samchain/econo-pairs-v1 huggingface dataset:
My expectation is that once the price reversals and short-run imbalances from the economy reopening have played out, inflation will come back down to about 2 percent next year. Although the U.S. economy is on a very favorable trajectory overall, we must remember that our economy does not exist in a vacuum. The speed of the recovery will also depend on the global picture. We are seeing a slower rollout of immunizations, emerging strains of the virus, and a more subdued rebound in other parts of the world. This international context is another reason why a complete U.S. recovery will take time to achieve. 2/3  BIS central bankers' speeches  The Fed’s Policy Response Given all of this information, it’s clear there is a big shift in the economy, and the outlook has improved. But let me emphasize that the data and conditions we are seeing now are not nearly enough for the FOMC to shift its monetary policy stance. For these reasons, the FOMC decided last week to keep strong monetary policy support for the economy in place. Specifically, the FOMC maintained the target range for the federal funds rate at zero to ¼ percent and made no changes to its program of asset purchases. In thinking about adjusting its stance in the future, the FOMC has defined conditions and measures that will inform its decision-making.

More people are becoming increasingly comfortable resuming activities in person, and this is starting to show up in robust consumer spending, job gains, and economic growth. So, now that we are on our second trip around the sun during this pandemic, many are looking to answer the most common question raised when traveling by car. And that is, “are we there yet?" With respect to the virus, I’ll leave that question to the public health experts to answer. But with respect to the economy, I will say this: while I am optimistic that the economy is now headed in the right direction, we still have a long way to go to achieve a robust and full economic recovery. In my remarks today I’ll set the scene for both the U.S. and global economies. I’ll also highlight a few of the factors I consider when evaluating the outlook for the economy. Finally, I’ll explain what that means for our monetary policy decisions. But before I continue, I need to give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or others in the Federal Reserve System. Economic Outlook Let me begin by saying that despite the challenges and uncertainties we’ve faced since the pandemic took hold, the economy is now positioned to grow quickly.
While the financial sector has, over the years, strengthened its risk management and control functions to combat financial crimes, a higher degree of emphasis and attention by senior management and the Board, on issues relating to AML/CFT, can further improve the standards of compliance and the effectiveness of measures put in place to fight against money laundering and terrorist financing. We also observed that financial institutions exhibiting effective defences against financial crimes shared four common attributes in their AML/CFT framework. These are: (i) well developed and clearly articulated policies and procedures; (ii) effective governance structure, particularly on the compliance function; (iii) incorporation of AML/CFT compliance assessments in the audit and capacity development programmes; and (iv) increased and effective use of information technology and management information systems for AML/CFT risk monitoring and management. therefore, talent development in this area is becoming increasingly critical. A well trained workforce is a valuable asset that would contribute to the implementation of an effective compliance framework with impactful results. This can be achieved through the formulation  2  BIS central bankers’ speeches  of structured and coordinated capacity development programmes aimed at elevating the level of technical skills, leadership and professionalism. On this note, Bank Negara Malaysia lauds the initiative by the financial sector in formulating the AML/CFT Certification Programme for compliance officers that will be launched during this conference. This conference and indeed the theme “Raising the Bar in Compliance and Enforcement” is very timely and relevant.

As the history of the Industrial Revolution which began shortly after Adam Smith’s death demonstrates compellingly, there will always be people who endure great difficulties when rapid economic change occurs. Chairman Greenspan has recently noted that “a significant minority, trapped on the adverse cycle of the market’s process of creative destruction, are suffering. This is an issue that needs to be more fully addressed if globalization is to sustain the public support it requires to make further progress.” Perhaps this will indeed be one of the major challenges we will face in the years to come. Dealing with it by way of relentless government interference with the forces of the free market will at best fail to produce desirable results. At worst, it will begin to reverse the dramatic welfare gains we have enjoyed since the time of Adam Smith. 2  BIS Review 38/2005
In complementing the sukuk market as a source for fund raising, also being explored are other funding channels to assist small and medium enterprises, new growth industries and entrepreneurs that have limited access to the sukuk market. A multi-bank investment platform is now being developed for the effective matching of funds from potential investors with targeted industries and ventures in the real sector. Foreign Islamic financial institutions and investors also stand to benefit from this platform, with the offering of multi-currency financing options for foreign projects. The platform facilitates Islamic banks to perform  2  BIS central bankers’ speeches  investment intermediation functions. It enhances further the intermediation role of the Islamic banking institutions to also function as an investment intermediary. In an increasingly internationalised global financial marketplace that has generated significant cross-border flows, one of the requirements as we advance forward is the need for more tradeable cross-border Islamic financial instruments that can cater to the different profiling of investors’ risk appetites. The issuance of the short-term sukuk by the International Islamic Liquidity Management Corporation (IILM) is a breakthrough in innovation towards increasing cross-border liquidity flows that could potentially enhance financial stability and the efficient functioning of the Islamic financial markets. Let me conclude my remarks. There is clear indication of the growing relevance and importance of the sukuk market, with the growing interest from both emerging and developed jurisdictions and the strategic approaches taken to diversify the funding sources through the sukuk market.

