samchain/econo-pairs-v1 huggingface dataset:
0.2 0.1 0 -0.1 -0.2 -0.3 -0.4 -0.5 -0.6 -0.7 -0.8 Mar 2015  Chart 22: Term structure of inflation swap forward rates  5th to 95th percentile (2009-13) Interquartile range (2009-13) Unconditional mean (2009-13) Latest  Per cent 4.5 4.0 3.5 3.0 2.5 2.0  2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Years ahead  Sources: Bloomberg and Bank Calculations. Notes: Unconditional distribution from a parametric factor model using data from January 2009 to August 2013. Data from May 2012 to January 2013 are excluded due to uncertainty about proposed changes in RPI methodology, which temporarily affected expectations of the RPI-CPI wedge. On either measure, inflation expectations have fallen over the past year at all horizons. At longer-term horizons, that is difficult to reconcile with global disinflationary trends having been the result of one-off falls in global prices. Measured expectations suggest that lower inflation is expected to persist. To the extent this affected wage and price-setting, those expectations could become self-fulfilling. A number of plausible explanations for a shift in longer-horizon inflation expectations are possible. One is greater slack in the economy than is currently assumed in the MPC’s central projections. A second is doubt about the ability of monetary policymakers to boost inflation – for example, because of the constraint of the zero lower bound on interest rates. A third explanation is greater expected persistence in low global price pressures.

And changes in the competitive structure of labour and product markets can influence the impact of slack on wage and price pressures, causing the Phillips curve to change slope over time. 2  See the Governor’s Open Letter to the Chancellor (Bank of England, 2015b). 3  Bank of England (2015b). 4  Google Scholar lists more than 3000 citations for Phillips’ original article (Phillips (1958)). BIS central bankers’ speeches  5  Chart 10 plots the historical relationship between wage growth and unemployment in the UK over the period since 1856. Although noisy, it suggests a negative relationship between the two, with an average slope of just under ½. In others words, a 1 percentage point increase in the unemployment rate has, on average in the past, lowered wage growth by around half a percentage point. A somewhat clearer window on this long-run Phillips curve relationship is provided by looking at distinct monetary regimes: exchange rate targeting regimes under the Gold and dollar standards (1856–1970); discretionary monetary policy regimes without central bank independence (1970–1997); and inflation-targeting regimes with independently-set monetary policies (1997 onwards). Chart 11 plots the Phillips curve relationship over these windows. The introduction of discretionary monetary policy regimes, without independence, caused an outward shift in the Phillips curve and a shift up in wage and inflation expectations. That is consistent with a loss of monetary credibility.
This inaugural conference is set to mark a significant step to enhance collaboration and deepen financial linkages in Islamic finance between Malaysia and Hong Kong. The theme “Sukuk as a Viable FundRaising and Investment Instrument” is most apt, given that the ethical-based fixed income instrument has increasingly gained recognition by the global financial community as an attractive source of funding for real sectors and long-term development. Adoption of best practices for sukuk issuance The growth of the global sukuk market has been very promising. It reached a stock value of USD268 billion at the end of 2013 and since 2000 has grown at a cumulative average rate of 50% per annum. The creation of a sukuk market in Hong Kong is a timely initiative as it has the potential to further spearhead its foray into Islamic finance. Sukuk, as a new asset class, is ideal for portfolio diversification and is increasingly well-accepted all over the world. From our experience, the new venture by Hong Kong into the sukuk market may be able to deepen its bond market further and open the opportunity to tap the burgeoning investor pool seeking good quality Shariah compliant and ethical-based instruments. Being a player in an increasingly developed sukuk market, Hong Kong has the opportunity to adopt the best practices in sukuk issuances. Firstly, in the area of Shariah standards where it provides principle-based guidance on the execution of Islamic financial contracts. Such standards are designed to cover the needs of different jurisdictions.

