samchain/econo-pairs-v1 huggingface dataset:
In addition, as we have moved far away from near-zero interest rates, it makes sense to shift 3/5  BIS central bankers' speeches  away from a focus on normalizing the stance of monetary policy relative to some benchmark “neutral” interest rate, often referred to as “r-star.” Now, I have spent a good deal of my career studying r-star and I find it to be a useful concept for describing the economy’s longer-run behavior. Having said that, at times r-star has actually gotten too much attention in commentary about Fed policy. Back when interest rates were well below neutral, r-star appropriately acted as a pole star for navigation. But, as we have gotten closer to the range of estimates of neutral, what appeared to be a bright point of light is really a fuzzy blur, reflecting the inherent uncertainty in measuring rstar.8 More than that, r-star is just one factor affecting our decisions, alongside economic and labor market indicators, wage and price inflation, global developments, financial conditions, the risks to the outlook… I think you get the point. Returning to the balance sheet, the question of what exactly the new normal looks like is still being analyzed and discussed at the Fed.

We have indicated that we plan to shrink the balance sheet to the smallest size consistent with the efficient and effective conduct of monetary policy, and that, in the long run, the asset side of the balance sheet will consist primarily of Treasury securities.9 That’s our strategy, but its execution will depend on the operating framework of monetary policy, among other factors. Here, the Fed basically has two choices. We could return to a system similar in spirit to that used before the financial crisis, in which the supply of reserves in the banking system was kept relatively scarce, and the interest rate was set by adjusting reserves on a frequent basis through open market operations. Alternatively, we could continue with the system that we’ve been using since the crisis, in which bank reserves are abundant and the federal funds rate target is achieved through adjustments to administered rates. As I said, this approach is working very well at controlling interest rates and has proven to be easy to communicate and adaptable.10 The Fed will be looking closely at these options in the coming months and will subsequently make a decision on the future operating framework. And, as is our standard practice, we will be sure to communicate our thinking and decisions on this issue as soon and as thoroughly as practicable. Conclusion Monetary policy-making has perhaps never been more challenging than it was following the financial crisis.
Armed with this, we can consistently build resilience into the financial system well ahead of when that resilience is needed. The second theme is how we are keeping pace with a changing financial system. New research is enabling us to simulate the effect of economic downturns on the growing non-bank financial system. It has highlighted possible weak spots that need monitoring and some that need new standards of resilience. Keeping up with the economy  Disciplined macroprudential policy builds resilience to economic shocks into the financial system well before it’s needed. You don’t make cities near fault lines resilient to earthquakes by waiting until there are tremors that signal a quake may be imminent. That would be not just ineffective; it would be counterproductive, See Piet Clement, ‘The term “macroprudential”: origins and evolution’, BIS Quarterly Review, March 2010. Andrew D Crockett, ‘Marrying the micro- and macro-prudential dimensions of financial stability’, remarks before the Eleventh Conference of Banking Supervisors, Basel, September 2000. 1 2  2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  leaving the city with buildings under re-construction and surrounded by scaffolding and cranes just as an earthquake hit. The right approach, for building resilience to earthquakes into structures, and for building resilience to economic shocks into financial systems, is to focus not on tremors, but on the underlying vulnerability. By underlying vulnerability I mean how serious a quake – real or economic – could be if one occurred at any point.

I will not repeat here the figures already published and explained and which were yesterday commented on by the Minister for Economic Affairs and Competitiveness before the Economic Affairs Committee. BIS central bankers’ speeches  7  However, I do want to say that the exercise performed is unprecedented in terms of its depth and detail, the severity of the macroeconomic assumptions accepted and the scrutiny to which it was subject throughout by experts from the institutions I have mentioned above. But there is still some way to go in the clean-up and restructuring of our banking system. The Memorandum of Understanding signed last July sets out the steps now to be taken, which the Spanish authorities – and, rest assured, the Banco de España – will comply with as precisely as possible. The restructuring or resolution plans for banks owned by the FROB must be approved before December 2012. Also, before November, we shall have at our disposal the recapitalisation plans of banks which cannot meet their capital shortfall without State aid, on the understanding that banks which are not considered viable will be resolved orderly in accordance with the terms of the corresponding resolution plan. Banks that can meet their capital shortfall without resorting to State aid will be required to implement their recapitalisation plans before June 2013. The other key component of the Clean-up Programme is the Asset Management Company which should be operational at the beginning of 2013.
The time horizon typically extends to two years, or a more ambiguous definition as “medium term.” As long as medium-term inflation expectations remain anchored, the monetary policy helps to reduce the volatility of other variables. In addition, a FIT regime also requires a flexible exchange rate, so monetary policy can be conducted independently. However, a proper FIT should help to stabilize the currency as long as monetary policy should move leaning against the wind. For example, a persistent depreciation of the currency, other things equal, should increase the inflation forecast, although much more moderately than in rigid exchange rate systems. This effect should call for a tightening of monetary conditions, reducing pressures against the currency. Many times it has been argued, especially in non-professional discussions, that inflation targets ignore output fluctuations. As I just argued, this is a mistake. Flexible inflation targets take into account activity and employment, and this is implicit in the choice of the time horizon. Moreover, a credible inflation target is efficient in terms of minimizing the tradeoff between output and inflation fluctuations, and also helps to reduce real exchange rate volatility. Indeed, a flexible inflation targeting regime can maximize welfare and perform much better than an exchange rate or monetary target. What variables should a central bank consider when setting the interest rate? In the regime I just described, the answer to this question is pretty simple: anything affecting inflation over a two-year horizon.

