expenditure, are currently around SEK 1,900 billion. If we assume that incomes will remain unchanged, abolishing the tax relief would thus reduce households’ disposable incomes by around 1.6 per cent.23 A simple calculation shows that household consumption would then decline by 1.3 per cent. If one only uses consumption’s share of GDP, this corresponds to a 0.5 per cent lower GDP.24  21  Monetary Policy Report, July 2013. 22  At present, the average mortgage rate households pay is around 3.1 per cent, so that households pay interest of around 2.2 per cent after the tax relief of 30 per cent. If the tax relief were abolished, in other words, households’ interest expenditure would rise by around 0.9 percentage points. As households aggregate debt is around SEK 3,300 billion, this corresponds to an increase in interest expenditure of SEK 30 billion. 23  The ratio between the increase in interest expenditure and the aggregate disposable incomes, that is 30/1900. The effect on disposable income is here less than for our standard households as it is calculated on aggregate debt data for the entire population. 24  To estimate the effect on household consumption, one can use a so-called consumption equation, which relates changes in consumption to changes in wealth and disposable income.