samchain/econo-pairs-v1 huggingface dataset:
Fiscal policy directly affects total demand in the economy. Fiscal policy can be very effective when the economy is characterised by high unemployment and very low interest rates alone cannot provide sufficient stimulus. The side effects of fiscal policy via asset prices are also less severe. There are good reasons why monetary policy is the first line of defence in managing the business cycle in normal times. The policy rate can react rapidly, both when the economy is exposed to shocks and when the monetary policy impulse needs to be reversed. Fiscal stimulus 7/9  BIS central bankers' speeches  measures take longer to implement and can be more challenging to reverse. A related issue is the ambition level we should set for our inflation targeting. Our statutory responsibility is to deliver low and stable inflation. According to the Regulation on Monetary Policy, our target is annual consumer price inflation of close to 2 percent over time. But monetary policy is also expected to contribute to high and stable output and employment and to counteracting the build-up of financial imbalances. Inflation targeting should be forward-looking and flexible. In some situations, a longer horizon than usual is appropriate for returning inflation to the target after a deviation. This may lead to a better overall result. In the wake of the fall in oil prices in 2014, the policy rate was lowered, but we stopped at 0.5 percent. The objective of financial stability was given weight.

This has widened output gaps and depressed inflation. In response, policymakers have provided unprecedented degrees of policy support – in a number of advanced economies, double-digit percentages of GDP in both Quantitative Easing (QE) and fiscal stimulus. These actions should stimulate activity, shrink output gaps and boost inflation. Chart 1: CPI inflation projection  Source: Bank of England. Notes: Projection from February 2021 Monetary Policy Report, based on market interest rate expectations, other policies as announced. 1  For example, Batini and Haldane (1999). 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  It is these heavy weights on either end of the inflationary see-saw which give rise to unusually large uncertainties around future inflation. If the hit to activity were to prove larger or longer, even this degree of policy stimulus may prove insufficient to return inflation to target. But if economies bounce-back as the vaccination programme is rolled-out, policy stimulus could over-stimulate the economy and, with it, inflation. There are few, if any, historical precedents to help judge the response of the economy to this scale of shock and degree of policy stimulus. And the costs of getting these judgements wrong could be significant. Costs for the economy, if policy is set either too tight (resulting in lost jobs and income) or too loose (resulting in policy needing to be tightened more than expected, causing future losses of jobs and incomes). And costs for central banks in damaged credibility, if inflation targets were to be missed persistently.
Philipp M Hildebrand: Developments in the hedge fund industry Speech by Dr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, at the Swiss Finance Conference 2005, Zurich, 4 February 2005. *  *  *  Ladies and Gentlemen, Let me begin by thanking the organizers of the Finance Forum for the opportunity to be on today’s outstanding program. It is not often that a Swiss central banker gets to speak after a Nobel laureate. Both the gratification and the risks involved in doing so are self-evident. I will enjoy the former and try to ignore the latter. Adding value to the rich debate about hedge funds is a difficult task. It is generally recognized that hedge funds have made an important contribution to the transfer and diversification of risk through innovative asset management skills and techniques. They are a positive force in rendering global financial markets more liquid and therefore more flexible. My comments today will focus on those aspects of the hedge fund industry that strike me as particularly relevant with regard to the need to preserve and enhance liquid financial markets.1 After some general remarks about hedge funds and the hedge fund industry, I will explore the question of whether hedge funds can materially influence market volatility. I will also refer to one of the key characteristics of hedge funds – the use of leverage – and examine how such leverage might affect overall financial market stability.