Examples include using the Kuala 2  BIS central bankers’ speeches  Lumpur Regional Centre for Arbitration that offers services as dispute resolution for Islamic financial contracts; Hong Kong issuers tapping the Ringgit sukuk liquidity for cost-effective pricing given the depth of the sukuk market in Malaysia; as well as enhancing knowledge and expertise in Islamic finance through our higher learning education centres such as the International Centre for Education in Islamic Finance (or INCEIF). Forward-looking scenario – A common trading platform for sukuk Future growth prospect for the sukuk market is tremendous. Growth is expected to come from the GCC and Asian regions as infrastructure projects are estimated to be USD2 trillion and USD8.3 trillion respectively till 2020. Hong Kong, with its sizeable bond market to GDP of 72% can play a role in funding these projects. Moving forward, more efforts are needed towards developing financial inter-linkages between our two markets. One area is for our financial communities to explore a common sukuk trading platform for cross-border transactions. A common platform that incorporates international standards and best practices in all aspects of the sukuk trading is key to instil confidence in secondary markets. It can also increase cross-border activities. It has the potential to spur further diversification of product offerings, reduces cost of intermediation and boosts trading activities.
For example, in the case of an event with a binary outcome (where the event either occurs or not), the modal outcome can be assigned a probability that ranges from 50 percent to 100 percent. Finally, a problem with questions asking for a point forecast – “what do you think will be” or “by how much do you expect” – is that it is not clear whether the estimate individuals provide represents a mean, mode, median, or something else. Research also suggests that some respondents provide a point estimate that reflects varying degrees of loss aversion rather than just a pure forecast. Among the advantages of questions asking directly for the likelihood or “percent chance” of different outcomes are ease of interpretation, comparability across respondents, and the ability to measure subjective uncertainty. The consistency of a respondent’s answers can be checked using the laws of probability, and importantly, probabilistic questions permit elicitation of the quantitative measures of belief and uncertainty typically required in estimating economic models. Researchers can use a variety of methods to check the validity and information content of probabilistic subjective expectations data. First, one can look at response rates, reported ease and clarity of the questions used to elicit expectations, the use of focal points in responses, and the internal consistency of responses.

David Carse: The way forward for banking sector reform Speech by Mr David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority, at the American Chamber of Commerce Financial Services Committee luncheon meeting, Hong Kong, 9 April 2001. *  *  *  Ladies and gentlemen, The Hong Kong banking system is going through a period of unprecedented change. This is being driven by shifts in the competitive environment and by changes in the regulatory structure. I would stress that Hong Kong is not alone in this – what we are witnessing here is similar to the trends in other major banking systems around the world. Perhaps the changes have hit Hong Kong rather later than elsewhere. But the changes are now here and they are here to stay. This poses new challenges for the banks and, I would add, for the regulators. The purpose of this speech is to outline the current trends and how the HKMA is reacting to these through the introduction of a number of reforms of the banking sector. The underlying aim of these reforms is two-fold. First, we want to try to promote efficiency and innovation in the banking sector through removing barriers to competition. Second, we want to ensure that the safety and soundness of the banking system is maintained in an environment of increased competition and that there is adequate protection for depositors. Current banking trends These are long-term strategic objectives.
The underlying assumption for direct monetary policy intervention is that the central bank is better equipped than private agents to ensure an efficient allocation of resources. But it is not a given that central banks would have such an informational advantage. Quantitative easing therefore does not aim to promote some types of assets over others but merely to free up capacity to finance the economy. For instance, current monetary policy encourages investment in longer-term projects, with better returns than government bonds, such as infrastructures and energy transition. But with one prerequisite: prudential regulations must be consistent, which may require adaptations to the framework laid down by the Solvency II insurance Directive. I welcome a number of recent  2  BIS central bankers’ speeches  proposals promoting infrastructures made by the European Commission, which are a step in the right direction. 2. The information challenge: the role of disclosure  The potential risks posed by climate change to the financial sector are complex and we have only just started to understand them. The most urgent need is probably better information. Much high-quality work has been carried out in recent years to improve disclosure on climaterelated issues. The French act on energy transition, which was enacted on 17 August 2015, strengthens the requirements regarding the disclosure and management of environmental risks.

We need to ensure that any new requirement provides the right incentives to financial institutions, gives a certain degree of flexibility to the authorities and does not create disincentives to make headway in the energy transition process. Modest, adaptable, yet determined. Because there is a battle to be won and because the current market signals – overly low carbon prices and an overly short time horizon – are insufficient to ensure full mobilisation. There are a large number of private initiatives. But there is also a need for a public framework to ensure the general and lasting alignment of interests. We are determined to play a full part, from Basel to Paris and elsewhere. Thank you. 4  BIS central bankers’ speeches
In the real economy, asset prices rose and household balance sheets in particular became stretched. Fast forward to the present day and the neat separation of powers and responsibilities between policymakers has evaporated (Chart 6). Monetary policymakers are beginning to explore unconventional tools to arrest the economic decline as nominal interest rates approach the lower bound. Fiscal policy has returned as a major tool of macroeconomic management as well as an essential support to the banking sector. And the Bank and the Treasury have been drawn deeper into the financial stability realm. A substantial share of the British banking system is now owned by the UK taxpayer. Are these just temporary changes to deal with an exceptional crisis or were there some more structural flaws in the original design and the consensus that underpinned it? I would draw out seven lessons. (Chart 6) Lesson 1: The limitations of private-sector risk management One weakness in the system was the failure of banks and many other investors to appreciate, price and manage risk.3  2  http://www.bankofengland.co.uk/publications/workingpapers/wp290.pdf. 3  For a comprehensive discussion of these issues see the recent speech by Andrew Haldane, the new Director of Financial Stability at the Bank, in Why banks failed the stress test. BIS Review 21/2009  3  It was not that banks were blind to the froth in financial markets.

