samchain/econo-pairs-v1 huggingface dataset:
Birgir Ísleifur Gunnarsson: Monetary policy, economic growth and prosperity Opening address by Mr Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, at a conference to mark the 60th anniversary of the University of Iceland Faculty of Economics and Business Administration, Reykjavik, 31 October 2001. *  *  *  I would like to congratulate the University of Iceland’s Faculty of Economics and Business Administration on its 60th anniversary, its noteworthy activities and its contributions towards strengthening the Icelandic economy. I also wish the faculty every success for the future. At the same time I thank you for the honour I have been shown with this invitation to deliver the opening address at this anniversary conference. I have chosen to call my talk “Monetary policy, economic growth and prosperity.” I shall therefore focus on the role played by monetary policy in economic policy implementation, and its contribution towards economic growth and prosperity. And there is ample reason as well, because the most notable events in economic organisation this year have involved precisely the monetary policy framework and the Central Bank. Price stability Important changes have been made to central bank legislation around the world in recent years.

There is always scope for new opinions in debates on current affairs. The debate in recent weeks partly reflects the fact that people are still absorbing the major changes that were made to the monetary policy framework this year. A wide range of cooperation has taken place between the Central Bank and the University of Iceland in recent years. The Central Bank has supported research projects in its areas of activity, and published the findings in its journals. As the importance of monetary policy becomes increasingly recognised in economic policy implementation, it is vital for the University’s Faculty of Economics and Business Administration to give a high profile to monetary economics, both theoretical and practical. Monetary policy is transmitted through numerous markets and it is vital for people engaged on both the analytical and business sides to have a firm grounding in this field. Similarly, it is important for the dialogue on monetary policy to be conducted as far as possible on a firm professional basis. The Central Bank is eager to cooperate more closely with the faculty and other bodies on strengthening university level teaching in monetary economics and central banking. Ladies and Gentlemen: In this talk I have described the changes made in Iceland’s monetary policy implementation and new attitudes to monetary policy in much of the world. The main task of most central banks is to promote price stability, because it is recognised that by doing so they make the best contribution to economic growth and prosperity.
Trichet: I can confirm that three of the four decisions were unanimous or taken on the basis of a consensus. One decision namely the Securities Market Programme was decided, as I have already said, by an overwhelming majority. All our decisions – including last Sunday’s – are taken after weighing up all the pros and cons. HB: Were you not in contact with authorities? Trichet: Yes, I was in contact with my good friend Ben Bernanke, the Chairman of the Federal Reserve and other central bank governors, throughout the evening and the night. It was not only a European but also a global serious situation. HB: For more than ten years, the ECB was able to keep inflation in the euro area under control. Now, all of a sudden, the Union has stopped functioning properly. What has happened? 2  BIS Review 67/2010  Trichet: We are currently facing challenges on a global scale. The events that we are now seeing have ceased to be a matter solely for Europe. The challenge of running sound sustainable fiscal policies is the problem affecting most of the world’s major industrialised countries. That needs to be understood. The crisis in private financial markets has now been followed by severe tensions in the public sector. Ultimately, all industrialised countries are very much in the same boat. HB: From Athens are coming only nice words, just words… Trichet: No, nice words aren’t the only thing coming out of Athens.

The situation in a number of financial markets was hampering the transmission of our monetary policy, a monetary policy stance that we had judged to be appropriate precisely the previous Thursday. That had to be put right. The exceptional circumstances demanded that we act swiftly. HB: What volume will the purchase programme have? Trichet: I do not provide any figures at the moment. HB: The markets would like to know in somewhat more detail how you intend to absorb the liquidity again. Trichet: Allow me to repeat myself: We are not changing our monetary policy stance. We are not embarking on quantitative easing. We will withdraw the liquidity that we will inject mainly through tendering term deposits. HB: Will that be possible? Trichet: Of course. It does not present technical difficulties. That is what we intend to do. And let me say, that what counts, is our determination and the fact that we are true to our primary mandate of safeguarding price stability. The Governing Council will not tolerate inflation. HB: Is Greece an isolated case? Could the same happen to other countries as well? Trichet: Greece was clearly in a unique exceptionally grave situation before it embarked on its adjustment programme. But I call solemnly upon all countries to implement programmes commensurate to recover sound fiscal situation. HB: What has to be done?
Third, and this is the trickiest of the three, is when individuals consciously tap on these cognitive biases to their own advantage. The rise of the asset management industry is one example, where asset managers’ herd behaviour may be looked at as perfectly rational. An IMF researcher referred to such situations as “rational bubble-riding”, whereby financial benchmarking and the short-term nature of performance appraisals imposed on asset managers, lead them to consciously ride on bubbles, despite believing that the prices are unjustified by fundamentals. Investors may be incentivised to herd, preferring to succeed or fail together to prevent reputational damage. As John Maynard Keynes famously said, “It is better for reputation to fail conventionally, than to succeed unconventionally”. Whether these cognitive biases are unconsciously wired in us or consciously being tapped on, we ought to recognise the power of perception. Edward de Bono aptly pointed out that “perception is real, even if it is not reality.” In reality, a few of these misperceptions result in tangible consequences that influence the ringgit exchange rate level. Let me cite five instances of misperceptions that have been making its rounds in the market: First, the perception that the ringgit is driven by oil prices. This was derived from fact that Malaysia is one of South East Asia’s net exporters of oil and gas. Petronas is also one of the world’s largest producers of LNG.

