samchain/econo-pairs-v1 huggingface dataset:
The Swiss notes traded at above the parity because of the risk that holders of the 10,000 note would find that they had a forgery and could not exchange it at the central bank. Second, before the capture of Saddam Hussein there was inevitably some uncertainty about the prospects of the new regime and the new currency that it issued. The circulation of Swiss dinars in Kurdish controlled Iraq during the 1990s was a market solution to the problem of devising a medium of exchange in the absence of a government with the power to issue currency. Changes in the relative price of Swiss and Saddam dinars show that the value of money depends on beliefs about the probability of survival of the institutions that define the state itself. V.  Case Study 3: Monetary policy in Japan and the zero bound on interest rates  My third case study shows that institutional arrangements need to be consonant with the underlying economics, or failure will result. Recent experience in Japan has led to the rebirth of interest in monetary policy when official interest rates are constrained by the zero lower bound. Official shortterm interest rates in Japan have been approximately zero since the beginning of 1999. Of particular interest in this context is the question of how responsibilities should be divided between the central bank, on the one hand, and the finance ministry, on the other. Guy Debelle and Stanley Fischer (1994) introduced the distinction between instrument and goal independence of central banks.

That distinction has become the standard framework within which to analyse the optimal constitution of central banks. But such a distinction presumes the existence of a  16  Source: compiled by the Central Bank of Iraq, based on data collected by the United Nations World Food Program. BIS Review 5/2004  11  policy instrument that is uniquely available to the central bank. That instrument is the level of official short-term interest rates. But when interest rates are constrained at their lower bound of zero, the position is much less clear. Indeed, I shall argue that in such circumstances both instrument and goal independence are impossible. Rather when interest rates are at their zero lower bound, policy relies on successful cooperation between central bank and finance ministry. I shall assume that, when interest rates are zero, monetary policy takes the form of open market purchases or sales of government securities using central bank money. A well-known policy prescription, which has become known as unconventional monetary policy, is that the central bank should buy long-term Government bonds rather than the more conventional shortterm bills. The Bank of Japan did indeed follow this prescription. The logic of such a proposal is as follows. Long-term bonds are likely to contain a significant premium to compensate investors for their lack of liquidity - the fact that, in practice, investors face significant costs when switching between bonds and goods.
This suggests quite strongly that improved access to good education, childcare and affordable housing would help. As I noted in a recent speech, an important aspect of a city’s vitality is the ability of its residents to develop the skills necessary to be successful and achieve their dreams.1 A big asset for New York City is its access to affordable education. Each year, tens of thousands of low-tomoderate-income New Yorkers send their children to one of the city’s specialized high schools. When it comes time for college, many of these same students have access to the City University of New York (CUNY) and State University of New York (SUNY) systems. A recent highly regarded study assessed how much of an opportunity children born to less advantaged 5/6  BIS central bankers' speeches  families in different parts of the United States have of moving up in the world. New York City ranked 10th out of the 50 largest U.S. metro areas.2 This is a better than average performance, but I think New York City should aspire to do even better. To conclude, while the near-term outlook for the U.S. economy is reasonably good, there is considerable work to do over the longer term to improve our nation’s productive capacity and foster an environment in which the gains are spread more evenly. Monetary policy is limited in what it can do to address these broader structural issues.

