samchain/econo-pairs-v1 huggingface dataset:
Kydland and Prescott showed that room for manoeuvre in economic policy may have a price. The insight they provided was that economic policy can achieve better results if the authorities can commit themselves to a pre-established set of credible policy rules, rather than give themselves the possibility of changing policy at any given time in the future. This was a fundamentally new insight compared with the belief that the authorities had unlimited possibilities for managing the economy, a view that had dominated economic policy in previous decades. 1  Skånland, Hermod (2004): “Doktriner og økonomisk styring. Et tilbakeblikk”, Norges Banks skriftserie nr. 36 (“Doctrines and economic management in retrospect”, Norges Bank’s Occasional Papers, no. 36) (in Norwegian only). 2  See Kydland, F. E. and E. C. Prescott (1977): “Rules rather than discretion: the inconsistency of optimal plans”, Journal of Political Economy 85, 473-490. 3  Lucas, R. E. (1976): “Econometric Policy Evaluation: A Critique” Carnegie-Rochester Conference Series on Public Policy 1, 19-46. BIS Review 4/2005  1  One example used by Kydland and Prescott is what can happen when the authorities impose heavy taxes on capital today at the same time as they promise to lower taxes in the future. If firms believe this, they will increase investment now. However, when the increased real capital stock becomes a fact, the authorities may be tempted to disregard their promise of lower taxes. The purpose of reducing taxes has already been achieved. A breach of promise may be accepted once.

Jarle Bergo: The basis for inflation targeting Speech by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at the Foreign Exchange Seminar of the Association of Norwegian Economists, Sanderstølen, 21 January 2005. Please note that the text below may differ slightly from the actual presentation. The speech does not contain new assessments of the economic situation or of current interest rate setting. The references and the  Charts in pdf-format can also be found on the website of the Norges Bank. *  *  *  In 2004, the Norwegian Finn Kydland and the American Edward Prescott were awarded the Nobel Prize in economic sciences. They received the prize for their theoretical studies in the 1970s on economic policy rules and the importance of anchoring economic agents’ expectations. Norway’s current economic policy, with an inflation target for monetary policy and a fiscal policy rule, is partly based on the insights of Kydland and Prescott. But it is not just theory that has brought us here. Practice and experience over the last 30 to 40 years have perhaps been just as important. In his book “Doctrines and economic management in retrospect”, Hermod Skånland, former Governor of Norges Bank, points out that until the 1980s, the perception that government had to assume responsibility for employment and that borrowing should be inexpensive contributed to both the currency crisis and the banking crisis.1 Today’s economic policy can be seen as a result of a long learning process where academicians and the authorities have contributed.
A critical problem in Europe right now is that private borrowing costs are very low in countries like Germany where the economy is operating close to full capacity, but quite high in countries like Italy and Spain – which are struggling in terms of economic performance. The monetary policy transmission channels in Europe are impaired. Banking union would make them work better. •  It would underscore the fact that a euro is a euro and will remain a euro throughout Europe, reducing perceptions of redenomination risk. This would make depositors less prone to move their funds from the periphery to the core and strengthen the resiliency of the system against shocks. •  It would help foster greater integration of the European economy, with potentially significant macroeconomic benefits. In short, banking union has the potential to make a powerful contribution to eurozone stability and growth, both in the short term and in the long term. Now, will moving to a pan-European banking system be easy? Of course not. It will require a common set of standards to be applied across the whole system. This may well reveal shortcomings among particular banks and the burden is not likely to fall evenly across the European Union. It will be important to identify the sources of capital that will fill any such holes in order to ensure ongoing stability and to avoid constraining the availability of credit. The process of banking union appropriately begins with a single supervisory mechanism.

