samchain/econo-pairs-v1 huggingface dataset:
The precise objective of policy - even within the confines of the concept of price stability - remains a political decision: there will always be those who argue for a somewhat higher or somewhat lower target, and the fact that the Government endorses a precise target rather than just the vaguer goal of “stability” certainly strengthens our hand by allowing us to concentrate upon our essentially technical task. I am bound to say that in practice it seems to me to be rather a second order issue anyway given the narrowness of the range of definitions of “stability” that would carry conviction with the public, including financial markets. The Act confers the responsibility for meeting the Government’s inflation target specifically on a newly created Monetary Policy Committee, comprising myself as Chairman, the two Deputy Governors, two Executive Directors appointed by the Governor after consultation with the Chancellor and four members appointed from outside the Bank by the Chancellor. The Governors are appointed as members of the Committee for their full five year (renewable) terms; the remaining members are appointed for three year terms which are also renewable. The Committee’s policy meetings are also attended by a senior Treasury Official in the capacity of an observer, who may participate in the discussion - essentially to inform the Committee of any relevant aspects of the Government’s wider economic policies and explain the Committee’s thinking to the Chancellor - but he may not express a view on the monetary policy decision or, of course, vote on that decision.

Drivers of central bank balance sheets since the Global Financial Crisis I will start with some brief scene setting points – apologies that they are pretty obvious ones, but they are important. There has been a large and sustained expansion of most central bank balance sheets in the past decade. This has come about in support of both monetary policy and financial stability objectives. These respective drivers of balance sheet growth are closely intertwined – never more so than in the response to the Covid crisis – but distinguishing the causes and consequences is important nonetheless. Starting with financial stability, the Global Financial Crisis revealed banks had previously held insufficient high quality liquid assets, in part due to the inadequacy of the prudential regulation regime at the time. The changes since then, in regulation and in banks’ approach to managing risk, have resulted in a significant increase in the demand for central bank reserves, a large part of banks’ stock of high quality liquid assets. Thus, the level of reserves required by the banking systems in the major economies is persistently higher, though it is not straightforward to determine exactly how much higher. That depends on a number of factors that can change over time. Second, monetary policy has also undergone a major shift over the past decade, towards using central bank balance sheets as a tool to provide monetary stimulus, through the purchase of assets, usually government debt. These two reasons for increasing the size of central bank balance sheets coincided in time – i.e.
Quite apart from our own Hong Kong-specific initiatives, there are movements for reform at the international level, resulting from a very different experience in the more developed economies, which we cannot ignore. This point brings me to my second observation: the need to move with the times. The past year has seen a plethora of ideas and proposals for reforming financial regulations, and interventions by government that were unprecedented in their nature and scale. Even in economies less deeply affected by the latest crisis, including Hong Kong, it has been necessary to deepen government involvement, for example in more extensive deposit guarantees or in more intense supervision of banks' risk management – although it is gratifying that so many of the tools that we have been able to rely on, including the apparatus and contingency arrangements for ensuring liquidity, have been developed in a pre-emptive rather than a reactive way. On the various emergency measures, I am quite sure that in the fullness of time, these will either be turned into standing arrangements or withdrawn, hopefully through smooth exit strategies. But, current sentiment is clearly demanding much closer regulation and supervision of banks over the longer term. Quite what form this will take remains to be agreed on in international forums, although the thinking already seems to be towards improvements in the level and quality of banks' capital; new global standards for measuring, managing and supervising liquidity risk; and macro-prudential supervision to reduce the pro-cyclical dynamics of financial markets.

