samchain/econo-pairs-v1 huggingface dataset:
Pay Power Speech given by  Andrew G Haldane Chief Economist Bank of England Acas “Future of Work” Conference Congress Centre, London 10 October 2018  The views expressed here are not necessarily those of the Bank of England or the Monetary Policy Committee. I would like to thank Will Abel, Shiv Chowla, Tomas Key, Brad Speigner and Ben Stokes for their help in preparing the text. I would like to thank Ben Broadbent, Clare Macallan, Becky Maule, Mette Nielsen, Silvana Tenreyro and Jan Vlieghe for their comments and contributions. This work contains statistical data from ONS which is Crown Copyright. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates. 1  All speeches are available online at www.bankofengland.co.uk/speeches  It is great pleasure to be here at the Acas Annual Conference whose theme this year is the “Future of Work”. It is a particular pleasure to have Brendan Barber as Chair. As a member of the Bank of England’s Court between 2003 and 2012, Brendan’s insights on the labour market and wider economy were crucial in helping the Bank steer a policy course through a period of first macroeconomic calm and then extra-ordinary macroeconomic storm following the global financial crisis. It is the labour market that I want to discuss today.

It will make price comparisons across Europe more transparent and reduce transaction costs. In addition, the single currency area will enjoy price stability and sound public finances, which will lead to a high level of confidence and to low market interest rates. Last but not least, the euro will be a major international currency and this will facilitate international monetary cooperation. EMU is not only based on solid economic grounds. It is also a realistic economic process. EMU is based on convergence criteria which have to be met on a sustainable basis. The fulfilment of the convergence criteria is not only a legal condition for participating in EMU but, of course, corresponds to the sound policy management which is in the interest of all Member States. I am convinced that EMU will create an environment of stability I know how important the concept of stability is to the German people. This culture of stability, which explains to a large extent the economic success of your country, is shared by many Governments, central banks and citizens all over Europe, not least in France. I know that the German people have expressed some qualms about the disappearance of the Deutschemark and its replacement by the euro. But I will try to convince you that the euro will be as stable as the Deutschemark, as stable as the French franc today, for the sake of European economic prosperity and growth. Indeed, EMU will contribute to reinforcing stability in Europe. EMU will bring legal, fiscal and monetary stability.
Zeti Akhtar Aziz: The mandate and roles of Asian central banks Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Bank of Korea International Conference 2010 “The changing role of central banks”, Seoul, 31 May 2010. *  *  *  It is my great honour to be invited to speak at the “Bank of Korea International Conference 2010”, held this year in conjunction with the 60th anniversary of the Bank of Korea. Let me take this opportunity to congratulate the Bank of Korea on this special occasion. The Bank of Korea can take great pride in its achievements during these six decades. From its establishment in June of 1950, the Bank of Korea has devoted great efforts to provide a stable and conducive macroeconomic environment and to build an effective financial system that has facilitated the growth of the Korean economy and its long-term sustainability. This recent decade has been the most challenging for policymakers, in particular, for Central Banks. In the late 1990s, the Asian region was confronted with a severe crisis, and about a decade later, the world was confronted with a financial crisis of unprecedented global proportions. While Asia was adversely affected by these crises, there was a rapid return to recovery, both during the Asian financial crisis and during this recent global financial crisis.

The first relates to the shift in focus to the single mandate of price stability as being the core function of Central Banks. This has been frequently accompanied by the adoption of the inflation targeting framework. The second relates to the establishment of a separate entity to undertake the supervisory function of banks, although more than half of the Central Banks around the world still have the responsibility of the supervisory function. In the aftermath of the recent global financial crisis, the search for the appropriate framework for monetary stability and for the optimal institutional structure for financial sector regulation and supervision continues, perhaps now with greater earnest. Prior to the recent financial crisis, the predominant view was that Central Banks should pursue “one tool and one target” policy strategy. Based on this view, the best role for the Central Bank in pursuing macroeconomic stability and prosperity was to ensure that inflation remains low. This recent crisis has changed this perception. Maintaining price stability and financial stability is a means to an end. The ultimate goal is surely to achieve sustainable economic growth and prosperity. Maintaining orderly financial markets has also now become an important role for Central Banks given the implications it has on the functioning and performance of the real economy. For the emerging economies in Asia, ensuring orderly financial markets has always been an important role for the Central Banks in the region.
The rather large price fluctuations that are a normal feature of these goods and services can be taken to indicate that the recent increases do not constitute a ketchup effect, so that the conditions for a return to a rate in line with the target should be relatively good. Not just transitory effects At the same time I definitely do not want to make light of the increase in inflation. Even excluding the goods and services I just mentioned, inflation has moved up more than expected and it has done so even though resource utilisation is lower, at least at present, that we counted on earlier. That is the main reason why, in the latest Inflation Report, we have slightly revised our appraisal of how resource utilisation is likely to affect inflation. A conceivable interpretation of the revision is that today we consider that resource utilisation last year was higher than we reckoned on earlier. That is not self-evident, however; this year’s wage outcomes have been lower, which one would not expect if resources have been more strained. Another possibility is that, even if resource utilisation was not in fact higher, price increases have occurred due to insufficient competition. In the past, the Riksbank has presented a picture of goods and services divided into those that are priced in a market as opposed to administratively. This showed that in 1996-97, for instance, goods and services priced administratively kept inflation up even though resource utilisation was falling (Diagram 3). Perhaps we are now seeing a similar phenomenon.