One factor that indicates growth could continue to be high in these countries is that intra-regional trade has increased in Asia and the continent is therefore less exposed to negative direct and indirect trade effects from countries outside Asia. This is illustrated in Figures 4 and 5, which show how exports from China and India have developed per trading partner. Figure 4 Chinese exports Percentage of total Chinese exports, ASEAN includes India  Source: National Bureau of Statistics of China  2  This applies to the value of exports in nominal terms. 3  The Riksbank’s company interviews, September 2011  BIS central bankers’ speeches  5  Figure 5 Indian exports Percentage of total Indian exports, ASEAN includes China  Source: Ministry of Commerce and Industry, India  As the figures show, an increasing proportion of China’s and India’s exports are going to countries in the rest of Asia and exports to the United States have declined in importance. China and India are thus somewhat less sensitive than previously to weaker demand in the European Union and the United States. However, it is clear that the European Union is still the most important export market for these countries, which means that weak economic development in Europe will have significant consequences for growth prospects in China and India too.
It takes quite a leap of faith to choose instead the candidate whose skills are misaligned with the hiring organisation. Back in 2006, the Bank of England did some personality-type evaluations of middle managers and graduate entrants, using the well-known Myers-Briggs psychometric test. This was a  71  14  Drawn from Page (2007) and Deloitte (2013). BIS central bankers’ speeches  population of 240 individuals, large enough to make reasonable statistical inferences, although it is worth bearing in mind that no psychometric test is without its drawbacks. The Myers-Briggs test groups individuals according to four classifiers, each with two possible outcomes. 72 So there are in total 16 possible personality types, typically summarised by a four-letter acronym. For example, I am an INTJ: Introvert, iNtuitive, Thinking, Judging. Although these 16 personality types are not uniformly distributed across the population, no one category typically comprises more than 12–14% and none less than 2–3%. Viewed from this vantage point, the Bank’s results were interesting. Around 60% fell into a single category: ISTJ. In 2006, ISTJ’s were the star-bellied Sneetches of the Bank of England. The chances of this occurring by chance in the population at large are far less than one in a million. The good news on this front is that, with the arrival of new staff with new and different skills at the Bank over the past few years, its personality has already become more diverse, perhaps significantly so.

