samchain/econo-pairs-v1 huggingface dataset:
Over the past 20 years, long-run inflation expectations in Japan have averaged a little over 1 percent. Yet during that period, the only time inflation was palpably above zero – let alone not in outright deflation – was when consumption taxes increased or oil prices spiked. So inflation expectations may remain stable while inflation itself lags for a prolonged period. 17 Conclusion As I think about the process of normalizing policy, I conclude that today’s risk-management calculus says we should err on the side of patience in removing highly accommodative policy. We need to solidify our confidence that our ultimate exit from the ZLB will occur smoothly – and in a way that sustains our escape from it. A corollary to this is we should not shy away from policy prescriptions that generate forecasts of inflation that moderately overshoot our 2 percent target for a limited time. Such a policy strategy more properly balances expected costs and benefits. And it would leave me with much more confidence that inflation will not stall out below target once we start raising rates. I agree with Atlanta Fed President Lockhart in thinking that we ought to be “whites of their eyes” inflation fighters. 18 The last thing we want to do is regress back into the ZLB. Indeed, such a relapse would be a sign there was something else going on that was preventing the economy from being as vibrant as we thought possible. 17  Consensus Economics, Inc. (1994–2014). 18  Lockhart (2014).

These efforts have helped the economy make impressive progress toward our employment mandate and appear to be moving us closer to our 2 percent inflation target as well. Given this progress, it is natural to ask if it is time to return to business as usual. Are we close enough to our policy goals – and do we have enough confidence in our ability to achieve those goals within the foreseeable future – that policy can return to operating according to more traditional guidelines? BIS central bankers’ speeches  1  As I will discuss in more detail, I think the answer is no. First, inflation remains stubbornly low. Second, I believe that substantial slack persists in labor markets and that some remaining and slowly dissipating headwinds could weigh on our progress toward full employment for some time. Chair Yellen pointed to a few of these headwinds in her press conference after the September FOMC meeting: tight mortgage credit for some borrowers; depressed household expectations for their income prospects; and modest productivity growth. 1 And, third, there is my weighing of risk-management considerations. To me, the risks imposed on an economy forced to operate at the zero lower bound on policy rates are paramount. In an economy mired at the ZLB, interest rates cannot fall low enough to equate the supply of saving with the demand for investment – a constraint that then significantly impedes consumer spending, capital formation, and employment expansion.
And the Bank intends to consult the market shortly on what the requirements should be in respect of loan-by-loan information for such assets to be eligible in the future. Along with other monetary authorities taking similar actions, 8 standardisation of information provision may help improve investor confidence in the underlying securities. Non-bank lending Also during 2009, the Bank used its market and corporate contacts to identify why bank lending dominated the supply of credit and what the obstacles were to lending from nonbanks. There appeared to be no easy wins but a recent HMT consultation paper which draws  8  6  See the ECB announcement: http://www.ecb.europa.eu/press/pr/date/2009/html/pr091223.en.html. BIS Review 23/2010  heavily on the Bank’s investigation, explores options to facilitate the supply of credit from non-bank lenders. 9 Interactions with other monetary policy actions The commercial paper and corporate bond schemes seem to have been reasonably successful in helping to improve key markets and hence facilitating access to credit, at least for larger corporates. Smaller firms who supply those larger firms, may also have seen some “trickle down” benefits. One indicator of this is that the rise in the level of company insolvencies during the recession has been surprisingly small so far, given the fall in output (Chart 7). But the major supportive factor has probably come from the very low level of Bank Rate and the programme of quantitative easing.