FOCUS: Greece, with its high levels of debt, would need to make drastic savings. How is that possible? It would result in mass demonstrations or even political unrest. Trichet: Let me say this again. All countries have to put their house in order. Greece is no exception to this rule. Ireland has also taken these courageous and difficult steps. I am convinced that, given the nature of the situation, the Greek government will do likewise in order to meet the 3% goal it has just committed itself to for 2012. FOCUS: Can you envisage Greece having to leave the euro area if the country does not manage to resolve its problems? Trichet: I have already said that I don’t comment on absurd hypotheses. FOCUS: You once said that the countries participating in Economic and Monetary Union share a common destiny. In this case, the strong countries would have to help the weak ones. Should France and Germany help Greece? Trichet: I repeat solemnly: we – the 330 million citizens of the euro area – share a common destiny. In a monetary union, the ties between the individual member countries are indeed extremely close. The external surpluses of some member countries (in the balance of payments) finance the external deficits of some others, and the constellation can change over time. We all share a credible currency, which is an immense advantage. At the same time, all countries owe it to their partners in the euro area to behave responsibly and correct their imbalances.
This is an important issue, and one that matters if we are to have growing challenger banks. We want to put such a regime into effect, and thus demonstrate that at the PRA we are very serious about our competition objective. I hope the European authorities will likewise pursue this important change. We will also be arguing in Basel and in the EU to narrow the gap between standardised and internally modelled capital requirements for prime mortgages including by having more risk sensitivity in the standardised approach. And, we have also tightened the standard for models. I also want to be clear that we welcome internal model applications by smaller banks and we will do what we can to help them meet the required prudential standards, which are largely set out in the EU legislation. Lord Mayor, a year in your office is never dull, and likewise our world is certainly full of interest. I have ranged quite widely this evening to give a report on a number of our key areas of activity. There are however some very important core principles at the heart of our work, getting the incentives right for firms and individuals, and establishing the importance of personal  BIS central bankers’ speeches  5  responsibility within an appropriate setting. I have been blunt on one or two points and this may provoke debate.

Recognising shifts in the operating landscape, the Financial Sector Blueprint 2022-2026 focuses on fostering market dynamism to enable financial sector to be highly adaptive to wide ranging scenarios. Regulatory efforts will be directed toward targeted interventions to remove undue barriers to innovation as well as address market failures. The Bank is also reviewing how we regulate innovation to facilitate a more conducive environment for solutioning. This includes reviewing existing policies and enhancing the Regulatory Sandbox to better support innovation in value-based finance, including the novel application of Shariah contracts. We also strongly encourage innovation in impactdriven instruments such as Islamic social finance, blended finance, and green solutions. Potential recalibration of existing regulatory requirements will be explored to support the broader and more diversified application of Shariah contracts in advocating inclusivity and sustainability. Secondly, financial institutions must demonstrate immediacy, and act together to solve 'real world' issues. The need for a collective and coordinated response to deliver meaningful impact to stakeholders is urgent and paramount. The flood last year provided a harrowing glimpse of the consequences of fragmented actions. Delayed evacuation responses and inefficient donation allocation to relief centres resulted in lost lives and wastages. Applying lessons learnt to achieve desired outcomes for the financial sector – which is finance for all, finance for transformation and finance for sustainability – requires leaders to have foresight in identifying collaborative  1/3  BIS - Central bankers' speeches  opportunities across industries and work together to develop impactful and scalable solutions.
The savings banks with their strong local implantation and closeness to and knowledge of  5  BIS Review 44/2000  customers should be able to play an important role here. Detailed personal knowledge is an unbeatable weapon in competition. In conclusion With my speech, I have wished to contribute to increasing understanding of and support for the objectives and tasks delegated to us who have been appointed to manage the Riksbank. I believe it is particularly important to create clarity in the sometimes exaggerated view of the import of the Riksbank’s independent position. It is my definite view, given the control the government authorities have over the Riksbank and the openness that characterises our activity, that the demands made in a democracy on an authority responsible for a branch of economic policy are well satisfied. BIS Review 44/2000  6

