samchain/econo-pairs-v1 huggingface dataset:
This systematic monitoring framework is then augmented by careful deliberation of the policy measures that integrates analyses from both our supervision and monetary policy groups. So far, our experience with such approach has been positive. Let me now turn to the second issue: Should the implementation of macroprudential policy be based on discretion or subject to rules? To me, this is a complex and is still an unsettled issue. On the one hand, given the complex nature of how financial instability develops, regulators may understandably wish to retain some degree of freedom in choosing the timing and instrument to address the sources of risks as they emerge. In this sense, there appear to be good cases for the use of discretion. On the other hand, there is also a danger that discretionary prudential measures can add to the multitude of shocks and exacerbate rather than absorb them. Therefore, a sound practice of macroprudential policy should at least be partially governed by rules, in order to minimize the chance of adverse outcomes and to ensure that policy is consistent with the promotion of long-term financial stability. As you can see, there are strong validities on both sides. The third issue is the international dimension of macroprudential policy. As I see it, going forward, the major source of risk to financial stability in Asian emerging markets is likely to be external.

The growing importance of Islamic finance Indeed, Islamic Finance has grown most significantly in the last decade, posting double- digit rates since 2007, at close to 20%, compared with growth of 4% in the “conventional” financial sector. It has now reached a volume of $ 2 trillion, which is a very significant figure that represents around 1% of total global bank assets. The surge of Islamic Finance is apparent both in Islamic countries and also, in European markets, with the establishment of Islamic banks and the development of the Sukuk market for private and official issuers under some European jurisdictions. The prospects for Islamic finance are also positive, given the extensive scope for the financial inclusion of a population in a number of countries, with very low rates of bank access and usage. The regulatory challenge of Islamic finance The further development of Islamic finance will nonetheless depend on implementing the necessary financial reforms to ensure its integration into the wider financial system. Here, I think that the challenges are twofold: FIRST, in Islamic jurisdictions the challenge is to continue developing the architecture of Islamic finance in areas such as payment systems and supervisory and resolution regimes. In particular, it would seem vital to advance towards the standardisation of Islamic finance regulation, breaking the existing jurisdictional heterogeneity, in order to take advantage of a wider international market. The SECOND challenge refers to the integration of Islamic finance into the wider financial system.
After lift-off looks sustainable and the federal funds rate is somewhat above the zero lower bound, the Committee will cease to reinvest those funds generated by maturing Treasury securities and prepayments of agency MBS securities. The Committee  3  See Primary Dealer Surveys and Pilot Survey of Market Participants. 4  See Policy Normalization Principles and Plans. 4  BIS central bankers’ speeches  anticipates that the balance sheet will gradually normalize passively as these assets run off, not actively via asset sales. The effective federal funds rate will be pushed into a higher target range by raising the interest rate paid on excess reserves (IOER). The overnight reverse repo repurchase (ON RRP) facility will play a secondary role, in the sense that it will be used “only to the extent necessary” to help put a floor under the federal funds rate, and it will be phased out when it is no longer needed. With respect to “how fast” the normalization process will proceed, that depends on two factors – how the economy evolves, and how financial market conditions respond to movements in the federal funds rate target. Financial market conditions mainly include, but are not necessarily limited to, the level of short- and long-term interest rates, credit spreads and availability, equity prices and the foreign exchange value of the dollar. When the FOMC adjusts its short-term federal funds rate target, this does not directly influence the economy since little economic activity is linked to the federal funds rate.