In 2006, a single digit inflation level was attained. Although inflation rose to double digit levels at the end of 2008 owing to the effects of the global economic crisis, we have since seen it return to single digit levels;  iii. The financial sector has also recorded tremendous growth since the commencement of liberal economic and financial policies in the early 1990s; and  iv. Equally, positive developments have been registered in the payment systems. I must caution, though. that sustaining macroeconomic stability remains a key challenge in the face of limited resources, infrastructure and financial inclusion. Ladies and gentlemen, as you participate in this workshop, allow me to underscore the importance, we in Senior Management attach to capacity building programmes for all Bank employees. I am reliably informed that during the workshop you will cover a number of important topics including the following: i.  Self awareness;  ii. Time management;  iii. Action or goals required to achieve a vision;  iv. Emotional intelligence and values;  v.  Power to take action; and  vi. Ability to manage direction successfully. BIS Review 107/2010  1  I am fully aware that some of the topics that you will be dealing with may not be entirely new to you, but I firmly believe that they may be necessary for purposes of reinforcing what you already know. You are all therefore implored to take keen interest in all the topics if you are to realise the full benefit of the workshop.
The fastest pace of sales in the previous business cycle was 17 million units for all of 2005. While there may be some additional upside potential to these sales given the quite long period over which they were depressed  2  BIS central bankers’ speeches  relative to fundamentals, it seems unlikely that they will continue to grow at the rate they have over the past few years. Housing is another area where the upside risks are likely to be less than what we might expect under more normal conditions. We have seen an impressive recovery of multi-family housing starts over the past few years. However, starts of single-family homes continue to languish at relatively low levels despite the fact that home prices have risen substantially over the past two years and mortgage rates remain quite low. Mortgage lenders continue to be extremely risk averse and mortgage credit to those with lower credit scores is still significantly constrained. There is nothing on the horizon that would lead me to believe that situation will change in a material way any time soon. Lastly, over the past few months the exchange value of the dollar has appreciated while growth prospects of key trading partners, particularly the Euro Area, have dimmed. Of course, the appreciation of the dollar is likely due in part to increasing confidence that growth prospects in the U.S. have improved. Therefore, this development does not mean we should abandon the consensus forecast.

Rather, as with the other issues I have discussed, I view this development as limiting the upside risk to that forecast. Despite the limiting factors discussed above, the pace of growth envisioned in the consensus forecast implies that overall labor market conditions will continue to improve. But there is a great deal of uncertainty about the resulting path of the unemployment rate, with some forecasters expecting a fairly steep decline to around 5 percent by the end of 2015, while others anticipate a much more gradual decline. In addition to how strong output grows, the ultimate path of the unemployment rate will also depend on the behavior of productivity growth and the labor force participation rate. The labor force participation rate has declined a great deal since 2007, the previous cyclical peak, due to a combination of demographic factors and protracted cyclical weakness in labor demand. The behavior of the participation rate and its likely future path is an issue we continue to monitor and study intently. While I still believe that the participation rate could move back up again as the demand for labor strengthens, I am less confident about this than earlier as the downward trend in participation rates has persisted even as the labor market has improved. What I can say with greater certainty is that there still is a significant underutilization of labor market resources. I come to this conclusion after assessing many labor market indicators, not just the level of the unemployment rate.
We created the Tracker Fund in a little under 6 months, from the time the EFIL Board recommended on 21st June 1999 that this was the way to launch the disposal programme. We did this at a time when market sentiment in Asia was just beginning to become less negative. If this were not enough of a challenge, we also had the shadow of Y2K hanging over us! By some miracle or rather due to the sheer hard work, long hours and perseverance on the part of the project team, we overcame countless operational, IT, legal and regulatory challenges thrown at us. Just to add to the degree of difficulty, we had to work in the full glare of the public eye, knowing that any miscommunication (however slight) could have a severely negative effect not only on our stock market but also on the international perception of Hong Kong. I have to tell you that making the decision to use an ETF as the disposal strategy was not an easy one. The strategy was then unorthodox and unproven in Asia, as was the investment appetite for such a product. The investment banking community was perplexed that we should launch an ETF when a block trade or a convertible bond option was so much more “familiar” or “safer”. Our legal advisers were perplexed that we should launch a fund through an IPO.

The Fund did encourage longer term investment into unit trusts and kick started the ETF market on the HKEx and elsewhere in Asia, where we now have a variety of ETFs covering a wide range of asset classes. The result has been the provision of more choice to investors, both retail and institutional, at lower cost than traditional unit trusts. As we enjoy our 10th anniversary celebration, I cannot help but wonder if the exit strategies currently on drawing boards around the world will be as successful as we were? Only time will tell. I wish you all a very pleasant day and once again many thanks to State Street for organizing this celebration. 2  BIS Review 142/2009
4  BIS Review 50/2008  Section IV: Lessons The recent turmoil has highlighted clear deficiencies in banks’ liquidity risk management. And it has also demonstrated that these deficiencies pose serious risks to financial stability and thus to the economy more broadly. To address this risk in the near term, central banks globally have provided additional liquidity to the banking system and emergency operations have been conducted to support Northern Rock and Bear Stearns. Additional liquidity has been provided at longer-term maturities to address the problem of funding an unexpected overhang of illiquid assets. The Bank’s recently launched Special Liquidity Scheme is enabling UK banks to liquefy a proportion of their outstanding stock of illiquid assets by swapping them for high quality liquid government securities, while ensuring that credit risks remain very clearly with the banks. That should ease current funding pressures. But in the medium term, it is clear that action is needed to strengthen the financial system’s defences to liquidity risk to limit the likelihood of any recurrence of the recent problems. Central banks globally are reviewing the lessons of the episode for their market operations, for example, to ensure that the usefulness of facilities is not undermined by perceptions of stigma that may be attached to a bank that uses them. But it is clear that primary responsibility for bolstering the defences lies with the banks themselves and that supervisory regimes for liquidity risk need reinforcing to support that process.

