samchain/econo-pairs-v1 huggingface dataset:
30 For example see Baranova, Y; Coen, J; Lowe, P; Noss, J; and Silvestri, L (2017), Simulating stress across the financial system: the resilience of corporate bond markets and the role of investment funds, BoE FS Paper No. 42, July. 29  21  All speeches are available online at www.bankofengland.co.uk/speeches  21  pooled resources, achieving the same level of insurance for a much lower cost.31 This would imply a tripling in the IMF’s resources over the next decade, enough to maintain their current share of global external liabilities. 32 The design of the GFSN is also important. Positive steps have been made in recent years by introducing precautionary liquidity facilities so countries can borrow to prevent crises, as well as mitigate their impact. This should also reduce stigma of drawing on the facilities. But so far, only a few countries have taken them up. It is important to do everything we can to normalise use of these precautionary facilities. 33 Conclusion In the deceptively simpler time of the pre-crisis world order, “keeping your house in order” was a handy prescription of the G7 to EMEs. When countries were hit by volatile capital flows, they were admonished that there were “no innocent bystanders” and that only by doubling down on the Washington Consensus reforms could they be free to enjoy the benefits of sustainable cross-border investment. The experience of successive crises and shocks – confirmed by the Bank of England’s analysis – suggests that advice was once worthy but is increasingly incomplete.

This is partly due to increased trade and a shift in imports towards low-cost countries. The rise in prices for domestically produced goods and services pushed up CPI-ATE inflation until this year. Since the beginning of the year, domestic inflation has edged down, hovering around 1.3 per cent. The rise in prices has been lower than expected for both goods and services. There may be several factors behind the low inflation rate. Strong competition between various producers within the food industry and the construction industry may have had a dampening impact on inflation. In addition, productivity growth in retail trade has been high in the past few years. Intensified competition may also have contributed to curbing the rise in prices for banking and insurance services. Global growth has been high in recent years. In the US and in China, growth has been high for a long period. Growth picked up in Japan last year, and this year conditions are conducive to increased  BIS Review 90/2006  1  growth in the euro area. Growth in China is expected to remain strong and contribute to pushing up growth in the global economy. Growth in the US is expected to be somewhat lower. Against this background, it appears that GDP growth among Norway’s trading partners will be high again this year and remain firm over the next few years. However, the housing market in the US has weakened more than expected in recent months, and the uncertainty associated with economic developments in the US ahead has increased.
Additionally, all intermediaries now have to provide a service guide to help insurance buyers better understand the advice and services to which they are entitled. Instead of viewing these as requirements to be complied with, I would like to encourage financial advisers to take advantage of these disclosure tools to help customers fully understand what they are paying for. This will go a long way in establishing yourselves as trusted advisers. Upholding independence The second feature of a trusted adviser is independence. When consumers seek financial advice, they expect to get an objective point of view that places their best interest above all else. And rightly so – the individual’s hard-earned savings are at stake. Yet, the reality today is that the practice of commission-based compensation for financial advisers may not be fully aligned with the principle of rewarding quality advice to customers. Certainly, commission-based compensation has its advantages. It is effective in ensuring that products are actually bought. It is also appealing to consumers who may not be able to afford to pay for advice. But there is a world of difference between sales and advisory. While sales seeks to maximise transaction volume, advisory seeks to maximise the consumer’s welfare. With the prevalent practice of commission-based compensation, it is not surprising that the industry is still often perceived as one that pushes products, rather than provide solutions. The introduction of the balanced scorecard, which is currently being piloted among financial advisers, is to help address this perception.

