samchain/econo-pairs-v1 huggingface dataset:
Chart 7  Chart 8  Earnings yield on equities and 10-year government bonds yields have diverged since 2000  UK equity risk premium is estimated to have grown since 2000, and together with lower growth expectations, explains bulk of equity-bond spread currently  Per cent  Percentage points  18 16  Unexplained component  14  ERP contribution  12  Growth contribution  10  10 8 6  Equity-bond yield spread  8  12  4  6  2 0  1965  1975  1985  1995  2  4  10-year government bond yield Earnings yield 2005  2015  Source: Thomson Reuters Datastream and Bank Calculations. Shows FTSE All-Share equity yield and UK 10-year government bond yield. 0 2000  2005  2010  2015 -2  Source: IMF, Bloomberg, Thomson Reuters Datastream and Bank calculations. The equity-bond yield spread is the difference between the reciprocal of the FTSE AllShare price-earnings ratio and the UK 10-year government bond yield. The growth contribution is calibrated from the IMF 5-year-ahead world growth and inflation forecasts. The ERP contribution is calibrated using the VAR model described in Chin and Polk (2015), “A forecast evaluation of expected equity return measures”, Bank of England Working Paper, No. 520. The serial disappointment in earnings growth is mirrored in global growth since the crisis (Chart 9). In advanced economies, uncertainty appears to be holding back spending, particularly by corporates. Globally, investment remains weak (Charts 10 and 11).

Financial arms races are scarcely a new phenomenon. How different history might have been had Chuck Prince heeded JP Morgan’s words from a century earlier: “I made a fortune getting out too soon”. Although not new, the liberalisation of financial services over the past 30 years, and the accompanying increase in financial scale, has probably increased arms-race pressures. As banks have piled on the pounds, their fights on the beaches have intensified. The stronger those competitive forces, the quicker an arms race escalates. In what follows, I discuss three examples of modern-day arms races in the financial sector: races in return, races in speed; and races for safety. These are examples from the past, present and future respectively. In each, a competitive battle for relative dominance results in an evolutionary equilibrium which is sub-optimal, individually and socially. They are latter-day tragedies of the financial commons. ************ By any historical metric, the pre-crisis period was an extra-ordinary one for the financial sector. This is no better illustrated than in the returns to financial sector labour and capital. Between 1989 and 2007, the nominal gross value added of UK financial intermediaries rose more than threefold, or by about 8% on average per year. Over the same period, value-added of the non-financial corporate sector rose by about 5½% per year. More commonly-used performance measures in banking are returns on equity and executive compensation. These rose even more dramatically over the period. Returns on equity for UK banks rose from on average 1% in 1989 to 38% by 2007.
Our last speech for this event will be held by Mr. Cristian Popa, Deputy Governor of the National Bank of Romania, showing you just where we, as central bank and as economy, stand in the preparation of the introduction of inflation targeting. What I do want to mention is the current debate on the appropriateness of adopting inflation targeting in Romania. I am very happy that monetary policy steals the spotlight from football, at least temporarily. Some acknowledged Romanian economists claim that inflation targeting is not needed since future euro adoption requires fulfilling the grueling conditions of the ERM-II framework. In line with this argument, the exchange rate might prove to be a better choice for a nominal anchor. Given the soon to be completed capital account liberalization, I believe that exchange rate management would be very difficult outside a currency board. Although I am confident about our option, I respect all disagreeing opinions. For those retaining their doubts about the benefits of inflation targeting, there is one more argument, courtesy not of a renowned economist, but of the Danish physicist Niels Bohr. When asked why he, an enlightened scientist, kept a horse-shoe on display in his house, his prompt answer was that “it helps non-believers too”. Likewise, provided that the National Bank of Romania has convinced enough people of its commitments, non-believers should also enjoy the benefits of this policy change. Ladies and gentlemen, let me now introduce Rachel Lomax, Deputy Governor of Bank of England and member of the Monetary Policy Committee.