Two factors are behind this development: the sharp appreciation of the Swiss franc following the discontinuation of the minimum exchange  2  4  According to World Bank data, the Swiss economy ranked 20th out of 194 countries in 2014. Switzerland’s export intensity is significantly above the OECD average. BIS central bankers’ speeches  rate and the pronounced fall in oil prices last year. These factors are transitory, and as such do not pose a threat to price stability over time in Switzerland. Exchange rate appreciation and the energy price decline are the results of international spillovers that affect consumer prices primarily by lowering import price inflation. 3 Chart 8 shows that most of the downward pressure on Swiss inflation is attributable to these international spillovers. However, as can be seen in the chart, domestic price components have shifted down as well. This harks back to the flexibility of Swiss companies, which I referred to earlier. In particular, those Swiss companies that compete in markets for imported goods have lowered their prices in order to maintain competitiveness in the wake of the exchange rate appreciation. Such price cuts play an important role in restoring the Swiss economy’s price competitiveness over the medium term. They are thus part of the adjustment process in response to the sudden exchange rate appreciation. That such a process can be painful for some of the companies directly involved goes without saying. For this year, we expect consumer price inflation to average about –1.2%.
Focus groups and surveys conducted by the Federal Reserve System suggest this contraction is the result of three distinct factors – a decline in demand for credit, a tightening of lending standards, and a weakening of credit quality due to lower collateral values and cash flows. 1 Which is the most important is difficult to discern. However, surveys of small-business owners indicate that much of the weakness in lending to this sector reflects lack of demand. The National Federation of Independent Business (NFIB) Small Business Optimism Index, for instance, asks respondents to indicate their single most important problem from a standard list. For some time now, the response “poor sales” has been the most frequently cited problem. In contrast, relatively few respondents cite “financial and interest rates” as the most important problem (Chart 13). A caveat to this is that credit constraints could be inhibiting the formation of new small businesses – something that surveys of existing firms would not capture. Although credit availability has begun to improve, the decline in collateral values remains a significant impediment. For example, housing prices have declined so far that nearly one quarter of homes are now worth less than the value of the mortgages that finance them. Lacking sufficient collateral value, such homeowners cannot take advantage of the fact that conforming mortgage rates are at their lowest level in history and refinance their mortgages.