There are still plenty of reasons to be cheerful: •  Growth is running at an annual rate of over 3%, above its historical trend and at the top of the G7 league table. Growth in the UK will probably exceed global growth this year, for the first time in over a decade. According to outside and MPC forecasts, UK growth is expected to remain at or above trend for the next few years. •  Recent revisions to GDP suggest that the UK experienced both a shallower recession, and a somewhat stronger recovery, than previously believed. As a result, the level of GDP reached its pre-crisis peak in the middle of last year, three quarters sooner than earlier estimates suggested. •  UK growth is reasonably well-balanced between consumption and investment, although net trade continues to disappoint. Business investment is growing at double-digit rates and has contributed fully a third to economy-wide growth since its trough. According to the MPC’s forecasts, investment will continue to grow at double-digit rates in the period ahead. •  Consumer price inflation, at 1.2%, has fallen below the Bank of England’s 2% inflation target, reducing the squeeze on households’ real disposable incomes. According to financial markets, inflation is expected to return and stay close to target over the medium term. •  Borrowing costs remain at exceptionally low levels. Secured borrowing costs for households and large companies are in the range 3%–6%, around 3 percentage points lower than in 2007. Measures of credit conditions have continued to ease.
Joseph Yam: Financial stability issues, dollarisation and price dynamics Opening remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at HKIMR Summer Workshop 2003, Hong Kong, 27 August 2003. *  *  *  Ladies and Gentlemen, I am delighted to welcome you to this first “HKIMR Summer Workshop in Money and Finance”. This is an event that we hope from now on will take place annually. The organisers have put together an interesting programme with three papers dealing with issues that are of current or potential importance for Hong Kong. The first paper, to be presented by Professor Charles Goodhart, focuses on financial stability issues. These issues are of particular interest to an international financial centre, as the success or otherwise in the maintenance of financial stability, and therefore the efficiency of financial intermediation, not only has an impact upon the domestic economy but also on the economy of the region that centre serves. The second paper, to be presented by Professor Genberg, deals with the subject of dollarisation. Dollarisation, in the traditional sense of the US dollar replacing or displacing the Hong Kong dollar as a medium of transaction in respect of domestic economic activity, is in my opinion unlikely to occur here in Hong Kong. This is notwithstanding the operation of a currency board system with the US dollar as the anchor currency. But, from another perspective, we are seeing continuing economic integration between Hong Kong and Mainland China.

Housing starts and sales are now on a clear upward trend, and a widely followed national home price index is up around 12 percent over the twelve months ending in April.1 Indeed, anecdotal reports suggest that this higher-than-expected increase in home prices is due to a lack of homes for sale. Unfortunately, the improvements in consumer spending on durable goods and housing are not yet showing through in the overall GDP growth rate due to the significant headwinds that we continue to face. First, federal fiscal policy has recently become quite contractionary. Estimates from the Congressional Budget Office (CBO) indicate that this fiscal restraint is on the order of 1.75 percentage points of potential GDP this year. In the period since 1960, there have been only two previous episodes of fiscal contraction of this order of magnitude  2  BIS central bankers’ speeches  – 1969 and 1987 – both of which occurred when the economy was on a more solid footing than it is today. Second, the euro area is experiencing a protracted recession and growth in many of the largest emerging economies has slowed. This has resulted in a very sharp slowing of U.S. exports, with an associated slowing in production and employment growth in the U.S. manufacturing sector. Thus, I continue to see the economy as being in a tug-of-war between fiscal drag and underlying fundamental improvement, with a great deal of uncertainty over which force will prevail in the near-term. This tug-of-war is clearly seen in the monthly employment data.
The cantons – our majority shareholders – are well represented in our supervisory body for operating matters, the Bank Council. As you see, the special characteristics of the Swiss system are taken into account. Federalism is mirrored in the composition of the Bank Council and in the distribution of our shareholdings and – not least – in the distribution of profit. The Swiss constitution and the National Bank Act provide for the SNB’s profit to be paid to the Confederation and the cantons. Two-thirds accrue to the cantons and one-third to the Confederation. However, a distribution can only be carried out if the balance sheet and the SNB’s result allow for this to be done. The robustness of our balance sheet, in other words, setting aside provisions for currency reserves, takes first priority over a distribution. This can be derived directly from the legislation. The appreciation of the Swiss franc against most other currencies weakened our balance sheet last year. In addition, very volatile results may be expected in the next few years because of the current size of the balance sheet and the uncertain situation in the capital markets. Consequently, the possibility that distributions to the Confederation and the cantons will have to be suspended in certain years cannot be excluded. Fiscal interests must take a back seat when it comes to ensuring our long-term monetary policy freedom of action and independence. The Governing Board is also genuinely Swiss.