That is only to be expected when the krona has fluctuated markedly, besides being clearly under-valued on the whole in recent years. Differences in inflation and growth could previously explain most things In a longer perspective there are explanations for a large part of the krona’s depreciation. In the past three decades the nominal exchange rate has weakened about 90 per cent. More than half of this deterioration can be attributed to the higher inflation in Sweden compared with the rest of the world in the 1970s and ’80s. Mostly of the remaining part of the real deprecation can be explained in terms of relative GDP growth and worsening terms of trade in the same period. But neither of these two factors is relevant to the period since 1992 with a flexible exchange rate: inflation, growth and terms of trade have been at least on a par with the rest of the world. Various flows may have played a part in the short run. Looking back, it is evident that export growth and rapidly rising Swedish share prices may have contributed to the high exchange rate with the euro twelve to eighteen months ago. During the past year the opposite has applied. Another factor has been large investments in foreign shares when earlier barriers to risk diversion were removed from the pension system. In September there was also general financial unrest. However, variables such as these have proved to be of little value for forecasting.
But not only have we learned from past errors, like the need to have good economic policies; the world is also better. The progress of the past few decades in technology, flexibility, international integration, transparency and accountability, among other factors, make this world a safer place. In Chile we have a policy framework that grants us a good position like no other before, to sail through troubled waters. Regarding the world economy, there are big risks. The Chilean inflationary problem stems from international price rises, although recently we have seen the harmful effects of propagation. In the baseline scenario, the world will post strong growth in coming years, driven to a large extent by emerging economies, particularly China and India. One cannot rule out a deeper and longer lasting slowdown of industrialized countries than assumed in the baseline projection. In a weaker economic scenario, commodity prices should decline. A drop in the oil price would come as a relief for the world economy. Also, a weaker world economy could affect Chile’s GDP growth directly. These forces would pull down inflation. However, the inflationary dynamics and the convergence of inflation to the target cannot be based on a weak world scenario. This is a possibility and, as we always do, we will act with sufficient flexibility and realism to incorporate international developments and prospects in the analysis that underlies our monetary policy decisions. In these moments, inflation risks and dynamics do not allow for excessive optimism.

First I will review the harmful effects that the ongoing crisis will have on the future development of financial markets. Next I will discuss financial bubbles and booms in monetary policymaking, and the nature of the present crisis and possible consequences, to wrap up with the implications of the world growth scenario on the Chilean monetary policy. In the present turmoil, authorities have acted as lenders of last resort providing liquidity to ensure proper market functioning. Nonetheless, regarding financial bailouts two costs have to be balanced: averting a financial collapse with catastrophic consequences on the one hand, and the negative signals that come from said bailouts, on the other. Not only have the too-big-to-fail institutions been rescued, but also entities whose connections with the system are such that if they fail the whole financial system may be shaken. Troubled companies’ shareholders should not be bailed out, because it is important that risk evaluation is done more diligently in the future. Care must be taken in rescuing debtors of defaulted firms, because it may relax borrowing and repayment discipline, and punish good creditors by comparison. The tradeoff between these two objectives is clearly illustrated with the developments of the past week. Allowing the demise of Lehman Brothers was a sign that bailouts would not be up for grabs and even the downfall of a large investment bank would be accepted, but this may have accelerated the devastating chain of events that followed.
BIS Review 76/2000  6  We should focus more on systemic risk rather than protecting individual firms, or preventing risky products from reaching the market. We should allow investors to judge and take business risks for themselves. We should rely more on market discipline and full information disclosure to protect investors, rather than extensive formal and informal regulation. We need to shift emphasis from regulation to supervision, and from one-size-fits-all rules to oversight tailored to the characteristics of individual institutions. We decided on these fundamental changes in our policy framework for the financial sector in 1997. We went ahead to launch it, just as the storm clouds were gathering, because we saw it as an essential strategic shift, independent of short-term ups and downs of economic fortunes. We felt confident of weathering the storm, although we did not know it would turn out to be a super hurricane. We decided to make a phased transition over several years, rather than have a single big bang. We had seen how big bangs in some other countries had led to excesses and problems later down the road. We could not afford this risk, unlike the more established financial centres like London. Our regulators, financial institutions, and investors all needed time to develop new expectations of one another, and understand the new way things worked. We needed to manage the reform process in an environment made difficult by the Asian crisis, and keep the system on an even keel.

