samchain/econo-pairs-v1 huggingface dataset:
One of my ECB colleagues in fact once put it to me that - “when we have closed off every other policy option, we will finally be forced to do the things we know that we should have been doing all along!” There are those, I know, who find our hesitation about the euro - in an economic context - hard to understand. That’s true particularly of those who have been in effective de facto monetary union with the Deutsche Mark for a long time already. But it is not just stubbornness or obstinacy on our part though we British can of course be pretty stubborn at times. In the macro-economic context it reflects a real debate about the risks and potential costs of divergence between our own monetary policy needs and those of the members of the Eurozone - which in turn depend upon the extent to which our economies really have achieved sustainable convergence, and the extent to which we are able to respond flexibly on the supply side to economic shocks or tensions between our domestic monetary policy needs and those of our European partners. As you know, the Chancellor of the Exchequer announced some three years ago that we would not join the euro in the first wave. He made it clear that the present British Government is not opposed to Euro membership as a matter of principle. It will make a decision on pragmatic grounds, based upon five economic tests.

In addition, as financial markets in Asia become more developed, the markets now have the capacity to transact large quantities with cost effective pricing. In 2011, Malaysia issued the first 10 year global sovereign USD Sukuk, with the issuance size of 2 billion, under an innovative Shariah principle of Wakala which recorded the lowest absolute yields achieved by an Asian sovereign for a new USD issuance. Another recent landmark issuance on the domestic front is by PLUS Berhad, the largest toll operator in Malaysia, with the issuance of a record size of RM30.6 billion programme, equivalent to USD9.7 billion, with maturities ranging from 5 years to 27 years. The depth and breadth of Asian capital markets have drawn investors to expand their investment activities to this region. Even central banks, as traditionally conservative investors, are also venturing into investing part of their reserves, in each other’s markets. Bank Negara Malaysia, has since 2003, gradually embarked on investments in regional markets. This includes investments in the Indian rupee market. As an approved Foreign Institutional Investor, we have also been able to actively participate in the Indian rupee market. Progression in the Malaysian financial markets Progressive efforts have been made to transform Malaysia’s financial sector with a major dimension of the transformation involving achieving greater regional integration. Following a decade, institutional and financial infrastructure development that focused on enhancing domestic capacity of the financial sector while evolving a more competitive environment.
At this time, given better growth prospects for emerging markets in the near-term, there could be a resurgence of strong capital flows to emerging markets once the current global crisis subsides. As large capital inflows are known to be one of the key contributing factors of many financial crises in the past, preparing the economic and financial system to effectively intermediate it and manage the associated risk to maintain financial stability, will be the first and foremost challenge for SEACEN regulators and  2  BIS Review 96/2009  policymakers. In the past, what happened was that, in response to the strong capital inflows and abundant liquidity, banks tended to relax their underwriting standards, which gave rise to the formation of asset price bubbles. Therefore, going forward, risk management of banks must continue to be strengthened and regulators must be prepared to use macro-prudential measures proactively as necessary to reduce such risk. This means credit standards and bank capital rules must remain vigilant regardless of the abundance of liquidity. Second, the issue of procyclicality has gained the attention of regulators and the banking industry for quite some time in the context of Basel II. Since then, especially at the start of this crisis when credit crunch has slowed economic activities, a number of proposals have been put forward to deal with this issue. So far, the debate remains open.

