samchain/econo-pairs-v1 huggingface dataset:
I conclude that an exchange cross rate between Hong Kong and the Mainland which varies, or has the potential to vary, is not a problem for us, and this seems set to remain the case for the foreseeable future. The corollary to this is that there would be no advantage in attempting to hitch the HK dollar to the renminbi in some formal or permanent fashion. Other options? There are of course other alternatives which might be explored. For example, in a perfect world, if we were to set ourselves the narrow objective of sustaining our price competitiveness index at a particular level and we possessed a nicely calibrated model of the economy, and if we then applied suitable methodology, we could derive some formula for the optimal exchange rate, which would doubtless be different from that determined by the present regime, and we could then devise an operational strategy to deliver that exchange rate path. But this sort of desktop solution could be a nightmare in reality. Even if the empirical basis of the formula was entirely reliable (a wholly unrealistic assumption), imagine the possible consequences for interest rates or foreign reserves, and the practical problems in terms of operability, comprehensibility, transparency, credibility, financial market confidence, and so on. Such problems could be particularly acute, and the risks of such a strategy therefore correspondingly high, in such an open economy and open financial market-place as Hong Kong. I have deliberately exaggerated in order to make the point.

Over twenty-five years we have moved from monetary targets to an inflation target and from a medium term financial strategy to rules for fiscal policy over the cycle. Yet the essential objective of maintaining monetary and fiscal discipline remains the same. All major political parties in the UK now agree that stability is the key to economic success. We do not know whether the Great Stability will continue, as it has for more than a decade now. In part, it will depend upon whether our framework of inflation targeting can respond to the economic shocks that will undoubtedly be visited upon us in the years ahead. And that is the subject of my lecture. In only fifteen years inflation targeting has taken the central banking world by storm. Table 1 shows that there are now 22 countries in which monetary policy is based on an inflation targeting regime. So tonight I want to discuss what inflation targeting really means, why it has been successful in Britain and elsewhere, and what challenges it faces in the years ahead. The lecture tries to answer three questions. First, what can monetary policy do and how has our understanding of that changed over time? Second, what are the challenges for central banks that result from incomplete knowledge of the transmission mechanism of monetary policy? Third, is inflation targeting the answer to those challenges? I believe that it is. Inflation targeting, I shall argue,  1 2  This proposition is documented in detail by Batini and Nelson (2005).
In the banking industry, for example, statistical and computational analyses developed for evaluating exposures to market risk led, over the past decade or so, to the application of similar techniques to credit risk. Indeed, the introduction of increasingly reliable estimates of the drivers of credit risk, such as the probability of default, led to many of the proposals that form the basis for the Basel II bank capital framework, as I will discuss in a few minutes. The Joint Forum found that the “ultimate expression” of risk aggregation is the summation of many types of risk into a single risk measure. This measure, often called “economic capital,” estimates the amount of capital a firm requires to protect itself against all risks with a certain degree of confidence. But the benefits of developing more aggregated measures of risk across diverse business lines are especially appealing to complex financial organisations whose activities span many kinds of activities. 2  BIS Review 32/2004  As a result, it is not surprising that large, mixed financial conglomerates have tended to invest the most in the development of economic capital estimates. III. The structure of financial supervision  The two trends in the financial services sector to integrate risk management into a dedicated function and to aggregate risk measures into a single measure of economic capital form the first part of the “virtuous circle.” These trends are influencing much more than the behaviour of individual firms. They are similarly influencing the structure of financial supervision.