Our welldeveloped social security system also fulfilled its role as an automatic stabiliser. Discretionary fiscal policy, by contrast, played a relatively minor role. One reason for this is that we have a federal system with extensive decision-making powers in the hands of the people. Another is the extensive global integration and openness of the Swiss economy. This means that much of the impact of any fiscal programmes designed to stimulate the economy would have been felt abroad rather than in Switzerland. There are certainly positive sides to the fact that fiscal policy in Switzerland was not used actively, or to a large extent, for crisis management – as is evident if we think of the problems of sovereign debt currently afflicting other countries. Yet we should not forget that monetary policy had to bear the lion’s share of the adjustment burden in its place. As I mentioned before, article 6 of the National Bank Act constitutes the foundation stone of our independence. However, the principle that the SNB should be an independent central bank is actually established at the highest level of all, in article 99 of the Swiss Constitution. This shows the importance attached to the independence of the SNB by the constitutional  2  These findings were taken into account when the European Monetary Union was founded. Under the Maastricht Treaty, a country planning to join the union must have an independent national central bank.
This has shown up in  2  BIS Review 33/2002  concrete form in the severe operational losses suffered by a number of international institutions. The Committee has therefore decided to take the lead in promoting greater understanding of operational risk and more consistency in the way in which it is measured, managed and controlled. This would by itself be relatively unobjectionable. However, the Committee has decided to put some teeth into its recommendations by proposing an explicit capital charge for operational risk in the New Capital Accord. This is controversial for two reasons. First, there is no firm consensus on how to measure the capital required to support operational risk - the Committee is currently proposing three approaches to this, which range from the very basic to the quite sophisticated. Second, the amount of capital charge that the Committee originally had in mind was considered to be much too high. In response to this, the Committee is proposing a reduction in the proposed target of operational risk capital from 20% to 12% of minimum capital. A further reduction would potentially be available to those banks which use the more advanced measurement approaches. This is an example of how capital requirements can be used as an incentive to banks to improve their risk management practices. This, in our view, is where the real value of the New Accord lies.

I noted particularly that the Association could play a role in three main areas: by acting as an industry representative and interlocutor with regulators; by establishing common standards and documentation; and by promoting market transparency and efficiency. I am glad to say that the Association has delivered on its promises in each of these areas. Its website is, for example, now up and running, and is an important source of information for both members and non-members. If I could put in a plea, however, it would be for more market statistics to be made available on the parts of the website that are open to non-members - or honorary members such as the HKMA. In its representational role, the Association offered very helpful comments last year on the draft guideline that the HKMA prepared on the management of the risks associated with syndicated lending. Our initial draft generated a certain amount of heat. This was I think largely due to a feeling on the part of the industry that we had overplayed the inherent risks of syndicated lending. We therefore made it clear in the final version of our guideline - which we issued in non-statutory form - that syndicated loans are not necessarily riskier than other types of lending. Indeed, the distribution of lending among participants is designed to reduce risk by sharing it.
The other contributing factor was a rise in the price of beef, following the ban on transportation of cattle from Southern Province, a major supplier, to curb the spread of the cattle disease, Contagious Bovine Pleural Pneumonia (CBPP). Higher non-food inflation was due to increased household energy and transportation costs, following upward adjustments in prices of petrol and diesel in January 2007. During the second quarter of 2007, however, inflation is expected to slow down due largely to improved food supply. Already in April, inflation slowed down to 12.4% from 12.7% in March. What is your assessment of the recent developments in commercial banks lending interest rates? In line with lower inflation and yields on Government securities, commercial banks nominal average lending rate declined to around 28% in December 2006 from about 34% in December 2005. More recently, in April 2007, it declined further to 24%. BIS Review 55/2007  1  How would you describe the recent performance of the external sector? The external sector has continued to score remarkable improvement, as reflected in the overall balance of payments surplus of US $ million in 2006 compared to a deficit of US $ million in 2005. Furthermore, the preliminary assessment is that the current account deficit as a percentage of GDP (excluding grants) reduced to 1.1% from 11.5% in 2005. This improvement has been due to increased export receipts arising from record high copper prices and increased export volumes.

Caleb M Fundanga: Bank of Zambia’s Information Dissemination Programme Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, on the launch of the Bank of Zambia Information Dissemination Programme, Lusaka, 28 May 2007. *  *  *  Governor, kindly give brief introductory remarks On behalf of the Bank of Zambia Board, management and staff, and indeed on my own behalf, I wish to sincerely thank the Zambia National Broadcasting Corporation (ZNBC) for this opportunity to launch the Bank of Zambia Information Dissemination Programme. This programme is part of our comprehensive strategy to inform the general public and all our stakeholders on the role of Bank of Zambia in the economy. What is the primary role of the Bank of Zambia? Just to remind the listeners, the Bank of Zambia’s primary role is to formulate and implement monetary and supervisory policies that will ensure price and financial system stability. Our vision, in this regard, is to become a World Class central bank. What is your general assessment of the recent performance of the Zambian economy? In the past few years, the Zambian economy has performed relatively well, recording positive real Gross Domestic Product (GDP) growth, with inflation and interest rates coming down. Specifically, what have been the developments in output? During the period 2001-2005, growth in real GDP averaged 5.0% per annum. More recently, in 2006, it is estimated that the economy grew by close to 6%, marking the eighth consecutive year of positive real growth in output.