Pressures increase from regulated entities, which complain about regulatory uncertainty, and from policy-makers, who are keen to foster economic recovery and growth after 8 years of low economic performances almost a lost decade! Keeping the momentum relates to three objectives: –  complete the regulatory agenda, in particular regarding what is named now as “market-based finance”, so as to effectively and comprehensively strengthen the financial system and remove regulatory uncertainty;  –  make sure that the regulatory spectrum expands well beyond the sole banking sector so as to avoid unfair level playing field, regulatory arbitrage and a paradoxical outcome that is favoring and encouraging those who are still “in the shadows.” On top of that, keeping pace with the creativity of all players is no small challenge. BIS central bankers’ speeches  1  –  devoting adequate resources and designing the proper organization of supervision which needs to be intrusive. 2  Preserving diversity  While the objective of expanding the scope of regulation beyond the banking sector may require applying similar – though not identical- regulation to similar asset classes or risks, irrespective of the legal status of the intermediary bearing them, it must also be acknowledged that business models, accounting frameworks, liability structures, time horizons of decisions may differ across sectors and entities. In that respect, it can be argued that that “one size does not necessarily fit all” and that one should preserve and ensure diversity.
Just as importantly, yields on government bonds indicate that inflation is expected to remain low over the next fifty years. Gordon Brown deserves great credit for taking the time to design the institutional arrangements so carefully in advance. This was not a traditional “make it up as you go along” approach to British economic policy. In fact, the design is a good example of how to overcome the fundamental constraint faced by social institutions. That constraint is that it is both impossible and undesirable to enforce binding commitments on the collective decisions of our successors. It is impossible because there can be no outside enforcer. It is undesirable because we cannot imagine or articulate every possible future development. As such, institutions must have, and be likely always to have, widespread support. Their design must meet three principles. First, in order to maximise the breadth and permanency of support, the objective should be as clear as possible. Second, the institution must have the appropriate tools and competence to meet those objectives and be held accountable for doing so. Third, for the institution to command widespread support, the design must reflect history and experience. How do our current monetary arrangements meet these requirements? First, the objective – the inflation target – is clear. It is 2% for CPI inflation. Second, responsibility for setting interest rates has been delegated to a group of people – the Monetary Policy Committee – with the appropriate technical competence and who face incentives focussed on meeting the target.

5 But the higher living standards which the division of labour permits require institutions that allow us to exchange what we each produce. Smith described how “in a nation of hunters, if any one has a talent for making bows and arrows better than his neighbours he will at first make presents of them, and in return get presents of their game”. 6 But a man who spends all day making arrows to swap them for meat gives up the chance of hunting himself for the chance of sharing in a larger catch. For the group to specialise, the hunter who turns arrow-maker has to be sure that his partner in trade will deliver the “present” of meat. When the timing of these exchanges is not coincident, there is a need for social institutions to prevent one party reneging on the transaction, and, in particular, for money – an issue that I will return to later. Smith’s second insight was that the social institutions necessary to exploit the full potential of a market economy were not derived from the relentless pursuit of selfinterest, but from the recognition that we all benefit from what he described in Theory of Moral Sentiments as the exercise of “sympathy”. In other words, we step back from our immediate situation and ask: how do my actions affect others? Answering that requires an ability to imagine ourselves in others’ shoes – “sympathy”. That sympathy in the hunter, for example, might mean feeling the pain of a starving arrow-maker.
The expansionary credit policy, combined with monetary financing of large general government deficits in turn put foreign exchange and monetary policy under considerable strain. The result was hardly surprisingly inflation and a depreciation of Sweden’s currency. Today the time when Sweden’s central bank could be forced to finance war efforts in far-away countries seems very distant. Of course, the financial system was also entirely different a couple of hundred years ago. But the fundamental principles for the credibility of monetary policy and that it should not be possible to use the central bank for “short-term” purposes, remain largely the same. …and experiences closer to our time. There are also examples of the importance of a clear framework for economic policy even in modern times. At the beginning of the 1990s Sweden underwent the deepest economic crisis since the Depression of the 1930s. This also came to be a rather dramatic conclusion to almost 20 years of stabilisation policy problems. The economic policy conducted in the 1970s and 1980s was for various reasons overly expansionary and not compatible with the monetary policy objective of the time – to maintain a fixed exchange rate. Price and wage developments repeatedly came on a collision course with the fixed exchange rate target and Sweden suffered cost crises. As a temporary solution the krona was devalued when the situation became acute – a strategy they adopted on no less than five occasions in just seven years. But the depreciation of the krona did not solve the fundamental problem.