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And we are totally devoted to our primary Treaty mandate of price stability. We have delivered price stability over 13 years with an annual inflation rate of 2.0% for the euro area as a whole and 1.55% for Germany. This is better than any time over the previous 50 years. For the last four years we have been experiencing the worst global crisis since World War II, and not surprisingly it is hampering our monetary policy transmission. That is why we have had to take some non-standard measures but with caution and prudence. With our decisions since the outbreak of the crisis, we have reacted appropriately to the market failures in the financial markets. We have lived up to our responsibilities. The two German members of the ECB’s Governing Council, Axel Weber and Jürgen Stark, both resigned because they could no longer support the buying up of government bonds. Jürgen is a very good European and a very close friend. Over the last 18 years he has been closely involved in the European construction and European unity. He has been an outstanding ECB Chief Economist. He is one of the greatest champions of the European Union that I know. When, after serving the euro for many years, such a person, who has been totally loyal to the institution, announces his resignation for personal reasons, one has to fully respect his decision. According to opinion polls, a majority of Germans now want the Deutsche Mark back.

It should also be pointed out that in practice, not all goods and services will be objects for cross-border trading and that competition will not therefore be completely all-inclusive, even when the single market has been implemented. The actual introduction of euro banknotes and coins will not noticeably increase competitive pressure in Sweden, as prices here will continue to be expressed in krona and prices in the euro countries will be expressed in euro. This will probably continue to give some scope in the future for specific pricing adapted to Swedish conditions. I stated earlier that the role of the krona as unit of account and means of payment in Sweden is unlikely to be affected by euro banknotes and coins becoming legal tender in the euro area as of 1 January 2002. The krona is also likely to continue to play an important role as store of value for Swedes, as least uncertainty over real growth in net wealth, i.e. future real purchasing power, will be achieved if households save and borrow in assets and liabilities in their domestic currency, as long as price stability is maintained. Hence, a large part of Swedish households' assets and liabilities are held in krona today. Those Swedes who now choose to build up their future purchasing power by buying euro bonds are probably intending to pay for their future consumption in euro, either by moving to a euro country or because they assume Sweden will adopt the single currency at some point in the future.
However, this does not prevent giving consideration to the real economy – growth and employment – when this can be done without jeopardising the inflation target. This is also clearly stated in the preparatory work on the Sveriges Riksbank Act. The Riksbank uses the repo rate – the rate at which the banks can borrow or deposit funds in the Riksbank - as its monetary policy instrument. When interest rates are low, demand is usually high households save less and companies invest more - which leads to a gradual increase in prices. The reverse applies when interest rates are high. However, the interest rate should not be higher than it needs to be to guarantee that the Riksbank’s inflation target can be met. With hindsight, we can note that inflation was below target in 2004-2005 and that the interest rate was therefore too high. The main explanation for this is that productivity growth was higher than expected and international price developments were weaker. Competition has also become stiffer in many different markets and has contributed to low inflation. It is very difficult to predict at an early stage what is happening in the economy and the Riksbank was far from alone in being mistaken in its forecasts. Almost all other analysts made similar, or larger, forecasting errors during this period. At the previous monetary policy meeting, the Executive Board unanimously decided to hold the repo rate unchanged.

3 When one has had an increased degree of sick leave for a period of time, the norms are affected and it may become more acceptable to take sick leave. In connection with the 1990s crisis, it could be noted that sick leave declined significantly when the problems in the labour market increased. This may have been because people were more worried about losing their jobs and therefore avoided taking sick leave. Demographic changes Employment and unemployment may also be affected by demographic changes. It is known that unemployment is higher in certain groups of the population than others, for instance, it is higher among those born abroad and among young people (see Figure 9). Unemployment among young people (aged 16-24) is more than twice as high as unemployment in other groups. Unemployment among young people has shown a rising trend since the 1970s. Breaking this trend must be one of the most important domestic policy tasks of our time. Unemployment is also around twice as high among persons born in another country than among those born in Sweden. A period of increased immigration or reception of refugees can thus increase unemployment. Of course, this is not one of the main explanations for the changes in unemployment, but it can have more than a marginal effect when the demographic changes are substantial. This was the case during 1994-2000 when the number of persons of working age born abroad declined by 25 000.