Ladies and gentlemen, Despite our progress, we should not settle for what we have achieved thus far. Much more can be done and need to be done to improve the sustainability of the Thai society as a number of challenges remain. Some of which leave us to question our collective actions as a society on how we allow these challenges to get out of hand. Allow me to highlight four challenges in particular: First, despite a more broad-based economic growth and a number of government policies targeting low income households, 2/6  Thailand remains among the world’s most unequal countries in terms of wealth, with the richest one percent owning more than half of total household wealth2. Meanwhile, low financial literacy and high household debt level continue to hamper the ability of individuals to pursue new opportunities and secure long-term financial security. These have curbed individual’s chance to improve her socio-economic status in the long-run. Essentially, widening wealth and income inequality is a major contributor to the fragility of the Thai society and is frequently used as an excuse to draw public support for a number of costly and unsustainable populist policies. Second, our labor productivity growth is moderating and should be emphasized. As an aging society with declining labor force, enhancing productivity is critical for the Thai economy to maintain growth. And yet a number of public policies have focused on creating short-term stimulus rather than on encouraging the necessary adjustments to address long-term productivity issue.
With different standards and core systems, financial transactions and data flows will face frictions, which will discourage competition, collaboration, and innovation. In the world of Big Tech, strengthening the value of our financial network is critical for a small economy like Thailand, and it needs to be done so that our network remains dynamic and efficient, fostering an ecosystem conducive to innovation and competition. The nature of financial services requires that we emphasize on strengthening the value-added of our financial network. Therefore, the transformation towards digital finance cannot be efforts of individual firms alone, and we need to focus on creating the digital finance ecosystem with active collaboration from a wide range of stakeholders. Ladies and gentlemen, Today I would like to take this opportunity to highlight four important principles that have underpinned our recent developments and will continue to guide our FinTech agenda. These are principles that will strengthen the value of our financial network and develop our digital finance ecosystem. The first principle is the open architecture framework. Important infrastructure must be made open, allowing both old and new market participants to easily connect as long as they meet the required security standards, appropriately share the cost of development and maintenance, and do not pose financial stability risks. The open architecture framework will level the playing field and eliminate barrier to entry for new players who often enter the market with innovations. The second principle is interoperability of systems.

Már Guðmundsson: Capital flows and systemic risk in Iceland Panel comments by Mr Már Guðmundsson, Governor of the Central Bank of Iceland, in Norges Bank's (Central Bank of Norway) 200th Anniversary Symposium, Oslo, 16 June 2016. * * * In my short introductory remarks, I would like to discuss what I consider to be one of the key factors behind the financial crisis in Iceland: the interaction between capital flows and systemic risk. I will focus in particular on those aspects that have more general relevance and herald unsolved problems for economic management and financial stability in small, open, and financially integrated economies (SOFIEs), such as Iceland was before the crisis and now strives to be again, at least up to a degree. The saga of Iceland’s experience during the Great Financial Crisis had two separate but interrelated sub-stories. The first story was related to Iceland’s boom-bust cycle and problems with macroeconomic management in small, open, and financially integrated economies. This is a story that has played out many times around the globe, and many of its elements have been seen before in Iceland. It might have been somewhat more extreme this time around, but it wasn’t fundamentally different. Strong capital inflows that met with an insufficient policy response and contributed to huge imbalances in the domestic economy were a key part of the story. I will come back to this later. The second story was the rise and fall of three cross-border banks operating on the basis of EU legislation (the European “passport”).
The survey findings indicated that agricultural activities still remained a major source of income for most Zambians but that this sector was largely under-served by financial service providers. The survey findings also showed that there was an increase in the number and types of banking services and products but that the uptake had remained unchanged as the focus of financial service providers appeared to be serving the same market, as opposed to enhancing financial inclusion. Overall, there was a marginal increase of 3.6 percentage points in financial access to 37.3% in 2009 from 33.7% in 2005. Developments in banking, currency and payment systems During the quarter, there was a continued improvement in the availability of electronic payment options. The number of Point of Sale (POS) terminals increased by 3.8% to 1,033 terminals (Quarter 2, 2010: 995). The volume of POS transactions also increased by 15% to 199,817 (Quarter 2, 2010: 173,606) while the values increased by 13% to K86 billion (Quarter 2, 2010: K76 billion). The number of Automated Teller Machines (ATMs) increased by 4% to 468 ATMs (Quarter 2 2010: 450). The volume of ATM transactions also increased by 11% to 6,333,073 (Quarter 2 2010: 5,697,122) while the value increased by 16% to K2,898 billion (Quarter 2 2010: K2,498 billion). The Bank would like to continue urging the public to use electronic payment methods as they provide a more convenient, safer, efficient and effective way of making payments.

