samchain/econo-pairs-v1 huggingface dataset:
Page 5  As ever, I will come to my own conclusions about Bank Rate on those occasions on the basis of my assessment of the data flow, with my decision focused on meeting the MPC’s price stability mandate through achieving the 2% inflation target on a sustained and lasting basis. Before opening up to questions, I wanted to conclude with a few comments on the title of my remarks this evening: ‘Inflation is a wicked problem’. The challenges posed by the cost-of-living squeeze are all too real for many households and businesses. This is especially true for those households towards the lower end of the income distribution, which spend a greater share of their income on food and energy – items for which prices have risen the most. Addressing these challenges – and containing the difficult implications of the cost-of-living squeeze – motivates the MPC’s actions to return inflation to target. But in talking about ‘wickedness’ this evening, I am referring to a different dimension of the inflation problem. This draws on the social science literature, where a ‘wicked problem’ is defined as one that – because of the complex web of interdependencies within which it is embedded – is resistant to resolution. [7] In particular, the effort to solve one aspect of a ‘wicked problem’ may reveal or create other related problems across other aspects. This literature describes a tendency to address ‘wicked problems’ by converting them into socalled ‘tame problems’ or ‘puzzles’.

I am pleased to see that the recent euro barometer showed a steady progression in the satisfaction of the Maltese with the adoption of the euro (from 40% in September 2005 to 64% in June 2007). Let me hand over the euro star to Governor Bonello to symbolically flag that the Central Bank of Malta will join the Eurosystem on 1 January 2008. We look forward to welcoming you wholeheartedly into the euro area. Thank you very much for your attention. BIS Review 110/2007  1
12  See James, H. (2012): “Making European Monetary Union”, The Belknap Press of Harvard University Press. BIS central bankers’ speeches  3  Some will remember the IMF Annual Meetings in 1997 in Hong Kong, when calls to create an “Asian Monetary Fund” were judged incompatible with the IMF’s universal mandate.13 Contrary to Asia in the late 1990s, Europe had the political infrastructure in place to sustain the sharing of sovereignty that makes mutual insurance mechanisms possible. This is not to say that all the discussions were easy, far from it, as might be expected in times of crisis. Europe’s sense of commonality was, and still is, under severe strain. But the political framework was there to produce decisions, and most importantly, a legal framework was also there to implement them. The lesson from this is that regional integration, regional rule of law, and the sense of a common project are sources of stability.14 In East Asia, things have moved on since the late 1990s, with the Chiang Mai Initiative multilateralisation. The G20 has taken stock of the Asian and European experiences and acknowledged the relevance of regional financial arrangements. The road ahead for the euro area Based on the lessons learnt from the Asian crisis, what are the main challenges we face in the euro area? Let me consider them one by one. Restructuring Europe’s financial sector To begin with, we need to reform Europe’s financial sector. We have, so to speak, come to a crossroads in Europe.

This is precisely one of the objectives of the Institute of Bankers, and with its newly launched Representative Office in Beijing, the Institute will extend its existing good work to the Mainland. It will help promote the training of bank employees on the Mainland, thereby contributing to the effective financial intermediation and smooth functioning of this crucial part of modern economy. The economies of the Mainland and Hong Kong are now highly interdependent. The Institute’s Beijing Representative Office will not only serve to enhance professionalism of the Mainland’s banking sector as a whole, but also contribute to the financial stability and development of both the Mainland and Hong Kong. Let me end this address by wishing the Institute’s Beijing Representative Office every success in its future endeavours. BIS Review 45/2005  1
The evidence presented is largely based on ongoing research within the Bank and it naturally supplements some of the main topics discussed in our 2017 Trend Growth Report. It also attests to the generosity of multiple institutions that, through covenants, have cooperated by sharing this information, including the INE, the Internal Revenue Service, the Civil Registry, the Labor Directorate and the Ministry of Education. Final remarks Before I conclude this presentation, I would like to mention the materialization of an initiative that we anticipated when we presented the September Monetary Policy Report before the Senate’s plenary. On that occasion we announced that the Bank will seek an external evaluation of its performance in complying with its Organic Law’s double mandate, that is, to safeguard price stability and financial stability. For this purpose, a panel of renowned world experts in central banking will be convened. I want to take this opportunity to inform you that we have appointed the five foreign economists that will make up the aforesaid panel of experts: Dr Karnit Flug (Chair), former governor of the Central Bank of Israel, and professors Dr Petra Geraats, from the University of Cambridge, UK; Guillermo Calvo, from Columbia University, US; Enrique Mendoza, from the University of Pennsylvania, US; and Donald Kohn, Senior Researcher at the Brookings Institution and who formerly served as ViceGovernor of the US Federal Reserve Board. We selected the panel on the basis of these experts’ vast professional experience and knowledge of central banking, all renowned economists at the world level.