The expectation of such a put is dangerous because if investors believe it exists they will view the equity market as less risky. This will cause investors to push equity market values higher, increasing the likelihood of an equity market bubble and, when such a bubble bursts, the potential for a sharp shock that could threaten financial stability and the economy. Let me be clear, there is no Fed equity market put. To put it another way, we do not care about the level of equity prices, or bond yields or credit spreads per se. Instead, we focus on how financial market conditions influence the transmission of monetary policy to the real economy. At times, a large decline in equity prices will not be problematic for achieving our goals. For example, economic conditions may warrant a tightening of financial market conditions. If this happens mainly via the channel of equity price weakness – that is not a problem, as it does not conflict with our objectives. In contrast, when we want financial market conditions to be extremely accommodative – as has been the case in recent years when we have been far away from our employment and inflation objectives – then we will take into consideration a broad set of developments with respect to interest rates, the stock market and other measures of financial conditions in choosing the appropriate stance for monetary policy.
The SNB provides banks with so-called central bank money in exchange for financial assets. They can hold this central bank money as sight deposits at the SNB or withdraw it as banknotes. Banks use central bank money to carry out transfers for their customers and for customer withdrawals. Equally, the commercial banks need central bank money for paying out loans. These payments lead in turn to the creation of new money in the banking system. What exactly happens when credit is granted? The process always begins with the bank customer, for example when he or she applies for a mortgage loan. The bank then has to  Page 2/8  check whether the customer is creditworthy and whether the loan is economically viable from a risk/return perspective. Furthermore, the bank must determine whether it has, or whether it can obtain, sufficient central bank money to pay out the loan. The payment is usually made electronically by crediting the house seller’s sight deposit account, which is generally held at another bank. Consequently, overall sight deposits in the banking system rise and new money is created. Although money created when a loan is granted is not central bank money, private customers’ sight deposits at commercial banks have equal status in payment transactions and can also be exchanged by customers for SNB banknotes at any time. On the one hand, payments into sight deposits – for instance customers’ salary payments or proceeds of selling their house – are an important source of central bank money for banks.

But I would expect that there is enough potential here to ensure that the debt markets in Hong Kong as well as in the wider region continue to develop and prosper as we look ahead. BIS Review 57/2000  4
According to the draft agreement, the legal spending commitments attached to the projects included in Next Generation EU shall be made, at the latest, by 31 December 2023, and the related payments will have to be made effective, at the latest, by end-2026. More specifically, 70% of the transfers should be committed during the 2021-2022 two-year period, with a country-based distribution factor that depends on the unemployment rate in 2015-2019, population and the country’s per capita income. The remaining 30% must be committed before end-2023, and the distribution factor will be adapted to incorporate more directly the heterogeneous impact of the health crisis. Thus, the unemployment rate will be replaced by a variable that will weight, in equal portions, the decline in GDP in 2020 and the cumulative decline in GDP in 2020-2021. In sum, the fund will enable, at least in part, a balance to be struck between the potential and real financial divergences among the European partners. This is because it will benefit from the positive externalities arising from joint action and it will serve to engineer a coordinated exit from the crisis, based on common budgetary instruments. The financing of the fund through Community debt will benefit from the favourable low-interest-rate environment and will prevent this new debt being assumed by Member States individually, under conditions which, in some cases, would be foreseeably more unfavourable than those 4  which are expected to be applied to this pooled instrument.

As of late June, the annual decline in actual registrations is estimated to have eased, such that the level of actual registrations was 11.4% down on the figure a year earlier. Should the epidemiological situation not change significantly, the recovery observed in Q2 will continue over the summer and give rise to high quarter-on-quarter growth in Q3. Nonetheless, interpreting this growth calls for caution, since we should not lose sight of the fact that the level of activity will continue to be significantly below that observed prior to the pandemic breaking, such that the process of recovery will be far from complete. We can thus talk of an incomplete recovery, using the first of the three adjectives I referred to at the start of my address. The conditioning factors I mention for the short-term outlook to materialise - the absence of any material changes in the course of the pandemic in Spain - are no minor matter. Indeed, economic developments would be adversely affected in the coming months, perhaps severely so, if the outbreaks seen in recent weeks in different territories after the easing of the restrictions on movement could not be controlled with local-level and temporary measures. Accordingly, health-related uncertainties will persist for some time until effective treatment for the illness or widespread access to a vaccine against the virus are achieved. Moreover, the doubts over economic developments in the coming quarters are not confined to the health area.
Thus, euro area GDP is projected to grow at 0.5% in 2023 (3.4% in 2022), rising to rates close to 2% in 2024 and 2025. In tandem, the inflation projections have been successively revised upwards. After average inflation of 8.4% in 2022, the December 2022 Eurosystem projections forecast a much higher rate for 2023 (6.3%) than expected in September (5.5%) and June (3.5%). Inflation is then expected to fall gradually to an average of 3.4% in 2024 (compared with the September forecast of 2.3%) and of 2.3% in 2025. The upward revision to inflation for 2023 and 2024 is the result of recent inflation data reflecting, as I mentioned earlier, a stronger and more persistent inflationary episode than expected, the fiscal measures adopted to soften the impact of inflation on households and firms (which reduce inflation in the short term but increase it when they are rolled back) and the expectations, in line with the latest information, for stronger wage growth. The aforementioned macroeconomic context has also triggered a deterioration in financial stability. The combination of higher inflation and lower-than-expected economic growth, together with rising interest rates, is adversely affecting households' and firms' ability to pay, especially among the most vulnerable segments, which are characterised by low income levels, dependence on energy and food products and, in some cases, high indebtedness.

