samchain/econo-pairs-v1 huggingface dataset:
As illustrated in the accompanying charts, in the thirty years 1865-95 consumer prices are estimated to have fallen by 48% in the United States and 3 27% in the United Kingdom - average compound rates of decline of about 2% and 1% respectively. This is generally regarded as having been a supply-side-driven phenomenon arising from rapid productivity growth alongside abundant labour supply, aided by and the opening-up of new markets globally. Real GDP growth averaged 5-6% (boosted by immigration) in the USA and 1?% in the UK in that period. Subsequently, modest inflation took over, but inflation did not reach a serious scale until 4 the first world war. The inter-war years were rather different from the late nineteenth century episode. There was a mixture of deflation and inflation - but with the former being more the result of monetary policy mistakes, such as those associated with the Great Depression, than of supply-side forces such as were so plainly evident half a century earlier. Inflation did not really become re-established on a significant scale until the second world war, after which it persisted for most of the remainder of the twentieth century. Most recently, the potential problems posed by deflation, particularly in a financially developed world where debt and balance sheets interact, have become apparent, most notably perhaps in Japan. All in all, there is perhaps a mixed message from these historical examples. It may be possible to live comfortably with a modest pace of deflation, especially if it reflects benign supply-side influences.

Moreover, buyers of services increasingly elect to travel elsewhere to consume them. Thus the international price elasticity of a wedding ceremony, a game of golf, hospital or health spa treatment, or conference facilities is ever rising. Soon there will remain only very few location-specific activities - heritage tourism perhaps, but even that is not immune from the pressure of the law of one price, if one considers the competing heritage sites around the world. I see some evidence in Hong Kong of the impact of this process of more broad-based globalisation, and I am sure it is happening elsewhere too. Liberalisation of trade policies and the achievements of the WTO will also have contributed. Thus, deflation is being driven in part by the expansion and intensification of competition across an ever larger range of sectors and countries. This may explain why some price surprises on the macro-policy front in the recent past have been on the downside, but if central banks can digest this ingredient there is no reason why they should be more than temporarily knocked off course by it. 3  For the UK, the peak-to-trough comparison would be 1873-95, during which the average compound deflation rate was 1.7% pa.  4  My thanks to HKMA colleagues Daryl Ho and Lu Dai for researching the historical data.
The market may also have a different view from the Riksbank of how monetary policy will react to economic disturbances of various kinds. But we can express in different ways our assessments of policy as reflected in implied forward rates and in this way clarify our view in relation to that of the market. This also enables us to influence market expectations more directly in the short term. Let me illustrate this by some examples: In connection with the Inflation Report in October last year, we said that we thought that the implied forward rate path on that occasion gave rise to reasonable inflation developments in the coming years. Consequently, no great changes occurred in market expectations when we published the report (see Figure 2). In connection with the December report, we considered that the market was correct in anticipating an increase in the repo rate at the beginning of 2006 but that the rise might be a bit quicker in the winter and spring than that reflected by the path of implied forward rates. When the monetary policy decision was announced, the market reacted consistently this time as well by the implied forward rate path shifting in a way that reflected the expected interest rate increases taking place earlier (see Figure 3).

Mr. Lamfalussy reflects on the possibilities and constraints of monetary policy against the background of price stability in Europe Address by the President of the European Monetary Institute, Baron Alexandre Lamfalussy, on the occasion of the change of the presidency of the European Monetary Institute in Frankfurt am Main on 30/6/97. The moment has come for me to say a heartfelt “thank you” to you all! I should like to express my gratitude, first of all, to the governors of the central banks of the European Union, who, in the autumn of 1993, chose me as their candidate for the presidency of the European Monetary Institute, thereby setting in train a process which has allowed me to play a part in a ground-breaking enterprise of exceptional scope and responsibility. I should like to thank them, secondly, in their capacity as members of the EMI Council, for their cooperation in this undertaking and for their wisdom, prudence, willingness to compromise but also their will to achieve results. They have invariably acted with the utmost professionalism. I should like to add that we should not have been able to achieve what has been done without the conviction - which each of us shares - that the first duty of a central bank is to maintain price stability. This fundamental principle has never been a matter of dispute. My thanks go next to the political authorities.
I think the Administration wants better trade deals and not – I think the question is whether they’ll get better trade deals without actually having to put, you know, higher trade barriers in place. Obviously to the extent that trade barriers go up and that would tend to raise import prices, that would feed into price level in terms of inflation, and so obviously, we had to take that into consideration in terms of how we do monetary policy. But going to be happening in a dynamic world where a lot of other things are going on. So, I wouldn’t want to take one thing and say, “Oh, if that happens, we’re going to do X,” because it really depends on, one, it’s highly speculative what’s going to happen on trade policy, and two, even if it happened, it would depend on magnitude and it would depend on a lot of other things that are going on. So I think it’s really hard to speculate about something like that. Maureen O’Hara: Okay, I see some hands way back there. So if you can hand the microphone to someone who’s got their hand up, way back there, that’d be great. Audience Member: Recently, it’s been speculated that the Trump trade policy actually will evolve into a border tax. It’s been in the works in the Republican Party for the last several years. This would simply entail an increase across-the-board in taxation on imports and an equal proportional across-the-board decrease on all exports.

