samchain/econo-pairs-v1 huggingface dataset:
A number of processes, such as those concerning government finances, are being modified. But this is accompanied by an increased need to discuss issues raised by the fact of monetary union. Now that the countries which will be participating initially in monetary union have been singled out, moreover, an informal group - the Euro 11 Group - is being set up for discussions among the ministers of finance and economy in the euro area. The idea is that this group will concentrate on matters that concern just the participating countries and cater to the greater need for dialogue and cooperation that they perceive in connection with the inception of monetary union. However, this is not a decision-making body and all matters considered by Euro 11 are prepared by the Monetary Committee, in which all fifteen EU Member States are represented. The crucial institutional change is, of course, that as of next year the conduct of monetary policy will be fully centralised. The Treaty explicitly states that the ECB is not to be swayed by political considerations; its task is to concentrate on monetary policy. But naturally a dialogue will be needed with the governments in the EU and euro areas, in the first place with the ministers of finance and economy. The Treaty actually provides for this in that the Ecofin president may participate in meetings of the ECB Governing Council and even submit motions. Moreover, representatives of the NCBs and finance ministries will continue to meet in the Economic and Financial Committee.

This shortfall of monetary accommodation would result in less desirable economic outcomes during the recession and recovery. In particular, inflation would typically undershoot its desired target during these episodes. The persistence of belowtarget inflation rates in many advanced economies over the past decade is a testament to this dynamic. As a result of the inherent asymmetry introduced by the lower bound on interest rates, an inflation-targeting central bank could experience inflation that is below target, once we consider the average inflation rate over periods when policy is constrained and those when it is not. With inflation on average below the target level, inflation expectations will likely slip below the target rate as well.5 A simple example helps illustrate this problem. Say that 80 percent of the time, the lower bound on interest rates does not constrain policy and the central bank aims for a 2 percent target inflation rate. During these “good” times, an inflation-targeting central bank aims to keep inflation near 2 percent. But, 20 percent of the time, the economy falls into a recession that’s severe enough that the lower bound constrains policy. Assume that during these periods, inflation averages only 1 percent. So, 80 percent of the time inflation averages 2 percent and 20 percent of the time inflation averages 1 percent. The resulting average rate of inflation is about 1.8 percent. As a consequence, inflation expectations are likely to become anchored at the long-run average of 1.8 percent, below the desired 2 percent target. But, that’s not the end of the story.
This is complemented with effective surveillance that is forward looking and focused on addressing the risks to overall financial stability. This decade has also seen the modernisation of the legal framework, that has included the enactment of two comprehensive laws this year to govern the financial sector under a single legislative framework for the conventional and Islamic financial sectors. The implementation of these laws have strengthened Malaysia’s financial sector by providing a consistent approach to regulation and supervision and enhancing the Central Bank’s power to take timely intervention actions in relation to financial intermediation activities that occur outside the banking system. Following the global financial crisis, such shadow banking systems have come under greater regulatory scrutiny. Specifically, regulators have been concerned with the scope that exists for non-bank financial institutions to perform financial intermediation activities in a way that replicates the systemic risks associated with banking activities, without being subjected to the same rigor of regulation and supervision that is applied to banks. In this recent decade, the strengthened institutional arrangements in Malaysia to promote financial stability have contributed towards addressing this important gap. They include the establishment of an oversight authority for credit cooperatives, and provisions for the Malaysia Deposit Insurance Corporation to extend temporary deposit insurance coverage to instruments of non-bank intermediaries that are similar in nature to deposits. Also important has been the significant strengthening of inter-agency coordination arrangements to address potential regulatory gaps.