This prudence is well captured in the FOMC’s Policy Normalization Principles and Plans, released in September 2014, which note that, in the long run, the Fed’s balance sheet should be no larger than necessary for the effective and efficient implementation of monetary policy and should consist primarily of Treasury securities.24 We also need to make sure that the impulse of monetary policy is transmitted effectively to the real economy. Given the growing importance of nonbanks in many money markets, especially in the U.S. dollar markets, we should think about the counterparties with whom we interact. Would expanding the types of counterparties that we do business with increase the effectiveness of monetary policy? What are the costs and benefits of interacting with counterparties beyond our traditional set? Any long-run monetary policy implementation framework should be assessed relative to goals. That assessment may be informed by recent experience. For example, a framework should allow us to achieve an appropriate degree of control over short-term rates, both in normal times and during periods of financial distress. It should also be as robust as possible to potential structural changes in the financial system. The framework should enhance our ability to achieve macroeconomic objectives at very low or even negative interest rates. Further, it might be important to consider the framework’s ability to address liquidity strains in money markets and to support overall financial stability.
Which leaves us with the question: is that a price worth paying in order to avoid the fall-out when a bubble eventually bursts? And that leads us to the second judgement that underpinned the non-intervention doctrine. Prior to the latest crisis at least, many policymakers believed that the costs of allowing a bubble in financial markets to run its course were relatively small. Interest rates could always be cut after the event to “mop up” the damage. Blinder and Reis summarise the received wisdom beautifully in their review of the decision to loosen policy when the DotCom bubble burst: “If the mopping up strategy worked this well after the mega-bubble burst in 2000, shouldn’t we assume that it will also work well after other, presumably smaller, bubbles burst in the future?” The large and coordinated cut in interest rates at the start of this decade almost certainly contributed to the build-up of an ever larger bubble. So its not at all clear that the post-2000 mopping up strategy worked that well in retrospect – it just stored up more trouble for the future. And even if it did work well last time around, I hardly need to add that mopping up the fall-out from the latest crisis is stretching the world’s policymakers to the limit. It is evidently not safe to rely on being able to mop up after the crash. Lesson 6: Inflation targeting is necessary but not sufficient A more fundamental question is whether the Inflation Targeting regime itself needs to be rethought.

(a ) Le ve ra ge ra tio de fine d a s to ta l a s s e ts divide d by to ta l e quity e xc luding m ino rity inte re s t. (b) Due to da ta lim ita tio ns , the c ha rt o nly pre s e nts info rm a tio n o n A&L, B &B , B a rc la ys , HB OS , HS B C , Llo yds , No rthe rn R o c k a nd R B S . (c ) The re is a bre a k in the s e rie s due to the intro duc tio n o f IF R S in 2004.
There is a view that the euro should in some sense ‘belong’ to the participating countries and to them alone. If that view were to prevail it would point in the direction BIS Review 29/1998  ˝  -5-  of one form of bureaucratic regulation or another - no doubt with a nod in the direction of monetary policy considerations as justification - which would damage the euro at least as much as it would harm the financial markets of the City. At the same time some of these same people argue for a successful, strong and widely-used euro that will take its proper place alongside the dollar and the yen as an international trading and portfolio currency, and in that context they positively welcome the active participation of London. In the end I do not think there is very much choice. In a world of increasingly integrated capital markets and liberalised capital movements it is inconceivable that the international use of the euro could be unnaturally constrained. And that will be in the interest of the users of financial markets - whether as borrowers or lenders - within Europe itself and across the world, including the Mediterranean region. It will be in the interest, too, of the providers of financial services by promoting the volume of financial activity throughout the European Union. Like trade in goods and other services, trade in financial services is very much a positive sum game.