The overall direction and potential of the global sukuk market are certainly well recognised, particularly in its role in contributing towards greater economic development. There is significant potential for the sukuk, in particular to fund infrastructure projects. This is particularly relevant for the GCC, African and Asian regions given the infrastructure needs going forward. This would contribute towards building deeper and more liquid, efficient and effective global sukuk market. The dynamism of the sukuk market also contributes towards strengthening financial stability and in facilitating the expansion of inter-regional investment flows. As we move towards increasing this internationalisation of Islamic finance, and thus towards greater global financial integration, it will contribute towards a global growth process and financial stability that will be mutually reinforcing. BIS central bankers’ speeches  3
The development provides for a shift from post factum analysis of banks’ statements and periodical sampling analysis of some assets to online analysis of all bank operations and analysis of bank business model with account taken for stress-testing. For this purpose an up-to-date unified supervisory IT system and a centralised data storage capable of accumulating information about all bank transactions and operations will be created. The key element of supervision reorganisation is separation of the risk assessment centre from the centre for supervisory decision-making. Stress tests conducted by both the Bank of Russia and credit institutions are to play a special role soon. They will cease to serve only monitoring purposes and their outcome will determine bank requirements. 6  BIS central bankers’ speeches  Preventive measures (i.e., when banks do not violate prudential ratios, but are exposed to elevated risks of future violations) will first be applied to large banks with assets exceeding 500 billion rubles. First inspections of major banks are to start next year in the context of implementation of the second pillar of Basel II. The Bank of Russia will assess the quality of internal capital adequacy assessment procedures worked out by banks and their application in 2016.

Therefore we do see the promotion of digital financial inclusion becoming one of the main priorities on a global level. For instance, the G-20 Global Partnership for financial inclusion in late 2020 has set the digital financial inclusion as one of the main priorities in its financial inclusion action plan stressing financial education and consumer protection complemented with regulation as key factors in protecting and empowering the most vulnerable groups. Therefore, we are very grateful that the INFE OECD and the Ministry of Finance of the Netherlands accepted our request for workshop on digital financial services and financial education. Bearing in mind the importance of financial education in a dynamic and innovative financial 2/3  BIS central bankers' speeches  system, there is unquestioned need for an innovative and systemic approach based on our Strategy for Financial Education and Financial Inclusion. In general, the central banks together with other financial regulatory authorities play the leading role. The last survey on financial literacy of adults in South East Europe done by OECD (2020) revealed that the National Bank of the Republic of North Macedonia is the most trusted among central banks in the region as provider of financial education. However, the active participation of other stakeholders from the private and civil sector is more that welcome to achieve this mission. Last but not least, as socially responsible institutions, we have a mutual obligation to work together closely and constructively and to exploit available synergies for the benefits of the overall population and society.
Jean-Claude Trichet: The financial turbulence – where do we stand? Speech by Mr Jean-Claude Trichet, President of the European Central Bank, at the Economic Club of New York, New York, 14 October 2008. *  *  *  Introduction Ladies and Gentlemen, It is a great honor and a pleasure for me to be invited to speak at the Economic Club of New York in these very challenging times for banking supervisors and central bankers. The changing nature of the turbulence over recent months, together with the new developments over the past few weeks, have meant that the turmoil is an enormous challenge for the financial system at large, as well as for policy makers and regulators around the globe. Since August 2007 central bankers have been busy managing increasing volatility and risks in financial markets. The primary goal of a central banker and certainly of the ECB is to maintain price stability over the medium term and be credible in delivering price stability, which is a necessary condition for financial stability, if not a sufficient condition. To achieve this, we not only have to define the monetary policy stance and set policy rates, but we also have to implement our monetary policy. This is done by conducting open market operations with the aim of steering short-term interest rates on the interbank money market – and in particular the overnight rate – close to our main policy rate, i.e. the minimum bid rate in the main refinancing operations of the Eurosystem.