Can households pay for consumer goods with debit cards, cheques or credit cards, or do they have to carry significant amounts of cash with them? Can workers in urban areas transfer money to their rural families by simply sending an SMS, or do they have to carry it with them on a dangerous bus ride? Particularly in Africa, where distances are vast and security is often a concern, the availability of non-cash payment instruments can increase the returns to economic activity for businesses and households. Figure 3 shows that today, most economies in Africa are still strongly cash based. Both in sub-Saharan and northern Africa, more than one-third of funds available for immediate payments are in cash form. The notable exception is South Africa where the level of non-cash money is above 80%, and thus similar to that of Switzerland. Developments over the past 15 years show a promising picture for other countries on the continent as well. Since 1995, the share of non-cash money has increased from 50 to 60 percent in sub-Saharan Africa, and 55 to 65 percent in North Africa. This mirrors the increased availability of electronic payment instruments available to businesses, but also to households.
In other words, such shocks tend to put upward pressure on the NAIRU (at least initially, they move you rightwards along the Phillips curve in Chart 2, not downwards4). Yet, for much of the past two years, pay growth was weak even as unemployment declined sharply. I commented on the striking flexibility of real wages in a speech last summer, from which Chart 2 is taken. Suppose, however, that the drop in productivity has had nothing to do with existing jobs but instead reflects the skew in the creation of new jobs towards relatively less productive, less well-paid roles. To that extent, there’s no real-wage resistance, among existing employees, to overcome, and the arithmetic impacts on average pay and average productivity are necessarily immediate and coincident. This would also help to explain why pay surveys, which track wages of the median employee (rather than the average), appeared to over-predict wage growth in 2013 and 2014 (Chart 6): they failed to take account of changes in the mix of employment. You can see from Chart 6 that when the compositional effects were positive, during the recession, the surveys undermeasured AWE growth. Finally, these shifts can also shed light on the most recent trends in the aggregate data. The latest estimates show that the compositional effects have risen during the first half of this year – the skew towards lower-paid jobs has diminished.

Chart 7, summarising the results, is a version of a graph we published in the last two Inflation Reports. Note that, over time, the effects have tended to be positive. The average age and experience of the workforce has grown; more people have gone into higher education and higher-paid occupations. But on top of that underlying trend, we’ve seen sharp movements, in both directions, during the recent cycle. Both the drop in job creation during the Great Recession, and the corresponding pick-up during the recovery, were skewed towards the less skilled, less well paid end of the jobs market. Chart 8, which plots the differences in job creation across three classes of occupational characteristics, depicts one aspect of that pattern5. You can see similar differences in rates of job creation between young and old, less and more educated. And as I outlined in the introduction, the effect of these swings was to add materially to the growth of average earnings during the downturn and to subtract from it in 2013 and 2014. Unskilled employment generally more cyclical Before asking why this has happened let me make a few points about the estimates. First, there are some approximations involved. One involves the mix of surveys: we’re estimating the impact of compositional changes on LFS pay data and assuming the effect simply carries over to the AWE. That’s the most reasonable assumption, but it’s an assumption nonetheless.
According to the Basel Committee on Banking Supervision, operational risk is the “risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”. This definition is based on the underlying causes of operational risk at the broadest level and includes legal risk, but it excludes strategic and reputational risks. The Basel Committee has also asserted, “the most important types of operational risk involve breakdowns in internal controls and corporate governance.” That’s why Basel II aligns with a variety of other regulations and supporting frameworks for enhancing corporate governance. 'Management of operational risk is thus taken to mean the 'identification, assessment and / or measurement, monitoring and control of mitigation of this risk. While many of these risks are inherent and visible in day to day operations of banks, some components are applicable to supervisors and regulators. 4. The banking industry’s awareness of operational risk and efforts to manage it have accelerated in recent years, driven in part by an increasing desire to improve operating efficiency, reduce earnings volatility, rationalize the allocation of capital between competing businesses. It is not easy to get banks to identify and assess the operational risk inherent in all material products, activities, processes and systems and in particular to follow such practices when new products are introduced.