My colleague Andréa Maechler will describe the adjustments to monetary policy implementation in more detail later. Page 1/4  Zurich, 22 September 2022 Thomas Jordan  News conference  Inflation forecast  Let me now turn to inflation developments. Inflation rose to 3.5% in August and is likely to remain at an elevated level for the time being. The latest rise in inflation is principally due to higher prices for goods, especially energy and food. Our new conditional inflation forecast is based on the assumption that the SNB policy rate is 0.5% over the entire forecast horizon (cf. chart 1). Up to mid-2024, the forecast is above that of June. After that, it is lower due to the now tighter monetary policy. At the end of the forecast horizon, inflation stands at 2%. The new forecast puts average annual inflation at 3% for 2022, 2.4% for 2023 and 1.7% for 2024 (cf. table 1). Without today’s SNB policy rate increase, the inflation forecast would be significantly higher. Global economic outlook  I will now move on to the economic outlook. Global economic growth has slowed considerably in recent months. At the same time, inflation in many countries is markedly above targets. In response, numerous central banks have further tightened their monetary policy. In our baseline scenario, we expect this challenging situation to persist for now. Global economic growth is thus likely to remain weak in the coming quarters.
And there is scope for greater deployment of our savings within our two regions, as investors in both regions look for improved returns. We are seeing the beginnings of a fruitful and meaningful relationship in financial sector cooperation. There is much scope for regional financial centres like Singapore and Kuala Lumpur to provide a gateway for fund flows between the Middle East and Asia. Singapore can by no means be a complete financial centre for the Middle East. That role will be played by financial centres in the Middle East. But we can and will complement and work in partnership with financial centres in the Middle East, and other Asian centres like KL. We can provide a gateway to take Middle Eastern investors into Southeast Asia and China, and to take investors from the region into the Middle East. What can we do to facilitate and spur on these financial ties and build sturdy bridges? Allow me to make three observations. First, the wealth management industry can play a pro-active role in helping investors to diversify their portfolios by introducing them to opportunities in Asia and the Middle East. In so doing, we will also help Asian and Middle Eastern capital markets grow and become deeper and more liquid. We are already seeing asset managers based in Singapore receiving investment mandates from investment agencies in the Middle East.

For the coming academic year, 31 Iranian graduate students have been offered A*STAR International Graduate Scholarships, to pursue Master’s degree studies at NUS and NTU in the areas of Biomedical Sciences, Physical Sciences and Engineering. (The scholars were selected from top Iranian Universities, including Sharif University of Technology, University of Tehran, Shiraz University and Isfahan University of Technology.) Recently, Al-Azhar University, the Harvard equivalent of Islamic education, announced that it will be helping Singapore develop a centre of Islamic learning. Established in 988 AD, Al-Azhar is the oldest operating university in the world. It is collaborating with the Islamic Religious Council of Singapore (MUIS) to run programmes that are likely to range from introductory to post-graduate courses in Islamic studies. We can bring students together not just for formal degree courses, but for summer schools. Middle Eastern families can come to Singapore for holidays and health services, while the young go to school. Middle Eastern youth will find Singapore a friendly, multicultural and multi-religious city. They will find an English language environment and educational programmes that combine the best of East and West. They will find friends from Singapore, Southeast Asia, China and India. A further area of potential collaboration is in teacher training and education research. For example, the National Institute of Education has been appointed by the Abu Dhabi Educational Zone in the UAE to advise on the setting up of a teacher training institute. We will be able to exchange training materials and officials, as well as collaborate on innovative projects in education.
In this case, the actual monetary policy will be more contractionary, exactly in a situation in which a more expansionary monetary policy is desired.9 Secondly, in my opinion, it is a mistake to continue to accept this lower limit and not thoroughly reassess it at every monetary policy meeting, in particular as later information and analysis indicates that very low interest rates do not give rise to any problems with financial stability or the financial infrastructure. It has also been claimed that it would be wrong to lower the repo rate path during an economic upturn, even if a very deep recession is still prevailing. I do not understand this argument. Whether it is right or wrong to lower the repo rate path should, in my opinion, be determined solely by whether the stabilisation of inflation and resource utilisation would be improved or impaired by a lower repo rate. I cannot discern any reason for it to be less important to stabilise inflation and resource utilisation as efficiently as possible now that the economy has touched bottom and the prevailing deep recession has become somewhat less deep. Transparency and mean squared gaps  Let me finally address the role of the mean squared gaps in improving the transparency of monetary policy. Monetary policy has a major impact on both inflation and the real economy. The Executive Board bears a considerable responsibility for its decisions and their consequences for inflation and the real economy.