First, the Eurosystem has adjusted the distribution of liquidity supplied over the course of the reserve maintenance period by frontloading, relative to normal times, the supply of liquidity at the beginning of the maintenance period and reducing it later. In this way, the total supply of liquidity over the entire maintenance period remained unchanged and, at the same time, the changed pattern in banks’ liquidity demand was satisfied without putting pressure on shortterm interest rates. In addition, last month the ECB enlarged the provision of liquidity at its regular weekly main refinancing operations, well above the amount normally envisaged by the frontloading approach, with the aim of further strengthening its liquidity intermediation at a time of significant rigidity in the euro money market. The ECB then reabsorbed the resulting excess of liquidity on a daily basis through overnight fine-tuning operations, and continued to rebalance the liquidity conditions towards the end of the reserve maintenance period. Second, the Eurosystem has supplied liquidity to the banking system by using open market procedures, which were very rarely, if at all, used before the start of the turbulence. 1. The use of fine-tuning operations has been much more frequent than in “normal times” because of the volatility in banks’ liquidity demand and the difficulty of producing a reliable ex-ante estimate of the overall liquidity conditions.
In the old days, when the economy was dominated by manufacturing, it might have been relatively easy to measure the volume of output and value added of different industries. But our economy today is dominated by services. Conceptually even defining the value added in, say, the financial sector, let alone measuring it, is not straightforward. Moreover, the meaning of a series often changes subtly over time as the economy evolves. Manufacturing today is a very different animal from manufacturing 30 years ago: for instance, the value added of Rolls-Royce aero engines today comes as much from the after-sales and maintenance as from the engine assembly itself. Finally, and most saliently for real-time policy analysis, the official data invariably appear with a delay of some months and can be substantially revised as more information accrues and the ONS improve their methodology. For that reason, the Monetary Policy Committee supplements the official data with two other sources of information that are more timely, even if they lack precision compared with the official data. The first are the regular business surveys from the likes of the Confederation of British Industry and the British Chambers of Commerce. As many of these have been going for quite a while, we have in many cases been able to establish their usefulness as predictors of the not-yet-available official data. Second, we also rely on the information provided by our network of regional Agents who have about 8000 business contacts across the country.

Public disclosure requirements designed to compensate for this information problem do not exist. Even if information on the overall size of the fund’s positions were available periodically, it would be difficult to accurately ascertain its risk profile. This gives individual firms an incentive to free-ride on the due diligence or monitoring by others, which may render resultant collective discipline inadequate. The foundations of modern risk measurement rest on a framework that uses past returns to measure or estimate the distribution of future returns. The stability of the recent past, even if much of it proves durable, probably understates potential risk. The parameters used to estimate value at risk can produce very large differences in predicted exposure, especially at extreme confidence intervals. Estimating the potential interactions among these exposures in conditions of stress is even harder, due to the uncertainty about the behavior of investors and other market participants and because of the potential effects of financial distress on overall economic activity. The relatively short history of returns for new products, the complexity of measuring exposure in many new instruments and limitations on transparency also create the potential for classic “agency” problems - internal conflicts of interest that can lead to problematic outcomes. In exposures where the  4  BIS Review 85/2006  measurement of potential loss is more uncertain, more subjective, and less amenable to independent evaluation, for example, reasonable people can come to very different judgments about the potential risk in a particular position.
Stronger initial cushions against stress reduces the need to hedge risk dynamically in a crisis, reducing the broader risk of a self-reinforcing, pro-cyclical margin spiral, such as we have seen in this crisis. 4  BIS Review 74/2008  How should we decide where to set these constraints on risk-taking? This is hard, but the objective should be to offset the benefits and the moral hazard risk that come from access to central bank liquidity in crises, without setting the constraint at a level that will only result in pushing more capital to the unregulated part of the financial system. Risk management and oversight now focuses too much on the idiosyncratic risk that affects an individual firm and too little on the systematic issues that could affect market liquidity as a whole. To put it somewhat differently, the conventional risk-management framework today focuses too much on the threat to a firm from its own mistakes and too little on the potential for mistakes to be correlated across firms. It is too confident that a firm can adjust to protect itself from its own mistakes without adding to downward pressure on markets and takes too little account of the risk of a flight to safety – a broad-based, marketwide rush for the exits as the financial system as a whole de-leverages and tries collectively to move into more liquid and lower risk assets of government obligations.