Mugur Isărescu: Inflation targeting - international experience and Romania’s prospects Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Conference on Inflation Targeting, Bucharest, 30 March 2005. *  *  *  Ladies and gentlemen, I would like to begin by extending a very warm welcome to you to the National Bank of Romania. It is a great honor for me to open the conference “Inflation Targeting: International Experience and Romania’s Prospects”. I would like to add that I am particularly pleased that such distinguished guests agreed to join us today and share some of their insights regarding inflation targeting. This spring marks an important moment in our history: in April 1880, the National Bank of Romania was established, and became the 19th central bank in the world; now, 125 years later, our central bank is getting ready to become the 19th (plus 3) inflation targeter. For a few years now, the National Bank of Romania considered inflation targeting to be the monetary policy framework suitable for the timeframe between achieving single digit inflation and joining the ERM II. My confidence in inflation targeting stems from my belief that price stability should be the primary goal of monetary policy and that there is full long run compatibility between this objective and economic growth. This has been proved by successful inflation targeting experiences of numerous countries, regardless of the level of economic development.
17  All speeches are available online at www.bankofengland.co.uk/speeches  17  Producing something along these lines would be a new departure for macro-economic policy, if not for some of the other arms of policy. Analyses of monetary policy have tended to emphasise the economy-wide effects, measured in terms of macroeconomic outcomes like GDP, unemployment and inflation. This still makes sense as a means of explaining the social good monetary policy is offering. But messages often land most effectively when they are personalised. Monetary policy has an important personalised impact on most people’s lives. Some scorecard-like device could, at times of significant change in the monetary policy stance, help explain, in simple terms, the personal as well as societal benefits monetary policy confers. It would seek better to explain how monetary policy is affecting your job, your cost of living, your GDP. This should help make monetary policy relevant to people’s everyday lives. At a time of diminished trust, and some scepticism, it could potentially make a contribution towards improving public understanding of, and trust in, monetary policy. It would mean the next time someone shouts from the audience “That’s your bloody GDP”, we would have right of reply: “Oh no it’s not; it’s yours too.”  18  All speeches are available online at www.bankofengland.co.uk/speeches  18  References  Agerström, J, Carlsson, R, Nicklasson, L and Guntell, L (2016), ‘Using descriptive social norms to increase charitable giving: The power of local norms’, Journal of Economic Psychology, Vol. 52, pp. 147-153.

It should be kept in mind that the persistence of certain global imbalances and protectionist pressures and the uncertainties over oil and other commodity prices represent risk factors for growth, which date from before the outbreak of the current bout of turbulence. Turning to prices, the behaviour of production seems to have been accompanied by a slight upturn in inflation to around 2% in the medium term, since the smaller contribution of indirect taxes (which has been especially marked in 2007) should be offset by the larger contribution of unit labour costs, in what is a buoyant labour market. Against this background, a possible increase in wage pressure associated with the aforementioned taking-up of slack in the labour market, or a widening of the margins in those sectors more sheltered from international competition, pose risk factors for price stability in the euro area. The current financial market turbulence has naturally heightened the downside risk to growth, and this has in some way mitigated inflationary risks, which nevertheless continue to rise. Above all, however, the turbulence has widened the range of uncertainty associated with the central scenario for the European economy that I have just described. In these conditions, the first ECB Governing Council meeting this month unanimously decided, as you know, to hold interest rates unchanged and gather more information on this episode of turbulence and study it in more detail before taking any new decisions.
However, the Riksbank’s ambition is to formulate monetary policy so that inflation returns to the target level in a few years’ time. But why in a few years’ time? Why not the next quarter? The reason is that the Riksbank also strives to stabilise production and employment around long-run sustainable levels. Sometimes an overly rapid return to the inflation target could lead to excessive fluctuations in production and employment. The Riksbank then tries to bring inflation back on target at a somewhat slower pace so production and employment develop in a stable manner. It is also possible that inflation will approach the target for reasons that risk slowing down production and employment. One example of this is when substantial wage increases lie behind an inflation rate that is below target beginning to rise. The inflation target and Industrial Agreement have contributed to higher real wages So what significance has the inflation target had? Let me start by reviewing what has happened to the rate of inflation. Figure 1 shows how high inflation in Sweden has been from 1970 until today. Inflation here is measured in terms of the annual percentage change in the consumer price index (CPI). 1 The average annual rate of inflation during the period 1971–1992 was 8.4 per cent. The inflation  1  2  Statistics Sweden has adjusted the methods for calculating the consumer price index, for instance in 2005. BIS central bankers’ speeches  target has led to a severe slowdown in the rate of inflation.