Also, cross-border regulatory cooperation needs to be further enhanced. This includes greater exchange of confidential supervisory information so that national regulators can be fully informed about the conditions of the banks that operate within their borders. It also requires efforts to ensure a level playing field across jurisdictions so that the focus is on promoting safety and stability rather than trying to protect, favor, or shield national champions. BIS central bankers’ speeches  1  In terms of the macroeconomy, there is both good and bad news. In the United States, the good news is that the economic outlook appears to be gradually improving. The household sector is far along in the deleveraging process, the housing sector is recovering, the banking system is healthier and credit conditions are easing, the corporate sector is highly profitable and awash in cash. Monetary policy has been effective at fostering easier financial market conditions, even with short-term rates pinned at the zero bound. To provide the appropriate degree of accommodation, the Federal Reserve has recently moved to an outcome-based approach in which the use of our tools is explicitly tied to developments in the economy and economic outlook. Currently, as part of this strategy, we are purchasing $ billion of longer-term Treasuries and agency mortgage-backed securities each month. After reviewing the efficacy and costs of this program, I have concluded that that efficacy has been as high or higher than I expected at the onset of the program and costs the same or lower.
As Jean Monnet said, “we need a Europe for that which is essential … a Europe for what nations cannot do alone.”[1]  Sovereignty in an interconnected world On the whole, European citizens appear to welcome the benefits brought about by economic integration through the EU. [2] The free movement of people, goods and services – that is, the Single Market – is routinely seen by citizens as the EU’s most positive achievement. In the euro area, 75% of people are in favour of the euro and Monetary Union, and 71% of Europeans support the EU’s common trade policy. Yet at the same time, public attitudes towards the EU’s political structures seem to be hardening. Average trust in the EU stands at 42%, down from 57% in 2007. This decline has taken place against the backdrop of a general loss of faith in public institutions. Trust in national governments and parliaments has dropped to just 35%. This tension between economic integration and political cooperation is fuelled by a powerful belief that there is an inherent trade-off between EU membership and the ability of countries to exercise sovereignty. In this way of thinking, if citizens want to be able to exert more control over their destinies, they have to loosen the EU’s political structures. But this belief is wrong. It is wrong because it conflates independence with sovereignty.

Where development needs are identified through FIDE Forum’s screening process, it should be able to refer candidates to the existing director education programmes provided by ICLIF, or work with ICLIF to develop new ones to respond to an unmet need. To my mind, this clarity of role and purpose will significantly enhance the potential impact and influence of FIDE Forum and ICLIF, to the overall betterment of the industry. As members of FIDE Forum, directors have a critical role to play in setting its priorities and in driving future initiatives to ensure that FIDE Forum remains relevant and continues to add value. In this respect, members should be active in giving their views, including providing inputs to concept members, engage in propagating the common interest of the industry and enhancing the good image of the sector. Conclusion The Malaysian financial sector has taken important strides to strengthen boards, in particular through the ongoing education and increase in supply of top-quality directors. The success of ICLIF’s FIDE Programme and the industry-led initiatives by FIDE Forum in pushing frontiers in developing, sourcing and attracting board-level talent would very much depend on the collective efforts of all. It is from this perspective that the FIDE Forum should be commended for initiating this effort. I encourage the industry to continue to use FIDE Forum as a platform for promoting board-level talent management and through it, to build an effective partnership with ICLIF as the centre of excellence for directors’ education in the financial sector.
Mohd Razif bin Abd Kadir: Islamic financial services industry – developments in Malaysia Speech by Mr Mohd Razif bin Abd Kadir, Deputy Governor of the Central Bank of Malaysia, at the Signing Ceremony of Memorandum of Participation for Commodity Murabahah House, Kuala Lumpur, 28 July 2009. *  *  *  It is my great pleasure to be here today at the Signing Ceremony of Memorandum of Participation for Commodity Murabahah House (CMH). This event, jointly hosted by Bank Negara Malaysia and Bursa Malaysia, marks another milestone in the development of the Islamic financial services industry. This pioneering effort, mooted about two years ago, is a collaborative initiative of Bank Negara Malaysia, Securities Commission of Malaysia (SC), Bursa Malaysia and the market players under the MIFC initiative. CMH, which is scheduled to be launched in mid-August, is a purposefully designed exchanged-traded platform to facilitate commodity murabahah transactions. It is the first internet based platform in the world with crude palm oil (CPO) as its underlying base commodity. I am also pleased to note here that CMH has received the endorsement of the Ministry of Plantation Industries and Commodities and is supported by the Malaysian Palm Oil Board (MPOB), Malaysian Palm Oil Association (MPOA) and Malaysian Palm Oil Council (MPOC) as well as the CPO industry players. CMH will provide another dimension to the already robust liquidity management infrastructure of the Islamic banking industry in Malaysia; thus providing market players with greater tools to manage their assets and liabilities.