Stefan Ingves: Cross-border banking regulation – a way forward: the European case Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Conference on International Financial Instability: Cross-Border Banking and National Regulation, Federal Reserve Bank of Chicago, Chicago, 16 October 2006. *  *  *  Introduction It is an honor for me to address this distinguished audience on a very timely topic. I have spent many years dealing with distressed banks in my own and by now a large number of other countries. One conclusion I have drawn from this rather odd line of work is that efficient banking regulation is needed both to reduce the risk that banks run into problems and to minimize the externalities that arise if banks actually fail. At the national level, many countries – including my own – still need to implement regulations to ensure that these risks are fully mitigated. Let me also take this opportunity to congratulate the organizers on their choice of subject for this conference. The importance of the international dimension of the regulatory set-up is growing steadily. It is only now that many banks are becoming truly cross-border, with substantial retail activities in several countries. At the same time banking regulation, in terms of supervision, oversight, deposit guarantee schemes and responsibility for financial stability, remains predominantly national. This imposes additional challenges for financial regulators. These challenges are particularly acute in Europe given the rapid growth of cross-border banks on that continent. However, the issues raised are of global concern.
As you know, the Banco de España, in its various publications and in my own addresses, has upheld the view that the fiscal policy response to the pandemic should be decisive in the short term, to mitigate the adverse effects of the crisis on businesses, the self-employed and households, and to prevent a deterioration in our economic growth potential. At the same time, in order to rebalance public finances in the wake of the extraordinary shock caused by this crisis, an ambitious fiscal consolidation strategy for the medium term is needed; it should be defined swiftly, include rigorous and credible measures and address, among other factors, a comprehensive reform of the Spanish tax system. In my view, the economic recovery under way still shows clear signs of fragility and is subject to considerable downside risks, so that a widespread increase in the tax burden is not advisable at this time. For this reason, I believe it may have been preferable to delay the introduction of some of these measures until our economic recovery is more robust. As regards the main instruments employed to achieve this projected increase in tax revenue, I insist that in my view what is needed is a profound and comprehensive reform of our tax system. In addition, in many cases (such as, for example, the taxes on financial transactions and digital services), these changes must be approached in a coordinated manner internationally, to maximise their revenue-raising capacity and prevent competitive distortions or relocation of tax bases.

The consequence is that investors in search of these securities increasingly need to pay a premium, a specialness premium, which, broadly speaking, reflects the costs of the difficulty in finding a lender of the security. The premium will then depend on the scarcity of the underlying 3 / 10  BIS central bankers' speeches  asset and their holding structure: many of the residual government bond holders are unwilling to sell them, or will sell them at a higher price due to regulation or their own asset-liability management rules. You can see this on my next slide. Our asset purchases have coincided with a notable increase in the share of German bonds that trade “special” in the repo market, meaning they trade at a premium over GC rates. Before we started our purchases, typically less than 5% of bonds in the German repo market were trading special. In the second half of last year, this share increased to more than 50%. Year-end events, which I will come back to later, pushed their share even higher. You can also see that specialness did not increase immediately with the start of our purchases under the public sector purchase programme (PSPP) in March 2015. The reason might be related to potential non-linearities in the way supply changes affect market outcomes. That is, price effects from the flow of purchases may only become visible the moment supply effectively starts to constrain demand. Reverse supply effects are also clearly visible on the same chart.
We are also aware of the important role that the Development Bank of Zambia and others institutions that provide long term finance can play in this process. It is for this reason that the Bank of Zambia monitors the performance of these institutions to ensure that  2  BIS Review 53/2010  they are financially viable to be able to play this important role. Rather than thinking of Government recapitalising these institutions, we should think more in terms of developing the capital markets to enable these institutions raise resources for long term financing from the private sector. On the issue of the foreign exchange market, I wish to emphasise that we have a flexible exchange rate regime that has served us well after doing away with exchange controls in the early 90s. The exchange rate of the Kwacha against other international currencies has enjoyed relative stability since 2003 when the interbank foreign exchange market system (IFEM) was introduced. With this system, the Bank of Zambia intervenes in the market mainly to smoothen fluctuations and to build international reserves. The exchange rate is expected to be driven by economic fundamentals such as the terms of trade. An attempt to fix the exchange rate would have disastrous effects especially when the fundamentals suggest that the rate should depreciate as this would wipe out all the reserves we have struggled to build over the recent past.