•  Another welcomed development of the banking system belongs to the customer service, which through electronic terminals, has been naturally associated with the increased number of electronic cards in circulation. Presently, banks provide debit and credit cards, in cooperation with the international companies of Visa and MasterCard, Diners Club. Nine banks provide the ATM service and the number of the latter ones at end of December 2005 was 205, while in August of this year it has reached to 266. In the meantime, the number of the points of sale has reached to 1073, of debit cards to about 70,176 and of credit cards to 4,245. •  Undoubtedly, the further expansion and strengthening of the banking system is an important aspect. The geographic extension of covering the territory with banking business, the increased competition, the introduction of many new products and the new recent developments constitute an additional argument for the vital role played by the banking system. The map of covering the country with banking business was further expanded, including new regions uncovered previously. Thirty new branches and agencies were opened during 2004, while in 2005 their number became 48, making the total number of branches at end of 2005 reach 127 and that of agencies reach 113. 4  BIS Review 115/2006  •  The positive developments in the banking sector and the increased number of subsidiaries and agencies have brought about a considerable increase in the number of employees.
Once these exercises are complete, we will analyse the feedback we have received and use it to inform our final decision, which will be announced in December. If a final decision is made to move to polymer, we will also use the opportunity to introduce notes which are somewhat smaller than the current series. These will be easier for both the public and the cash industry to handle and will generate further financial benefits in terms of lower production and storage costs. In moving to smaller notes, we will retain the present tiering of denominations by size, which is of particular benefit to the visually impaired. I would now like to invite any questions that you may have. I’ll be joined in addressing these by the Bank’s Chief Cashier and Executive Director for Banking Services Chris Salmon, and the Head of our Notes Division Victoria Cleland. 2  BIS central bankers’ speeches

In alphabetical order, the magnificent seven are: Bank of China (Hong Kong), DBS Bank (Hong Kong), Bank of East Asia, Hang Seng Bank, The Hongkong and Shanghai Banking Corporation, Standard Chartered Bank, and Wing Lung Bank. I thank them sincerely for their participation as Retail Exchange Fund Notes Distributors. BIS Review 31/2005  1  Access for retail investors to the primary market of debt, not necessarily restricted to Exchange Fund Notes, is, of course, only part of our continuing efforts. To increase and sustain retail investor interest in bond products in general, we need also to provide convenient access to the secondary market at low transaction costs and reliable market information. But this is a subject for another occasion, after ideas, just recently discussed and endorsed by the new Financial Infrastructure Sub-Committee of the Exchange Fund Advisory Committee, mature and arrangements put in place, in collaboration with the industry. Allow me to conclude with a commercial targeted at retail investors. The Exchange Fund Notes are a very safe investment – you are putting your money with the Exchange Fund, which is managed by the HKMA. The Exchange Fund Notes provide you with a steady stream of fixed-interest income that is higher than interest on bank deposits. The Exchange Fund Notes are highly liquid – you can sell them any time you want. There are 26 market-makers appointed by the HKMA to make a market in Exchange Fund paper.
As I mentioned earlier, stablecoins may be innovative in the technology they use, but the fundamental questions they pose are not new. We as central bankers and regulators need to look at them as what they propose to be – a new form of private money. This means that we will hold them to standards similar to those applicable to existing private money. It doesn’t matter what type of technology you’re using or the legal form of the firm. If a firm is offering private money on a systemic scale then it should be regulated as such. Our core rules and requirements came through trial and error, often following financial crises. Our work on a regulatory regime for stablecoins builds on this learning process – rather than starting at square one and expecting different results. I recognise that the themes here sound curmudgeonly. But this is not an anti- innovation message: quite the opposite. Establishing a secure regulatory environment for new forms of digital money to operate within the UK will lay a foundation for sustainable innovation. As I said at the outset, if new forms of digital money can be made safe, they could potentially contribute to faster, cheaper and more efficient 4/5  BIS central bankers' speeches  payments with greater functionality. They could increase the resilience of payments. And they could even have long-term benefits for financial stability.