High real wage increases despite moderate nominal pay increases are one factor that has undoubtedly increased the support of wage earners for the price stability objective. The fact that the price stability objective has been confirmed by law has also probably contributed to confirming confidence in the inflation target. However, the Riksbank has a pedagogical and practical problem. Monetary policy decisions are based on assessments of inflation a couple of years ahead and are focused on achieving the inflation target during that period. This means that we can often be compelled to increase the interest rate despite the actual rate of inflation at the time being under the target. In December last year, for instance, the Riksbank increased interest by 25 points despite inflation then being at 1.4 per cent. Decisions are then made on the basis of forecasts over a two-year horizon. The most important reason for not waiting until inflation actually exceeds the target is that inflation expectations would then risk accelerating since it takes up to two years before monetary policy has its full effect. And then we may – to rein in inflationary expectations again – be compelled to tighten up the economy more than we would have to have done if we had reacted earlier. The Riksbank’s way of conducting monetary policy obviously plays an important role with regard to maintaining confidence in price stability. However, we should not forget that fiscal policy also has to be conducted in a way compatible with the price stability target.
As with job insecurity, this will in turn have tended to lower workers’ pay power and increased the degree of wage differentiation within the workplace. Empirical research confirms those findings. Trade union membership has been found to result in a pay premium for workers. In the UK, this premium is typically found to lie in the range 10-15%, though it may have fallen over time. 17  There is also evidence that falls in rates of unionisation and collective bargaining  have resulted in wages becoming more dispersed and differentiated across occupations and locations. 18  14  Bradley (2016). Gardiner (2016). 16 Gardiner (2016). 17 Bryson (2014). 18 Gregg et al (2014). 15  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  We can quantify these effects in our wage equations. In Table 1, we include the unionisation rate and estimate over a longer sample period (1892 to 2015) to reflect the lower-frequency movements in unionisation. This suggests unionisation is positive for pay growth and (statistically and economically) significant. Over the sample, a 10 percentage point rise in the degree of unionisation raises wage growth by around 25 basis points per year. Over recent decades, unionisation rates have fallen by 30 percentage points. Using the long-run estimates, that will have lowered wage growth by around 0.75 percentage points per year over the past 30 years, a significant effect. Consistent with it, the sharpest falls in unionisation came in the 1970s and 1980s, coinciding with falls in the UK labour share.

There has been growing evidence that Green and ESG investments may not lead to a sacrifice in returns. On the contrary, some ESG investments could actually enhance long term sustainability and improve risk-adjusted returns for investors. As the manager for the Exchange Fund, the HKMA takes a long term view and sees Green and ESG investments as an important driver of value in the long term. In this connection, the guiding principle that the HKMA will adopt going forward is that priority can be given to ESG investments if the long term return is comparable to other investments on a risk-adjusted basis. More specifically, the HKMA has taken or will take the following measures to support Responsible Investment: ___ (a) we have already incorporated ESG factors in our credit risk analysis of bonds; we have required our external managers of the Hong Kong equity portfolios to comply (b) with the Principles of Responsible Ownership promulgated by the Securities and Futures Commission in 2016; we have invested two tranches of $ billion each in the Managed Co-lending Portfolio (c) Programme (MCPP) run by the IFC. A substantial part of the MCPP will target sustainable investments across emerging markets; (d) we will further grow our green bond portfolio, through direct investment or investment in green bond funds; (e) we will participate in ESG-themed public equities investments through external managers in passive or active mandates targeting ESG benchmark indices; and (f) we will accord green accreditation as a predominant factor in investment in buildings in our real estate portfolio.
In the terms of the new Act the Monetary Policy Committee - apart from its public accountability through the Inflation Report and the minutes of its meetings - is accountable for the adequacy of its procedure to the Non-Executive Members on the Bank of England’s Board of Directors, who in turn report to Parliament through the medium of the Bank’s Annual Report. We are all accountable to Parliament in the sense that we may be - and regularly are - summoned to appear before the relevant Select Committees of both Upper and Lower Houses. And we are accountable to the Chancellor in that the Chairman of the MPC is required to write him an open letter if the rate of inflation diverges by more than one percent either side of the 2½% target explaining why and what steps we propose to take to bring inflation back within that range and over what time period. Finally, the Treasury has the power to give the Bank directions in respect of monetary policy if they are satisfied that the directions are required in the public interest and by extreme economic circumstances. Again, some observers have suggested that these elaborate accountability provisions are onerous and constrain the Bank’s independence. I take the contrary view, that they are essential to the legitimacy of the arrangements as a whole and so actually reinforce our independence - provided of course we are able to provide convincing explanations of our conduct!