I’m perfectly – I think it makes sense to look at the Dodd-Frank Act, to see which parts are working and which parts are not working so well. I mean, when I sort of think about the Dodd-Frank Act, I think there’s really two things that we’re trying to accomplish here. Number one, we’re trying to make the probability of failure of large complex financial institutions a lot lower than it was before. So that means more capital, more liquidity, better governance, better risk management. And we want to keep all those things. And the second thing we’re trying to do is that if a firm does get into trouble, we can actually allow it to fail without it threatening to take down the rest of the financial system. So that means you need good resolution regimes, and you need a financial system where you don’t have a lot of vulnerabilities. You know, one thing, for example, that we’ve accomplished over the last year is we’ve had money market fund reform. Money market funds were one of the accelerants of the crisis after Lehman Brothers failed. So, fixing the financial system to address some of those structural weaknesses is also important. So I think keeping that part of Dodd-Frank, central clearing of derivatives, I think is 8 / 13  BIS central bankers' speeches  something that makes the financial system more robust. Keeping all those parts I think makes a lot of sense. Volcker Rule?
18  Svensson, L.E.O., 2005, ‘Optimal inflation targeting: further developments of inflation targeting’, prepared for Central Bank of Chile Conference on ‘Monetary Policy under Inflation Targeting’ Santiago October 2005. 19  For examples, see Chapter 1 ‘Monetary policy assessments and strategy’, Norges Bank Inflation Report 3/2005, November 2005, and Section 1 ‘Policy assessment’, Reserve Bank of New Zealand Monetary Policy Statement March 2006. 20  Svensson, L.E.O., 2005, ‘Optimal inflation targeting: further developments of inflation targeting’, prepared for Central Bank of Chile Conference on ‘Monetary Policy under Inflation Targeting’ Santiago October 2005, page 8. 21  For an example of such a fanchart see Chapter 1 ‘Monetary policy assessments and strategy’, Norges Bank Inflation Report 3/2005, November 2005. BIS Review 46/2006  7  The debate is certainly interesting, and it should go without question that, like policymakers everywhere, I am very much in learning mode over these issues. (b)  Is there a stabilisation bias? Inflation targeting has been characterised as ‘constrained discretion’ in the sense that the central bank makes policy choices, but choices disciplined by a clear objective. 22 Exploring the implications of discretion, Michael Woodford and Lars Svensson have argued, in a series of papers 23 , that optimal policy suffers from a stabilisation bias, arising from time inconsistency.

Forward-looking models can be set up in ways where things go wrong for a while. In particular, by allowing agents to learn more or less gradually that the monetary authority really does mean it about achieving its target for inflation (or some other nominal variable) 12 . Everything still turns out okay eventually, but the route can be a bit bumpy. Experiments of that kind can help policymakers to think through, in a disciplined way, what might happen if inflation expectations were to become dislodged. But, so far, they do not do much to help us know what to look for in identifying whether inflation expectations are in the process of becoming dislodged. We do not know enough about how households and firms form their expectations – how much forward7 looking, how much backward-looking – to be able to model the process rigorously. That is not part of the ‘information set’ of policymakers in today’s world. What this underlines is that policymakers may well not be able to rely on their models to help them terribly much when the stakes are highest; ie when our credibility may be fragile. They are tools to help us think. But they don’t tell us the answers. Crucially, we have to make judgments about whether medium-term inflation expectations are, in fact, securely anchored. We need to resist falling into the trap of thinking that the nominal side is now, and forever, nicely looked after by some miracle of credibility.
State supervision according to the global literature has three specific dimensions. i.e., the prudential aspect, conduct of sound business and consumer protection. Prudential supervision promotes the safety and soundness of institutions through their risk management. Conduct of sound business supervision covers fair and orderly conduct of businesses. Consumer protection covers safeguarding interest of consumers. The Central Bank’s supervision mainly covers prudential supervision in three areas, i.e., issues of regulations, examinations and problem resolution. Issues of regulations covers maximum limits on business to limit risks, minimum requirements on risk mitigation instruments such as BIS central bankers’ speeches  3  minimum capital, liquidity, loan loss provisions and governance. Periodical examinations cover the assessment of risk management capacity and early warnings of impending problems to take early remedial actions. Problem resolution covers solution to institutions in crisis or distress such as restructuring, bailing out and liquidation. This supervision has two perspectives at the Micro and Macro levels. Micro supervision means dealing with individual institutions. Macro supervision means actions to protect the system stability. Although the differentiation between the two is barely understood by many, the central banks’ supervisory actions are clearly understood from how central banks have acted in crisis times. The best example is permitting the failure of small ailing institutions and bailing out of systemically important institutions. However, the customers of each ailing institution want the Central Bank to bail them out, despite risky behaviour of both customers and institutions. The Central Bank has no mandate to bail out each such institution and repay their investments.