Given that the relative magnitudes and rates obtained from the surveys, including the unemployment rate, should not change much, this means that in the last three years the Chilean labor market has been able to accommodate between 120 and 190 thousand migrants per year more than what the surveys indicate, without a significant increase in unemployment. Both the revised remunerations figures and the estimated revisions for employment are in line with recent administrative files and clearly above what would be obtained if adjustments to employment growth, remunerations and hours actually worked were not considered. This does not mean that labor market gaps are closed or nonexistent. Full absorption of the increase in labor supply can take longer, so this increase in employment growth does not imply that more unemployment does not exist. In fact, wage indicators—both the revised INE figures and administrative records—show low growth rates, consistent with a labor supply increase, a vision that coincides with the contents of our IPN. This special study on the labor market, however, goes beyond the review of current indicators, as it seeks to understand the characteristics that shape its behavior over the course of the business cycle and at longer terms. In particular, it presents a characterization of the labor market in Chile from an empirical perspective, using diverse sources of information to provide the broadest view possible.
With high growth in employment and falling unemployment, consumption growth is expected to be high in the period to the end of the year and into next year. As the interest rate level gradually normalises, household interest expenses will increase. Household interest-bearing debt is approximately NOK 1300 billion. According to our interest rate forecast, which I will return to later, the interest rate in 2008 will be more than 2 percentage points higher than in 2006. Such an interest rate increase will have a pre-tax effect on household income of roughly NOK 25 billion. Combined with projected lower employment growth and higher inflation, this might reduce growth in household purchasing power in the years ahead. Higher wage growth would have the opposite effect. Overall, moderate growth in household purchasing power is expected to result in lower consumption growth in the period ahead. A continued rise in house prices may contribute to sustaining consumption growth. House prices have increased further this autumn, and the twelve-month rise moved up to 18.2 per cent in October. Residential construction is still high. In 2005, the number of housing starts was the highest since the beginning of the 1980s. It appears that growth will be high again this year, but somewhat lower than in recent years. A number of contacts in Norges Bank’s regional network report high demand for new dwellings, and order backlogs for residential construction are still exhibiting solid growth. A gradual increase in the interest rate will probably curb activity in the housing market.

Petar Goshev: Promotion of the European Fund for Southeast Europe – EFSE in the Republic of Macedonia Welcoming speech by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia, Skopje, 1 March 2007. *  *  *  Distinguished ladies and gentlemen! Allow me to express my pleasure, more precisely the pleasure of all employees of the National Bank of the Republic of Macedonia for being hosts of the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia. Therefore, I greet the representatives of the European Fund for Southeast Europe, wishing them a warm welcome to our country, where, I sincerely assure them, they could fully, equally, safely and more ambitiously offer their financial services to the market of the highly open Macedonian economy, also encouraged, of course, from their previous positive experience they acquired through their cooperation with the Export and Credit Bank, AD Skopje. I would also like to especially welcome all of you that responded to the invitation by attending this presentation, thus de facto showing respect and interest in yet another new financial initiative in the Republic of Macedonia. Certainly, there is a deep reason for such respect and interests.
Before a monetary policy decision the Bank makes clear whether it expects inflation to deviate from the target or not, given the current interest rate level. If the forecast is above or below target it shows clearly that there is reason to consider whether the repo rate needs to be changed. The framework applied by the Riksbank has been the established practice in inflation-targeting countries. But as early as the mid-1990s the Reserve Bank of New Zealand, for example, opted for a  2  The volatility, measured as the standard deviation of GDP growth, was 1.9 percentage points during the period 1970-1992. Since 1995 the corresponding standard deviation has been 1.3 percentage points. 3  See Andersson, M., Dillén, H. and Sellin, P., ”The yield curve and the Riksbank’s signalling”, Sveriges Riksbank Economic Review 3, 2002, 5-19. BIS Review 11/2005  3  different method, publishing forecasts based on the interest rate path that they thought gave the best target fulfilment. Our academic advisers have also repeatedly said that we should prepare forecasts based either on how the market expects interest rates to evolve or that we, as in New Zealand, should work out what interest rate path is consistent with reaching the inflation target.4 Against this background we at the Riksbank have of course discussed over the years the question of what importance we should attach to different interest rate assumptions in our internal work and when we publish forecasts.