Reflecting the weakness in aggregate demand, the output gap remains negative and the Albanian economy is still characterised by incomplete utilisation of production capacities. The lower economic growth and poor performance of the employment index have led to weaker pressures on increasing wages and production costs. Also, the sluggish aggregate demand keeps profit margins low. Weak pressures from production costs and downward inflation expectations were the main drivers lowering core and headline inflation rates. In parallel, imported inflation was contained due to low inflation rates internationally and the exchange rate stability. This situation is expected to continue in the quarters ahead. The macroeconomic analysis, updated with information for the first two months of the year, suggests low economic growth during this period. Private investments and consumption remained weak because of the low confidence of economic agents, slowdown of disposable income, tight lending terms, and presence of spare production capacities. Trade deficit expanded 3.6% in January, primarily as a result of declining exports, in contrast to a month earlier, when it expanded due to unusual import growth. “Minerals, fuels and electric energy” were the main drivers of contraction in exports of goods. On the other hand, exports of goods in the category of “Textiles and footwear” increased. In response to enhanced competitiveness and shifting of financial and human resources towards exporting sectors, export growth should be one of the main pillars of Albania’s economic development in the period ahead.
The only policy rule in common use in developed countries with floating exchange rates is inflation targeting: so far this appears to have been quite successful, although the experience is still limited. The technical requirements are demanding, however, and especially so for developing economies. Policy makers must be able to accurately forecast not only inflation but also the response of inflation to changes in the policy levers. This is a challenging enough task for the highly trained staff in central banks of developed economies, who generally benefit from dealing with a relatively stable economic structure and from considerable experience in  BIS Review 53/1999  6  monetary management under floating exchange rates. Needless to say, the success of developing economies in operating such a system is far from assured. An alternative approach would be to proceed along the same path that Europe is pursuing, in the form of a monetary union. There are clear advantages to this approach. One of these is the creation of markets in a single currency that are sufficiently large to make it difficult for individual speculators or groups of speculators to manipulate markets. Another advantage is that trade within the monetary union is fostered by the certainty and ease of transaction in a single currency. Of course, as the EMU experience shows, there are important political issues that must be resolved before monetary union can become a reality.

For emerging economies, capital flow volatility is a fact of life and something that policy makers have to deal with; and we have to acknowledge that the size and volatility of capital flows will only intensify. While the transmission of global shocks to the domestic economy through the real economy channel – that is through trade and investment – is something that we have been dealing with for decades, policy makers today are confronted with the increasingly dominant channel of 1/3  BIS central bankers' speeches  transmission of shocks through the financial markets, at least in the immediate term. All of us have experienced how spillovers from external developments that were manifested through capital flow volatility have adversely affected domestic financial markets, asset prices, liquidity conditions and importantly, exchange rates. All these challenges make for a complicated policy environment for ASEAN central banks. Gone are the days when keeping our own house in order is enough. Sure, good fundamentals matter as they have no substitute. They are, however, no longer sufficient. As Keynes rightly pointed out a long time ago, “the market can stay irrational longer than you can remain solvent.” Often, we have seen how external developments that are beyond our control, such as the unprecedented quantitative easing by the advanced economies and the subsequent Taper Tantrum, triggered periods of large inflows followed by sharp reversals in emerging economies with severe consequences. For small open economies, these flows can easily overwhelm the domestic financial markets and lead to build-up of vulnerabilities in the economy.