Despite having independent directors and elaborate control structures in place, firms have failed because of decisions by their management and when boards have not effectively performed their oversight role. This has been principally attributed to the lack of sufficient collective knowledge of the board and inadequate competence of individual directors which in turn have led to poor judgements that hampered the ability of the board to rein in excesses at an early stage. Competency gaps generally allow for individuals on boards or from senior management to exert a dominant and undue influence over the decision making process, without being subject to sufficient scrutiny and effective challenge. This occurs when Boards are not able to grasp the risks associated with inordinately complex activities that their institutions are engaged in. This is generally further compounded by the failure to provide an effective countervailing influence to an overzealous risk-taking culture among front-liners who are principally driven by the pressure to deliver short term returns. BIS central bankers’ speeches  1  Of course, sound processes and structures will continue to have a central role in any good governance framework. This provides the parameters within which decisions can be made. However, the growing significance of behavioural, cultural and ethical issues suggests that governance frameworks must give greater attention to the “softer” aspects of governance. A clear reason for this is that the more challenging and fluid operating environment demands greater exercise of judgement by management.
SGFinDex uses the national digital identity and a centrally managed online consent system to enable Singaporeans to access their financial information held across different government agencies and financial institutions. Singaporeans can seamlessly consolidate their financial information, and use digital tools to make holistic financial planning decisions. 2/3  BIS central bankers' speeches  Singapore is now looking at how our digital infrastructures can be made interoperable and connected with the rest of the world. The PromptPay-PayNow connectivity that links domestic payments between Thailand and Singapore will go live very soon. India’s Rupay and Singapore’s NETS were connected last year to make merchant payments interoperable. But linking payment systems bilaterally is complex and expensive, due to the different technical and data standards as well as legal regimes. We must explore multilateral cross-border payments in a more scalable way. The Bank for International Settlements (BIS) Innovation Hub Centre in Singapore is exploring how payment systems could be linked together to enable faster and cheaper cross-border payments. There is strong synergy between the BIS Innovation Hub’s work on a cross-border payments bridge with MAS’ work on foundational digital infrastructures. MAS plans to collaborate with the BIS Innovation Hub to explore opportunities to improve cross-border payments by connecting payment systems to digital identities across borders. We are also engaging financial regulators and central banks globally on their digital infrastructure initiatives to explore similar synergies and opportunities to move forward as a global digital community.

Just as governments collaborate on economic integration to advance prosperity, the time has come for them to do so with digital integration to seize new economic opportunities. This requires establishing foundational digital infrastructures and connecting them, to create truly global digital public goods. Upon these platforms, enterprises can build innovative digital services and solutions to seamlessly serve global markets, helping to empower and uplift millions of people. 3/3  BIS central bankers' speeches
Because of the openness of its economy and the vitality of its business environment, Hong Kong serves as an important reference point for the world. Hong Kong has captured the world’s attention artistically as well, especially through the recent work of the screenwriter and director Wong Kar-wai. His recent film, 2046, has rightly enjoyed acclaim, but it is the film’s unique perspective on time that might be interesting to contemplate today. In his film, as many of you may know, an author writes a book about the future, but gradually we realise that he is actually exploring his past. With apologies to Mr Wong and with deep respect for his beautiful film, I might venture to say that we can draw some parallels with our discussion today. As I have just suggested, I believe that in order to secure financial stability in the future, we must explore and understand the risks that have endured since the past. If I may draw on my own artistic license, I’d like to reinterpret the premise of Mr Wong’s film slightly. Let’s consider an author, perhaps a central banker or a supervisor, who lives in the year 2046 and has the benefit of the perspective provided by the passage of the first half of this century. What might such an author write about the main determinants and evolution of financial stability during the first five decades of the twenty-first century?

The closer these cushions are to levels that reflect potential future exposure across a more adverse set of market conditions, the more resilient markets and institutions will be under conditions of stress, and the less likely the prospect that the behavior by institutions will amplify financial shocks. Stress testing and scenario analysis is an important part of the process of calibrating this relationship between risk and capital and margin. The test of a sufficiently strong process is not simply the realism of the process used to measure potential losses, but the impact that it has on the decisions made by the institution on the size and type of exposures relative to earnings, capital and collateral or margin and the terms on which it extends credit. Let me conclude by noting again that we are in a period of perceived strength in economic fundamentals in the United States and many countries around the world. This strength has helped to induce significant reductions in a range of market-based perceptions of risk. Much of this confidence may prove warranted and durable, but the extent to which it endures will depend in part on the degree to which those running the major financial institutions in the United States use the opportunity presented by this period of relatively high profitability to strengthen their capacity to withstand a less favorable overall macroeconomic and financial environment.
On the other hand, it is also possible that the different paces of recovery between emerging and developed economies and the exchange rate tensions in place result in a delay in the withdrawal of the monetary stimulus, causing an immediate increase in global inflation and calling for more aggressive monetary policy responses later on. Conclusions Today monetary policy conduct is facing an important challenge. Headline inflation is near the target and trend inflation is back to above-zero figures, albeit still substantially below 3 percent. However, inflationary pressures have increased globally raising inflation forecasts, spreading concerns about future inflation in the different economies, including our own. The recovery process of the Chilean economy has consolidated and output gaps are closed. As I said a while ago, the increases we have seen in international prices of foodstuffs and oil will result in total inflation surpassing the upper bound of the tolerance range during some quarters. Our main task today is to ensure that the convergence of trend inflation to the target occurs with as few setbacks as possible. Monetary policy conduct will aim at the inflationary trend remaining in levels consistent with the tolerance range, so that towards the end of the projection horizon headline inflation stands around 3 percent. There are important risks, though. The recent experience with international price shocks has shown that preoccupation per se will not solve their inflationary consequences.

