samchain/econo-pairs-v1 huggingface dataset:
It means being able to integrate and think critically when there are only pieces of information. It means being able to provide breadth of perspective anchored by depth. For us in Bank Negara Malaysia, mastery of economics and finance is what helps us differentiate the ‘signal’ and the ‘noise’ in economic policymaking and financial regulation. It also helps us to differentiate the symptom and the root cause in the supervision of financial institutions. It also means learning the lessons from history and avoiding the same mistakes within the context of our operating environment. Thus, I encourage you to focus and follow your curiosity in exploring the depths of your field of study. There is no end to learning, and may your thirst for knowledge drive you on. Have the humility to recognise that we never stop learning. As a Chinese proverb goes, “Learning is a treasure that will follow its owner everywhere.” Second, on adaptability. Charles Darwin famously reminded us that, “It is not the strongest of the species that survives, nor the most intelligent, it is the one that is most adaptable to change.” This means one must be able to constantly learn new things. One must also unlearn things that have become outdated. No one can really be certain on the precise impact of automation, artificial intelligence and the new industrial revolution 4.0 on future jobs and the complexion of society.

Jarle Bergo: Monetary policy challenges and experiences in Norway Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), for the Norwegian Shipping Club, Oslo, 4 September 2006. Please note that the text below may differ slightly from the actual presentation. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 16 August, Inflation Report 2/06 and on previous speeches. *  *  *  Introduction Monetary policy in Norway is oriented towards low and stable inflation, with annual consumer price inflation of close to 2.5 per cent over time. In its conduct of monetary policy, Norges Bank operates a flexible inflation targeting regime, so that weight is given to both variability in inflation and variability in output and employment. Monetary policy functions through an interaction with other components of economic policy. Among other things, this interaction must take into account that the Norwegian economy is exposed to strong external influences, particularly through developments in oil and gas prices. Oil gives us an economic asset that is not available to many other countries, but it also poses considerable challenges. First, when oil is extracted and sold, our national wealth is transformed from petroleum wealth into financial assets. Norway’s national wealth belongs not only to our generation, but also to future generations. The authorities must therefore exercise fiscal discipline, taking into account long-term considerations. Moreover, the size of the cash flow from petroleum activities varies considerably.
One of the most important and immediate consequences would be impact on trade finance which is a critical issue for emerging economies and Asia. This is because our economies and financial structure is more dependent on it, compared to some western economies. Let me elaborate. International trade is a major driver of GDP as our export is part of the global and increasingly integrated regional supply chain. However, many of our exporters are SMEs not large conglomerate. These local SMEs rely on bank financing, as our financial system remains more bank-based than market-based. Supplier of trade financing is still banks in western countries, especially European banks. The deleveraging of European banks can reduce the supply of trade financing and impact growth and development. To address this, it is important that Basel Committee recognizes that trade financing has relatively large impact on Asia, compared to the western economies for which Basel III is mainly geared. Treatment of trade financing in leverage ratio framework will create incentive for banks to shift away from trade financing towards other types of financial transactions, including derivatives which have lower impact on leverage ratio, but can earn higher return. This is because they are assigned lower credit conversion factor even though trade financing is less complex, more familiar, has low liquidity risk as they are self-liquidating, and most importantly, it clearly serves real sector. We believe these rationales argue for a more appropriate treatment of trade financing to ensure that the Basel III framework is appropriate for Asia.

