samchain/econo-pairs-v1 huggingface dataset:
Rachel Lomax: International monetary stability – can the IMF make a difference? The Gam Gilbert de Botton Award lecture delivered by Ms Rachel Lomax, Deputy Governor of the Bank of England, at Somerset House, London, 1 November 2006. I am grateful to Phil Evans, Gregor Irwin and Gareth Ramsay for their help in preparing this lecture. I would also like to thank Katie Farrant, Andrew Hauser, Jens Larsen, Chris Salmon and Misa Tanaka for their very helpful contributions. *  *  *  Next month will be the thirty-fifth anniversary of the Smithsonian Agreement – hailed at the time by President Nixon as ‘the most significant monetary agreement in the history of the world’. Today it is remembered, if at all, as a stage in the collapse of the Bretton Woods system of pegged exchange rates. But it also inaugurated a period of intense debate about the future of the international monetary system and the role of the International Monetary Fund, which culminated in the Second Amendment to the Fund’s Articles in 1976. Thirty years on, the Fund’s role in promoting international monetary stability is again under scrutiny. The world economy and the international monetary system have been transformed since the late 1970s. The Fund has evolved to deal with new situations and fresh crises. But much more change is needed if it is to meet the challenges of the 21st century. That much is common ground.

Even as banks continue to upgrade their systems and processes to strengthen their risk resilience, it is equally important that banks regularly test the robustness of their contingency plans and capability to manage tail risk events. I am glad that the industry continues to demonstrate its commitment to sound risk management with your investments in systems, technology and in your people. MAS appreciates your close co-operation to develop and update our risk management guidance, and your active participation in IWST exercises. Thank you. BIS central bankers’ speeches  5
Amid these increased uncertainties, there has been heightened volatility in the international financial markets, arising in part from increased sovereign credit risks and, more recently, the sharp movements in the major currencies in the foreign exchange markets. In contrast, the recovery in the emerging market economies, in particular Asia, remains robust, with the potential for relatively strong growth to be sustained. While most Governments in Asia had an important role in stimulating the economic recovery, private sector activity has been revived and is now having a greater role in driving the economy. Also, with rising intra-regional trade, external demand from the region is providing additional support to growth. Amid this favourable growth prospects, the region however is also confronted by a number of challenges. As highly open economies, the weaker global environment will, and indeed, has already resulted in a moderation in external demand. In addition, the divergence in growth prospects between the advanced and emerging economies, has precipitated surges of capital inflows, in particular, to Asia. This could in turn lead to the risk in the build-up of destabilising imbalances in our economies. Asia today, is however, in a better position to address these rising concerns. First, domestic demand has steadily increased in importance since the beginning of this decade and is contributing towards a more balanced growth. Second, is the diversification of Asia’s export markets towards increased intra-regional trade which now accounts for more than 50% of the total trade in Asia.

V.  Conclusion  Let me conclude: Considerable uncertainty remains in the outlook for the global economy and we must thus remain vigilant to emerging risks. Second, in a more complex and interconnected environment, broader prudential and economic considerations must factor more prominently in financial institutions’ management of risks. Third, while we believe our regulatory and supervisory system has served us well, we are not complacent and will continue to work hard to place the financial sector on firmer ground so that our ability to manage future shocks will be further improved. And finally, we are confident that with a clear vision, focus and effective implementation, our strategies to bring the financial sector to a new level in this next decade will deliver better outcomes for our financial system and our overall economy. Thank you. 8  BIS Review 146/2010
The RAF is therefore central to our commitment to end ‘too big to fail’ and to having a regime which is ‘fit and ready’ to achieve that. As I said earlier, the UK’ s resolution regime is well set up to give us options, in good or bad economic situations, when a firm fails. While the Bank of England is responsible for undertaking a resolution, having the legal powers is necessary but not sufficient for an orderly resolution; firms also need to play their part by making the changes necessary to ensure a bail-in resolution transaction can be executed. Action by firms to be prepared for a resolution reduces the risks of disruption as the authorities act and provides the authorities with credible options and the flexibility to respond to a crisis. Earlier this week the Bank published a Dear CEO letter which I sent to the CEOs of the eight largest UK banks and building societies18, providing more 17 18  HMT consultation paper on an expanded resolution regime for Central Counterparties. You can find the letter here. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  guidance on our expectations under the RAF. Publishing this letter demonstrates our ongoing commitment to make the regime and firms’ resolvability more transparent and better understood. The RAF is the lens through which we will judge a firm’s resolvability – in terms of being able to financially and operationally support itself through a resolution, so that a resolution and restructuring can be orderly.