The role that microfinance institutions play in financial inclusion is therefore very crucial. Over the years, the microfinance institutions in Zambia have played a significant part in the provision of financial services, particularly for low-income households. Although access to finance remains low, microfinance institutions have had a somewhat positive impact on the economic activity of low income households, in both urban and rural areas. I am hopeful that the microfinance sector will continue to bridge the financing gap especially to the unserved population. However, the Bank of Zambia continues to receive a number of customer complaints on the high cost of micro loans in the country. It has been observed that the interest rates charged by some institutions exceeded 300% per annum in some cases. Furthermore, in most instances the effective rate of interest and other charges are not disclosed to the customers resulting in them paying much more that what was initially publicised to them. This has raised ethical questions regarding transparency and the role of microfinance institutions in poverty alleviation and economic development in Zambia. In addition, although, the interest rates of microfinance loans may vary significantly relative to the duration and size of the loan, it is incumbent upon all microfinance institutions to provide clear information on the cost of the loans and options available. It is also important for institutions to sensitise customers on what products may best suit their incomes and to educate them to borrow prudently.
•  Firms should understand and have sufficient information available on its internal and external dependencies, including continuity or replacement strategies for each service, as well as contingency arrangements in place to retrain or replace personnel or services needed to maintain operations. •  While there are many areas that supervisors/regulators and legislators need to continue to work on to make cross-border resolution a reality, these five areas are ones that we have highlighted for near-term focus by firms. •  And just a note for firms in the next tiers, including the wave two and three filers – as I know that concerns have been raised about the depth and breadth of work required – particularly for the “non-systemically important” foreign banking organizations (FBOs):  BIS central bankers’ speeches  3  –  2. As we’ve indicated in our discussions, our reviews of your plans, which we are conducting jointly with the FDIC, will be a learning experience for us – as much as it is for you. We are viewing this process as iterative – as it has been for the first wave filers, and we expect to learn quite a bit through the reviews, including much more about your U.S. operations, that will help us and you ensure a robust planning process that works for each firm. Challenges of coordination  Turning now to the second area where I think more work needs to be done – coordinating the supervision and oversight of the large systemically important institutions.

Sarah Dahlgren: Five years since the crisis – where are we now? Remarks by Ms Sarah Dahlgren, Executive Vice President of the Financial Institution Supervision Group of the Federal Reserve Bank of New York, at the Institute of International Bankers’ Seminar on “Risk management and regulatory/examinations compliance issues”, New York City, 8 October 2013. *  *  *  Thank you Sally. It’s great to be here again this year to open up the IIB’s annual seminar on Risk Management and Regulatory/Examinations Compliance Issues. I appreciate the opportunity to address this group and to continue the dialogue that we’ve been having over the past several years. Given that we are celebrating the five-year mark of what was probably the worst part of the financial crisis, I thought I’d take this opportunity to take a step back and reflect a bit on how far we’ve come since the crisis in addressing some of the most pressing issues. Then I’d like to share with you some of my thoughts on areas that still need to be addressed and where I think more concerted effort is needed. As always, my remarks reflect my own views and not necessarily those of the Federal Reserve Bank of New York or the Federal Reserve System. It’s hard to believe that it has already been five years – and I’m not sure whether it feels longer or shorter than that!
William C Dudley: The economic outlook and implications for monetary policy Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the New York Association for Business Economics, New York City, 20 May 2014. *  *  *  Thank you for inviting me to speak here today. It always is a special pleasure to address my fellow economists. In my remarks today, I am going to focus on the economic outlook and the implications of that outlook for monetary policy. My views on the economy have not changed much since last fall. Although economic growth stalled in the first quarter, some slowing was expected and unseasonably harsh winter weather appears to have done the rest. The fundamental supports for a strengthening economy remain in place, and recent data seem to confirm that forecast. On the price front, I expect inflation to drift higher over the remainder of the year as the effects of some temporary factors that have been holding inflation down dissipate and the labor market continues to tighten. If my forecast is correct, as growth strengthens and inflation drifts higher, the focus will turn to monetary policy. In particular, what will be the timing of lift-off? And when lift-off occurs, how quickly will the Federal Open Market Committee (FOMC) raise rates and to what level?

Money market mutual funds and other providers of short-term financing could rapidly shift funds into the facility away from assets such as commercial paper that support the private sector. In contrast, in the current regime, when financial crises lead to flows into less risky assets, their interest rates fall, limiting the appetite for these less risky assets. Consequently, under a full allotment setup, runs could be larger and these runs could  2  6  The floor has been more solid since the testing was extended in January for a full year. In part, this is likely because the extension allowed market participants to plan ahead knowing that they could rely on the facility. Raising the caps has also been a factor in solidifying the floor. BIS central bankers’ speeches  exacerbate the fall in the prices of riskier assets. Note that the risk here is how quickly financial flows could reverse from one day to the next, not the average level of take-up of the facility over time. Fortunately, this risk seems relatively easy to address. One could design the facility to prevent rapid inflows during times of financial stress. This could be done by building in circuit breakers such as caps on overall usage of the facility. The circuit breakers would not affect the amount of take-up during normal times or prevent take-up from rising at moderate rates. Instead, they would be in place to limit the pace and magnitude of inflows during times of stress.