8  BIS central bankers’ speeches  Figure 6 GDP growth (percent) 8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  08  09 Annual change  10  11 (1)  -6  Quarter-on-quarter change (2)  (1) Dark blue shows growth range for GDP forecast for 2011 in Monetary Policy Report of March 2011. (2) Seasonally-adjusted series. Source: Central Bank of Chile. Table 2 Economic growth  (annual change, percent)  2009 GDP Domestic demand Domestic demand ((w/o inventory change) Gross fixed capital formation Total consumption Goods and services exports Goods and services imports Current account (% GDP)  -1.7 -5.9 -2.9 -15.9 1.9 -6.4 -14.6 1.6  2010 5.2 16.4 11.5 18.8 9.3 1.9 29.5 1.9  2011 (f) 5.5-6.5 7.6 8.7 13.9 7.0 6.8 9.6 1.2  (f) Forecast. Source: Central Bank of Chile. BIS central bankers’ speeches  9  Figure 7 MPR and expectations (percent) 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0  07  08  09  10  EES Mar.11  11  FOS 2Q Mar.11  12  13  MPR  Source: Central Bank of Chile.
Before I do that, however, I should like just to highlight the challenges and achievements of the past year, and to touch on an issue that I know is of concern to Members: the question of accountability and transparency. The year in review Nineteen-ninety-eight was an extremely tough year for Hong Kong. The Asian financial crisis, and eruptions in other parts of the world, brought continuing instability. The effects on Hong Kong’s open and outward-looking economy were severe. GDP declined by 5.1%, the sharpest decline shown in GDP statistics dating back to 1961. The unemployment rate more than doubled, to 5.7% at the end of the year: it has, since then, increased still further. Property and share prices plummeted, though they have since regained some of their lost value. The strains and uncertainties of recession have penetrated into every home and every business. The distress has been all the more acutely felt because the recession appeared with dramatic suddenness after many years of vigorous and uninterrupted growth. Hong Kong’s banking system, quite naturally, came under severe pressure, though it has handled the downward adjustment in asset prices and the volatilities brought on by the financial crisis with remarkable success. A much more disturbing feature of the larger crisis has been the succession of opportunistic attacks on the Hong Kong dollar and on Hong Kong’s financial markets. These attacks increased the pains of recession by pushing up interest rates and by corroding confidence in our financial system, both locally and overseas.

