samchain/econo-pairs-v1 huggingface dataset:
Exchange rate policies are expected to be designed to support rebalancing of global demand, while structural reforms to enhance access to finance by small and medium scale enterprises (SMEs), should help boost growth and reduce unemployment. Finally, better policy coordination among all stakeholders should help alleviate liquidity constraints and rebuild confidence. Regional financial trends Your Excellency, distinguished guests, Africa has been reasonably unaffected by the crisis due to the low level of exposure of its economies to international trade and financial flows. The continent experienced encouraging growth in 2010 not only on account of a recovery in exports and commodity prices, but also due to implementation of prudent policies by some of our economies prior to the global down turn. In addition, the effect of reduced foreign inflows from aid, foreign direct investments and remittances was far less than originally anticipated. The increase in global demand and hike in oil prices benefitted oil-producing African countries with Nigeria and Angola, the two largest oil producers experiencing strong growth of around 6 percent. In spite of the encouraging trends, risks to Africa’s economic prospects remain, particularly given the faltering global economy. It was recognized that the crisis originated from the financial systems and this has underscored the need for a more robust and effective financial sector supervision framework in African countries that can withstand potential future shocks.

Your Excellency, distinguished guests, it is indeed an occasion for all stakeholders of the Bank – the Government, Civil Society and the public at large – to be updated on the progress of the Bank, its diverse contributions to the economic and social development of Sierra Leone and the challenges that lie ahead. This is also a fitting occasion to re-dedicate ourselves to the original mandate that the founding fathers adopted at the inception of the Bank in 1964 namely; to achieve and maintain monetary stability and, without prejudice, to maintain a sound, vibrant and stable financial system. In this regard, I will be speaking on the theme “Repositioning the Bank of Sierra Leone to Meet the Challenges of the Financial Sector”. As part of the global economic and financial system, Sierra Leone has not been entirely insulated from the shocks of the crisis and as the global economy reevaluates and repositions itself to achieve full recovery, it is but fitting, especially as our nation marks its 50th independence anniversary, that the Bank spearheads efforts to ensure that the financial system is robust enough to withstand any future shocks. In doing so, let us recall the developments on the global, regional and sub regional levels before examining the initiatives to reposition the Bank. Global financial developments Your Excellency, distinguished guests, as mentioned in my speech last year, the global economy is recovering, though at a slower and unbalanced pace.
We do have estimates of expected inflation from other sources – such as the Survey of Professional Forecasters (SPF) conducted by the Federal Reserve Bank of Philadelphia. If such measures do indeed reflect the inflation expectations of investors, then we can conduct a reasonably accurate ex-ante analysis. TIPS analysts often talk about a concept they call the breakeven inflation rate. Essentially, this is the realized inflation rate that would cause investors to come out the same in terms of total compensation regardless of whether they had bought TIPS or nominal Treasuries. The difference between the auction breakeven inflation rate and the SPF forecast yields a measure of the net savings or loss incurred by the Treasury that is independent of forecast errors. It is also equal to the net value of the illiquidity and inflation risk premiums associated with each TIPS. Our analysis, which covers TIPS auctions through April 2008, found that prior to 2004, the breakeven inflation rate was below the SPF. This indicates that the illiquidity premiums exceeded the inflation risk premium over this period. However, since 2004, we find that breakeven inflation rates were approximately equal to expected inflation, indicating that investors were roughly indifferent between the benefit of being protected against inflation risk versus the cost in terms of the greater illiquidity of TIPS relative to onthe-run nominal Treasuries. Thus, on an ex-ante basis, it appeared that the cost of issuing TIPS was about equal to the cost of issuing nominal Treasuries.