Motivating all banks to improve their management of risk, and thereby strengthen the stability of the banking system, is one of the principal objectives that the Basel Committee set out for itself in undertaking a major revision of the international standards for regulatory capital. The three years since have been a tremendous journey for all of us as we seek fundamental reform of the capital adequacy framework. Meeting here in Cape Town, it seems fitting to portray our work to date as an unfinished journey. This historic port has traditionally served as a way station and respite for weary seafarers who had weathered many storms, but had not yet reached their destination. So today we’ll have a chance to rest near the Cape of Good Hope, to reflect on how far we’ve come, and to chart the rest of our way to the successful implementation of the New Accord. I’d like to share with you the latest news on where the New Accord stands and offer some insight into what you can expect to see in the future. I’ll begin with my views on the milestones that we’ve achieved. Then, I’d like to bring you up to date on how we are resolving outstanding issues. It’s wise to conclude any speech with thoughts about the future, so I’ll close with some remarks on what we’ll need to do to finish our journey – from the perspectives of the Committee and of other supervisors, including of those who may have adopted the 1988 Accord more recently.
And I should like to take this opportunity above all to thank all of you - and the various organisations that you represent - for the tremendous support that you have given to me and to the Bank over so many years. I must begin, Gordon, by thanking you. In fact I’ve been immensely fortunate to have first Ken Clarke and then you, Gordon, in charge at the Treasury during my time as Governor. You shared the conviction that overall macro-economic stability - reflected in consistently low inflation - is a necessary condition for sustainable growth. That’s a conviction that is deeply embedded in my soul as a lifelong central banker - if indeed as a central banker I’m allowed to admit to having a soul! You inherited from Ken an inflation target in the form of a cap and a degree of transparency - and public accountability - that we’d never had before. And, in your own, very first - and inspired - decision as Chancellor, you advanced that approach radically further. You - rightly - kept the political responsibility for setting the inflation target - opting crucially for a symmetrical point target. But you devolved the technical responsibility for meeting that target to your new creation - the MPC - to which you appointed independent, external, experts in fields which are relevant to monetary policy to work with our team at the Bank. And you reinforced the procedures for transparency and accountability. In terms of the overall macro-economy this framework has served us well.

It was only founded a year ago and we believe it will continue to develop and be fully fledged as a legacy of our national memory. In mid 1800s, announcing the competition on American banknote, the US Secretary of the Treasury, specified two obligatory requirements to participants about the design: it had to be original, and unpublished previously, and have a national character. Since at the beginning, the banknote is thought as not only a means of exchange, but also as an education tool for the public. As such, it should bear important moments of the history. The banknote performs this function through complicated techniques of subtly fine lines, to prevent reproduction, attributable also to robust security features. Although we frequently have these valuable papers on our hands, seldom do we concentrate for a few minutes and enjoy the art embedded in them. We very rarely focus on examining how the work of a talented painter is intertwined in a sort of a miniature canvas with that of a talented engraver, turning that piece of paper into an elegant expression of creative art. The image is familiar, but it is hard to believe that 14% of interviewers in advanced countries are able to remember recognise the picture designed on each banknote. Even less people may recognise the portrait depicted on 1000 Leke or 2000 Leke Albanian banknotes.
Residents are also allowed to purchase, through authorised financial institutions, shares quoted on foreign stock markets, and are permitted to transfer foreign exchange abroad to pay for purchases of such securities. 3. By the same token, non-residents are allowed to buy and sell Turkish securities quoted on the Turkish stock market. They are also allowed to buy and sell Turkish government securities through intermediary institutions operating in Turkey. 4. A substantial part of the controls on capital movements were removed, greatly easing inflows and outflows of credit. Turkey has accepted the provisions of Article VIII of the Articles of Agreement. 5. To avoid excessive risks for the banks, new regulations were adopted governing the foreign exchange position of the commercial banks. The banks are free to set their own rates for buying and selling foreign exchange. Our foreign exchange system, described above, is very convenient for foreign capital flows. Now let me describe the main characteristics of our financial system. Even though our efforts to liberalise the financial system did not begin until 1980, the Istanbul Exchange Market has existed and operated since 1858. It grew out of the activities of Non-Muslim bankers in the Galata district of Istanbul. These operators, mostly Levantines, Jews, Armenians, and Greeks, used to risk their own capital by extending credit to the government, secured by pledges of future tax collections.

