samchain/econo-pairs-v1 huggingface dataset:
This complies with EU agreements. ERM membership is voluntary. But even in a flexible regime, exchange rate movements constitute an important policy indicator, albeit more indirectly. •  If the exchange rate weakens and remains at the weaker level, demand in the Swedish economy is stimulated via increased exports and decreased imports. BIS Review 35/1998  ˝  -6-  In this way, a permanent depreciation can lead to higher inflationary pressure. The Riksbank then has to keep its instrumental rate at a higher level than otherwise in order to fulfil the price stability target. •  A permanent appreciation of the krona tends to dampen demand, leading to lower inflationary pressure. All else equal, the Riksbank can then keep the instrumental rate at a lower level. With reference to the exchange rate, the Riksbank is wont to talk of “permanent” or “lasting” developments and that is applicable here. We do not react to occasional market movements because they are unlikely to influence inflation prospects. The Maastricht Treaty requires all member states to treat exchange rate policy as a matter of common interest; this applies even if the exchange rate is flexible. An EU country is expected to focus economic policy - both monetary and budget policy - on stability to the same degree as the other EU countries. This, basically, is the absolutely crucial condition for sustained exchange rate stability. An exchange rate that deviates permanently from the long-term real equilibrium level may be an indication that economic policy lacks credibility.

The reforms in recent years have been appropriate and have contributed to shoring up the system’s financial sustainability; but adverse demographic developments require measures whose application should not be delayed. Population ageing gives rise to a reduction in the proportion of the total population making up the workforce, which negatively affects productivity and our economy’s ability to innovate and incorporate new technologies. Given that it is impossible or very difficult to change demographic trends, even in the medium term, it will be important to persevere in enhancing the education system and pursuing the institutional and regulatory reforms that contribute to improving productivity, promoting or enabling greater competition and innovation. Thank you very much for your attention. 6/6
Mr. McDonough considers the challenge presented by the Year 2000 problem Remarks by the President of the Federal Reserve Bank of New York, Mr. William J. McDonough before the Annual Membership Meeting of the Institute of International Finance in Hong Kong on 21/9/97. I am pleased to be able to share my thoughts with you today on an issue that is sure to challenge every one of our organizations for the next several years -- the Year 2000 and how the century date change poses a very significant risk for financial markets. As I look at the membership of the Institute of International Finance gathered here in Hong Kong, I cannot help but be impressed as to how truly global financial markets have become. Realizing that this meeting is being hosted here in Hong Kong, with the People’s Republic of China as the host country, further underscores how rapidly the world is changing and how interdependent we are. As a central banker, I worry a lot about events that could disrupt financial markets. Many of the events that I worry about are hypothetical. In those cases, a large part of my job is to convince others that the hypothetical event in question is sufficiently possible that it is in the industry’s best interest to work together to try to avoid the event and related problems. Today, I am sure that I do not have to convince you about the inevitability of the approaching century date change. It is a certainty.

Our experiences include provision of advisory services to Shariah funds and asset management companies in the U.S, Switzerland and South Korea; and to sovereigns and corporates on sukuk issuances. Our legal firms have also played a part in the development of legal and regulatory frameworks for Islamic finance in a number of countries. Contributions have also been made in the area of research, education and training, with more than 50 international projects, training and customised programmes delivered to international clients since 2010. The third imperative is in the area of talent. The success of an Islamic finance system depends critically on having the right set of quality talent. This is more so as we aspire for Islamic finance to reach greater heights, in this new normal of rapid advances in technology and changing demographics. Accordingly, Malaysia has made significant investments in developing a complete ecosystem dedicated to meeting the human capital needs of the Islamic finance industry. Our talent infrastructure caters to every level, for both academic and professional needs. Dedicated talent entities for Islamic finance have also been set up, such as INCEIF – a global university for Islamic finance – and ISRA, a globally recognised institution in enriching research and knowledge on Shariah. An important aspect of talent development is elevating the quality and professionalism of talents in Islamic finance – not just in Malaysia, but globally. In realising this vision, the Chartered Institute of Islamic Finance Professionals was set up to promote the highest standards of professional practice among Islamic finance practitioners.
Insurers can therefore partially reverse any deterioration in their capital position due to a higher risk margin if interest rates fall by applying to the PRA to recalculate their TMTP upwards. For example, TMTP recalculation would have reduced the decrease in aggregate capital surplus following a 100bps fall in interest rates by about two thirds as at end-2017. Conversely, if the risk margin falls because of an increase in interest rates, the PRA may require recalculation so that TMTP is not overstated. % change in surplus (excluding any TMTP recalculation  Chart 4: Aggregate market risk sensitivities for UK life insurers 50%  Aggregate market risk sensitivities for UK life insurers YE16  YE17  25%  0%  -25%  -50%  Source: Aggregated UK life insurers market risk sensitivity submissions  Some individual insurers have published many of these market risk sensitivities. But the pattern is inconsistent across firms. I held a roundtable with insurance analysts and investors on disclosure around a year ago. 9  I took away that they find Solvency II disclosures more useful than accounting disclosures, at  least in the current state of insurance accounting. And a consistent set of such sensitivities was near the top of their disclosure wish list. I hope insurers and industry groups will work towards an industry standard in this area, perhaps drawing on what they report to us.