It is therefore reasonable to calculate the alternative forecasts for inflation and the real economy on the basis of expected deviations from the main scenario. The effects of expected deviations are somewhat greater than the effects of unexpected deviations. Figures 2.13–2.15 in the Monetary Policy Report are calculated using unexpected deviations. 6  The effects of anticipated and unanticipated deviations are calculated using the methods presented in Laséen and Svensson (2009) and Leeper and Zha (2003), respectively. BIS Review 22/2010  5  Figure 3 The effects of expected and unexpected deviations from the repo rate path of 0.25 percentage points over four quarters.
Second, despite the steps reported above and some lively academic literature on financial contagion over the last two decades, systemic risk analysis and research is far less advanced than that of monetary policy, for example. There are no established frameworks that can be taken “straight off the shelf”. Having said that, let me describe briefly the concept of systemic risk. Systemic risk was defined by the G10 in 2001 as “… the risk that an event will trigger a loss of economic value or confidence in, and attendant increases in uncertainty about, a substantial portion of the financial system that is serious enough to quite probably have significant adverse effects on the real economy.” 6 In simpler terms, it is the risk that the failure and distress of a significant part of the financial sector reduces the availability of credit, which in turn may adversely affect the real economy. Interestingly, this notion of systemic risk is quite similar to the definition of financial stability that the ECB uses in its Financial Stability Report, underlining the fact that our financial stability work has always had a macro-prudential orientation. Our working definition describes financial stability as a “condition in which the financial system – comprising of financial intermediaries, markets and market infrastructures – is capable of withstanding shocks and the unravelling of imbalances, thereby mitigating the likelihood of disruptions in the financial intermediation process which are severe enough to significantly impair the allocation of savings to profitable investment opportunities”.

Prior to the summer of 2007, in a number of official publications 16 , attention was drawn to a number of growing vulnerabilities and potential risks such as: •  the (then incipient) crisis in the US sub-prime mortgage market and its potential to deepen and spread to other markets;  •  the fact that financial market liquidity could vanish abruptly when investor uncertainty and risk aversion rose;  •  the role of hedge funds as key players, over the years, in fuelling liquidity in financial markets, implying that a shock to the hedge fund industry would severely affect the smooth functioning of some markets;  •  the excessive reliance of investors on the risk assessment of structured products made by rating agencies;  16  See ECB Financial Stability Review, June 2007; BIS Quarterly Review, June 2007; Bank of England Financial Stability Report, April 2007; IMF Global Financial Stability Report, April 2007. 8  BIS Review 115/2009  •  the concentration of risks in the financial system, which was becoming increasingly difficult to identify due to the proliferation of structured finance products and credit risk transfer instruments;  •  the risk-bearing ability of the ultimate risk-holders in these chains. However, it would be fair to say that few, if any – including market participants and public authorities – were able to foresee the magnitude and severity of the crisis.
Furthermore, there are still a number of open questions. What combination of policy instruments should recipient countries use in order to minimize costs? To what extent should the burden of adjustment also be on source countries? Is it possible to improve on the decentralized outcome through international policy cooperation? I am still unconvinced that there is room for much greater international policy coordination – central banks have domestic, not global mandates. However, it seems to me that there is some scope for cooperation at least in identifying potential cross-border and financial stability risks and adopting, when necessary, targeted macroprudential policies – either in recipient or in source countries – in order to prevent capital flows from fueling unsustainable financial bubbles. *  *  *  I’ve raised a number of open issues in central banking that I believe will shape central banking for some time to come: •  Financial stability is once again a core function of central banks, but macroprudential policies and frameworks are still in their infancy, and a proper role of monetary policy in ensuring financial stability is still under discussion. •  Inflation targeting remains the dominant monetary policy regime, but if growth skeptics are correct and the zero-lower-bound recurs, there will be renewed calls for moving to innovative regimes or at least higher inflation targets in mature economies. •  A laissez-faire approach to capital flows is off the table.

The 2012 MoU sets out a panoply of safeguards against the repetition of such an incident, including a requirement for timely notification from the Bank to HM Treasury of any risk to public funds, and analysis of the systemic impact of alternative policy options. The MoU makes it clear that the Chancellor has sole responsibility for the use of public funds, approves all ELA (including the terms on which it is provided), and may if necessary direct the Bank to extend ELA – though this is a backstop power, whose use is not expected to be considered in the majority of crisis situations. Where it is judged necessary to keep ELA covert for a period in order to minimise the risks to financial stability, key Parliamentary Chairs will be briefed orally by senior officials on any government indemnity attached to such lending – and full disclosure to Parliament would be made at the earliest subsequent opportunity once the risk of damage to the public interest had passed. 6 Covert operations, particularly those involving a fiscal component, are often cited as the most troubling forms of LOLR by those concerned that central banks have a bias to lend “too much”. In the United Kingdom, the disclosure of large covert loans to HBOS and RBS in late 2009 (more than a year after the loans were advanced) triggered a public debate about the  3  http://www.bankofengland.co.uk/markets/Documents/smf/annualreport15.pdf. 4  http://www.bankofengland.co.uk/about/Documents/mous/statutory/moufincrisis.pdf. 5  “The view from No.11” by Nigel Lawson, pages 402-6. 6  See page 22 of http://www.publications.parliament.uk/pa/cm200910/cmselect/cmtreasy/181/181.pdf.
The first is that these claims are denominated in Sterling, the ‘unit of account’ in the UK, the common measuring stick of economic value that we all accept, that is governed by the Bank of England under the authority of Parliament. The Bank’s Monetary Policy Committee is charged with ensuring the stability of the currency’s value in terms of what it can buy. The second is that the private banks that hold our transactional accounts (i.e. take deposits) and create money by issuing claims on themselves, have to operate within a comprehensive legal and regulatory framework – supervised by the Bank of England and the FCA. This framework itself has been greatly strengthened since the financial crisis. It is designed to ensure that the banks that are authorised to take deposits and issue claims on themselves in return, are robust and can absorb losses. They have access to the lending facilities of the Bank of England to meet any shortages of liquidity. Up to £ of deposits are protected by a statutory deposit guarantee scheme paid for by the banking industry. Banks are also now subject to ‘resolution’ requirements to ensure that in the unlikely event of failure they can be stabilised and subsequently broken up, sold or wound down to the degree necessary while protecting depositors’ ability to make and receive payments – and without requiring taxpayer money. The payment systems through which claims on private banks are exchanged, are likewise supervised by the Bank of England.