Mark Carney: Writing the path back to target Speech by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the University of Sheffield Advanced Manufacturing Research Centre, Sheffield, 12 March 2015. *  *  *  Accompanying charts can be found at the end of the speech. It is a great pleasure to be in the City of Steel to honour both its historic role in forging the industrial foundations of modern Britain and its current leadership in promoting advanced manufacturing for the post-industrial age. This city has been at the very forefront of innovation for hundreds of years. In the 18th Century Sheffield revolutionalised steelmaking with the discovery of the crucible steel process. By the mid-19th Century the city represented almost half of Europe’s total steel output. Since then, Sheffield has remained fleet of foot through hard work and innovation. The University of Sheffield’s Advanced Manufacturing Research Centre is a prime example of that spirit. No one knows better than you that manufacturing needs to become ever-more productive to prosper in a world of steadily falling prices and relentless international competition. Prices for advanced manufactured goods fell on average by around 1 per cent a year during the decade prior to the crisis.
Muhammad bin Ibrahim: Financial services industry – opportunities and challenges for Asia and Europe Speech by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the 12th Asia-Europe Business Forum: “The Potential Role of Islamic Finance in Contributing to Global Financial Stability”, Brussels, 4 October 2010. *  *  *  I am honoured to be invited to speak at this Asia-Europe Business Forum themed “Financial Services Industry: Opportunities and Challenges for Asia and Europe”. During a time of global economic challenge and uncertainty, following the recent unprecedented global financial and economic crisis, it is timely for this forum to take place as a platform for business leaders and policymakers across Asia and Europe to reflect on the challenges and to discuss on solutions that can contribute to restoration of global financial stability. My address has a specific focus on Islamic finance since over the last ten years it has grown phenomenally and it will play an important role in promoting greater global financial stability. In the current search for an enduring solution to ensure stability of financial systems, Islamic finance offers tremendous potential in shaping more resilient financial systems that enables financial intermediaries to function efficiently within national economies and across borders. The much talk about discussions that banking should return to its fundamental functions of providing financial services which add value to the real economy, represents the very principle of Islamic finance that explains its relative resilience during the crisis.

As the proposal for the revised Payment Services Directive is currently discussed in the Council of the European Union, a unique opportunity is given today to all stakeholders to tackle the different issues raised by the new regulation in the presence of representatives from all European competent authorities that are involved. Once again, thank you all for being here, and I wish you fruitful and vivid discussions on all of these aspects, hoping this conference will provide you with a comprehensive overview of the new security challenges for retail payments. Before leaving the floor to our first set of panelists I now invite you to listen to Benoît Cœuré, Member of the Executive Board of the European Central Bank, who cannot be physically with us today but who has recorded his comments for us. Thank you for your attention. 2  BIS central bankers’ speeches
The exact path of reserves in the banking system would depend on the interplay of numerous autonomous factors outside the Fed’s influence, such as currency growth and balances at the Federal Reserve held by the Treasury Department, as well as the usage of reverse repo and term deposit facilities. BIS central bankers’ speeches  5  FOMC policy will dictate that the balance sheet remains large, and that open market operations would be designed to achieve the Committee’s objectives in such an environment. With this in mind, a well-rounded toolkit for the implementation of monetary policy would provide us with a selection of instruments that allow us to target either reserve levels or interest rates directly, while variables for each type of objective would include the term of the operation, the auction method, and the counterparty type. This would provide a flexible set of instruments to respond to market conditions as they evolve and as directed by the FOMC. Generally speaking, operations that target reserve levels, like those we conducted before the crisis, might be implemented most efficiently through fixed-quantity auctions. A structure of several overlapping term auctions, for example, could achieve significant size objectives while minimizing the rollover risk for maturing operations. In contrast, overnight, fixed-rate tools that are also full allotment, meaning participants could invest as much as they want at the administered rate, might be more effective for directly targeting interest rates.