Mohd Razif bin Abd Kadir: Malaysia’s position as an international Islamic financial centre Closing keynote address by Mr Mohd Razif bin Abd Kadir, Deputy Governor of the Central Bank of Malaysia, at the Malaysian Islamic Finance - Issuers and Investors Forum 2006, Kuala Lumpur, 15 August 2006. *  *  *  It is my pleasure to be here at the end of the two-day Malaysian Islamic Finance - Issuers and Investors Forum 2006. The joint hosting of this Forum by Bank Negara Malaysia, the Securities Commission, Labuan Offshore Financial Services Authority (LOFSA) and Bursa Malaysia is testimony to the strong cooperation and close collaboration of the key regulatory and market authorities in the financial services sector in Malaysia. I would regard the Forum as a successful one. The 14 sessions and the 54 distinguished panellists and 8 moderators from various backgrounds and experience have deliberated and focused on issues that are relevant to both the issuers and investors, who are among the key stakeholders of Islamic finance. My closing remarks today will centre on summarising the issues and suggestions that have been put forward to further enhance Malaysia's position as an international Islamic financial centre, and to reiterate and reaffirm the strong commitment of the Government and the relevant regulatory agencies to spearhead this MIFC initiative. In many of the sessions, Malaysia has been recognised as having in place a strong foundation and the right pre-requisites to become an effective and efficient Islamic financial hub. Among them are: i.
As an example, it is more difficult to propose needed regulatory measures at the same time as promoting the growth of the financial market. To sum up: A country should be able to manage independence, accountability, transparency and efficiency satisfactorily in any kind of supervisory structure. For independence there might be some advantage with central bank supervision. But for cooperation leading to better efficiency there might be a slight advantage with a unified authority. Arguments for and against various supervisory structures After having discussed the conditions for good supervision let me now review some of the arguments for and against the various actual supervisory structures. I will first address the issues of having supervision inside or outside the ministries and the central banks. I will then turn to the arguments for and against unified authorities. Supervision inside ministries may provide some benefits in the form of insight and staff expertise, maybe also access to resources. But there is a strong disadvantage in the lack of independence plus the risk to the public’s confidence in the government if failures should occur in the supervised sector. There is also a serious governance issue in those countries where the government is the owner of financial institutions and also supervises them. Arguments for retaining supervision in the NCB What about supervision inside the NCB? First, banks have a special importance in the financial system. Their activities are often complex. Therefore, they need high quality, resource-intensive supervision. The NCB normally has independence and revenues.

Thomas Jefferson believed that the US Constitution should be rewritten every 20 years or so at a new constitutional convention.7 Second, we cannot fully describe an optimal monetary arrangement because we do not know all possible states of the world and hence the policy rule to which we would like to commit. Those two aspects of the technology of collective decisions create a role for institutions. But they differ in important ways. If there were only a commitment problem, then we could describe an optimal state-contingent monetary policy reaction function. Mechanisms could then be devised to make it less likely that policy would deviate from this optimal plan - perhaps by writing the optimal rule in the form of a constitutional provision which could be overturned only by a substantial majority, or financing deficits by issuing index-linked debt. Such mechanisms would make it incentive compatible collectively to stick to the optimal plan. None of this would have come as a surprise to the authors of the American Constitution. In Federalist Paper No.10 James Madison points out that “our governments are too unstable” (p173) and in No. 37 he writes: “the people of this country, enlightened as they are with regard to the nature ... of good government, will never be satisfied till some remedy be applied to the vicissitudes and uncertainties which characterise the State administrations” (p243). Outside observers agreed.
Facilitating the integration of fintechs into the regulatory framework As regards the fostering of innovation, I would first like to recall a founding principle. As supervisors, we need to promote a regulatory framework that is innovation-friendly, but technology-neutral, in order to encourage the appropriate and uniform treatment of risks: the same activity, same risk, same rule principle. Last year, I drew a parallel with the invention of the railway, which was a major innovation in the 19th century but not devoid of risks. Our role is to prevent the train from going off the tracks and to ensure that passengers are happy to get on board without being afraid. In other words, we need to promote innovation but also confidence in 1/3  BIS central bankers' speeches  innovation. At the European level, the balance between innovation and security is embodied in the first draft texts of the digital finance package, presented by the European Commission in September 2020. The draft Markets in Crypto-Assets Regulation (MiCA) constitutes a first step forward. I would like to stress two key points: it must be adopted quickly, and it must be consolidated. Indeed, technology is advancing rapidly, and decentralised finance, which is an even more crucial area than in September 2020, must be taken into account to avoid leaving any blind spots or allowing alternative circuits to develop without regulation. The draft DORA Act focuses on the key issue of operational resilience, which is vital, notably to address cyber risk.

And I firmly believe in the role that you, the fintechs, have in reshaping the financial landscape alongside the existing players who are themselves undergoing transformation. Keep that spark of originality that encourages you to push the existing limits even further, and continue to develop French and European technological know-how. Thank you for your attention. 3/3  BIS central bankers' speeches