The second measure relates to responsible investment by the Exchange Fund. The Exchange Fund now adopts a guiding principle that priority will be given to Green and ESG investments, if the long term return is comparable with other investments on a risk-adjusted basis. 11. Our third measure is the launch of the Centre for Green Finance under the HKMA’s Infrastructure Financing Facilitation Office, focusing on capacity building to facilitate the equipping of financial institutions with the knowledge, skills, tools and other resources in green finance. 1/2  BIS central bankers' speeches  12. In fact, we’re now in our developmental plan to prepare banks for the upcoming changes. A working group on the assessment framework has been in place since August, and today’s seminar marks the beginning of the capacity building programme for the Centre for Green Finance. On the other hand, the assessment framework will help banks understand their readiness for change, while the capacity building events will equip practitioners with the necessary knowledge for the changes. 13. For today’s seminar, we will first invite the IFC to provide an overview of the opportunities and challenges to green banking, and introduce some case studies on their approach to assisting banks in “greening” their operations. This afternoon, several banks will share their initiatives and practical experience on their green journey, including governance, risk management, disclosure and green products and business policy. 14. And here I would like to extend our special thanks to the IFC for their dedicated support for this workshop.
Our fourth and final PoC in this category, also announced today with Digital Reasoning will examine the extent to which analysis of the large quantities of weakly-structured textual data on regulated firms available from multiple public data sources can yield insights on intent and sentiment. The PoC will look at whether those insights are capable of complementing analysis of more formal data reporting. Cyber security (2 PoCs) The Bank, in common with other major financial institutions, spends a lot of time on cyber security – both for its own systems, and in terms of its requirements and expectations of regulated firms. Much of this takes place as part of the Bank’s core work programme, but a number of more exploratory exercises have taken place through the Accelerator. In particular, we undertook a PoC with BitSight aimed at assessing the extent to which a firm’s cyber resilience can be evaluated using publically available data. And we worked with Anomali and ThreatConnect to explore ways of consolidating threat intelligence into a format that can be used to optimise information collation, enrichment and sharing. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Non-PoC work of the FinTech Accelerator  In addition to enabling PoCs, the Accelerator team has also been able to leverage off the contacts and relationships made with firms and public authorities in the UK and overseas to provide a wider intelligence-gathering and horizon scanning function on FinTech to inform the Bank’s policy and operational work.

RegTech: machine learning (4 PoCs)  Machine learning (and its close bed-fellow artificial intelligence) builds on the basic tools I have just summarised, but takes them a stage further, using algorithms to learn iteratively from data and drawing out potential patterns. In the near term, this could be used to complement and strengthen central bank analysis and supervisory activity. In the more distant future, it could do people like me out of a job! This is perhaps the most challenging and experimental area of FinTech in the Accelerator programme, and the results are therefore necessarily more speculative than in the other categories. Our first PoC, conducted with BMLL, examined algorithms designed to analyse high resolution limit order book data from trading exchanges. The second used tools provided by Mindbridge Analytics to detect anomalies in anonymised regulatory data from credit unions. The PoC combined conventional data science techniques (including clustering and classification algorithms) with a feature allowing users to flag items as suspicious or safe, permitting the program to ‘learn’ from the user which items could be of potentially more interest and adjusting its risk scores accordingly. And a third PoC with the same firm, announced today, will look to expand these findings to larger and more diverse data sets, including transaction data, and a broader range of classification and machine learning algorithms.
And they could become more positive as a result of two possible changes: downward move in inflation expectations, and further upward adjustments in expected nominal interest rates. 9  Page 10 sur 14  2.3 Some initial thoughts on the balance sheet Another issue that we will need to confront is the normalization of our balance sheet. It has expanded in recent years through numerous programmes (APP, PEPP, TLTROs,..) and is now just short of 9 trillion euros. It would not be consistent to keep a very large balance-sheet for too long in order to compress the term premium, whilst at the same time contemplating tightening policy rates above neutral. In addition, rising remuneration on very large excess reserves may alter the transmission of the desired tightening through the bank channel. But obviously, this question is less pressing than the rise of interest rates to neutral, and should come only at a later stage. Let me simply put forward at this stage a few preliminary principles that could in my personal view guide the normalisation of our balance sheet, in due time:  First, our key interest rate should remain our primary instrument to adjust our monetary policy stance. The size of our balance sheet should be used as a complementary policy tool, whose effects are more difficult to calibrate or finetune.

