samchain/econo-pairs-v1 huggingface dataset:
How quickly that happens depends on the strength and durability of the recovery. Some of the turnaround in growth here and elsewhere is mechanical in nature, driven by a reduction in the rate at which businesses are running down their inventories. But as far as the strength of the recovery over the medium term goes, one needs to look at the underlying forces driving the demand for UK goods and services. On this score, there are both reasons to be fearful and reasons to be cheerful. The reasons to be fearful are several. First, the banking system here and elsewhere is still dealing with the legacy of decisions taken before the crisis. The process of balance sheet repair has some way to run and that is likely to continue to restrain the supply of credit. Moreover, a key feature of the run-in to the crisis was an underestimation of risk and an excessive compression of risk premia. We should not expect premia to return to where they were before the crisis broke. The spreads on lending to businesses and households, particularly riskier prospects, will be higher in the future than before the crisis. BIS Review 31/2010  1  Second, the housing boom has resulted in some households, especially younger ones, carrying forward high levels of debt.

The fact is that policy has to be made in ignorance of how the future will turn out, and one has to weigh certain near-term costs against uncertain longer-term gains. Moreover, it seems unlikely that higher interest rates in this country alone would have prevented us experiencing a severe recession. Events in the United States would have proceeded in much the same way, regardless of what the MPC chose to do. And, as we have seen, the downturn has been global in nature, not confined to those economies with overblown financial or housing markets. Would it have helped if our target variable had, say, included a measure of asset prices, particularly house prices? There is certainly a good case for including a measure of owneroccupied housing costs in any consumer price measure, as for many households it represents their largest single expenditure. And, depending on the measure used, that could have resulted in higher inflation figures during the years leading up to the crisis. That does not, however, translate directly into a higher level of Bank Rate. Monetary policy affects inflation with a long and somewhat variable lag and there is little the MPC can do to offset unanticipated movements in near-term inflation. Instead, we have to look at inflation prospects two or three years ahead. But it is in the nature of asset prices, including house  6  BIS Review 31/2010  prices, that one can say rather little about their likely direction of movement that far ahead.
In time, however, 10 per cent inflation will be regarded as normal and wage demands will be based on this level. With higher nominal wage increases, real wage costs will move up again and unemployment will tend to return to its initial level. In the figure this means moving from B to C. In order to boost employment in this situation, inflation would have to rise to say 15 per cent and the procedure will be repeated. All that is ultimately achieved is higher average inflation. The level of unemployment to which an economy returns when inflation expectations have adjusted is usually referred to as equilibrium unemployment. It is determined by structural factors such as demographic changes, technology and the institutional set-up in the labour market, factors that are immune to monetary policy. The important conclusion to draw from this is that permanently low unemployment cannot be achieved by accepting permanently high inflation. Under favourable circumstances, to which I will shortly return, monetary policy can promote an economic recovery; but an appreciable improvement in the unemployment situation calls for measures in many other fields, above all in the workings of the labour market and wage formation. What should monetary policy aim for? If a central bank is incapable of “creating jobs” on a permanent basis, what should be its primary task? By means of an appropriately balanced monetary policy a central bank can determine, or at least strongly influence, the rate of inflation that prevails in the economy and underlies economic decisions by firms and households.

Mr. Heikensten talks about monetary policy and the Swedish economy Speech by the Deputy Governor of the Bank of Sweden, Mr. Lars Heikensten, on the occasion of the 1997 Money and Capital Markets Day arranged by The Association of Local Authorities and the Federation of County Councils on 13/3/97. Today I shall be considering this field in terms of three topical issues: - First there is the path of inflation in recent years. In this context I shall dwell on the significance of transitory effects, not just for recent price tendencies but also more in principle. - Next comes the issue of employment. What can monetary policy do to help create new jobs in Sweden? - The third matter is the rule system for monetary policy. What is the point of delegating the management of monetary policy and the task of establishing low inflation to a central bank? In this connection I will also look at various proposals that are being discussed at present for amending the rules for the Riksbank. Inflation and monetary policy Price stability is the Riksbank’s paramount objective, specified in the target of keeping the increase in the consumer price index to 2 per cent, with a tolerance interval of ±1 percentage point. There is a time lag of one to two years before a monetary policy measure has its full effect on inflation. Our discussion should therefore focus on future inflation. But first I want to say something about inflation in the past year.
I have also had reason to go over how fiscal policy has been managed, since leaving the Ministry of Finance in 1997 to become head of the National Institute of Economic Research and later General Director of Statistics Sweden in 1999. In June 1999, Finance Minister Bo Ringholm appointed me to assess the reformed budget process. The budget process had been reformed in stages since the end of the 1980s. Following the assessment and with broad political agreement, a Budget Act came into force on 1 January 1997. It contained regulations on, for instance, an expenditure ceiling and guidelines for public expenditure. The main conclusion of the assessment was that the new budget process had functioned well. It had contributed to public expenditure as a percentage of GDP being reduced significantly and to public sector financial saving being turned around from a large deficit to a surplus. Of course, there had been some creative accounting to bring public expenditure under the ceiling, but this was on a relatively small scale. The changeover in exchange rate and monetary policy In 1992, when the fixed exchange rate for the krona could no longer be defended, and we changed over to a floating exchange rate, Sweden found itself in a situation where it had not been since the 1930s. The krona was floating and the fixed exchange rate could no longer function as a nominal anchor for monetary policy.