Overall, the desire to rebuild wealth through savings and the limits on credit availability to households has acted to restrain consumer spending, keeping the recovery tepid. To some degree, this adjustment is unavoidable, as the economy had reached unsustainable levels of consumption and housing demand. However, the fact that many of these adjustments are inevitable does not rule out a role for monetary policy to support economic activity. Very low interest rates can help smooth the adjustment process by supporting asset valuations, including making housing more affordable and by allowing some borrowers to reduce debt interest payments. Beyond this direct role in smoothing the deleveraging process – to the extent that monetary policy can “cut off the tail” of the distribution of potential adverse economic outcomes, making a truly disastrous outcome less likely – it can help encourage those households and businesses with money to spend to do so. Today’s low and falling rate of inflation – at a time when interest rates are near zero – is a problem that is slowing the adjustment process. Currently, by most measures, inflation is below the level that members of the Federal Open Market Committee (FOMC) view as consistent with price stability. Although the Federal Reserve has no formal numerical inflation target, it is noteworthy that the long-run inflation forecasts of the FOMC members cluster around 1.75 percent to 2 percent for the personal consumption expenditures (PCE) deflator.
I attributed this in significant part to prudent fiscal and regulatory policy, underscoring that this not only facilitates job and overall economic expansion in Texas, but is the underpinning of confidence. I would suggest that  7  See the FOMC’s /20120125c.htm. 8  “Prosperity at Risk: Findings of Harvard Business School’s Survey on U.S. Competitiveness,” by Michael E. Porter and Jan W. Rivkin, Harvard University, January 2012. 6  BIS central bankers’ speeches  statement,  Jan.  25,  2012,  www.federalreserve.gov/newsevents/press/monetary  now is the time for prudent fiscal policy to be enacted by a Congress that on both sides of the aisle has for far too long, under both Republican and Democratic presidents, been shamefully negligent of its responsibility. Today marks the 1,009th day without an agreedupon federal government budget. The Congress has found it easier to not agree on a budget than to go about correcting fiscal imbalances that drive the nation’s growing indebtedness. Our political leaders’ misfeasance exacerbates the “angst” that inhibits the confidence of consumers and job-creating businesses. My staff has found a wonderful sketch on YouTube that might best illustrate the behavior of Congress. Here it is: http://www.youtube.com/watch?v=Li0no7O9zmE. That sketch says it all. The Fed, the nation’s monetary authority, has clearly articulated its longer-run goal and policy strategy and has conducted itself with integrity by responding to the needs of the economy. In contrast, the fiscal authorities have conducted themselves with impunity: Their only long-term strategy is to pass the bill to our children and grandchildren.

Richard W Fisher: A report on the Texas economy and a hawk(s)eye view on recent Fed pronouncements – what does it all mean? Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Headliners Club, Austin, Texas, 2 February 2012. *  *  *  Thank you, Patti [Ohlendorf]. I am flattered that such a great group of Austinites has turned out tonight. I am especially pleased that Alejandro and Rosa Laura Junco are here. Alejandro is CEO of the print media company Grupo Reforma. He has earned a sterling reputation for journalistic independence in a part of the world where independence is a rare and sometimes dangerous thing. Columbia University, the University of Missouri and Michigan State University have honored him for his journalistic accomplishments, and the University of Texas at Austin has named him a Distinguished Alumnus. Alejandro’s company and its flagship paper in Mexico City take their name from La Reforma, a period of liberalizing reforms that transformed Mexico into a nation state in the mid-19th century, beginning with the overthrow of the man Texans know best and like least – Santa Anna – and ending with the ascension to power of a good general gone bad, Porfirio Diaz. As a child growing up in Mexico City, I was taught about La Reforma in school.
Jessica Chew Cheng Lian: Remittance flows – benefitting lives in Malaysia and abroad Remarks by Ms Jessica Chew Cheng Lian, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Closing and Handover Ceremony of Project Greenback 2.0, Johor Bahru, 30 November 2017. * * * Two years ago, on this very same stage, Governor Muhammad Ibrahim set out two specific outcomes for Project Greenback 2.0 here in this beautiful city of Johor Bahru. First, to further improve on the costs of remittance transactions for individuals and businesses, and second, to help consumers make better and more informed decisions. Today, the results speak for themselves. The average cost of remitting funds* in Johor Bahru is now around 2%, compared to above 3% before we started the Project. The use of authorised money services business providers to conduct remittance transactions has increased by 21% in value terms on an annual basis for the period January to October 2017 against the corresponding period in 2015, offering better protection to customers while safeguarding the integrity of our financial system. Of this, remittances by SMEs using more cost-efficient formal MSB channels has more than doubled. This increase has also outstripped the growth in remittances for the industry as a whole as a result of initiatives under the Greenback project. Over 35,000 migrant workers and 3,700 SMEs were engaged to increase awareness and promote the use of formal remittance services through more than 40 education and outreach programmes organised over the last two years.