In recent years regional central banks have also built up a large addition to their foreign reserves. Such a large pool of domestic savings should be channeled into long-term investment in the domestic markets to support growth and development in the region. At present however, the dominant financing tools in most Asian countries still continues to be short-term bank loans, and bond markets in the region still remain underdeveloped. The bulk of local savings has instead been channeled to international financial centers with a wider alternative for investment and well-developed financial markets. At the same time, Asia is a recipient of short-term portfolio flows that had been destabilizing and highly volatile. These funds have further aggravated the problem of maturity and currency mismatches making the region more vulnerable to fluctuations in international capital movements. Creating a more stable financial system Developing regional bond markets for Asia: Asian savings for Asian investment Efficient and liquid bond markets in Asia - both at the local and regional levels, would enable the private sector as well as the public sector in Asia to raise and invest long-term capital without the currency and maturity risks which accompany international capital flows into the region. Development of regional bond markets will help governments and businesses in the region reduce currency and maturity mismatches.
Now it’s hard to say how much weight to put on that because historically consumer confidence goes up and down, and it doesn’t just necessarily feed into consumer spending. But the increase in business confidence is quite striking, especially for smaller businesses. And so one of the big open questions that we’re going to be assessing over the next few months is: is that improvement in animal spirits, so to speak, going to actually feed through and lead to more spending? So, I think where a year or two ago, I think our anxieties were more about the risks to growth to the downside, so as that – well, a year ago, we were worried about events in China, we were worried about uncertainties about Europe. I think now the balance of risk is gradually shifting, where the possibility is that growth could actually be stronger than expected, rather than weaker than expected. The markets expect fiscal stimulus out of this Administration. That’s another factor that probably will over time tilt the equation more to the upside. But on fiscal policy, it’s really hard to factor into your forecast at this point because we don’t know what it is, how big it is, or when it will happen. Other than that, we have it completely nailed down. So, it’s really hard to sort of put that into your forecast. And so the way I think about the fiscal policy outlook is that we’re probably going to get some fiscal stimulus at some point.

I expect not because I think there’s always people that test the limits of the law and regulation and are always trying to see where they can go. And there are obviously going to be bad apples in any really large organization. What I hope is that, one, the banks will sustain their effort to improve their cultures. Banks really are working on this. I spoke at a bank industry conference about a month ago, where they brought in all their very high potential mid-level people to talk about culture, and it was really them talking about bank culture and I came in for a very short period. I think I was the only person from the official sector that spoke there. And I thought the fact that they were taking all these people that are high-performers and spending a day trying to inculcate them with the importance of culture maybe suggests that we’ve passed a tipping point. So, that’s important. I think the other thing that I’m hoping to see is the banks start to cooperate a little bit more with each other and share best practices on bank culture. Up to now it’s been most banks working sort of on their own thing alone. I think if they actually shared best practices, shared survey results, to see how they were doing relative to their peers, that would also help them perform. And the last thing I would say on culture, I think we’ve got to continue to work on incentives.
Every 10 percentage point increase in a company’s export share of turnover is, on average, associated with a 3% increase in productivity. While causation could operate in either direction, this illustrates the productivity benefits of a corporate sector which is open to trade and exposed to external competition and innovation. Chart 22e classifies firms according to their spending on new products and processes. The differences here are not especially surprising, with average productivity around 20% higher among firms investing in new  52 53  For example, Haldane (2016). Newman et al (2015). 14  All speeches are available online at www.bankofengland.co.uk/speeches  14  products and processes. Nonetheless it is striking, and perhaps surprising, these differences are not larger. Clearly, they do not explain most of the productivity differences across companies. Firm size appears to matter somewhat more to productivity (Chart 22f). For example, for small firms (with fewer than 50 employees) the picture is a nuanced one. In general, their average levels of productivity are materially lower than for larger firms, on average around 7% lower. There is, in particular, a larger lower tail of small companies with low, or even negative, levels of productivity. Nonetheless, some smaller companies do inhabit the high-productivity, upper tail. Moreover, small companies tend to exhibit faster rates of productivity growth than larger firms, even when it is from a lower base. Table 3 looks at average productivity growth rates among firms of different size.