These forces will shape the demand for financial services and supporting infrastructure going forward. The key outcome would be demand for broader set of financial products and services to serve regional cross-border trade and investment. The economic growth and growth of wealth in Asia will require better wealth management services. So, we have come full circle. The simple banking model that has served Asia well so far will not be adequate to serve our growing future needs. So our banks will have more products, more complex risk profile, more interconnected with global capital market, more reliance on IT infrastructure. The regulations being discussed at Basel and FSB will become increasingly relevant to us. BIS central bankers’ speeches  3  To go forward, we need to create a trust in risk management system and supervision, not just in our country but also our neighbors in Asia. Having a global standard is a help in fostering this trust, if we and our neighbors adopt the same standard. The challenge also is that we also need to make the standard appropriate for us. To do this, both banks and regulators across the region need to work together. This symbiotic relationship is how we get the Trust and healthy dose of skepticism to keep our financial system safe and efficient. Thank you. 4  BIS central bankers’ speeches
If they shift upwards in tandem, the interest rate differential between long-term Swedish interest rates and interest rates abroad does not change, and there is thus no large krona appreciation. According to one of the interpretations of the main scenario, the assumption is thus that longterm market rates abroad are much higher than the prevailing observed market rates. According to the other interpretation, the assumption is that long-term market rates abroad will rise gradually in pace with Swedish long-term interest rates. It is not clear from the Monetary Policy Report which interpretation is correct. The questions regarding the two interpretations have not been thoroughly analysed. Unrealistic assumption regarding foreign policy rates In both of these interpretations of the main scenario the high TCW-weighted foreign policy rate path plays an important role. Behind the main scenario’s TCW-weighted repo rate path lies the assumption, in my opinion an unrealistic one, that the Federal Reserve, the ECB and the Bank of England will start to raise their policy rates sooner than is indicated by prevailing market rates. For example, both the Federal Reserve and the Bank of England are assumed to start raising their policy rates within a year. If one is to produce a forecast for foreign policy rates that deviates from market pricing, I believe that great emphasis should be placed on the assessments made by the Federal Reserve, the ECB and the Bank of England themselves, as well as on the signals they give.

Had there been one, the Northern Rock recovery plan should have challenged the management and the Board on how its business model could adapt to and survive the closure of its key funding markets, given the sheer scale of its dependence on securitisation. Likewise, how could it have handled a serious stress when it had pursued a business model of aggressively taking market share by squeezing its net interest margin and accepting more borrower default risk? And then moving further into the guts of the bank, how would it deal with stress to a funding model where the bank was excessively dependent on cash deposits from the securitisation master trust but with a hard rating agency trigger linking that funding to the position of the bank, thus creating a severe amplification of any stress? Finally on Northern Rock, how would the bank deal with a funding stress when it was having to encumber such a high proportion of its good quality assets in order to over-collateralise its securitisation master trust? A very good example of the need for resolution plans is the case of Lehmans in Europe. Two questions are relevant here: what should the resolution plan have contained; and what changes to its organisation and operations might have made the massive task of dealing with Lehmans more straightforward? You will, I hope, appreciate that I can only scratch the surface of the Lehmans case in the time available so I apologise for the laundry list approach.
The challenge faced by central banks is to establish a framework that combines both price and financial stability as primary mandates and identify the policy instruments to target both, even at times they seem to conflict with each other. 2  BIS central bankers’ speeches  Central banks have typically calibrated short-term interest rates as their primary policy instrument to determine their monetary stance. Since policy rates are too blunt instruments that affect the entire economy, using them to achieve both of these targets may lead to unintended consequences. The level of interest rate required to ensure price stability can differ from an interest rate needed to preserve financial stability. For example, during boom periods driven by productivity and financial innovation shocks, a low policy rate would suffice to contain inflation; yet the very same level of interest rate may still lead to accumulation of financial risks. Moreover, during boom periods, emerging markets typically attract large capital inflows even with reasonably low level of interest rates. In such periods, the external and internal equilibrium requires different interest rates and monetary policy has to use more than one instrument. The “Tinbergen Rule” suggests that one instrument could be employed to achieve only one target, which in our case is conventionally recognized as price stability. There is clearly a need for a second set of policy tools. This second instrument, in my opinion, may be in the form of macro prudential tools that directly address financial activities.