To determine the impact of the illiquidity premium and inflation risk premium on these results, we decomposed our ex-ante analysis, comparing the breakeven rate of inflation excluding the illiquidity premium in TIPS yields 3 to the SPF forecast. This comparison yields an  2  In addition to these primary factors, TIPS yields also reflect the taxation difference between TIPS and nominal issues, the convexity difference between real and nominal yields and the price of the embedded deflation floor. 3  We used the illiquidity premium in TIPS yields estimated in D’Amico, Kim and Wei (2008). D’Amico, Kim and Wei calculated the liquidity component for five- and ten-year TIPS yields, which we used to adjust the auction prices for 5- and 10-year TIPS issues. For twenty- and thirty-year TIPS issues, we assumed that the liquidity component is equal to the component for a ten-year security, which in the event that these securities are less liquid than the ten-year note, understates this effect and thus underestimates the risk premium at this horizon. For further information, see Dudley, Roush and Steinberg Ezer (2008). BIS Review 14/2009  3  estimate of the premium investors were willing to pay for inflation protection at previous TIPS auctions. We found an average risk premium estimate of 47 basis points over our sample period. This suggests that the TIPS program does satisfy a real demand that is not met by nominal Treasuries.
Globally, labour has seen its share of income fall over the past twenty years and the IMF (2017) finds that technological rd  progress during the 3 Industrial Revolution has been the biggest contributor to this decline. The UK and Ireland  23  are outliers: in both countries, the labour share has been flat, and income inequality stable – if high  – since the late 1980s. 24  Moreover, there is strong evidence that advanced economy labour markets have been polarising since the 1980s – a structural shift that have generally been attributed to technological displacement of mid-skilled jobs resulting from the early stages of automation and digitisation of tasks. Employment growth has been strongest at the high and low skilled ends of the jobs spectrum, resulting in a hollowing out of mid-skilled employment. The polarisation of the labour market has also been evident in the returns to skilled labour, with earnings growth for those with higher levels of education far outstripping those with less schooling. So in summary thus far, if the Fourth Industrial Revolution is similar to past technological revolutions, the overall effect will eventually be labour augmenting – boosting productivity and wages, while creating new jobs to maintain or even increase overall employment. But that is in the long run. In the interim, if it is similar to previous industrial revolutions, it seems likely there will be a period of technological unemployment, dislocation and rising inequality.

That requires LDI funds to be resilient enough to prevent forced deleveraging and gilt sales in the event of severe but plausible stresses in gilt yields. Funds should hold enough assets, which can meet collateral demands, to be able to absorb such a shock without having to sell assets. This will avoid feedback loops that threaten financial stability. Importantly, the FPC intends for LDI fund’s resilience to be usable. [9] And after withstanding a stress, LDI funds should be able to continue operating during a period of recapitalisation by pension schemes. This is not just a financial stability issue. It is not in the interests of pension schemes or their corporate sponsors for LDI funds to unwind their hedges in periods of market turbulence, when they are most needed. And neither is it in their interests for LDI funds to sell assets at temporarily depressed prices. So pension schemes have no reason not to invest in LDI funds if they use their resilience to meet margin and collateral calls. To what level should LDI funds self-insure against stresses? The FPC judged that LDI funds should be resilient to a yield shock of, at a minimum, around 250 basis points. And that funds should also hold additional resilience over and above this, based on their own individual risks. How did we arrive at that judgement? We split up LDI funds’ steady state resilience according to three building blocks:[10] Firstly, a baseline resilience component that captures the idiosyncratic risks of assets held by LDI funds.
Finally, another important supervisory development has been the adoption, in 2004, of a risk based supervisory approach by SAMA. This has significantly strengthened and made more efficient the onsite and off-site supervision practiced by SAMA. This approach is proactive and requires enhanced and frequent communication with banks at all levels. It brings SAMA supervision fully in line with the new international standards. In recent years, the strength of the Saudi banking system and SAMA’s sound banking supervision practices have been recognized by a number of important international institutions. One of the findings of the Financial Sector Assessment Program by an IMF/WB Team in 2005 indicated that the SAMA Banking Supervision, fully or largely met the 25 Basle Core Principles. On the other hand, external rating agencies including S&P, Fitch and Capital Intelligence in 2004 and 2005 have issued favourable reports on the Saudi Banking system. The recent external rating upgrade by S&P to A+ reflects the inherent strength of the domestic banking system. The developments of the banking sector have been reflected positively on the performance of the Saudi economy. Over the preceding three years, GDP (at current prices) have increased by an annual average growth rate of 18.1%, and private sector GDP by 6.7%. Money supply has grown by an annual average rate of 12.9%, providing adequate liquidity to growth requirements of the economy.