3 While Norges Bank seeks to maintain the sum of the reserves in the banking system around NOK 35 billion, the sum of banks’ quotas is NOK 45 billion, so that banks as a whole can always deposit the reserves outstanding in the banking system at the key policy rate. Should the volume of reserves exceed the sum of banks’ quotas, some banks would have to hold reserves at the reserve rate. That would push down the overnight interbank rate towards the reserve rate. But for that to occur, Norges Bank would have to stop withdrawing surplus liquidity through market operations. There are no plans to make such a change to our liquidity policy. The reserve rate in Norway is now at a negative 0.25 percent. But this will not lead to negative money market rates. With normal liquidity management, which ensures that there are no excess reserves in the system, the key policy rate – not the reserve rate – determines  1  Similar quota systems are in use in Denmark, Switzerland and New Zealand. For a more general discussion of liquidity management systems, see Syrstad, O. (2011): “Systemer for likviditetsstyring: Oppbygging og egenskaper” [Liquidity management systems: design and features], Norges Bank Staff Memo 5/2011 (Norwegian only). Banks’ feedback on the current liquidity management system, introduced in October 2011, is discussed in Norges Bank Papers 4/2014: “Banks’ assessment of Norges Bank’s liquidity management system”.
BIS Review 55/1997  -4-  the banking sector. But it can also bring new risks if the banks do not use their new freedoms well - in particular if they do not develop the credit skills and risk management techniques which are required in the kind of lending boom that may develop after deregulation. 17. The pressures on the existing banks is increased if liberalization also allows new entrants into the market. Competition in some Asian economies has already intensified as a result of the granting of new domestic banking licences and more liberal policies on the admission of foreign banks. The need to meet WTO obligations will give further impetus to this process. But while the long-term impact on the efficiency of the banking system may be favourable, the short-term impact can be to narrow interest margins and erode franchise value. This can drive the local banks to take on more high risk business. 18. I should stress, however, that the answer to this dilemma is not to stop or reverse the process of deregulation. There are examples around the region of bad debt problems embedded in banks which are either owned by the government or, even if they are privately owned, have been granting policy loans on behalf of the government. Such banks should be encouraged to develop their own credit judgment in order to play an effective role in the process of credit allocation in the economy. So liberalization is the right approach.

While there have been periods of financial distress in individual banking systems in the region in past years, such incidents have generally been fewer and less severe than in other emerging markets. Asian banks were able to meet the Basle Committee’s recommended 8% minimum capital adequacy ratio with comparative ease. Moreover, despite the fact that barriers to entry in some economies have protected the Asian banks from the full forces of competition, they have managed to survive on lower interest margins and achieve a higher level of operating efficiency than their counterparts in other regions. 11. The Asian banks have of course benefited from operating in the fastest growing region in the world, and one where the macroeconomic environment in terms of GDP growth, inflation and exchange rates has been much less volatile than in, say, Latin America3. More recently, however, growth in some economies in the region has slowed. I hope that this will turn out to be a cyclical, rather than a structural, phenomenon. At any rate, the economic environment is currently somewhat less benign, and this has brought into sharper focus some of the challenges which banks in the region are now facing. 1 2 3  The Emerging Asian Bond Market, World Bank 1995. The East Asian Miracle, World Bank 1993. BIS Annual Report 1996. BIS Review 55/1997  -3-  The challenges faced by Asian banks 12. Let me attempt to describe what these challenges are.