Bowing out gracefully: LIBOR’s retirement draws near Speech given by Andrew Hauser, Executive Director, Markets  Risk.net LIBOR telethon 8 December 2020  I am grateful to Tom Horn for his help in writing these remarks, and to Andrew Bailey, Sarah Breeden, Sarah Hall, Alastair Hughes, Maggie Illingworth, Alieda Moore, Dave Ramsden and Edwin Schooling Latter for their comments and guidance. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Introduction I want to start by thanking Risk.net for organising a really fantastic event today. As a child of the 1970s and 80s, I have to confess the word ‘telethon’ conjures up slightly uncomfortable images of Dick Emery, Ed ‘Stewpot’ Stewart and the Krankies. But it’s really worked a treat today – even if Terry Wogan’s strange Blankety Blank microphone is inexplicably absent… Telethons are usually about raising money for good causes – but LIBOR is the exact opposite. A number whose apprenticeship began in the syndicated loan markets of the late 1960s, and worked its way up into every part of the financial system in the decades that followed,1 is now well and truly in need of retirement. The unsecured term interbank lending markets it seeks to measure barely trade, even in calm conditions. And when things get rocky, they don’t trade at all – as we saw in March.2  A rate like that simply can’t provide a robust backbone for the global financial system.
And finally, a bank needs a process to ensure that the results of stress tests receive the high-level attention necessary for the bank to respond effectively to the results. In the near term, supervisors also must re-examine how they think about concentrations. One lesson from the recent turmoil is how correlations in market prices arise from previously unsuspected linkages: countries with similar government debt structures or similar exchange rate regimes, institutional investors with similar risk strategies, and instruments traded with widely different customers, but with a common element of market risk, such as a countryrelated risk. Stress testing also can be useful in identifying such concentrations, particularly when accompanied by thoughtful analysis from bank management. These issues will be addressed in the ongoing work of the Committee on credit and liquidity risk management. In two other areas, we have begun work, but the magnitude of the efforts will involve more time. The first area is capital. The added focus on stress testing by banks and by supervisors should also influence how supervisors evaluate capital adequacy at banks. As banks are developing risk management and stress testing approaches, some are beginning to look at how they determine whether their capital is adequate to absorb losses, including losses under reasonable stress scenarios. One lesson from the current environment is the enormous size of market movements that are possible in such a stress scenario—whether in currency or equity markets or in credit spreads, and how quickly losses from even small positions can mount.

Realizing the value from these assets while winding down the less viable aspects of the business may be one way for the bank itself to manage its own market exit. As a second line of approach, banking supervisors had resolution procedures and the necessary statutory powers to take over failing banks and resolve them. This almost always involved the need for additional capital and funding. In many cases, the banking agency or deposit insurer could sell off deposits and other elements of the franchise in such a way that continuous service could be offered to customers. Since the banking agency or insurer often was left with the bad assets, workout expertise was required to realize value from them. Throughout these steps, supervisors need to work with troubled banks in a constructive manner, just as banks should deal with troubled customers. If the supervisory process is too harsh, the supervisor will exacerbate the stresses on credit and liquidity in the financial system. Bank supervisors must have the tools and the determination to make steady progress in terms of recovery or to seek resolution through merger, sale or the winddown of the bank. The process of workout may be deliberate and patient, but it must move forward as quickly as practicable and not be permitted to stall. Only then can the normal flow of credit and liquidity in the financial system be maintained.
My fourth bit of advice is to continue to build your human capital. That means seeking out jobs and opportunities that give you new experiences and skills. Keep up with your mentors and continue to cultivate relationships and build your network. Education isn’t just about college course work, it should be a lifelong experience. If your employer asks you do something new – don’t shy away from it. Instead, think of it as a wonderful deal: Your employer is going to pay you to deepen your skills and knowledge base. You will be paid to become more valuable. For me, the ability to build my human capital has happened – in spades – several times. The first occurred here at New College and at Berkeley for graduate school. Here I learned to really read critically and how to write – the one literature course that I mentioned earlier notwithstanding. The second was the opportunity early on in my career to become involved in macroeconomic forecasting and policy analysis. Up to that point, I had been a regulatory economist. I had only taken one course in macroeconomics in graduate school and it was the only course on which I received a “B” grade – I had not revealed any great affinity for that subject. At first, the work was stressful. When people asked me questions, I wasn’t sure whether I was supposed to know the answers or not. At first, I felt quite ignorant, but eventually that passed.