Following the implementation of inflation targeting, the report will be published quarterly; - a model calibrated by the Bank’s staff is currently being tested and will be used for forecasting purposes. Instead of going into the details related to the Inflation Targeting framework, I will let my fellow speakers tackle the most important issues. Shortly after this, Deputy Governor Ms. Rachel Lomax will present a compelling account of UK’s experience and, may I add, success as a benchmark inflation targeter. After the lunch break, Gill Hammond, Deputy Director of CCBS, will give you an excellent presentation dealing with specific issues and challenges faced by emerging market economies when adopting inflation targeting. Later on, we will have our guests from the Czech National Bank and the National Bank of Hungary giving you a purposeful insight of such challenges and of their countries’ experiences with the IT framework. Mr. Ludek Niedermayer, Deputy Governor of the Czech National Bank, will first explain to you “why and how” inflation targeting was adopted in the Czech Republic – the first country to embrace this regime in our region. Then, it will be for Ms Csermely Agnes, Director with the National Bank of Hungary, to share with us the “Lessons and Challenges” put forth by the Hungarian experience with inflation targeting.
With the largest current account deficit in the advanced world, the right policy mix leans towards tighter fiscal, more accommodative monetary and tighter macroprudential policies. 33 Given these considerations, the MPC will have to feel its way as it goes, monitoring a wide range of indicators and adjusting the pace and degree of Bank Rate as it learns about the effects of higher interest rates on the economy. There is, in fact, a wide distribution of possible outcomes around any expected path for Bank Rate, reflecting the inevitability that the economy will be buffeted by shocks and that monetary policy will have to adjust accordingly. After all, as the story of Magna Carta shows, history rarely proceeds in a straight line… why should monetary policy? 32  The MPC expects to refine its estimates of these effects in future Inflation Reports. 33  See Carney, M (2014), Speech at the Lord Mayor’s Banquet for Bankers and Merchants of the City of London at the Mansion House, London, June. BIS central bankers’ speeches  11

Zeti Akhtar Aziz: Strengthening relations between Indonesia and Malaysia Remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Launch of PT. Bank Muamalat Indonesia, The Malaysian Branch and First Islamic Investment Bank Ltd, Kuala Lumpur, 5 March 2009. *  *  *  It is my pleasure to be here this morning on this occasion of the launch of the Malaysian branch of PT. Bank Muamalat Indonesia, and its subsidiary, First Islamic Investment Bank Ltd., established under the Malaysia International Islamic Financial Centre (MIFC) initiative to operate foreign currency Islamic financial business in Malaysia. This is a significant development as it represents the first Indonesian financial institution in the Malaysian financial system. Indeed, this occasion signifies a further step forward towards strengthening the bilateral, financial and economic relations between Indonesia and Malaysia. The settingup of these two institutions in Kuala Lumpur would contribute towards accelerating the financial linkages that will underpin the expanding trade and investment ties between Indonesia and Malaysia. As the largest Islamic bank in Indonesia, we will also have the opportunity to leverage on our respective strengths and expertise and to mutually reinforce the benefits to be gained from this development. Potential of Islamic finance amid slower economic growth in the region Cumulatively, the total output of the ASEAN economies amounts to USD1.3 trillion while total trade of the ASEAN region now amounts to USD1.4 trillion.
I believe that the high level of debt, combined with an unwillingness to have higher debts than assets, could in such a situation have negative effects on growth in consumption.10 I would therefore feel more secure if the level of debt was lower, or at least was not increasing. But if I would feel more secure with a lower level of debt, why not use monetary policy to try to slow it down? The answer is simply that the disadvantages with using monetary policy in this way outweigh the advantages. A trade-off between target attainment at different horizons One fundamental problem here is how to make the trade-offs clear to economic agents, which is necessary if one wishes to convince them of the need to lean against the wind. The policy the Riksbank has conducted for some time means that one deliberately allows longer time for both inflation and the real economy to return to normal levels. At the same time, this is justified by the Riksbank’s mandate to stabilise inflation around the inflation target and production and employment around long-run sustainable levels. It is probably not clear to everyone how the actual aim of the policy is connected to the justification for it. The tradeoffs therefore need to be made concrete and clear – partly so that the Riksbank’s principal can assess its monetary policy, and partly so the general public can understand the basis for the policy the Riksbank conducts.