10  Page 11 sur 14   Second, we should follow a clear sequencing regarding the various programmes: (i) the reimbursement of TLTROs comes first, and we should avoid any unintended incentives to delay repayments by banks (ii) at the other end, PEPP should be reinvested until the end of 2024, as stated (iii) this leaves inbetween APP for which the Governing Council has said that reinvestment will continue in full until “well past the date when it started raising the key ECB interest rates”. Here we could start earlier than 2024, maintaining partial reinvestments but at a gradually reduced pace.  Third, the phasing out of the asset portfolio should be orderly, announced cautiously and well in advance. The ‘stock effect’ of asset holdings, which is the key transmission channel, primarily depends upon the expected end-point of the balance sheet normalisation, in terms of both the terminal date and size. Fluctuations in the pace of the run-off during the travel to destination do matter less.  Fourth, as taught by US experience in 2017-2019, the pace of the balance sheet reduction should not be left completely on “automatic pilot”. Starting slowly, assessing markets reaction, and gradually accelerating seems like a sound approach. Some flexibility should be kept, in case of sudden liquidity shocks. Indeed, the ‘flow effect’ may temporarily play a role when market liquidity abruptly dries up. III. A sensitive co-ordination issue This is the way we should run our domestic monetary policy.
On Islamic finance, institutions such as Islamic Banking & Finance Institute Malaysia (IBFIM), Association of Shariah Advisors in Islamic Finance (ASAS), International Centre for Education in Islamic Finance (INCEIF) and International Shari’ah Research Academy for Islamic Finance (ISRA) were amongst the key affiliates that were given specific mandates for education and training. Similarly, the Chartered Institute of Islamic Finance Professionals (CIIF), then known as the Association of Chartered Islamic Finance Professionals (ACIFP), was identified as the key institution to develop professional standards and set the professional qualifications for the industry. The Institute, now entering its 5th year of establishment, is recognised as the industry’s own professional body through the Islamic Finance Profession Charter, and as such is strategically positioned as the platform for the development of ethically driven talent imbued with professional integrity. With the industry leadership on board as CIIF’s members, the professional body is expected to continue its momentum towards becoming an influential organisation that embodies the very best of Islamic finance professionals. On this note, we commend the industry’s effort to put the professionalisation agenda of the Islamic finance work force as utmost priority, through the signing of Joint Commitments between Association of Islamic Banking Institutions Malaysia (AIBIM), Malaysian Takaful Association (MTA), Association of Development Finance Institutions of Malaysia (ADFIM) with CIIF in 2018.

In particular, they act out of self-interest or greed often at the expense of others. It is time to put this to rest. One can just take Islamic ethics as they are, and act as one say and as one mean. However, we should build on this, infuse it with a creed of professionalism that will provide its practitioners with not only a clear set of principles, but a sense of vocation to do what is right and to strive for the greater good and the betterment of the society to truly achieve the aspirations of maqasid al-Shariah. Let me share some further thoughts on this. In building such an ethos, we should always have in mind the basic or fundamental Islamic ethics that are also shared across many religions and societies. Such prescriptions lay out the fundamental basis of decency and behaviour. We cannot steal, cheat, lie, and act dishonourably. Principles that essentially guide us to be decent and in fact socially acceptable and responsible members of society. A natural component of this is ‘amanah’ or trust. As professionals, we should act as it is entrusted upon us, protecting the interests that we serve; our customers, shareholders, institutions, and sometimes this comes at personal expense. Trust is often called a valuable commodity. Indeed, it is even larger than that. Trust is a foundation or pillar of many relationships, including that of business and finance.
Competition both on and between platforms has generated an extraordinary array of FX execution choices for market participants to choose between. Whether to seek opportunities to net offsetting trades with others before transacting in the market. Whether to trade by voice or electronically. Whether to prioritise speed or diversity of execution. Whether to use algorithmic or trade-by-trade price selection – on firm or indicative prices; with wider or narrower groups of counterparties; in full view (‘lit’) or anonymously (‘dark’); or with more or less sophisticated ‘Transaction Cost Analysis’ (TCA) tools. Shifting patterns of demand for different bundles of these services, coupled with aggressive price and non-price incentives, have driven dramatic swings in market share between platforms (Chart 4). 4  Electronic Broking Systems line measures trades executed via automated matching systems for dealers. Electronic Trading Systems lines measure trades executed (predominantly by or for customers) via single-dealer proprietary platforms or a multi-dealer systems. 6  All speeches are available online at www.bankofengland.co.uk/news/speeches  6  Chart 4: Multi-dealer FX platforms – buyside market share  Source: Euromoney FX surveys. Some implications of fragmentation: the good, the bad and the ugly  Is fragmentation here for good? Some suspect it will eventually hit the buffers, as the declining marginal benefits of ever-greater product diversity, and the growing cost of navigating it, become more evident.