None of these changes is obvious, to say the least, but none should be taboo. II. Supervision: lessons from an active euro area model Fair enough about implementing Basel III; but then comes the next suspicion: Credit Suisse failed despite being Basel III compliant. The answer is clear: good regulation is necessary; it's never sufficient. The risks generated by specific business models such as the asset-liability mismatch at SVB or the weak profitability and weak internal controls that dogged Credit Suisse should typically have led to higher supervisory requirements. Supervision should not be seen as a static business; it must be active and tailored to banks characteristics. This is precisely the spirit of the "Pillar 2" in the Basel framework, with the annual Supervisory Review Process. I sometimes hear doubts about supervision, which some believe should be treated as a legal dialogue, cautious in its form, and slow in its effects. No: supervision can and must be intrusive – including on-site –, exercised by highly skilled practitioners, quick in its reaction, strong in its powers. This is not wishful thinking: it has been our experience for decades in the French ACPR, and now for years in the European SSM. Active supervision is indeed one of the great successes of our European Banking Union. In light of the recent reality test, I believe there are two lessons to be learnt from our model.
Muhammad bin Ibrahim: Beyond borders – bridging new horizons in Asia Pacific Speech by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 5th Malaysia Insurance Summit “Beyond Borders: Bridging New Horizons in Asia Pacific”, Kuala Lumpur, 7 October 2015. *  *  *  I am delighted to join you today at the 2015 Malaysia Insurance Summit themed “Beyond Borders: Bridging New Horizons in Asia Pacific”. I understand that this is the fifth year the Malaysian Insurance Institute has organised this event which brings together insurance and takaful professionals from around the region and beyond to discuss key developments in the industry. Prospects of the Asia Pacific region The world is undergoing rapid structural changes amidst a rapidly evolving Asia Pacific as an important centre of growth. The International Monetary Fund has projected a growth of 5.6 per cent for the Asia and Pacific region in 2015 and 5.5 per cent in 2016, with the region expected to remain the global growth leader over the medium term. Growth is primarily driven by domestic demand of Asia’s 4.3 billion inhabitants who account for 60 per cent of the world’s population. The region is also expected to be the strong driver of world insurance growth, with its share of the global insurance market likely to rise to 40 per cent in the next five years.

Low levels of production in Iraq have contributed to holding up oil prices. Strikes and production problems in Venezuela and Nigeria have also played a role. These developments may keep oil prices high until growth in the global economy returns to normal. The oil industry will then have come through this period of sluggish growth in the global economy since 2000 without a fall in revenues. This has, in isolation, curbed the effects of the international downturn on Norway. However, the situation, as a whole and with regard to oil prices, is still highly uncertain. Weak external developments have in particular had negative spillover effects on the Norwegian economy through the appreciation of the krone, the fall in equity prices last year and lower demand for Norwegian exports. The krone exchange rate is the price of our currency measured in terms of a foreign currency. Developments in other countries are just as important for the krone as developments in the Norwegian economy. The krone has been strong. As a result, prices for imported goods have fallen. This has contributed to low inflation despite strong wage growth over a period of several years. Our analyses indicate that the most important reason for the appreciation of the krone from May 2000 to the end of 2002 was the positive and widening interest rate differential. Combined with the interest rate differential, the fall in equity prices and reduced fluctuations, or volatility, in foreign exchange markets contributed to the appreciation of the krone last year.
The importance of predictability is underscored when one considers that in recent years, adverse economic shocks have generally been associated with sharp falls in longer-term interest rates. Such declines would tend to bring about faster MBS repayments and, if the outflow from the Federal Reserve’s portfolio were not constrained by a cap, an unforeseen tightening effect on financial conditions, amplifying the adverse shock. Prepared for the unexpected While I am confident that the FOMC’s plan will work well, there’s always the risk that events unfold differently than expected. In my view, we best prepare for the unexpected in two ways: we need to be operationally ready to change course when needed, and we need to remain analytically focused so we know when to recommend to policymakers that they do so. So long as the plan I’ve described to you proceeds uninterrupted and as expected toward normalization, it is likely that policymakers’ operational demands on the Desk will be considerably lighter than they have been over the last decade. However, it is possible that unexpected developments in the economy may require a change of plans. For example, the FOMC has made it clear in its addendum to the Policy Normalization Principles and Plans that it stands ready to resume reinvestment if a material deterioration in the economic outlook were to warrant a sizable reduction in the federal funds rate.