In the context of a flexible exchange rate, access to forex hedging with the proper regulation and supervision is certainly important for the various players. Chile has made great advances in this area with a derivatives market that has increased as a fraction of GDP, being above the average of Latin America and other emerging economies. In this context, it is important to expand the information system of derivatives, which allows to further approve the internationally accepted standards to "Transaction Repositories", which are currently considered as important as other types of financial infrastructures, such as Central securities depositories, counterparty entities and payment systems. Summing up, we believe that there is a series of legal changes that will enable the Chilean financial system to improve its efficiency and stability, providing the necessary tools for agents to make better decisions and foster growth. This, together with monetary policy oriented at keeping inflation stable over the medium term, is the best contribution the Central Bank can make to our country’s development. Dear senators, In the second quarter of last year there was a change in Chile’s economic scenario, with sluggish demand and lower inflationary pressures, that were particularly visible in low numbers for activity and prices at the end of 2016 and early 2017. As incoming data allowed to gauge the nature and magnitude of this change, the Bank adjusted its monetary policy by cutting the policy rate by 100 bp in five months.
As one country imposes capital controls, it pushes international financial flows elsewhere, inducing others to impose capital controls, and so on. Now assume that all countries are able to impose capital controls so that at the margin, there are no changes in net capital flows. Then the global adjustment would not take place, EMEs would grow beyond their potential, generating inflation, while weak economies would be trapped with low demand growth. EMEs can still try to temper capital inflows transitorily, but to completely avoid them would be unfeasible and inefficient. Concluding remarks Despite all the current tensions, the global economy is adjusting. Exchange rates of EMEs and commodity exporters have been strengthening – albeit at different speeds as some economies try to smooth the adjustment – and the global recovery is taking place (Figure 4). Fortunately, trade restrictions, which represent the biggest threat to the global recovery, have not been implemented. In recent weeks we have witnessed increased tensions in the world, such as the turmoil in the Middle East and North Africa and the natural and nuclear disasters in Japan. We need to play close attention to these developments, but they should not change the perspectives of the dual-speed recovery in the world economy. As discussed above, the policy decisions in large countries have repercussions on the rest of the world. However, the main role for policymakers is to secure recovery and to create the basis for sustainable growth, which requires macroeconomic and financial stability.

Since December 2009, the yuan has appreciated almost four percent, while this figure is much closer to ten percent for most EMEs. The comparison is even more dramatic when looking at a longer period of time. This has been achieved through massive reserve accumulation and limited financial integration. However, for measures in the foreign exchange market to have real effects – that is, on the real exchange rate, which is the relevant variable from the point of view of competitiveness – these measures need to have some support from the real side of the economy. In the case of China, this is a very high savings rate. China saves about half of its GDP and the resulting current account surplus sustains a depreciated real exchange rate. Otherwise, attempts to maintain a depreciated nominal exchange rate sooner or later lead to inflation, which is the way to achieve relative price adjustment when the nominal exchange rate is not allowed to adjust. The U.S., in turn, is undertaking an extraordinary monetary expansion. Beyond having reached the zero lower bound for the federal funds rate, unconventional measures are adding additional monetary stimulus. In particular, the massive purchase of securities implemented in the so-called QE2 program. This explains why the dollar has reached its lowest level in several decades (Figure 3), but this is not only the result of expansionary monetary policy, but also of the lack of domestic demand and of the external imbalances.
