samchain/econo-pairs-v1 huggingface dataset:
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.

A more detailed description will be provided by Professor Lars Jonung. Economists of the time could not, based on historical evidence, predict that national and international monetary systems would be facing substantial disturbances that would push up the price level considerably and lead to extensive instability. With the First World War, the gold standard was suspended and the money supply and price level rose sharply. The deflationary policy of the 1920s brought the price level down, but probably also contributed to instability. The price level rose again during the Second World War, when the occupying powers used the printing press to finance a substantial portion of their expenditure. The economic policy of the 1970s and 1980s contributed to high inflation. So, how well would economists in 1905 have predicted the Norwegian level of real income in 2005? BIS Review 43/2005  1  They would have been off the mark here too. They were not in a position to predict that the growth rate in the Norwegian and global economies would rise as a result of considerable technological progress, restructuring and higher productivity. On the other hand, they could to some extent have predicted our current industry structure based on their economic history. From 1865 to 1900, primary industries’ share of total GDP fell from about 34 per cent to 22 per cent. In the same period, manufacturing, other goods production and service industries accounted for an increasing share of total GDP.
This is the reason why it has always been my firm belief that timely sharing of experiences and lessons between policymakers is in itself a big part of policymaking. Candid discussions on policy effectiveness and unintended risks that could arise go a long way in minimising potential policy missteps. While capital flow volatility will remain a key feature of the global financial system, we have to acknowledge that with heightened uncertainties prevailing in the global economy, capital flow volatility would only intensify. For example, in Malaysia, two-way capital flows have increased by almost three-fold in the aftermath of the Global Financial Crisis. Yes, we have had large swings in capital flows before and we have been able to manage these surges. What worries me, however, is the fact that monetary and financial stability risks posed by large and destabilising capital flows are expanding, evolving and becoming more entangled. We are very familiar with the risks posed by volatile capital flows. At the extreme, capital flows can lead to the build-up of domestic vulnerabilities, such as currency mismatches, external indebtedness and broader financial imbalances. These risks are becoming more entwined and complex than ever before. Capital flows undoubtedly complicate efforts to achieve monetary and financial stability. Allowing exchange rate adjustment to deal with capital flows may also be too simplistic.

While I commend the significant development of the SEG forum in the 19 years since its inception, I know we can do so much more to leverage on the experience of each member country here. There is definitely a role for SEACEN that goes beyond equipping member countries with the necessary skills to manage capital flows. For instance, SEACEN can provide thought leadership on the need for small open economies to have a broad policy toolkit in preserving monetary and financial stability in the face of volatile capital flows. SEACEN can take a leading role in intellectually challenging the prevailing view that capital flow measures should only be considered as a last resort. There is no monopoly on good policies and Asia has plenty to offer. SEACEN can lead the way. On this note, I look forward to an engaging and fruitful discussion among members in our sessions today. I believe the forum will be thought provoking, with important learning points that 2/3  BIS central bankers' speeches  will help us better weather the new waves of challenges ahead. Thank you. 1 Terms of Reference of the SEG. 2 Jon Kabat-Zinn (1994), Wherever You Go, There You Are. New York: Hyperion. 3/3  BIS central bankers' speeches
A second cost is of a financial nature. Foreign reserves are invested in highly liquid and secure instruments of developed countries, whose interest rates are lower than those of the domestic instruments used to finance their acquisition. This originates a significant cost that deteriorates the Central Bank’s capital. The benefit of having these reserves is the enhanced  BIS central bankers’ speeches  3  security in case of an abrupt cut of external financing. These benefits are hard to quantify, but it is reasonable to expect that they will diminish as the availability of reserves increases, as has been occurring in Chile since 2008. On the real side, the deceleration of output and demand has been slower than expected, reflecting the fact that the external scenario has had a lower than projected impact. Although there are differences among sectors, economic activity in general shows a behavior consistent with convergence towards its long term trend. Some sectors have performed poorly and have shown more cautious inventory management, while others such as Trade and Construction have performed solidly. There are several signs that activity and demand will decelerate in the coming months. On one hand, there is the behavior of imports of capital and consumer goods. Worth noting is the drop in car imports that has taken place during the last months, consistent with the cautious behavior I mentioned a few moments ago. On the other hand, domestic credit conditions have also become somewhat tighter these last months, specially for consumer loans.