With market globalisation and the free flow of capital, there is a real risk that a financial centre will become involved in illegal transactions against its will. I consider reputational risk as the major challenge facing financial centres at the beginning of this century. In Switzerland this has long become conventional wisdom. Know your customer rules have effectively been implemented and constantly adapted to the evolving requirements of the market realities for many years. Swiss anti money laundering rules and regulations are widely recognised as expressions of the state of the art. I shall come back to this thorny topic in a moment. Challenges ahead What are the challenges ahead? a)  Market globalisation  As I mentioned at the outset, the banking sector has gone through a period of heavy restructuring during the past decade or so. Banking no longer amounts to simply accepting savings and granting loans. Business has become increasingly complex and is dominated by a dwindling number of everlarger financial conglomerates. The trend toward concentration and the tendency toward onshore international banking can be observed in your country as in mine. The internationalisation of the banking business has led the large banks to establish major business units outside their home country. Our banks create now more jobs outside the country than in Switzerland. Obviously, global business is the first challenge to be faced by the financial centres as well as by the authorities. A close co-operation between supervisors is essential.
To sum up, we can conclude that the low inflation outcome in 2004 cannot be attributed to a monetary policy that was contrary to the consensus view at the time. Instead, it was essentially a result of developments that practically nobody managed to foresee. Another possible conclusion is that we would have had to conduct a dramatically different monetary policy if inflation was to have turned out much closer to the target in 2004. For example, the Riksbank would probably have had to cut the repo rate rapidly and sharply at the beginning of 2002. Such a stance would most likely have caused something of a stir. Inflation was high at that time and nobody predicted the kind of dramatic decline that would have justified a substantial rate cut. To give you an idea of the sentiment at the time, one of the country’s leading trade union representatives warned us not to take the inflation target lightly. 2  BIS Review 18/2005  Has policy been asymmetrical? One recurrent feature of the recent discussion is claims that the Riksbank is more concerned about high inflation than low inflation. It has been said that inflation since the introduction of the Bank’s target – from 1995 onwards – has turned out somewhat below target on average. Personally, I can understand fears that central banks could be ”overly zealous” in their fight against inflation, especially if a country has experience of a high-inflation regime, as is the case in Sweden.

Coherence vs agreement I believe I have set out so far a reasoned view that the three Bank policy Committees – the MPC, FPC and PRA have a coherent set of objectives, structures, appropriate policy tools and coordination to ensure that there is not any inherent absolute conflict in the framework. And the strategic changes internally at the Bank announced earlier this year could be seen as being a reinforcement to that structure by maximising the synergies across the Bank, including the PRA. But coherence doesn’t always mean agreement. There will no doubt be disagreements at some point. Indeed, the appointment of independent members to the policy committees is intended to ensure challenge and the absence of “group-think”. Dissenting views on the MPC are not only an established part of the culture but actively encouraged by the Treasury Committee in Parliament. The FPC and PRA Board, in contrast, generally work by consensus, although there are provisions for recording dissent and votes if necessary. But disagreements over judgements between individuals are normal – that’s why we have decision making by committee in the first place. What we have not seen is any reason why the structure should be regarded as internally conflicted. How likely is it that there will be dissent across committees? There are mitigants in place to reduce the chances of that.
It is not even self-evident that inflation will return to the target level in the long run if monetary policy is too tight. If we are worried that a long period with a low repo rate will give rise to an unjustified upturn in housing prices and indebtedness, we should perhaps ensure we conduct a monetary policy that means we quickly move towards the inflation target, and that still works even if  8  BIS central bankers’ speeches  economic developments are less favourable than forecast in our main scenario. Such a monetary policy could entail cutting the repo rate now to increase inflation and then raising the repo rate slightly faster in the coming period when inflation accelerates (see Figure 7). Admittedly, preliminary assessments within the Riksbank, based on model calculations combined with empirical relationships, indicate that a large repo-rate cut now, followed by faster increases in the future would entail slightly higher risks linked to household indebtedness than if the repo-rate path advocated by the majority is followed. However, the difference in the risk outlook for these two alternatives is almost negligible.

7 Dovern, J. and G. Kenny (2017), “The long-term distribution of expected inflation in the euro area: what has  changed since the great recession?”, ECB Working Paper No. 1999. 8 See Kozlowski, J., L. Veldkamp and V. Venkateswaran (2015), “The Tail that Wags the Economy: Beliefs and  Persistent Stagnation”, NBER Working Paper No. 21719. The authors argue that if people base their beliefs on past realisations, then extreme, albeit transitory, events can generate persistent changes in our cognitive framework. 9 See e.g. Gerba, E. and D. Żochowski (2017), “Knightian uncertainty and credit cycles”, ECB Working Paper No  2068. 10 See e.g. Benigno, G. and L. Fornaro (2017), “Stagnation traps”, ECB Working Paper No 2038. 11 See Rossi, B., T. Sekhposyany and M. Souprez (2017), “Understanding the Sources of Macroeconomic  6/7  BIS central bankers' speeches  Uncertainty”, Barcelona GSE Working Paper No 920. 12 See e.g. ECB (2017), Financial Stability Review, May and November. 13 See e.g. Draghi, M. (2017), “Accompanying the economic recovery”, speech at the ECB Forum on Central  Banking, Sintra, 27 June. 7/7  BIS central bankers' speeches