Supervisors and regulators are required to review the efficiency of banks’ risk management practices and capital allocation methodologies, and empower market participants to make informed judgments on the efficiency of banks. Despite challenges, many researchers suggest that Basel II leads to rising rewards and discipline in banking industry. The indicators are that pay back for getting Basel II right and for looking beyond mere compliance to the real business benefits will be greater than originally anticipated. Encouraging banks to understand and believe that enhanced economic capital framework would be the key to high performance is undoubtedly a regulatory challenge. 17. I believe the deliberations of this seminar will improve our knowledge on ways and means of dealing with regulatory challenges posed by Basel II and operational risk mitigation measures. I wish the seminar a success and thank you all for your attention. 4  BIS Review 88/2005
The economy is probably approaching a normal rate of capacity utilisation. When inflation increases from a very low level, this will provide a basis for gradually moving towards a more normal short- term interest rate level in Norway. This may counter excessive credit growth and excessive pressures on domestic resources in the medium term. Interest rate developments abroad may have a considerable influence on movements in the krone exchange rate. The inflation outlook in Norway implies that Norway will not be the frontrunner when other countries increase interest rates. Interest rates were left unchanged at Norges Bank’s Executive Board meeting on 26 May 2004. Norges Bank’s key interest rate, the sight deposit rate, therefore remains at 1.75 per cent. According to Norges Bank’s assessment, with a sight deposit rate of 1.75 per cent at present, the probability that inflation two years ahead will be lower than 2½ per cent is greater than the probability that it will be higher. 3  Adjusted for the effect of the interest rate’s direct impact on house rents, changes in parental payments to day-care centres and for special factors relating to indirect tax changes earlier in the year. 4  Seasonally adjusted, three-month moving average recalculated as an annual rate. 6  BIS Review 34/2004

Shops will be in the firing line when the euro notes and coins are introduced. Cashiers will have to handle kronor and euro side by side for a time and customers BIS Review 41/1997  -4-  will no doubt have many questions about prices and conversion rates. Besides calling for resources as well as training, this will require a good deal of adjustment in retail trade. I shall now consider some of the foreseeable changes and also take this opportunity of commenting on the requirements formulated by the Research Institute for a changeover to euro. Banknotes and coins The Madrid meeting in 1995 agreed that euro notes and coins are to be introduced at the latest by 1st January 2002. Many people have reacted to an introduction at the turn of a year, which is when retailing tends to be most hectic. The agreement, however, stipulates 1st January 2002 as the latest date, so perhaps a start might be made in the autumn of 2001. The alternative of spring 2002 has also be mentioned. This matter is still being discussed; the Riksbank shares the trade's opinion that the turn of a year should be avoided and is therefore working for another date. The timing of the practical changeover arrangements is to be decided by each country; for Sweden the Riksbank hopes that it can be managed in a much shorter period than the maximum of six months. The public will be informed in good time about how the changeover is to be carried out.
At present the US still earns positive net income from abroad despite a steady deterioration in the current account since 1991, and a slower rise in its net external indebtedness. This is not to imply that the US is immune to the basic arithmetic of debt sustainability – sooner or later persistent deficits will lead to levels of external indebtedness that represent a significant economic burden even on the US; but it is more than usually hard to predict how long this might take. The dollar’s central role in the foreign exchange policies of Asian emerging markets adds to the uncertainty about the deficit levels at which the US will face tighter credit constraints. Since the foreign official sector – mostly Asian central banks – have been financing a substantial part of the US current account deficit (in net terms) and now hold a substantial amount of the outstanding stock of US Treasuries, private investors’ willingness to hold dollar assets depends to some extent on their expectations of what these Asian central banks will be doing. Since many Asian EMEs already have far more reserves than they need for self-insurance against financial crisis, their appetite for continued accumulation of US dollar assets will at some stage abate: indeed there has been some anecdotal evidence of this over the past year. They can already choose to diversify their reserve holdings, and the options available may become more attractive to them with the development of Asian bond markets. Their development strategies will also evolve.