In that background, it is vital that the country is not pushed into “foreign-grown” solutions of international agencies and others, who unfortunately, sometimes appear to be influenced by certain human rights crusaders, who have been well- known terror activists in the past. It is also worthy to recall that, in its commitment to the principle of restorative justice following the conflict, the Sri Lankan government has already granted amnesty to more than 11,000  2  BIS central bankers’ speeches  former Tamil Tiger terrorists, some of whom have even committed grave crimes. In such circumstances, if the government were to open new investigations as proposed by some, it could turn the clock back and cause great anxiety to those offenders who have been forgiven, and may even lead to some of them reverting back to violence. At the same time, some of the proposed “foreign” interventions that seem to be narrowly focused on the conduct of the Sri Lankan armed forces only, could also be construed as unfair and/or selective treatment towards the Sri Lankan armed forces who defeated terrorism, and could lead to a consequent de-stabilization of the country. Practical wisdom would therefore suggest that reconciliation between communities must be allowed to follow a “home-grown” path in keeping with the time and space as set out by those who suffered the agony of terror, and those who are today responsible for maintaining the peace in the country.
The cost of credit for households remains high relative to Bank Rate (Chart 4), and there is still evidence from smaller firms that credit is either difficult to obtain or unacceptably costly. Banks’ own funding has become a little less costly, but the major UK banks still face a considerable funding challenge over the next few years, as well as uncertainty about how much capital they will be required to hold in the longer-term. However, there are grounds for optimism from recent data that the recovery is broadly on track. GDP in the fourth quarter of 2009 is now estimated to have grown by 0.3% with growth in consumer spending. Household balance sheets have already been strengthened. Employment trends have remained surprisingly robust, and firms’ employment intentions continue to recover from the low point early in 2009 in the bulk of the business surveys. I don’t think it is yet possible to be confident in the pace of recovery, and still expect the path to be bumpy. But some of the severe downside risks have diminished. 12  These impacts have recently been set out very effectively in Miles (2010). BIS Review 27/2010  7  Conclusions As this is my final formal talk as an MPC member, it is a good opportunity for me to say that it has been a real privilege to serve on the Committee for such a long period, and to have done so alongside such excellent and stimulating colleagues.

Our challenge concerns more the nature of this financing: developing equity financing more than debt financing. Flat tax is a welcome step towards a greater tax neutrality between the different forms of investment. I have already stated this, insurers must create new tailored products, in the area of life insurance, which are less liquid but allow savers to benefit from the higher returns offered by equities in the long term, with a form of capital protection. The PACTE law on growing and transforming companies, presented by the Minister of the Economy, could provide an opportunity. Banks are also considering offering a new long-term savings product: I understand this point of view, provided that the aim isn't to create a new tax loophole; we have had enough of this great French speciality. 2/3  BIS central bankers' speeches  My last wish concerns the Banque de France, and it is a commitment to our transformation, which we want to be exemplary for the public service. In 2018, we will be over half way with our strategic "Ambitions for 2020" plan, which aims to improve our services to the French and European economies, while achieving significant savings: as of this year, our net spending will be almost EUR 100 million lower, in current euro, than it was in 2015: this is what we are "giving back" to the national community. In 2018, let us also be exemplary in our commitment to the social and territorial cohesion of the country, in order notably to help our most underprivileged citizens.
Reforms should, in particular, be conducive to capital accumulation and bring about tangible increases in total factor productivity. In other EU neighbouring regions, efforts in structural reforms have varied considerably. Following a severe financial crisis in 2001, Turkey witnessed a strong rebound in 2002 and began an ambitious process to reduce inflation, while still struggling with some of its long-standing problems. This achievement was supported by structural - though still insufficient - reforms. In Russia, after a long delay in the early years of transition, a first package of structural reforms has been implemented in recent years, positively contributing to the strong recovery the country has been enjoying since the 1998 crisis. United States Turning to the United States, labour, product and capital markets have reached a high degree of flexibility. This reflects both the traditional market-oriented nature of the US economic system and reform efforts over the past 20 years, including a variety of deregulation measures in the 1980s. The flexible microeconomic structure of the US economy has helped to make it one of the strongest growth poles in the world, with GDP growth averaging 3.3% from 1983 to 2002 (compared with 2.4% in the euro area). At the same time, the US experience shows that no country can consider structural reforms as “completed”. In its latest Article IV report on the United States, the IMF identified a number of areas where further efforts would be desirable, including the budgetary framework, the social security system and the energy sector.