ULC, labour costs and productivity in manufacturing 12 10 8 6 4 2 0 -2 -4 -6 -8 -10  ULC  1995  Labour cost per hour  1997  12 10 8 6 4 2 0 -2 -4 -6 -8 -10  Labour productivity  1999  2001  2003  Note. Annual percentage changes. Source: National Institute of Economic Research. 7. SEK/TCW, UNDIMPX xe and imported consumer goods 20  UNDIM PX xe  20  15  TCW  15  Imported consumer goods  10  10  5  5  0  0  -5  -5  -10  -10  -15  -15 95  96  97  98  99  00  01  02  03  04  05  Note. 12-month changes in per cent. Source: Statistics Sweden and the Riksbank  10  BIS Review 25/2005  8. Unit labour costs 6  6  4  4  2  2  0  0  -2  -2 Transport etc  Trade  -4  -4 1995  1997  1999  2001  2003  Note. Annual percentage changes. Source: National Institute of Economic Research. 9.
Running a bank is not like selling books or CDs: there is a whole range of other types of risk – credit, liquidity, interest rate risk and market risk – that need to be taken into account. Moreover, while the internet does indeed lower the barriers to entry, its anonymity and the vast range of choices also increase the importance of brand name. Depositors in particular will feel more comfortable with a name that they know and trust, and perhaps one whose name they see everyday in the street on signs above physical bricks and mortar. So banks with an existing brand name still have some advantage, but it is not something that can be wholly taken for granted. The banks will have to work hard to maintain and build their brand image,  BIS Review 108/1999  2  and to offer products which differentiate themselves from their competitors. This is a tough challenge, but it is one which the boards and senior management of banks in Hong Kong will have to confront. Operational risk Operational risk, including security risk, is of course one of the more frequently mentioned risks in connection with electronic banking. Security is not a new risk. We are all familiar with the various security issues that banks are facing on a day-to-day basis, e.g. robberies, thefts of ATM machines, frauds. However, banking transactions over the internet do pose new issues. A major concern about the internet is its open nature.

5 March 2018  The new challenges facing central banks Colegio de Ingenieros de Caminos Luis M. Linde Governor  Let me begin by thanking the School of Civil Engineering for inviting me to inaugurate this cycle of meetings with regulatory agencies. Many thanks to the President of the School, its Management Board and all of you for being here today. The international financial crisis that began in 2007 has given rise to various changes and to the emergence of new challenges. Central banks are, today, in a rather different and novel situation compared with where we were before the crisis some 10 years back, and we are affected by a debate about our functions in the economy and the thrust of our policies. In the past decade central banks have increased monetary stimuli manifold and there have been deep-seated changes in the monetary and regulatory policy objectives and instruments implemented. We are now emerging from the crisis and this is raising even more the profile of the debate on the role central banks should play and whether the policies pursued in recent years should be maintained, or progressively abandoned, and at what speed and to what extent either alternative should be taken.
BIS central bankers’ speeches  13  The Bank’s Monetary Policy Report also presents alternative scenarios for the Norwegian economy. If developments are broadly in line with expectations, economic agents can expect that the interest rate will be set in line with that projected by Norges Bank. If conditions change, as was the case in August, Norges Bank will naturally adapt the monetary policy stance in the light of new economic prospects. Through summer, dramatic falls on stock exchanges and political unrest made the headlines. There are now prospects of lower economic growth in many countries. In both the US and many countries in Europe, public debt is high and fiscal deficits are substantial. At the same time, measures to reduce the deficit in the short term will also dampen activity. Some economists fear a renewed economic setback in the US and the financial markets are characterised by turbulence and uncertainty. The US and EU authorities are facing demanding decision-making processes. In the US, the political parties and the people are divided in their views on taxation and the exercise of central government authority, reflected for example in the absence of measures to strengthen central government revenues. The debt problems in the EU are being aggravated by the lack of a similar coordination of fiscal policy to support the European monetary union. Government finances in many of the countries now experiencing problems have been weaker than required under the EU’s own rules for several years. Measures have been put in place.

Øystein Olsen: Use of models and economic theory in Norges Bank Lecture by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Department of Economics, University of Oslo, Oslo, 8 September 2011. *  *  *  The lecture is based on previous speeches and newspaper articles. A brief comment on recent developments is included in the final section. Please note that the text below may differ slightly from the actual presentation. Allow me to start by thanking you for your invitation to give this year’s Schweigaard lecture. Anton Martin Schweigaard was one of the leading statesmen of 19th century Norway. He was a jurist, a politician and an economist. Although “revival of productive forces” and “expansion of national wealth” were to Schweigaard important objectives for economic policy, most important was the promotion of “moral progress”, “public decency” and “the perfection of political and legal institutions”.1 I doubt that Schweigaard was always impressed by the perfection of political institutions, perhaps in particular the institution of Norges Bank. Schweigaard grew up in modest circumstances in the small market town of Kragerø on the coast of southern Norway – a town severely affected by the British blockade of Norway during Denmark-Norway’s involvement in the Napoleonic Wars in the early 1800s. Norges Bank was established in 1816, the year after the Wars ended. The Storting decided that a compulsory silver tax would be levied to provide capital for Norges Bank.