Chair Yellen recently discussed this topic 3 and the recent rule that removes large, non-complex firms from the qualitative assessment of the Comprehensive Capital Analysis and Review (CCAR) is a recent example.4 This tailoring principle drives efforts to mitigate risks to financial stability, while minimizing the collective burden on financial institutions, particularly for community and mid-sized banks, and allocating supervisory resources most efficiently. As a result, the standards and expectations from supervision become more stringent as a firm becomes larger and more complex in ways that pose risks to the broader financial system. With that background in mind, I’ll turn to the question of “optimal” bank capital that is the topic of this conference. To me, the question of optimal capital implies some type of a trade-off. This thinking is not limited to bank capital, but reflects all of the potential supervisory and regulatory tools such as capital and liquidity standards or a resolution framework. One can frame this trade-off simply in terms of two objectives often attributed to supervision: ensuring the safety and soundness of financial institutions and promoting efficient financial intermediation that supports the growth and stability of the U.S. economy. Other objectives could include, for example, reducing the potential spillover costs associated with distress and promoting fair and transparent financial services for consumers. In many cases, the objectives of enhanced resilience and efficient financial intermediation are mutually reinforcing.

As the financial industry continues to evolve in response to regulatory, technological and business factors, I expect new issues will emerge that potentially threaten individual firms, and supervisors need to be prepared to address them. Conclusions Effective supervision and regulation help create the environment where financial institutions provide critical intermediation services in a sustainable manner over time. A key lesson of the financial crisis and the post-crisis period is that stronger, more resilient financial firms can dampen rather than amplify shocks to the system. The greater resilience we observe today relative to the pre-crisis period suggests the U.S. financial sector is better positioned to continue to provide the critical services to households and businesses that are necessary to support the U.S. economy across a wide range of potential macroeconomic and financial conditions. It is also essential to distinguish the intended consequences of supervision and regulation where informed choices are made based on careful data analysis from the unintended consequences where outcomes are not consistent with policy objectives. This requires both a conceptual framework to identify costs and benefits to society as a whole, and empirical analysis to measure them. In my view, it is entirely appropriate to continuously evaluate and rigorously assess the impact to ensure that the observed outcomes are consistent with stated objectives such as greater resilience, efficient financial intermediation over time, and financial stability.
70  Hutton (2015) discusses the need to repurpose companies better to reflect longer-term objectives. 71  See Mazzucato (2013). BIS central bankers’ speeches  13  References Acemoglu, D (2009), “Introduction to Modern Economic Growth”, ISBN: 9780691132921. Acemoglu, D and Robinson, J (2013), “Why Nations Fail: The Origins of Power, Prosperity and Poverty”, ISBN: 978–1846684302. Aghion, P and Howitt, P (1997), “Endogenous Growth Theory”, ISBN: 9780262011662. Arthur (2011), “The second economy”, McKinsey Quarterly, http://www.mckinsey.com/insights/strategy/the_second_economy. available  at:  Arthur (2014), “Complexity and the Economy”, ISBN: 978–0199334292. Attanasio, O and Blundell, R (2014), “Human Capital in the 21st Century”, presentation at the “Capital in the 21st Century” conference hosted at the Bank of England on December 19 2014. Slides available here: http://www.cepr.org/sites/default/files/bank%20of%20england.pdf Bannerjee, A, and Duflo, E (2012), “Poor Economics: Barefoot Hedge-fund Managers, DIY Doctors and the Surprising Truth about Life on less than $ a Day”, ISBN: 978–0718193669. Barro, R and Lee, J (2013), “A new data set of educational attainment in the world, 1950–2010”, Journal of Development Economics Vol 104 Pages 184–198. Becker, G (1965), “A Theory of the Allocation of Time”, Economic Journal Vol 75 Pages 493–517. Berglas, A (2012), “Artificial Intelligence Will Kill Our Grandchildren (Singularity)”, available at: http://berglas.org/Articles/AIKillGrandchildren/AIKillGrandchildren.html. Bernanke, B (2011), “Global Imbalances: Links to Economic and Financial Stability”, speech given at the Banque de France Financial Stability Review Launch Event, Paris, France. Bresnahan, T, Stern, S, and Trajtenberg, M (1995), “Market Segmentation and the Sources of Rents from Innovation: Personal Computers in the Late 1980’s”, NBER Working Paper 5726.