The latter episodes have typically been associated with periods of rapid technological th  th  th  change, as after the three industrial revolutions of the mid-18 , mid-19 and mid-20 centuries. In each case, there was a significant lag between the arrival of new technologies and their impact on productivity. Rates of technological diffusion were relatively slow and sedate. This is typically felt to have reflected the time it takes for new technologies to find widespread use and become General Purpose Technologies (GPTs). 34  After the first Industrial Revolution, it took around 70-100 years for technological  diffusion to occur, GPTs to emerge and TFP and living standards to rise. 35  Subsequent industrial revolutions have also seen a lag between the emergence of new technologies and their impact on productivity. But there is evidence this diffusion lag may have shortened. Comin and th  th  Mestieri (2014) estimate the diffusion lag during the industrial revolutions of the late 19 and 20 centuries to have been 20-30 years, roughly a third of that during the first industrial revolution. This may have reflected increased flows of labour, capital, ideas and information between firms, regions, sectors and countries. Table 1 looks at average rates of UK TFP growth over the past 2000 years. It tells a tale of long waves of productivity stagnation and innovation. The historical data do not reject either hypothesis. Table 1 also puts into historical perspective the UK’s recent productivity slowdown.
Moreover, the small size of the domestic labour market and the extent of migration in and out of the country in past years suggest that in the event of an external shock specific to Malta, the labour market is sufficiently flexible to adapt. On a number of counts, in fact, labour market indicators are already comparable to those of the euro area. The resemblance is not complete, but further progress in this regard is to be expected as public sector employment is downsized further and as the structural reform programme continues to unfold. A similar conclusion emerges from a comparison with the euro area of the structure of the domestic financial sector and indicators of real convergence; the degree of similarity is already significant, although there remains scope for some catching up with respect to income and price levels. As far as fiscal policy is concerned, this has rarely been used for fine tuning purposes in Malta. If anything, the disciplinary mechanisms of EMU should serve to reverse the current trend of negative balances, allowing fiscal policy to respond to the needs of the economy and leaving monetary policy to focus more on price stability. As for the exchange rate, by pegging the Maltese lira to a basket of currencies, which is recognized as being the preferred regime for a small, open economy, the monetary authorities have long since given up the exchange rate as a tool of adjustment.