The household with an income of NOK 800 000 can cope reasonably well with a debt of NOK 2 million even after the interest rate has increased by 3 percentage points. The household with the lowest income will have a tight margin. Principal payments will have to be deferred and, even with a deferral of a few years, this household will have little leeway after basic expenses have been paid. In order to increase its financial leeway, it will either have to increase its income, or reduce housing consumption and dispose of its debt. Both households will be vulnerable should one member lose income from employment and have to rely on benefits. With an income loss of 10 per cent, even the household with the highest income level would have to make considerable spending adjustments. Although these households have higherthan-average debt, this debt level is not uncommon. 7  Based on the analyses in Inflation Report 3/05 and the assessments provided in the press release following Norges Bank’s monetary policy meeting on 25 January 2006. BIS Review 10/2006  5  However, for most households, it will be relatively easy to cope with gradually higher interest expenses. The outlook for the Norwegian economy is favourable. Output has picked up, although so far not to such a degree that there are visible signs of inflation. As long as the rise in prices is slow, it will be appropriate to maintain a low interest rate.
In line with that, the final report on bridging data gaps of the Network for the Greening of the Financial System (NGFS) from June 2022, and the New G20 Data Gaps Initiative (official launch in September 2022), made clear recommendations on the need to develop methodologies and sustainable finance classifications that make the indicators more comparable. An emphasis was placed on green bonds and a call to intensify efforts between central banks and supervisors to have standards for the disclosure of environmental data. The Central Bank of Chile, in addition to its participation in the NGFS, has joined two Chile-based initiatives. The first one is the Natural Capital Committee, a body integrated by the Ministry of the Environment, the Ministry of Finance, and the Ministry of the Economy, which aim is to advise and provide recommendations for the measurement of natural assets in Chile. And the second one is an initiative led by the Ministry of Finance to develop a classification system for environmentally sustainable economic activities. There is also a strong demand for central banks to consider the potential side effects of climate change on economic outcomes, insofar they impinge on their monetary and financial stability mandates. The distributional household accounts introduce household sector heterogeneity into the framework of national accounts and provide the opportunity to obtain a comprehensive and consistent view of the distribution of household economic resources through income, consumption, and wealth, in line with economy-wide totals.

Will it be possible to maintain the high growth and low inflation despite the high level of share prices and the low saving ratio? Another question concerns Europe: will any slowdown in the United States be offset by a stable recovery in Europe, underpinned by private consumption? Finally, can the Japanese economy finally shake off the profound crisis? A clearly positive outcome in any of these respects would provide conditions for a trend that is stronger than the main scenario’s. Sweden’s currency and interest rate The lower inflationary pressure that was indicated by international developments last autumn was accompanied by a weakening of the Swedish krona that could result in higher inflation. A more permanently weak krona can lead to higher inflation as a result of higher resource utilisation as well as higher import prices. 3  BIS Review 18/1999  In the December forecast the Riksbank envisaged that the krona would appreciate in the coming two years. Since then, however, the krona has strengthened more markedly than we expected: to date in 1999 the exchange rate has appreciated almost 5 per cent in terms of the TCW index and a little more than 6 per cent against the euro. A considerable part of the krona’s appreciation and stabilisation should be seen as a return to a more normal situation after the financial markets’ very turbulent and volatile autumn. At the height of the unrest, investors sold certain currencies in favour of the safety of larger currencies.