20  BIS central bankers’ speeches  Chart 5: Capital accumulation in the UK since 1850 Capital per head, 2006 prices £  50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000  0  5,000  10,000  15,000  0 25,000  20,000  GDP per head, 2006 prices £ Source: Hills, Thomas and Dimsdale (2010). Chart 6: Capital accumulation across countries since 1980 Capital per head, 2005 prices $ 140,000 Japan 120,000 Germany 100,000  Italy  80,000 South Korea 60,000 India  US  China  40,000  UK  Urban China  0  5,000  20,000  10,000  15,000  20,000  25,000  30,000  35,000  40,000  0 45,000  GDP per head, 2005 prices $ Source: McKinsey Global Institute (2010). BIS central bankers’ speeches  21  Chart 7: Literacy rates in Western Europe Netherlands  Great Britain  Sweden  Germany  France  Italy  Literacy rate, percent 100 90 80 70 60 50 40 30 20 10  1400  1500  1600  1700  1800  1900  0  2000  Source: OurWorldinData.org, based on Buringh and Van Zanden (2009) and Broadberry and O’Rourke (2010). Chart 8: Average years of schooling of the population aged 15+ Percent  Developing economies  12  World  10  Advanced economies 8 6 4 2  1950  1960  1970  1980  1990  2000  2010  0  Source: Barro and Lee (2013).
Holding flat the labour share may be too strong an assumption if the UK continues its cyclical rebound. Nonetheless, even the rise in wage growth seen through this year appears to have subsided somewhat over recent months. Shorter-term measures suggest annualised rates of pay growth of around 1 to 1.5% in Q3, down from 2.5 to 3% in Q2. Wage growth appears to be fizzling. And, of course, those are not the only potential downside risks facing the UK. World events have added to those downside skews over the past few months. There is now rather more convincing evidence of a gentle slowing in the UK and world economies since the summer. In the UK, this gentle slowing has been apparent since the middle of 2014. It leaves growth, in the UK and globally, little more than trend. Growth could accelerate in the period ahead, with the cost of credit at historically very low levels. Since the crisis, however, the pattern of UK output has been shaped less by the cost of credit today than by uncertainty about demand tomorrow. It was that uncertainty which cratered world demand in 2008. It was that uncertainty which flattened UK growth during the euro-area crisis of 2011–12. And it was the relief rally after that euro-area uncertainty abated which caused UK growth to bounce back during 2013–14. Uncertainty about demand is, once more, on the rise.

To increase the competitiveness of financial institutions, the BOT seeks to improve the financial system infrastructure, such as developing the payment systems to promote efficient business dealings and to prepare for cross-border transactions involving regional currencies. We also work toward raising the standard of Thai financial institutions to become Qualified ASEAN Banks (QAB), which is a standard used within the region to allow qualified financial institutions to expand their business within the region. The BOT has already formulated action plans for all of these aforementioned initiatives, and plan to accelerate implementation in tandem with Asia’s growth and regional economic integration. Ensuring financial institutions’ role as effective financial intermediaries will help promote inclusive growth, which would lessen unequal access to financial services. To this end, the BOT will ensure that financial institutions provide quality financial services that meet various needs at a fair price especially for risk hedging instruments. Along with greater provision of financial services, better consumer protection to create financial immunity for financial services users also tops our priority. To help consumers understand available products to better choose one that suits their needs, the BOT has set up the Financial Consumer Protection Center (FCPC). This center currently provides onetouch service through the hotline number 1213. The center also offers financial education to the public. Conclusion I would like to reiterate that the Bank of Thailand’s policy direction for 2012 will focus on making the Thai economy more resilient and improve the people’s standard of living.