And second, balance sheet effects can have material impacts – affecting the link between current account deficits and external debt burdens, as well as the external adjustment process itself. A corollary of financial globalisation has been the increased importance of market forces, rather than institutionalised inter government agreements, in providing incentives for policy makers within systemically important countries or regions to follow policies that are mutually consistent – notwithstanding the longevity of the Bretton Woods sisters (the IMF and the World Bank). The second important feature of today’s world is the rising economic importance of a group of Asian emerging market economies who heavily manage their exchange rates. As a result, the international monetary system has mutated into a ‘hybrid’ system in which some systemic countries float their exchange rates while others fix or manage them. One implication is that the pressure for adjustment to any given shock can be very asymmetric relative to a floating rate world. Thus, market driven exchange rate changes are likely to be concentrated on particular blocs rather than diffused across the system as a whole. As Obstfeld and Rogoff and others have pointed out, this is a situation which could create some difficult policy frictions. These have the potential to undermine free trade, and weaken world growth. The third feature is the continued dominance of the US dollar as both a reserve currency as well an anchor for those countries that choose to fix or manage their exchange rates. But nowadays countries have choices.
World Bank (2022) – Remittances Prices Worldwide Quarterly. 9. The Illustrative Scenario assumed demand for the digital pound was around 20% of retail and business deposits, which was equivalent to nearly all transactional deposits in the banking system. This assumption is particularly cautious for higher interest rate environments when deposits would be expected to pay holders somewhat more interest than an (unremunerated) digital pound. 10. Specifically, a limit of £ would allow 75% of UK income earners to hold their salary, pre-existing balances as well as an illustrative 10% bonus or overtime payment. 11. See for example the work the Bank of England has done with regard to omnibus accounts. 12. See for example BIS Innovation Hub projects looking at this topic - such as mBridge  , Icebreaker, Dunbar and Jura. Page 12  13. Last year the Bank set out its thinking and approach on many of these elements through a consultation on the roadmap for RTGS beyond 2024. See also The road to enhanced payments - speech by Victoria Cleland | Bank of England. As noted, this effort is complemented by work ongoing at the BIS Innovation Hub London Centre to look at the potential benefits from synchronisation under Project Meridian. 14. See Bank of England: ‘New Forms of Digital Money (2021)’ - Stablecoins are cryptoassets that aim to reduce volatility by pegging their value to government-sponsored – or ‘fiat’ – currencies. 15. For an overview see Gaining momentum – Results of the 2021 BIS survey on central bank digital currencies 16.

See for Example ‘Central bank digital currencies: foundational principles and core features series of reports  . ’ (2020) and the  on digital currency aspects (e.g. financial stability, system design) published in 2021. 17. These are likely to involve testing individual components of the digital pound architecture (against standards built on the considerations set out in our Technology Working Paper). Project Rosalind , being run out of the London Centre of the BIS Innovation Hub is one example of the kind of work we envisage. That project is currently running a tech sprint and expressions of interest are open until 10 February.
Increasingly, it is taking place through vehicles – such as open funds and ETFs – that issue very short-term (often intraday) liabilities and invest in long-term instruments. It may be a matter of priority to develop a conceptual and operational approach to macroprudential policy that allows regulators to monitor those parts of the financial system that are currently out of reach. BIS central bankers’ speeches  3  *** When central banks entered into non-conventional territory, most observers saw that as a temporary incursion. For some of us, this temporary situation has lasted seven years. For the euro area, the current horizon extends, at least, until 2017. This is quite a long period. For many young people today – say, for instance, current PHDs students -, conventional monetary policies are a prehistoric curiosity. Non-conventional is the only “normal” that they have experienced in their lifetime as adults. Will the future look like the past or be different? This question cannot be avoided for three reasons. First, over the past 30 years, long-term real interest rates worldwide have been steadily declining. If low equilibrium rates are a permanent phenomenon, which is rooted in structural shifts in the world economy, then current difficulties and challenges will persist. The chances that we will sooner or later hit the ZLB again are non-negligible.

Most likely, if a similar study is conducted in Malaysia, the results would show bigger savings here, given the greater digital connectivity we have today. Our efforts over the years have shown some encouraging developments. The aggregate data points that we are on the right track. The growth rate of cash in circulation (or better known as CIC) in Malaysia has been slowing down for three years in a row since 2015. Measured against GDP, CIC decreased albeit marginally for the first time last year since 2014. With high penetration of debit cards and mobile devices, Malaysia is well-positioned to transition into a cashless society in the medium term. To continue our collective effort to ensure widespread adoption of e-payments becomes a reality, my remarks today will touch on the following perspectives; future proofing the Malaysian payment infrastructure, embracing digital disruption that will redefine the payment mechanism as we know it, and some thoughts on public engagement and consumer protection. Future-proofing Malaysia’s payments infrastructure The use of big data will provide a competitive edge among payment service providers. Payment flows used to be an operational matter, but now have immense strategic value. It has to do with the enormous amount of data and information that the system collects on the payment habits of the public. With data analytics, these data can provide deep insights on consumer and merchant behaviour, and even the economy at large. With this information in hand, there is also the enormous responsibility to ensure that it is not being abused and mishandled.