I see a risk in allowing monetary policy to continue to lean against the wind until one sees tendencies for  15  I n a long-run perspective, inflation below the target could lead to unnecessarily high unemployment if inflation expectations are firmly anchored around the target (see Svensson, 2013). In the same way that unexpectedly high inflation benefits those who borrow and is a disadvantage to those who lend as the real value of the debt becomes lower than anticipated, unexpectedly low inflation can benefit those who lend at the cost of the borrowers. BIS central bankers’ speeches  7  inflation expectations in the long run to begin to adjust downwards. That is a situation that might be hard to turn around. Target attainment is important for credibility One argument that is sometimes put forward is that the differences between what the majority of Executive Board members and the minority advocate are so small and that in practice it is not very important whether or not one cuts the repo rate a little more. And in a strictly “mechanical” sense, it is perhaps true that a policy rate that was 0.25 percentage points lower for a period of time would have a limited effect on the economy. But for the sake of credibility and target attainment in the long run, it is also important how households and companies perceive monetary policy. How seriously does the central bank view the inflation target?
Even when financial contracts deal with the possibility that a LIBOR quote might not be available, they seem to have been drafted assuming that the gap is temporary, not permanent. In a permanent cessation of LIBOR, the fallback solutions in existing contracts become impractical or materially change the economics. That’s a situation that invites litigation, and in the case of LIBOR that litigation would be on a massive scale. So while this prospect might not be unwelcome to certain members of the litigation bar, this is not good news for those interested in maintaining financial stability. For example, many contracts state that if a calculation agent cannot find a LIBOR quote for a given day on the usual Reuters screen, it will call three large London banks and ask them what their borrowing rate is for that day—basically try to privately replicate LIBOR. Imagine if every calculation agent for every transaction tried to do this every time they had to set LIBOR. There would be chaos, especially when those London banks had already decided to get out of the LIBOR-estimating business. Why would they even respond? For some types of transactions—floating-rate notes, for example—there is a further fallback: to fix the interest rate at whatever the last LIBOR quote was. This is not a very satisfactory solution to either the issuers or the borrowers who thought they had an instrument that protected them against interest rate risk. Other transactions like syndicated loans may revert to prime rate loans —again, not what borrowers may want.

The balance financial intermediaries are regulated by various authorities while some are not regulated at all. Banking companies in Sri Lanka come under several jurisdictions, but the Banking Act is the centrepiece for financial regulations. It sets out all necessary regulatory provisions for capital requirements, shareholder limits, credit operations, provisioning requirements, consolidation, acquisition and mergers, suspension, winding up of banking companies, etc. Sri Lanka’s banking sector is currently operating on Basel I, but getting ready to implement Basel II Capital Adequacy Ratios from early 2008. Basel II is basically risk mitigation in banking operations and, it allows supervisors and regulators to encourage or require banks to build up capital buffers in good times. Financial regulations have thus been set taking into consideration the cyclical situation which banking firms face in home and host countries. In addition to the provisions in the Banking Act, the Monetary Law Act which governs the operations of the Central Bank, also provide for regulation of banking companies. However, in recent times, through various amendments, most of the provisions of the Monetary Law Act have been incorporated in the Banking Act. Their stock market operations come under the purview of the SEC Act. In addition to the banks, the Central Bank regulates the finance companies under Finance Companies Act and the leasing companies under the Leasing Act. The primary dealers who deal in the government securities market irrespective of whether they are banks or not, are under the supervision of the Central Bank.