Second, leverage can evolve greatly over a short period of time. Third, and perhaps most importantly, there are different forms of leverage, some of which are unlikely to be captured reliably by any aggregate industry data. The most basic form of leverage pertains to financial intermediaries such as global investment banks extending credit facilities to hedge funds to allow them to invest funds in excess of their own capital base. Such credit facilities are usually at the root of industry-wide or strategy-specific estimates of leverage in the hedge fund industry. Following the collapse of LTCM, much of the regulatory discussion focused on this type of leverage by attempting to strengthen the relationship between financial intermediaries and hedge funds to improve counterparty risk management. A second, more recent form of leverage in the hedge fund industry is related to the rapidly growing fund of funds industry. A number of fund of funds managers have begun to leverage their products by either using their own balance sheet or, alternatively, borrow credit facilities from other financial firms with large balance sheets. 2:1 leverage ratios are typical. In some cases, leverage ratios can be as  BIS Review 8/2005  3  high as 4:1. This form of leverage, though probably still limited, is unlikely to be captured by any industry leverage figures. Finally, the most complex form of leverage that hedge funds employ is what I would refer to as instrument leverage. This type of leverage is embedded in the use of most kinds of derivative instruments.
Michael C Bonello: Opportunities and challenges of the euro for business Speech by Mr Michael C Bonello, Governor of the Central Bank of Malta, at the conference The Transition to ERM II, EMU Convergence & EURO Adoption - Implications for Enterprises, organised by the Malta Business Bureau and the Mediterranean Bank Network, Valletta, 15 October 2004. *  *  *  The rationale for a common currency In addressing this topic it is first of all important to understand that the adoption of the euro marks only the last stage in a much broader process which started with accession to the EU. At that point, Malta concurrently joined the Economic and Monetary Union (EMU), but its participation in EMU is for the time being limited. In particular, Malta has not yet entered ERM II. This means that both monetary and exchange rate policy are still under the control of the local authorities. This is in line with the EC Treaty, which confers upon new members the status of Member State with a derogation, allowing them considerable discretion as to how and when they should proceed towards the euro. Such an approach builds on the premise that whereas a currency union offers the prospect of considerable benefits to its members, these can only materialise when a high level of convergence has been reached with the other participants in the union. When this point has been reached, a prospective new member is much less susceptible to asymmetric shocks, i.e.

Thomas Jordan: The various waves of money market turbulence and the measures taken by central banks Introductory remarks by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Geneva, 19 June 2008. *  *  *  The money markets are the lifeblood of the international financial system. Properly functioning money markets are absolutely essential for the solvency of banks, as well as for the effective implementation of monetary policy. Hence, events on the money markets since the onset of the financial turmoil have been a particular focus of central banks’ attention. So far, there have been three waves of turbulence. At the time of the last news conference, we were almost at the height of the second wave. In the meantime we have experienced a third wave, which peaked in April. An appropriate barometer of the health of the money market is the difference between the three-month Libor and the three-month (T)OIS rate (tom-next/overnight indexed swap). This difference reflects the credit and liquidity premium on unsecured money market trades compared to purely derivative business with virtually no counterparty risk. With the help of chart 1, which can be regarded as a “fever curve”, I would now like to look back at how events unfolded, and comment on the measures which the central banks took in response. The first wave peaked in September 2007.
But we all know that running an internal model is not just a one-off task, and there is a need for firms to continue to refine the models in the light of experience and as new data becomes available. As regulators, we need to be alive to the risk that when firms select the areas where change is required, and as internal models are updated, there is not some inherent bias towards changes which reduce the firm’s capital requirement, at the expense of areas of the model which might be insufficient. We are publishing today our supervisory statement on changes to internal models, setting out our expectations in respect of firms applying for  BIS central bankers’ speeches  3  approval for a major change to their approved internal models or an extension of scope to an approved internal model (e.g. to cover new business units or risks). In May 2016, the PRA consulted on its proposed approach to monitoring “model drift” for firms with an internal model, where model drift is defined as the risk that the capital level generated by an internal model moves gradually over time. Even acting in good faith, business pressures may create the risk that model changes generating lower capital requirements are favoured over time, and therefore that solvency standards might deteriorate. The PRA’s proposed approach includes monitoring the internal model SCR against a number of objective measures such as premium levels, technical provisions, MCR and the standard formula SCR.

Despite falling premium rates, general insurer profits in the past few years have been sustained by both benign catastrophe experience and levels of prior year reserve releases that are now the highest for thirty years (Chart 2). Natural catastrophes are a major component of many GI firms’ risk profiles. Catastrophe losses returned to more normal levels by historical standards in the first half of this year. But the low incidence of catastrophic events in recent years may have given support to the idea that this component has in some way diminished, whether due to trends in nature or more effective management of risks by policyholders and insurers. I have also heard speculation that some man-made risks may have decreased: for example, if planes and ships are built better than previously, or if companies are better at managing their risks. Mindful of both the impact and the uncertainty involved in considering this, we would expect firms to seek the BIS central bankers’ speeches  1  best available evidence and to take a prudent and comprehensive view to the assessment of risks. Put simply, we would not expect a handful of recent data points to lead to a marked reduction in a firm’s assessment of its best estimate of liabilities nor its “1 in 200” risk.
Some market participants have become more inclined to engage in "short-termism", that is, they might be too preoccupied with their short-term results. This trend might result, in particular, from growing pressure to yield immediate financial results that are not necessarily sustainable. Marking-to-market all assets and liabilities has also contributed to this widespread focus on immediate financial performances. This focus on short-term performance can translate into additional volatility in the price discovery process: the shorter the investment horizon of market participants, the bigger the impact of any new information on prices. Mimetic behaviour is by no means a new phenomenon on financial markets. However, technological developments on markets may have gradually reinforced this type of behaviour. The spread of benchmarking, which allows fund managers and clients to measure performance against that of other funds, together with the growing competition within the sector, appears to have increased such mimetic behaviour. Some operators have come to the conclusion that it is better to be wrong along with everybody else, rather than take the risk of being right, or wrong, alone. A striking example of rational mimetic behaviour is the influence that hedge funds enjoyed, a few years ago, as "opinion leaders" and trend makers. By its nature, trend following amplifies the imbalance that may at some point affect a market, potentially leading to vicious circles of price adjustments and liquidation of positions.