The desk’s role in implementing monetary policy Before discussing overnight, fixed-rate reverse repos, I think it would be helpful to lay out some context for how we think about monetary policy implementation. As you well know, the Federal Reserve Act charges the FOMC with formulating monetary policy to achieve what we call the “dual mandate” – stable prices and maximum employment. In normal times, the Committee would do this principally by changing the level of its target for the overnight fed funds rate, in order to influence the pricing of money and credit. Movements in this rate are passed on to other short-term interest rates that influence borrowing costs for households and businesses and financial conditions more broadly. Since December 2008, of course, the FOMC has held its target fed funds rate in a narrow range just above zero. Since then, in order to support a stronger economic recovery and help ensure that inflation, over time, is at the rate most consistent with its mandate, the FOMC has provided additional monetary policy accommodation using a number of unconventional tools. These tools include alterations in the size and composition of the Federal Reserve’s balance sheet and forward guidance on the target federal funds rate. Any change in the size and composition of the System Open Market Account (SOMA) decided upon by the FOMC is implemented by the Desk. This distinction between monetary policy formulation and monetary policy implementation is important.
The evidence suggests that investors in funds which offer short notice redemptions and that invest in less liquid assets tend to redeem more in response to a downturn in the funds’ performance than those in more liquid funds. And the redemption behaviour of investors in bond funds seems to have become more sensitive as these markets have become less liquid. 19, 20  Drawing these developments together, it’s possible that just as corporate bond markets have become less liquid, they may have become susceptible to greater selling pressure after a shock. We may have more of a mismatch of liquidity. That could amplify any price adjustment. None of this is conclusive and serious problems have not been caused by this in the past. But we have a duty to take the possibility seriously – to ask ‘could it happen?’ With markets having evolved so much in the past decade, the absence of problems in the past is no guarantee for the future. That’s why we’ve been developing simulations of the impact of this liquidity mismatch. The asset management industry has been a constructive partner in this work. I hope we and this Centre can collaborate as we take this work forward. There is much more to do, but our initial work suggests a case for exploring further, including by incorporating a range of other investors into the simulations and assessing the impact not just on bond markets but on the wider economy. You can expect to hear more from us as these efforts develop.

I am informed that there is a resource person from Ghana who will be able to shed more light on this matter. In New Zealand, the development of the financial literacy strategy was led by the Retirement Commission which was mandated by a broader group at a symposium on financial literacy. There appears to have been no contestation by other regulators, possibly because there was high level involvement. The examples I have outlined above indicate how successful or otherwise the strategy development process can be. However, a common feature for successful strategy development among all the above processes is the multi-partner consultative process. Mr. Chairman, in recognising the critical role played by various stakeholders, the Bank of Zambia believes that a multi-partner stakeholder process is the most appropriate for Zambia, as it would enable greater mobilization of stakeholders and resources for the promotion of financial literacy in the country. The Bank of Zambia, will therefore, provide the initial leadership but it will be critical for all stakeholders to support, and buy-in into the strategy development process. Ladies and Gentlemen, the tremendous support of the various stakeholders to the agenda of the FSDP cannot go un-noticed. The technical and financial support provided by a number of our development partners including the Swedish Government, the Finnish Government, the World Bank, IMF, DFID, the United States Treasury and First Initiative, and now the Financial Education Fund have gone a long way in slowly making this vision a reality.
International Monetary Fund (2011), IMF Performance in the Run-Up to the Financial and Economic Crisis: IMF Surveillance in 2004–07, available at http://www.imf.org. Ioannidou, V., Ongena, S., and Peydró, J.-L. (2008), “Monetary Policy, Risk-Taking and Pricing: Evidence from a Quasi-Natural Experiment”, ECB, mimeo. Kindleberger, C. (2005), Manias, Panics, And Crashes: A History Of Financial Crises, Palgrave Macmillan, 5th edition. Lowenstein, Roger (2000), When Genius Failed: The Rise and Fall of Long-Term Capital Management, Random House. Lucas, R.E., Jr. (1972a), “Expectations and the Neutrality of Money”, Journal of Economic Theory, 4, April 1972, 103–24. Lucas, R.E., Jr. (1972b), “Econometric Testing of the Natural Rate Hypothesis”, in Eckstein, O., ed., The Econometrics of Price Determination, Board of Governors of the Federal Reserve System, Washington, D.C. Papademos, L., and Stark, J. (2010), Enhancing Monetary Analysis, European Central Bank, Frankfurt-Am-Main. Phelps, E.S. (1968), “Money-Wage Dynamics and Labor Market Equilibrium”, Journal of Political Economy, 76 (S4), 678–711. Rajan, R. (2005), “Has Financial Development Made the World Riskier?”, presented at: The Greenspan Era: Lessons for the Future, a symposium sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, August 25 – 27, 2005. Rajan, R. (2010), Fault Lines, Princeton University Press. Reinhart, C., and Rogoff, K. (2009), This Time Is Different, Princeton University Press. Shleifer, Andrei, and Robert W. Vishny (1997), “The Limits of Arbitrage”, Journal of Finance, Vol. LII, No. 1, March 1997, 35–55. BIS central bankers’ speeches  9