The other polar view is that a more stringent regulation will not have any negative impact on growth because it would essentially reduce the frequency of crisis, hence improving the long term performance of the economy. Both views are well-informed and of interest. They come from fairly different constituencies and have very different underpinnings. Having studied carefully all the arguments made during the last months, let me give you my personal sense, at this stage, on the good regulatory equilibrium. First, some consequences of the new regulations are difficult to predict and should be carefully observed. Quantifying precisely the effect of the reforms on the economy is not an easy task. The phasing-in period of Basel 3 has been specifically designed to be consistent with the economic recovery and, more generally, to minimize potential adverse consequences on banks and the macro-economy. Second, we all know also that any regulation may have unintended consequences. One of those, of course, is to create incentives for regulatory arbitrage. It is therefore crucial that the reforms be applied fully and consistently across jurisdictions. It is also important to make sure that a significant part of financial intermediation does not shift to the unregulated (shadow) financing sector, as this would not help reduce the likelihood of disruptive financial crises. Finally, increasing robustness is a necessary but not sufficient condition to get safer financial systems. Another important element is to ensure that risk remains at acceptable levels and carefully managed.
Although the loan portfolio growth is below the previous years’ levels, it is satisfactory and at higher levels than in the region. Based on the periodical stress-tests, the Bank of Albania has identified all banks’ needs for capital, thereby enabling a rapid increase of the capital when necessary. Banks’ responses were instantaneous bringing in new capital. Total regulatory capital of the banking system increased 37.7 percent, being dominated by the core capital providing evidence for a qualitatively good and sustainable regulatory capital. The banking system’s capitalization level was significantly above the regulatory minimum required by our regulations and international practices. Efficiency indicator shows almost the same level as at year-end 2008, attesting to a prudential and stable growth of banking activity in general. On the other hand, shareholder’s equity is estimated to have increased 18.7 percent in 2009 versus 2008. Financial leverage reduced gradually during 2009. The decline of the financial leverage from 11.7 to 10.4 percent over a year implies that the system has relied less on debt to finance assets. Compared with the European Union countries, the Albanian banking system’s financial  6  BIS Review 78/2010  leverage remains low attesting to a low degree of the system’s borrowing practice. This indicator provides further evidence for the sound situation of the banking system. The network expansion of banking branches and agencies in the territory of Albania persisted in 2009 however at lower rates compared to the previous years.

The growth of money supply mainly attributes to the growth of its ALL component, while foreign currency loans and deposits contracted in 2009. The creation of money in ALL has been based on the fiscal sector’s domestic borrowing and the preservation of the private sector’s ALL credit rates. In addition to the higher banks’ sensitivity to their liquidity indicators, private sector credit activity was carried out under the conditions of a more conservative behaviour of banks’ lending in 2009. This conservative behaviour owes also to an increased caution of banks to certain banking products, such as:   foreign currency loans to certain segments of the economy exposed to exchange rate fluctuations, and    consumer loans. In the second half of the year, demand for loans declined as a result of the tight lending standards and the slowdown of economic activity. Despite the easy monetary policy of the Bank of Albania, private sector credit maintained a uniform slowdown trend during 2009. As at year-end 2009, credit annual growth rate marked 12 percent versus 33 percent in 2008. The growth of credit has been triggered by the business demand to finance the liquidity needs, while the households’ loan portfolio contracted over the same year. 1.4  Balance of payments and the exchange rate  In the presence of slow domestic demand and reflecting the difficult situation of the global economy, current account deficit narrowed by about 3 percent in 2009, standing at 15.3 percent of GDP.