For insurance, our main challenge is to ensure that all Singaporeans have access to the right products, at an affordable rate. That is our main priority for insurance. We must help consumers to meet their insurance needs for themselves and their families without paying for something they do not need. 10. That’s why we have the Financial Advisory Industry Review or FAIR over the last year. Two of the initiatives of FAIR will help consumers by making insurance products more affordable and their pricing more transparent. First, consumers will be able to buy basic life insurance products directly from the insurer, without paying commission. Second, consumers will be able to use the internet to use a web aggregator to compare prices and coverage of similar insurance products offered by different insurance companies. So they can choose what is suitable to their needs, and at the most affordable rate. The competition that comes about because of this transparency will also help keep costs low for consumers. Financial education 11. The second approach is reaching out to Singaporeans through MoneySENSE. This is the work of our partners, not just the MAS – including the community, the media, financial industry associations, advocacy groups like CASE and SIAS, our educational institutions which will play a larger role in the future, and a whole set of government agencies, all working with MAS to propagate financial education to as many Singaporeans as possible.
It has addressed the risk that those households and firms which consume more energy as a proportion of their income and/or lack the savings or access to external finance that might help them deal with the cash-flow implications of sharply higher energy bills – in other words, less well-off households and small businesses – could not manage the dramatic energy-driven cost-of-living squeeze that threatened over the summer. The UK Government's Energy Price Guarantee (EPG) is the main vehicle here. Decisions such as these are, rightly, in the domain of the government and not for independent central banks to make. However, I will discuss the implications for our economic forecasts in a moment. But I want to flag that the MPC's most recent baseline projection published in the August Monetary Policy Report incorporated the significant increases in European wholesale gas prices we experienced over the summer, but – owing to the pause implied by changes in political leadership– did not incorporate a fiscal policy response to those increases. This reflected the MPC's usual conventions and assumptions underlying the production of its forecasts, but – in the specific circumstances faced at the time – resulted in a baseline projection with debateable internal consistency. The Committee took the unusual step of distancing itself from that baseline in August, and relied more heavily on complementary analysis in scenarios and variants in motivating its decision.

In this regard, of course, this lending was also facilitated by special preferential programs issued by the government. The government adopted large-scale programs to support small- and medium-sized businesses, and we introduced our own mechanism: a special mechanism for preferential loans, which was in high demand. And we can see that banks, within the framework of such special instruments, issued about 18% of all loans to small- and medium-sized businesses. But the remaining increase in loans to small- and medium-sized businesses was carried out under normal market conditions, which is also a good factor. Moreover, in the first quarter of this year, we can see that the portfolio of loans to small- and medium-sized businesses 1/5  BIS central bankers' speeches  has also continued to grow adding another 5%. Mortgages grew at a high rate — as in the segment of small- and medium-sized businesses, there was and still is incentive offered by preferential programs. The mortgage portfolio also grew significantly, by more than 20%. Moreover, it already reached almost half of the total retail portfolio, and in the first quarter, it also continued to grow, also by 5%. As you can see, the figures are quite similar for both mortgages and small- and medium-sized businesses. That is to say that there are positive trends in both. However, when it comes to mortgages (we have talked about this repeatedly), we are worried about the accompanying rise in housing prices in the primary market.
At the same time, it might also fuel the growth rate of credit to economy, which has already experienced very rapid growth during the last two years, raising concerns for macroeconomic and financial stability. The results of reforms were not limited only to the openness and development of domestic financial market. They generated price and financial stability, sustained economic growth, assisted institutional building and increased confidence. These developments attracted interest of, and brought big financial groups in the region in general and Albania in particular. As I mentioned above entry of big financial groups, and the consolidation process that has followed since will continue to grow. What we are observing right now in the market is that the big fish is eating the small fish; the very big fish is eating the big fish in the European market with implications for the host countries. However, the process is far from over, gigantic fish (global player) might enter the region by eating the very big fish. Last but not the least, there will be mergers among domestic banks as well. Despite the increase in the concentration ratio that comes with these mergers and acquisitions, we have started to observe increased competition in our market. This competition increases efficiency, introduces new services and products, lowers spreads and generates positive spillovers for economic activity. While this makes a good precondition to foster financial stability, it is not a sufficient condition to increase financial discipline.

More generally, I am happy to report that the Committee on the Global Financial System – one of the Bank for International Settlements’ central bank groups – is engaged in a project to determine what lender-of-last-resort gaps currently exist, focusing, in particular, on those that may create vulnerability in terms of financial stability. One area that I anticipate will receive considerable attention is whether there are any gaps with respect to the activities of globally systemic firms that operate on a cross-border basis. Another issue that still needs greater attention is the appropriate role for the home- versus host-country supervisor. The regulatory and supervisory responses for large, systemicallyimportant firms that operate on a cross-border basis need to be closely coordinated, especially during times of stress. In particular, expectations about who will be the lender-oflast-resort need to be well understood in both the home and host countries. We have made considerable progress in recent years in enhancing the safety and soundness of the U.S. financial system. But there is more that we need to do. In particular, we need to study and understand how market liquidity and funding liquidity conditions are changing and what factors are driving that evolution. Conferences like this one go a long way in that regard. They serve as an important forum for discussing ideas and improving our knowledge and understanding. This will provide a solid foundation for any policy actions. Thank you for your kind attention. I would be happy to take a few questions. 6  BIS central bankers’ speeches