The big swing from inventory liquidation during the recession back to accumulation will soon end as inventory levels come back into better balance with sales. And fiscal stimulus from the federal government is subsiding and will soon reverse. Coupled with the benign outlook for inflation, these headwinds to growth and employment explain why the Federal Reserve is keeping short-term interest rates unusually low. We want to do all we can to support more rapid economic and employment growth, subject to keeping inflation low and stable, and inflation expectations well anchored. The situation has improved and total employment is now growing – for example, U.S. payrolls rose by 290,000 last month. But we are still far from where we want to be. In this environment, finding a job will be tough, but when you hit the pavement remember that the job market is improving. Don’t get discouraged. Get your foot in the door by doing something productive, even if it may not be exactly what you want to do for the rest of your life. Gaining knowledge and experience is what is important at this point. The first job out of college is a foot on the ladder – the job doesn’t have to be perfect to be valuable to you. A bit of advice In terms of your career, my first bit of advice is: don’t rush. There is plenty of time for your careers to unfold. It’s not a sprint, it’s a marathon.
I see no appetite to tear those up and start again from a blank sheet of paper, given the huge investment we have all made in their adoption. And broadly Solvency II has served the UK well – as evidenced by the resilience of your firms through the pandemic to date. But the regime is in my view somewhat over-specified, and it also does need tailoring in places – particularly on the Life side. It is common ground between us that the risk margin is not correctly calibrated, resulting in levels of offshore reinsurance of longevity risk in the provision of UK retirement income that will become increasingly uncomfortable over time if we take no action. The risk margin will come down from current levels, and become less volatile. But for us risk margin reform in isolation is not synonymous with discontent about the overall levels of capital in the system. We have not seen persuasive evidence that this is either too low or too high: I discussed the health of returns on equity briefly earlier; nor do I see evidence of current capital requirements meaning that demand for insurance goes unmet. Some big numbers are being bandied about in lobbying for an overall weakening of prudential standards. I have to say that I think these numbers – being based on multi-decade forecasts – are a little speculative.

In general, the direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances shall not be taken into account in Norges Bank’s conduct of monetary policy. We therefore look at different measures of underlying inflation. The chart shows inflation adjusted for tax changes and excluding energy products, CPI-ATE, and two other measures. This does not provide a precise measure, but an interval for underlying inflation on the basis of the different indicators. A weakness of the CPI-ATE as a measure is that the variable has not captured the higher rise in energy prices compared with the rise in prices for other goods and services in recent years. Over the past two and half years, underlying inflation has been fairly stable and is estimated at between 1 and 1½ per cent. The indicators of underlying inflation have recently been in the upper end of this interval. 2  BIS Review 47/2007  The fall in inflation in 2002 was attributable to an increase in imports from low-cost countries and a strong krone exchange rate. Prices for imported consumer goods fell sharply. In 2003, slower growth in both Norway and other countries also pushed down the rise in prices for domestically produced goods and services. In addition, competition was intense in many industries. In 2005, inflation appeared to be rising, but abated again in 2006, primarily reflecting the low rise in prices for domestically produced goods and services.
Despite this, we have been able to significantly increase resources in our main fields. We now have a lot more people working on analysing issues related to monetary policy and financial stability than we had ten years ago. The academic level has also been raised substantially, which can be noted, for instance, in the fact that we have a much higher percentage of employees with postgraduate research degrees than we had ten years ago. The emphasis on openness has also had clear consequences. We publish a comprehensive report showing the reasoning behind our interest rate decisions, the Riksbank Governor attends hearings at the Committee on Finance and members of the Executive Board travel around the country taking part in discussions and giving information on the Riksbank's work. In studies of central bank transparency, we are regularly ranked among the top few (Figure 6). In my opinion, this openness has been a central issue in gradually building up confidence in the Riksbank and its inflation target. It is also important to make it possible to regularly examine the Riksbank’s work in a serious manner. One indication that we are on the right path to achieving a solid monetary policy regime is what happened when Urban Bäckström announced his resignation in May 2002 and when I myself did the same thing a couple of weeks ago. In neither case were there any significant effects on either the exchange rate or interest rates.

Of course, I was a little uncertain as to whether I should just be pleased about this. But I think there is reason to be; it shows namely that we have a monetary policy regime which is stable and not dependent on single individuals. Inflation targeting – some thoughts on the future As I have mentioned, the macroeconomic outcome for Sweden has been relatively good over the past decade. Of course, this does not prevent there being questions worth discussing and much that can be improved. This also applies in the field of monetary policy. An important question in this context is what one can expect from monetary policy. If the expectations are excessive, there is a risk they will lead to the wrong issues being discussed and, if the worst comes to the worst, to political discontent that will undermine the current monetary policy system. Reasonable expectations According to the Sveriges Riksbank Act, the Riksbank is to safeguard price stability. We have chosen to implement this by keeping inflation at a target level of 2 per cent. The fact that the legislator has been clear that low inflation should be the target for monetary policy and nothing else, such as high growth or low unemployment, is because inflation is the only factor the Riksbank can govern in the long term. It is therefore unwise, and perhaps even counterproductive, to give a different impression.