Strengthen the continuing efforts aiming at market transparency Experience shows that uncertainty and incomplete information are determining factors in mimetic behaviour. These shortfalls in market transparency make mimetic behaviour seem rational to agents, who prefer to follow bigger participants, who are thought to be better informed, rather than develop their own analysis. Strengthening transparency therefore continues to be a priority. One of the objectives of transparency is to enable better differentiation of borrower creditworthiness. A key feature of mimetic behaviour is that all borrowers are "tarred with the same brush". So when one emerging economy encounters difficulties, all neighbouring countries, or countries that share common characteristics, are treated in the same way – regardless of their actual economic and financial situation. The same applies to businesses operating in the same economic sector. Transparency has substantially increased since the Asian crisis, thanks to a solid global consensus. Let us continue and reinforce these efforts. Take into account the medium and long-term perspective of some market participants Some investors, such as pension funds and insurance companies, have to invest funds in order to enable their customers to build up wealth over the medium and long term, notably in preparation for retirement. Consequently, these types of investors are supposed to behave differently from traders and short-term investors, who are working on a very different time horizon. But at times it seems that they are all pushed to behave in much the same way, on the basis of a very short-term horizon.
Such targeting requires co-ordination between donors and must be in response to the real needs of a country. To this end we see it as imperative that there is effective follow up to the IMF’s FSAP missions to channel technical assistance to where it is most needed. It is also important for individual regulators in developed markets to contribute to capacity development elsewhere. The growing interconnectedness of the financial system means it is in our interests to do so. Sometimes bilateral links can be valuable, especially where the legal and regulatory systems are similar, in former colonies or territories perhaps. At the FSA we have a practice of receiving secondments from other regulators, which is valuable for us, and we hope for them. Perhaps more relevant for Singapore is ensuring that Emerging Markets’ concerns and experiences are heard. A thousand different voices can be lost in the clamour so it is important that objections are  6  BIS Review 25/2003  raised in an organised way, for example through regional organisations. Then the international committees themselves must ensure their consultation processes are meaningful and wide-ranging. Though this combination of adjusting committee structures, and membership, enhancing technical assistance and encouraging effective consultation we can ensure that regulatory standards are truly global and fit for purpose in countries at all stages of financial market development. Conclusion So to return, finally, to my introductory question – is the global regulatory system fit for purpose in the 21st century?

So far the international regulatory community has not been successful in getting a grip on the extent of the possible systemic problem. It is a gap which needs to be filled quickly. Similarly, I am not sure we know enough about the hedge fund market. I chaired a working group on highly-leveraged institutions for the Financial Stability Forum, which reported a couple of years ago. Our conclusion then was that there needed to be better risk management by hedge fund counterparties, better risk management by highly-leveraged institutions themselves, enhanced public disclosure by those institutions, and some other related changes. I am not one of those who believes that hedge funds are inherently dangerous beasts in the financial jungle. Indeed in many cases hedge funds have been useful in being prepared to take positions, sometimes counter-cyclical positions, which have helped stabilise markets. But the sector has grown dramatically, and as the Long-Term Capital Management problem showed, if leverage is uncontrolled, even one fund alone can be a destabilising factor. So while I do not believe that the case for direct regulation of hedge funds is made out, I do think we need more transparency, particularly about the extent of their leverage, and the recommendations to that effect in my earlier report have not been effectively implemented as yet. It is encouraging that under its new Chairman the SEC are holding a series of roundtables on the subject in New York.
In Iceland’s case, this was partly mitigated through the liberalisation of capital inflows in October 2009 and legislative provisions that authorise the Central Bank to grant exemptions from the capital controls,  BIS central bankers’ speeches  1  provided that the balance of payments effects are not negative. But that does not change the big picture. Furthermore, the potential distortion stemming from the combination of free capital inflows and restricted capital outflows has materialised recently, as carry trade and other forms of capital inflows have increased following the announcement and subsequent execution of the resolution of the old banks in a manner that fully mitigated the negative balance of payments effect. This has created appreciation pressures that are not counteracted by outflows, as would have occurred under normal conditions. Finally, in the long run, comprehensive capital controls are inconsistent with Iceland’s membership of the EEA and thus the EU internal market. You might then ask: why have we not just lifted the capital controls? This is where the twist in the tale comes in. The problem is that our own success in preserving Icelandic asset prices and fostering the recovery of the economy has created the conditions for a stronger currency but has also, in some sense, preserved the obstacles to swift and orderly liberalisation of capital controls.