After the crisis began, major central banks were soon forced to lower interest rates to the effective zero lower bound. Or so we thought at the time: some central banks are now testing the bound by bringing interest rates further and further below zero. Even so, it is clear that there must be some effective lower bound on interest rates. Furthermore, negative rates, if maintained over a significant period of time, may result in financial market distortions; for example by causing lasting damage to the money market fund business model. Central banks responded to this new challenge through a variety of unconventional measures which included what is known now as quantitative easing (or QE). However, there is still no full agreement about the effectiveness and the collateral effects of these unconventional policies. (I will speak about some of its side-effects a bit later). Even before the debate about the limits of IT frameworks at a zero-lower bound, many economists, particularly in academia, proposed innovative monetary policy regimes such as price-level or even nominal GDP targeting. These regimes were seen as more powerful in the zero lower bound because they would effectively require central banks to make up for periods of below-target inflation or nominal GDP growth by keeping rates lower than required under IT after the economy recovers.
There is uncertainty about the exchange rate, in connection with the settlement of the failed banks’ estates and the liberalisation of the capital controls. There is little I can say about that at this point, but the aim of the work the authorities are doing at present is to minimise that risk. It can be done, but it is a risky process, and one that could be derailed at many points along the way if great care is not taken – and perhaps even if great care is taken. And now I will turn to monetary policy. Yesterday the Monetary Policy Committee decided to lower Central Bank interest rates by 0.25 percentage points, in view of recent developments and the near-term outlook for inflation and the decline in inflation expectations, which I mentioned a moment ago. If the Bank’s interest rates had remained unchanged, its real rate would have been higher than is warranted by where we are in the economic cycle and by the near-term outlook, particularly in view of the fact that it could rise still further in coming months. Estimating the Central Bank’s real rate is not always a simple matter, as different measures of inflation and inflation expectations give differing results. According to an estimate based on the average of various measures of inflation and inflation expectations, the Bank’s real rate was about 2½% before the recent reduction, and it had risen by approximately a percentage point in the previous year, which is a large change in terms of real rates.

And last but not least, GDP growth has been relatively robust and the margin of spare capacity in the economy has been disappearing at the same time as inflation has been trending towards target. Many observers would consider this to be evidence that monetary policy has hardly been on the wrong track. Yesterday’s announcement that future interest rate movements would depend on wage developments in the labour market seems to have drawn some attention. But there seems to be some misunderstanding about what this means. Over time – but not necessarily at every moment in time – wages in the labour market as a whole – but not necessarily for each group – should rise by an amount equal to the inflation target plus productivity growth. How much this is depends, then, on productivity growth. At present, productivity growth appears to be low – about 1%. This means that the scope for wage increases consistent with the inflation target is 3.5%. What that means for wage settlements depends on the degree to which wage drift can be contained. Some groups could receive larger pay rises than this, but then others would have to have smaller increases. Sometimes there are grounds for this. Then it is important to bear in mind that this is a long-term relationship.
But, given that it is 50 years since Stonewall, it’s clear we have more catching up to do. And this is where we owe OPEN Finance a great debt of gratitude. OPEN Finance gives us the tools we need to assess how we’re doing, and where we need to make progress. With the support of OPEN Finance, and the dedication of the Open Network at the New York Fed, we’ve introduced a number of new policies and measures that drive our efforts to make the Bank the open and inclusive employer we aspire to be. I’d personally like to thank David Ignell and Gil Carroll, presidents of our Open Network, for their work moving us forward. These efforts are important because they send a message to LGBT employees and the organization as a whole about our values and culture. I’d like to share one specific example. We recently created the option to add gender pronouns to our official e-mail signatures. This is a part of an organization-wide effort to raise awareness around the use of pronouns. On its own, it may seem like a small change, but it sends a loud message that part of respecting one another is using the correct pronouns. This effort has been well received, and a big part of that is because it’s created spaces for conversations that just weren’t happening before. But policies can only go so far.