And one segment where this may have a greater impact, and specifically alter the bankcustomer relationship, is that of payment services. Bank customers and technology: the payment services segment. Allow me to illustrate the changes emerging in this segment with a brief reference to the new Directive on payment services, known as PSD2, as I previously mentioned. 4/8  One of the most notable aspects of this Directive is that it definitively institutionalises the activity of the so-called third-party service providers, or TPP. The Directive acknowledges the right of holders of a payment account to expressly authorise a third-party entity, provided it is duly authorised, to order payments on their behalf and/or to consult certain information associated with this account. In the first instance, we are talking about what are known as “payment initiation service providers”, while in the second case they are called “account information service providers”. The latter offer users the possibility of gaining consolidated knowledge of the situation of the payment accounts the users have with different entities, thereby helping them with their financial planning. Conversely, payment initiation services arise as an alternative to the use of cards, for the payment of purchases made in e-commerce environments. They are consequently characterised by providing payment beneficiaries with the security that payment has been initiated correctly, acting as a spur for expediting the delivery of the good or service.
Experimental research over the past 50 years, by psychologists and neurologists, has taught us a great deal both about the determinants of patience and how it affects behaviour. This can perhaps provide insights into some of the historical drivers of a more patient, and hence higher growth, society. One important driver of patience is income and wealth. The lower income, the more impatient is human decision-making. 37 Why? Because surviving on limited means absorbs huge amounts of cognitive energy. 38 It causes a neurological focus on the near-term. This myopic thinking has been found in everything from under-saving for retirement to over-borrowing from pay-day lenders. In developing countries, it may help explain poverty traps. 39 During the Malthusian era, much of the population operated at close to subsistence income levels. If experimental evidence is any guide, that is likely to have generated an acute sense of societal short-termism. This may have manifested itself in, for example, a failure to invest in physical and human capital, retarding growth. Poverty and impatience would have been self-reinforcing, in a Malthusian poverty trap. The raising of incomes above subsistence levels which occurred after 1800 will have reversed that cycle. It will have boosted patience and laid the foundations for higher saving and investment and, ultimately, growth. In other words, after the Industrial Revolution patience may have created its own virtuous reward, endogenous growth style. Technological innovation has also been found to influence patience.

40 The invention of the printing press by Guttenberg in around 1450 led to an explosion in book production. It is estimated that there were more books produced in the 50 years after Guttenberg than in the preceding 1000 years. What followed was much more than a technological transformation. Books contributed to a great leap forward in literacy levels, boosting human capital. More speculatively, they may also have re-wired our brains. Nicholas Carr argues that the changes brought about by the printing press, and other information media, may have re-shaped our minds. 41 Books laid the foundations for “deep reading” and, through that, deeper and wider thinking. Technology was, quite literally, mind-bending. It has been argued that this re-wiring stimulated the slow-thinking, reflective, patient part of the brain identified by psychologists such as Daniel Kahneman. If so, it will have supported the accumulation of intellectual capital – creativity, ideas, innovation. Technology will have first shaped neurology and then neurology technology, in a virtuous loop. Slow thought will have made for fast growth. 36  For example, Clark (2009). 37  Wang et al (2011). 38  Mullainathan and Shafir (2014). 39  Bannerjee and Duflo (2012). 40  Carr (2011). 41  Carr (2011). 8  BIS central bankers’ speeches  It is possible to construct a quasi-neurological explanation of much-earlier shifts in growth. The world’s growth journey appears to have commenced, in earnest, around the time modern homo sapiens replaced Neanderthal man. Maybe that was no accident.