And we are fortunate to have Jerry Corrigan engaged in working to shape a set of recommendations to help us get the balance right. Regulatory structure Apart from the mix of incentives and constraints set by regulatory policy, the structure of the regulatory system in the United States needs substantial reform. Our current system has evolved into a confusing mix of diffused accountability, regulatory competition, an enormously complex web of rules that create perverse incentives and leave huge opportunities for arbitrage and evasion, and creates the risk of large gaps in our knowledge and authority. This crisis gives us the opportunity to bring about fundamental change in the direction of a more streamlined and consolidated system with more clarity around responsibility for the prudential safeguards in the system. In this regard, Secretary Paulson's blueprint outlines a sweeping consolidation and realignment of responsibilities, with a clear set of objectives for achieving a better balance between efficiency and stability, between market discipline and regulation. This proposal has stimulated a very constructive set of discussions, and will help lay the foundation for action when the dust settles. BIS Review 74/2008  5  The most fundamental reform that is necessary is for all institutions that play a central role in money and funding markets – including the major globally active banks and investment banks – to operate under a unified framework that provides a stronger form of consolidated supervision, with appropriate requirements for capital and liquidity.
One of these factors is that economic agents look to the future when they make decisions about consumption and investments, wages and prices, and want to take account of economic policy not only as it is today, but also as they expect it to be tomorrow and in the future. This is particularly evident in foreign exchange and financial markets, where exchange and interest rates are influenced when participants shift large amounts partly on the basis of their expectations concerning economic policy and economic developments. Financial market expectations concerning economic policy are entirely different today from what they were 20-30 years ago. Behaviour can change from being very rational to herd behaviour. The issues that receive attention, and that govern movements in exchange and interest rates, change. It is thus important that the authorities do not sow doubt, but on the contrary act in a long-term and predictable manner. The authorities must be credible and inspire confidence. There must be a good match between the stated objectives of economic policy and what is actually done to achieve them. This is the most important reason why the implementation of monetary policy has been delegated to the central bank in Norway,  1  Cf. Official Norwegian Report (NOU) 1973:36 (price problems). BIS Review 50/2002  1  as has been the case in other comparable countries. In Norway, the responsibility for interest rate decisions was delegated to Norges Bank in 1986. The other factor is the special challenges to stabilisation policy posed by petroleum revenues.

We commend the extensive IMF exercise, using data from millions of European companies and agree with its main conclusions. Job retention schemes, moratoriums on payment obligations, grants and credit guarantees can be effective in improving companies’ liquidity needs, even more so in advanced than in emerging economies. However, moving forward, the increase in indebtedness does raise concerns for solvency risks and investment prospects. It is true that, from the central banks’ perspective, all chapters of the report are extremely relevant. Personally, I always look towards the IMF’s research findings for confirmations of our own scenarios, different perspectives on certain topics, or even red flags. More broadly, the 2020 Regional Economic Outlook (REO) for Europe provides a much-needed analysis, from the IMF’s point of view of the opportunities and challenges that our region can expect following a very difficult year of restrictions, as well as social and economic difficulties. For 2020, the IMF forecasted a contraction of real GDP in Europe of 7 percent, the biggest contraction after World War II. Thanks to the extraordinary policy response, even more dramatic consequences have been avoided. I understand that the full extent of the pandemic’s impact on companies in 2020 is yet to be revealed as time passes and more data becomes available. I agree that long-lasting changes in the structure of the economy will occur, even though they are hard to predict at this moment.