Mr Yam presents the 1998 Hong Kong Monetary Authority’s annual report Speech by the Chief Executive of the Hong Kong Monetary Authority, Mr Joseph Yam, on the occasion of the presentation of the 1998 HKMA annual report before the Legislative Council Financial Affairs Panel in Hong Kong on 3 May 1999. Introduction Mr Chairman, Honourable Members, I am most grateful to you for giving me this opportunity to speak to you on the occasion of the publication of the HKMA’s Annual Report for 1998. The Report is tabled at this meeting of the Financial Affairs Panel; it is also being distributed to all Members of the Legislative Council this morning. This Report covers the full range of the HKMA’s work for the calendar year 1998, in addition to giving an assessment of the economic and banking environment for the year. I have no need to remind Members that 1998 was, to put it mildly, an eventful year. The Report sets out the many problems and challenges that the HKMA has had to grapple with during the course of the year, and explains what actions and initiatives the HKMA has been taking to address them. You are all familiar with these issues, and you have the details before you. So I do not wish to take up too much time with a long description. My main focus in this presentation will be on the challenges for the HKMA in the coming year, particularly in the light of current economic trends.
But, as I hope my lecture this evening has made clear, distorted incentives, information failings, collective action problems and network effects have played a large part in recent events. Our standard analytic toolkit should get us a long way in understanding what has happened. And that is one step on the road to avoiding a repeat. Third, we need to pay more heed to the lessons of history. Financial booms and busts have occurred with some regularity ever since the Tulip Mania of 1636-7. Yet we tend to treat them as pathologies that happen at other times or in other places. Their frequency suggests that we would be better advised to think of them as a central feature of capitalist economies that our models should aspire to explain. Fourth, we need to put credit back into macroeconomics in a meaningful way. Financial intermediaries are conspicuous by their absence in the workhorse New Keynesian/New Classical DSGE model. The focus is on intrinsic dynamics resulting from inter-temporal decision-making in the face of a variety of adjustment costs and impediments to price adjustment; there are no financial frictions to speak of. That such a framework has developed is unsurprising in the light of the Great Inflation and its subsequent Great Moderation. But the fact that financial intermediation plays a negligible role in Mike Woodford's magisterial stateof-the-art opus, Interest and Prices, speaks volumes. Some authors have sought to introduce financial frictions into the standard framework 12 .

And joint distributions with independence in the central mass but high correlation in the tails are likely to be extremely hard to model and calibrate. Monetary policy Other macroeconomic features also probably contributed to the growth in credit leading up to the crisis. In particular, according to some monetary policy was too loose over this period, especially in the United States (see Taylor, 2007). Fig. 6 shows the difference between the policy rate and benchmark estimates of an “appropriate” policy rate derived from a Taylor rule. Notwithstanding the usual caveats about the construction of such benchmarks, the very low level of the Federal Funds rate relative to the Taylor rule during 2001-5 is striking. Of course, the FOMC held rates this low for a reason – they were concerned about entering a Japanese-style deflation and in order to mitigate that risk committed to holding the policy rate at a low level for a sustained period so as to pull down longer-term market interest rates. There is, though, little to suggest that policy rates were noticeably out of line in the euro area and the United Kingdom. Credit was nevertheless growing rapidly, as documented earlier in Fig. 1. Despite generally low and stable inflation, that led some – most notably Bill White and colleagues at the Bank for International Settlements (Borio and White, 2003; White 2006) – to argue that the credit/asset-price boom was storing up trouble for the future.
We have delivered and we will continue to deliver. And all members of the Executive Board of the ECB, all colleagues of the Governing Council of the ECB can be very proud of that. Let me add: peace and friendship between the European nations are essential for the stability and prosperity of our continent. I have devoted my life to bring the friendship between France and Germany to the benefit of Europe as a whole. 2  BIS central bankers’ speeches

Institutional structure that is determined by the legal and administrative framework is the first pillar of competitiveness. The ability to execute financial transactions efficiently, with  2  BIS Review 117/2009  sufficient certainty and enforceability, and a clear process for resolving ambiguities and possible breaches of the contract will enhance competitiveness, both at the institutional level as well as for the financial system as a whole. In Malaysia, Islamic finance disputes are adjudicated in civil courts and not the Shariah courts where the jurisdiction is limited to matters relating to Muslim individuals. If the dispute concerns a point on the ascertainment of Shariah, the courts and arbitrators are required to refer to the Shariah Council at Bank Negara Malaysia to facilitate the ruling. The Shariah Council’s authority is the ultimate body responsible for Shariah in banking and financial matters that is within the purview of Bank Negara Malaysia. This referral system provides an enabling platform for preserving consistency and predictability in interpretation and application of Shariah principles for financial transaction in Malaysia. Concluding remarks Allow me to now conclude my remarks. The inherent strengths of Islamic finance amid the global financial crisis has heightened interest in Islamic finance across the world. The level of innovation, scale and complexity of Islamic financial transactions is also increasing at a tremendous pace. Going forward, it is envisaged that the legal services in Islamic finance will become even more significant in the continued advancement and efficiency of Islamic finance.