How are credit derivatives used in Sweden? As you may know, Sweden currently has one of the world’s most developed derivative markets. This is seen in relation to the size of the economy and the turnover on the stock market. But when it comes to credit derivatives, the situation is different. Here the trade is much more limited. This is primarily due to our corporate bond market being so small. And without corporate bonds, it has been difficult to trade in credit derivatives. The major Swedish banks base their core activities on long-term customer relations. Credits to small and medium-sized companies are predominant. The banks’ exposures to companies traded actively in the credit derivatives market are relatively small. Moreover, the banks have had plenty of capital and the need to sell credit risk to outsiders has been limited. The number of deals in credit derivatives has increased in recent years, but the total exposures remain small, on the whole. The major part of the trade has been on behalf of customers. This means that the banks mediate deals for customers, for instance, insurance companies, which for various reasons want to buy or sell credit risk. If we look ahead, there is reason to believe that credit derivatives will gain increased significance. This is partly related to the new capital adequacy rules, Basel II. The Basel rules, the old and the new, regulate how much capital a bank needs to cover the risks in its credit portfolio.
We can, of course, replicate this financial infrastructure for other currencies, and indeed we are currently exploring the possibility of doing so for the other major international currency not domiciled in this time zone the euro. And if this is appropriate, we can also transfer our technology to others through our advisory services. I am, in particular, thinking of the RMB financial infrastructure, which in my opinion requires urgent strengthening, not just for facilitating the development of the RMB bond market, but also for facilitating the many further measures in financial liberalisation following WTO accession. Meanwhile, our US dollar financial infrastructure in Hong Kong, coupled with the market making arrangements that have been well tried for over a decade, and the critical mass of financial institutions, is ideal for the launching of a US dollar bond programme for the Mainland. I understand, of course, that with foreign reserves well exceeding $ 200 billion, there is arguably little need for the Mainland to raise additional foreign debt. But part of the outstanding foreign debt could be refinanced in Hong Kong through such a programme. Perhaps with a liquid market and a reliable benchmark yield curve established, similar to those of Exchange Fund paper in Hong Kong dollars, the overall borrowing costs could be lowered.

Zeti Akhtar Aziz: Building institutions to support economic development Special lecture by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the SEACEN Conference on Central Bank Cooperation and Mandates “Building Institutions to Support Economic Development”, Sasana Kijang, Kuala Lumpur, 14 March 2016. *  *  *  Introduction It is my great pleasure and honour to speak at this conference in honour of Dr. Puey Ungphakorn on the subject of “Building Institutions to Support Economic Development”. The topic is highly relevant in the current environment which places greater demands on institutions given the significant structural shifts that are taking place in the global landscape and the changing character of the economic cycles that has brought with it a great many new challenges that need to be managed. Given that building institutions is about creating a positive environment for the economy to function, one that will shape the incentive structure that will drive economic activity and encourage the efficient use of resources, the new evolving environment would place a further urgency for institutional building. There is thus a great motivation for building effective institutions to serve this purpose. In particular, the urgency is for strong institutions that will transcend the passage of time and will ensure the path towards sustainable economic growth and development. Experience has shown us that institutions are pivotal to any economic success. However, institutional building is in itself an arduous task. And building institutions that are relevant for the future is even more challenging.
The five steps range from "Normal" to "Viability at Risk" and terminally, "Winding Up or Closure". Insurers assessed to be on the more critical steps will receive more stringent and intrusive supervisory actions. MAS draws the analogy between the risk classification of an insurance firm and the medical assessment of a patient's health. If an insurer is classified as being on the "Viability at Risk" step, it will probably be admitted to MAS' Intensive Care Unit. However, MAS is not regulating for a no-failure regime. We encourage industry consolidation. In today's competitive environment, size brings financial strength and facilitates diversification on both sides of the balance sheet. But it is not possible, and also not desirable, to operate on the basis that we will never, under any circumstances, allow a financial institution to fail. That way lies moral hazard. Improving corporate governance and internal controls A risk-based supervisory approach relies heavily on the strength of company leadership and management. Corporate governance is thus critical. MAS expects the Board of Directors to provide clear strategic leadership and set consistent corporate values. Management teams must operationalise these strategies while upholding the spirit of the corporate values. Given the nature of the insurance business, corporate values need to be guided by risk management concerns. What is the company's risk appetite? What should be its risk tolerance limits? What is the level of risk management skills in the company? How profitable is the underwriting of various classes of risks?