In the Bluebook document that the Federal Reserve Board staff prepared for the September 2008 FOMC meeting, the 1999 Taylor Rule called for a federal funds rate setting of 3.5 percent for the fourth quarter of 2008, well above the 2 percent setting at the time of the meeting. The standard 1993 Taylor Rule—which puts a greater weight on inflation—called for an even higher federal funds rate target of 4.1 percent. Given the rapid deterioration in financial conditions, instead of following the prescription from these rules, the FOMC cut the federal funds rate rapidly over the next three months, pushing the federal funds rate down to a range of 0 to a quarter of 1 percent by year-end. Consistent with this episode, such rules often perform poorly at times when the economic environment and outlook are rapidly changing. This is one important reason why I do not support proposals that would require the Federal Reserve to explain to Congress whenever its federal funds rate target deviates from a particular prescriptive monetary policy rule.
Subsequently, due to the intensification of the crisis in September/October 2008, the BCCH took extraordinary measures to provide liquidity in pesos and dollars and ensure the normal functioning of the financial system. Through these measures, it was able to dissipate internal financial tensions and bring about a fairly quick return to full normality. Compared with other central banks, the BCCH faces some limitations in managing situations of tension or crises. It is expressly forbidden to provide financing, directly or indirectly, to the government and state institutions or enterprises. It cannot, therefore, acquire securities issued by the Public Treasury as part of its monetary operations. This does not, at present, represent a significant restriction because these operations are carried out using the BCCH’s own securities but, in a critical situation, could limit its ability to inject liquidity into the system. Similarly, it can only provide liquidity to banks and cannot intervene directly in the financial markets by buying securities from other types of institutions or investors, nor can it make direct or indirect capital contributions to institutions in difficulties. However, the BCCH has not been alone in seeking to ensure financial stability. Fiscal policy, prudential regulation and banking supervision have also made a very positive contribution. Fiscal policy has, in general, been noted for its responsibility during this period. Moreover, since 2000, the government has applied a policy rule that sets effective spending as a function of permanent fiscal revenues.

Recent decades have brought notable achievements in this area. They were possible thanks to the institutional strengthening of central banks, including statutes of autonomy and advances in the design, implementation and communication of monetary policy. It is important to persevere on these lines whilst also bearing in mind possible adjustments or improvements. Central banks, however, also have an important responsibility for financial stability. Although this responsibility had lost prominence over time, the experience of recent years has clearly underlined its importance. Moreover, because of their monetary policy tasks, they are in direct contact with the markets and, therefore, have access to first-hand information about  4  BIS Review 142/2010  the functioning of the financial system. This puts them in a privileged position to undertake tasks related to financial stability. Central banks must, however, be realistic in setting their objectives. It is critical to ensure that they do not result in a more than reasonable level of protection for the financial system since this would encourage banks and other financial institutions to take excessive risks. The responsibility of central banks as regards financial stability must be geared principally to strengthening the reaction capacity of the system as a whole. If problems occur in specific institutions – which cannot be ruled out – the aim must be to minimize their systemic impact. Central banks must have a set of instruments that allow them to contribute effectively to financial stability.