All of the estates decided to fulfil the stability criteria, and the solution has mostly been implemented. The same principle and the same criteria will guide the Icelandic authorities in the next step, which is to mitigate the risks associated with the stock of offshore krónur before lifting capital controls on domestic residents in the near future. This will take two forms. First, the Central Bank of Iceland has offered to use part of its own FX reserves to buy offshore krónur in a single-price auction that will take place on 16 June. This will be the last auction of this type before the authorities begin to lift capital controls on domestic residents, which is expected to commence in the autumn. In the terms of the auction, which were announced yesterday, you can see that the exchange rate in the auction will vary inversely with the amount of offshore krónur traded in the auction. It will start at 210 krónur per euro for any amount and could rise as high as 190 krónur per euro if the volume exceeds 175 billion krónur. The total eligible stock of offshore krónur is 319 billion krónur. Outside the auction, anyone can sell offshore krónur to the Central Bank for 220 krónur per euro at any time until 1 November 2016. Participation in this auction, as in the 21 similar auctions that preceded it, will be entirely voluntary. We are aware that some holders of offshore krónur may wish to remain in Iceland and await future developments.
“Thai Economy: The Current State and the Way Forward” Keynote Address by Dr. Veerathai Santiprabhob Governor of the Ban of Thailand Nomura Investment Forum Asia 2018 5 June 2018 / Singapore Distinguished guests, Ladies and gentlemen, A very good morning to you all. I would like to thank Nomura for inviting me here to share my thoughts on the current state and outlook of the Thai economy. For today’s talk, I have two main agendas. First, I will talk about the current state of the Thai economy where I will discuss recent developments and its prospect ahead. Second, I will talk about Bank of Thailand’s roles to help transform the Thai economy into one with greater productivity, better economic prospect, and more inclusivity. As many of you know, the Thai economy has weathered several storms over the past few years. On the external front, changes in the political landscape and macroeconomic policies of major economies have brought about not only financial market volatility throughout the region but also greater uncertainty to global trade. On the domestic front, Thailand experienced major droughts and floods that affected agricultural prices and output, and most significantly the passing of His Majesty the late King Bhumibol a year and a half ago that caused the greatest grief and sorrow among all Thais. Yet the Thai economy stood firm and was able to continue expanding steadily, thanks to both sound economic fundamentals and a welldiversified economy which underpinned Thailand’s resilience against shocks.

You should be the flag bearers of Excellence and a source of inspiration to your colleagues. In addition to congratulating you the awardees, I want to congratulate the parents and schools that have contributed to the excellent results which qualified our awardees for the awards today. I speak especially about the parents of Ms. Rashidatu Caulker and Mr. Bobson Sesay and the Annie Walsh Memorial Secondary School, and the St. Augustine Secondary School Lungi, the proud producers of our awardees. To all the students present here this afternoon, , we implore you to have confidence in your abilities, and know that what Rashidatu and Bobson have achieved today you can also achieve. Please note that the Bank of Sierra Leone Charity Trust Fund was established to support any of you who can demonstrate proven ability. Let this therefore be a challenge to all of you to excel in your studies. Who knows, you might one day be a proud beneficiary!! Mr Chairman, Distinguished Ladies, Gentlemen and students, let me assure you that the Bank of Sierra Leone has a long term commitment to providing support, especially in building capacity nation-wide through education. Be assured that we will continue to uphold the objectives and tenets of the Bank of Sierra Leone Charity Trust Fund on a sustainable basis. All we ask for is your continued support. I thank you for your attention. BIS Review 32/2008  3