It needs to be structured in a way that is subordinate to general creditors, allowing for debt to be bailed in without the disruption of also having to bail in general depositors, or the operational difficulty of having to unpick a large derivatives book. And, for the large, complex international groups, the GLAC needs to be held in the right place so that the resolution plans drawn up in advance can be implemented. Where it is intended that the bank should be resolved at group level, the GLAC needs to be held in the holding company with a mechanism for transferring the loss absorbing capacity it provides to  BIS central bankers’ speeches  5  subsidiaries in other jurisdictions. Where the bank is to be resolved at a local level, the necessary GLAC needs to be held in each jurisdiction, either in subsidiaries or intermediate holding companies. The effectiveness of the legal framework for resolution relies not only on bail-in powers and having something that can be quickly and easily bailed in. It also requires contracts that recognise resolution powers across different jurisdictions. Though domestic and European law will create powers for the resolution authority to adjust the terms of local contracts, the law does not automatically provide for recognition of powers for contracts issued in different jurisdictions. Derivative contracts, in their current form, are a potential show-stopper here.
00-05  2006  2007  2008 (e)  2.9 2.4 3.1 2.2 1.5 10.0 5.5 2.7 2.7 3.0  3.8 2.9 2.5 1.9 1.6 9.4 4.8 3.0 3.1 3.1  5.1 3.9 2.8 2.9 2.0 11.6 5.5 5.6 3.0 4.6  5.2 3.8 2.0 2.7 2.4 13.0 5.9 5.7 3.2 5.0  3.2 2.2 1.1 0.9 -0.6 9.0 3.0 4.2 1.0 3.0  2009 (f) Report May'09 -1.2 -2.3 -3.0 -3.5 -7.2 6.5 -1.9 -2.0 -1.7 -1.5  2010 (f)  June IPoM meeting May'09 S S S T S S S T = S  -1.1 -2.2 -2.7 -4.1 -6.8 7.3 -1.8 -2.6 -1.7 -1.4  2.1 1.4 0.5 0.4 0.9 7.5 1.4 1.5 0.9 2.0  June meeting S S S = = S S S S S  2.3 1.6 0.6 0.4 0.9 7.8 2.1 1.9 1.3 2.3  (*) Regional growth are weighted average by world GPP participation in IMF World Economic Outlook (WEO, April 2009) (e) Estimated; (f) Forecasted. Fuente: Central Bank of Chile base on investment bank data, Consensus Forecast and IMF. Commodity prices have posted substantial increases in the past few weeks. Both copper and oil have seen their prices rise more than 50% since the end of 2008. The copper price hike reflects increased demand, especially from China. In the case of the oil price, the increase began showing in domestic prices, partly offset by the recent appreciation of the peso. Little by little, dislocations in international financial markets are being fixed.

On the contrary, the significant contraction of domestic demand, in particular for imported durable goods and inventories, spontaneously and quickly undid the incipient external deficit of the second half of 2008 and interest rates in Chile dropped. The Chilean economy has continued to show a very solvent net external position. BIS Review 93/2009  3  Figure 2 CPI and selected inflation measures (annual change, percent) 0  10  8  8  6  6  4  4  2  2  0  0  -2  01  02  CPI  -2  Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09  CPIX  CPIX1  CPI minus foods and energy  Sources: National Statistics Bureau (INE) and Central Bank of Chile. As we have pointed out on earlier occasions, persistent movements of the exchange rate may have inflationary consequences that must be taken into account when deciding on the monetary impulse. Anyway, our floating regime admits intervening in exceptional cases, whenever an overreaction of the exchange rate is detected that is giving misleading signals to the financial markets. In addition, although there is no obvious misalignment of the current real exchange rate from its long-term fundamentals, the present inflationary scenario may accommodate a nominal depreciation that does not compromise our price stability objective. In fact, imported inflationary pressures influence medium-term inflation, so if the recent appreciation of the peso persists, inflationary prospects will certainly moderate, which, as I just stated, has implications on the conduct of monetary policy.