This leads – again temporarily – to higher growth and more inflation. If, on the other hand, the central bank wishes to curb inflation, it increases its policy rate. I deliberately used the word ‘temporarilyֹ’ because if monetary policy were to target real interest rates below the equilibrium rate on a sustained basis, inflation would go on rising but this policy would not result in higher real growth in the long term. On the contrary, uncertainty about the path of inflation would reduce growth potential. This is one of the reasons why central banks are tasked with ensuring price stability. For this mandate to be fulfilled, the policy rate must be set such that, at the desired inflation rate, the real interest rate corresponds with the equilibrium rate in the medium term. It is likely that the real equilibrium interest rate is lower today than in the past. The case for this hypothesis is supported by the fact that real interest rates have been falling globally for a 1  In fact, there are several possible definitions. The ‘ex ante’ real interest rate is the nominal interest rate less expected inflation. The ‘ex post’ real interest rate is the nominal interest rate less the effective inflation rate. Page 3/16  considerable time because, it is argued, people are investing less and simultaneously displaying a greater propensity to save. The propensity to save is increasing due to population ageing.
BIS central bankers’ speeches  1  So if the narrowness of my scope disappoints, I would invite you sit back. Literally. Admire the Sheldonian’s ceiling. Marvel at how Wren’s original design bridged such an expanse with neither beams that could individually span its width nor floor-to-ceiling columns that could support it. Reflect on the allegory in the paintings that shows Truth descending upon the Arts and Sciences, expelling ignorance from the University. While you do, I will attempt my more meagre exam question. The Bank’s very great – yet rightly circumscribed – responsibilities are formalised in the remits of the three major policy-making bodies of the Bank – the Monetary Policy Committee (MPC), the Financial Policy Committee (FPC), and the Prudential Regulation Authority (PRA). The MPC’s remit requires it to achieve price stability, formalised as 2% CPI inflation, and subject to that to support the Government’s economic policy including its objectives for growth and employment. The FPC works to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system as a whole, and is subject to the same secondary objective as the MPC. And finally, the Bank of England’s PRA is required to promote the safety and soundness of individual firms; to contribute to securing an appropriate degree of protection for insurance policyholders; and, subject to that, to facilitate effective competition.

These countries’ governments are more concerned that their banks have framework conditions at least as favourable as competitors from other countries. This attitude leads to a competition to weaken the requirements as far as possible. The minimum requirements will not be lower than the level all the major countries will agree to. Given such minimum requirements, there is every reason to set stricter national rules. The Norwegian authorities have been doing this for a number of years, including requiring banks to hold more pure equity than most other countries have done. Banks object that higher capital standards make it more expensive to operate and will make borrowing more expensive for households and enterprises, in addition to reducing the competitiveness of Norwegian banks. But that a bank should be at a competitive disadvantage if it is not allowed to be as financially weak as another bank is hard to take seriously. This line of thinking presupposes that the government will bail out the banks. But we should not accept this supposition. Higher capital ratios will make banks less risky for shareholders, creditors and the government. Less risk means that banks’ creditors will require a lower interest rate. 48 In addition to higher permanent capital standards and other structural measures, it is also appropriate to use discretionary measures when systemic risk increases above normal. Under Basel III, higher capital requirements for banks can be required in the event of rising lending growth and surging property prices, see Chart 4. But other measures are also possible.
And if it were possible there would be no real reason to let the monetary policy decisions be made by a Board with six members. It would be enough to have a single wise decision-maker. In recent decades, however, the trend has been in the opposite direction. All over the world, it has become more and more common to let monetary policy decisions be made by a group of individuals – a committee or board – rather than by a central bank governor alone. Probably the most important explanation for this is that many central banks have become more independent in this period. This has made it seem more natural to delegate the right to make decisions to a group of people rather than to one individual. This development has meant that research on monetary policy decision-making in groups has accelerated. 1 One result that has emerged is that groups tend to make better decisions than individuals. 2 This may be because the members of the group have different backgrounds, knowledge and experience that they can bring to the monetary policy discussion. These differences mark the decisions that the group makes in different ways so that these decisions tend to be better than the decisions that an individual would have made alone – the whole becomes greater than the parts. This applies irrespective of how the decision is made – by voting, as at the Riksbank, or in some other way.

The decentralised set-up of the Eurosystem - with the ECB representing the hub of the system and the national central bank its spokes - has contributed to the acceptance of the euro as the single currency of more than 300 million citizens, as in particular the national central banks are well-equipped, in terms of knowledge of language and national backgrounds, to communicate to the general public. Contrary to the public perception about other European institutions, the Eurosystem is being perceived as relatively close to the heart of the public. I am very pleased to chair tomorrow’s meeting of the Governing Council here in Rome. The fact that the Governing Council meets in Rome is symbolic, in many aspects. First, Rome is regarded as the cradle of the European-Christian civilisation, as we know it nowadays. The Roman Empire was the first attempt to create a unified Europe. Although this period in history has greatly contributed to the development of the European continent, this experience has also made clear that Europe cannot be unified by means of force, with some nations or peoples subordinated to others. Unfortunately, this was a lesson, which Europe had to learn the hard way. It took us almost 2,000 years to realise that the continuous perils of war and oppression had to end.