Figure 2 shows our interest rate adjustments on the vertical axis and our inflation forecasts’ deviation from the target two years ahead on the horizontal axis. As we can see there is a clear relationship between forecast deviations from target and our decisions, but there are also points in Figure 2 that deviate from the average behaviour. These points chiefly relate to the forecasts we produced when we chose not to counter the effects of energy prices on inflation. So it seems that we have essentially acted in line with how we have said we will normally act. Yet another way to evaluate the result of our policy is to investigate whether it is credible. The most important factor here is that inflation expectations 2 years ahead and beyond have been firmly anchored to our target since the regime was stabilised in 1997-1998. That conclusion holds up fairly well regardless of the method used (see Figure 3). Our ambition to be transparent derives, among other things, from a desire to avoid unnecessary movements or unease in the financial markets. To illustrate our performance in this regard the Riksbank has conducted a number of studies over the years, of which some have been published.3 The picture we’ve received is that our policy has essentially been intelligible and that it hasn’t resulted in any sharp fluctuations in financial prices that could have been avoided.
Big banks of this kind therefore possess an implicit state guarantee and benefit from artificially low borrowing costs. From an economic point of view, this equates to a state subsidy. This is not in line with the basic principles of a free market economy. (cf. chart 1)  1  The commission of experts was composed of members of the Federal Department of Finance, the SNB, FINMA, representatives of the private sector and academics. BIS central bankers’ speeches  1  This problem is particularly acute in our country, with its two very big banks. Although they have reduced their balance sheets significantly since 2008, the balance sheet totals of both big banks still amount to around four times the gross domestic product. Even though this is only a rough yardstick, it nevertheless gives an indication of the risk to an economy. As the crisis has demonstrated to us, this risk can have dramatic consequences if it turns into reality. The cost to the state of rescuing a TBTF bank may be enormous. In extreme cases, the state may even need to ask for international help, which can would greatly jeopardise a country’s independence. (cf. charts 2 and 3) In order to massively reduce the likelihood of this nightmare scenario suddenly coming true, we must put our financial system back on a more stable footing. There is no doubt that this is in the interest of Switzerland as a whole.

*** The last few years have already been littered with outstanding achievements. It was not so long ago that most people doubted that the single currency would ever see the light of day. Then, when they saw that it would, they speculated that only a few countries would be able to join. But they underestimated the resolve of European governments to be part of this great step forward in Europe’s history. Since then, we have witnessed the two changeovers; the introduction of the euro in book-entry form and then in the form of banknotes and coins. Both went smoothly, not because they were easy, but because of the hard work of all involved. And of course, for nearly five years now, we have had a single monetary policy conducted by the European Central Bank for the euro area. During this time, the Bank has not been without its critics. I have not been without my critics. The nature of that criticism depended on which newspapers you read. If you read the Anglo-Saxon press, then we paid too much attention to monetary growth. It seems that money shouldn’t matter for monetary policy. If you read the German press, well the story was different. Some said we communicated too little. Others said we communicated too much. When you are flanked on both sides, then you must be somewhere in the middle of the park. I conclude from this that we must have positioned ourselves more or less right.
The Committee cautioned that many banks underestimate their principal risk by not taking into account the duration of exposure between trade execution and final settlement, which may create significant concerns during times of market stress. A key recommendation of the Committee is that banks should reduce its principal risk as much as practicable by settling FX transactions through the use of financial market infrastructures that provide PvP arrangements. Banking supervisors worldwide are incorporating the updated guidance into their supervisory requirements. For example, banking supervisors in Hong Kong are now bringing their supervisory manuals in line with the guidance, and have reminded banks to take actions to address any gaps and deficiencies. The decision of the Bank of Thailand to implement the PvP link will certainly facilitate banks in Thailand to meet the Basel Committee’s recommended standards in good time. The new PvP link will be the third cross-border PvP link for Hong Kong’s USD RTGS system. The successful experience of the established links with Malaysia and Indonesia clearly indicates that the arrangement can be fully integrated into the operation of the partner RTGS systems, tailored to meet local requirements and made easily accessible by local users. Since 2010 when both links have been in operation, the combined average daily turnover has almost doubled, equivalent to an annual growth rate of close to 20%. Last month, the daily turnover generated by the two existing PvP links reached a new record of $ billion.

It is thus due to the instruments available on the market that the largest part of our foreign currency investments is in euros (55%) and in US dollars (25%). The remainder of our investments is composed of yen (10%), Canadian dollars (4%), pounds sterling (3%) and other currencies (3%). Finally, taking a general and somewhat longer-term view, the following point should be noted. The SNB’s currency reserves are made up of foreign currency investments and gold. In a risk-averse environment, losses tend to occur on foreign currency investments and profits on gold, while in a risk-friendly environment the opposite is true. Consequently, diversification of a portfolio to include gold and foreign currency helps to stabilise earnings over an entire risk cycle. BIS central bankers’ speeches  3
companies or legal entities that are established either in Malaysia or in Labuan). Based on the assessment, legal entities are rated as “medium risk”. Taking into consideration experiences from the investigations conducted by the LEAs, there are various instances where legal entities have in the past being used to facilitate laundering activities by the criminals. Similar assessment was also conducted for the Non-Profit Organisation (or the NPO), especially from the perspective whether these NPOs are being used to facilitate financing of terrorism. Although, based on the LEAs investigations there are no known NPO involve in the terrorist financing activities, minimum supervision on the NPOs makes the sector vulnerable to be used by criminals or terrorist. The NRA on its own has no meaning unless the results are used to facilitate greater understanding among all stakeholders involved, including the financial institutions to better understand the money laundering and terrorist financing risks in their own sectors, as well as other sectors that they have dealings with. This will allow financial institutions to better assess the adequacy of their internal AML/CFT controls in mitigating the risks identified and to strengthen these controls where necessary. As the country gathers its understanding of money laundering and terrorist financing risks through the NRA, similar expectations are also incumbent upon the financial institutions.

Some of the targeted mitigation measures undertaken by the authorities include: •  Intensified joint investigation efforts by the LEAs to effectively combat money laundering and terrorist financing. This is reflected in the increased number of raids, arrests and prosecutions related to money laundering and terrorist financing and predicate offences;  BIS central bankers’ speeches  5  •  Another effort is the enhancement of the structure of the individual LEAs, which includes the formation of dedicated AML/CFT unit within the LEAs and increase in manpower focusing on money laundering and terrorist financing investigations;  •  Another response by the government is the amendment to the Anti-Money Laundering and Anti-Terrorism Financing Act 2001 (AMLATFA) which is aimed at strengthening Malaysia’s AML/CFT framework against criminal activities. The amendments would provide clarity on reporting obligations so that preventive measures can be implemented more effectively, such as requirements to submit STRs related to terrorism financing, tipping off provision and CDD requirement;  •  The intensity of enforcement actions against financial institutions that failed to comply and implement AML/CFT programs is also increased. In 2013 and 2014, BNM has compounded banks for various failures to implement effective compliance programs. With the coming into force of the amendments to the AMLATFA on 1 September 2014, the maximum penalty for various provisions was increased. For instance, maximum penalties under general offence have been increased from RM250,000 to RM1 million.