Since 1970, the labor share of GDP in the United States has declined about 5 percentage points. Similar declines are evident in most developed and emerging market economies. Second, the distribution of labor income has become more skewed. Since 1970, the top 1 percent of households in the income distribution has more than doubled its share of the nation’s income. Third, despite the notion of the American dream, income mobility in the United States remains relatively low compared to many other countries. Also, the potential for income mobility is not evenly distributed. Research has shown that where you are born and raised in the United States still has significant implications for your future prospects. As a country, we need to address these issues. With respect to the labor share of income, maintaining the U.S. economy at full employment should help. As the unemployment rate has fallen over the past two years, the labor share of income has moved up almost 1.5 percentage points. Supporting maximum sustainable employment is part of the Fed’s dual mandate, so we can play an important role here. With respect to the rising concentration of income and the low level of income mobility, I think considerable improvements are also achievable. Income distribution can be influenced by tax policy and by educational opportunities. Income mobility can be influenced by local policies on education and housing. As Raj Chetty’s pathbreaking work makes clear, income mobility depends on where one is born and lives.
One alternative might be to act in relation to a shorter time horizon, which would oblige us to adjust the interest rate more markedly as well as more frequently. Both I and many others believe that would be bad for output and employment. As we all know, assessing the future is difficult and the predictions can almost always be questioned and debated. Interest rate decisions by the Riksbank’s Executive Board are preceded by extensive discussions and our opinions sometimes differ. Disagreements are obviously not intrinsically desirable but when a group of people have to decide about complex matters, they are liable to reach different conclusions at times. That happens in business and it also applies to economic policy. The difference is that the Riksbank is an open institution, which means that our task-masters - ultimately the Swedish nation - can, from the minutes of our meetings, see the basis for a decision, the preceding discussion and the positions Board members have taken. I see that as basically an advantage for people’s confidence in Sweden’s monetary policy. Having said that, I also want to underscore the broad agreement among members of the Executive Board as to the fundamental framework for our efforts. It is important to bear that in mind. After these preliminary remarks, I shall now turn to developments in the Swedish economy in recent years. Sweden’s rapid economic expansion has slowed Economic growth in Sweden has been strong for a number of years. And although demand has risen rapidly, inflation has been low.

Swedish firms that are dependent on exports have been hit in particular, along with their suppliers. At the same time it should be noted that Swedish households, who account for around 50 per cent of demand, have lowered their consumption. Like their counterparts in the United States, people in Sweden have reduced their expectations about future income and wealth. Infrequent purchases, such as cars and household appliances, have fallen in  4  BIS Review 72/2001  particular. Sweden has been hit by the global slowdown in technological sectors such as IT and telecom; firms are being compelled to undertake structural adjustments and close down some production capacity. But although Sweden is affected more than other countries, on account of the dominance of IT and telecom firms, compared with earlier downturns the situation still looks relatively favourable, at least so far. The important thing now is to look to the future. It is not the most recent economic figures that determine the course of events and it is not entirely clear what conclusions should be drawn with regard to developments in one to two years' time. One thing that is clear, however, is that resource utilisation this year will be slightly lower than economic analysts have been counting on. If it turns out to be true that GDP growth only reaches a figure of just under 2 per cent this year, this will nevertheless be a fairly creditable result for the Swedish economy.
We’ve also taken two steps to improve our communication of the Fed’s monetary policy strategy and plans. First, we released a statement of our longer-run goals and strategies – essentially, a declaration of our monetary policy principles.7 That statement noted that we view a 2 percent inflation rate as most consistent with our mandates. It also emphasized that we will continue to balance our goals of maximum employment and price stability in making policy. Second, we now regularly report our views about the probable course of short-term interest rates over the next few years. Under current economic circumstances, most Fed policymakers judge that near-zero short-term interest rates will be appropriate well into 2014. In this way, our interest rate forecasts reinforce our public guidance. Releasing the views of policymakers in this fashion should further reduce public uncertainty about our plans. And that, in turn, improves the effectiveness of our policies. We at the Fed are broadening our commitment to openness and accountability. And we’re doing all we can to carry out the mission Congress gave us. The Fed’s powers are limited. Lower interest rates alone can’t fix all the economy’s problems. But monetary accommodation is indispensible. The economy would be in much worse shape if the Fed weren’t acting so energetically. Looking ahead, we may need to do more if the recovery falters or if inflation stays well below 2 percent. If the economy does need more stimulus, restarting our program of purchasing mortgage-backed securities would probably be the best course of action.

John C Williams: The economic outlook and monetary policy Presentation by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, to the CFA Hawaii Seventh Annual Economic Forecast Dinner, Honolulu, 1 March 2012. *  *  *  I would like to thank John Fernald, Rob Valletta, and Sam Zuckerman for assistance in the preparation of these remarks. The economic outlook and monetary policy Thank you. It’s a pleasure to participate in this event and to enjoy the beauty and hospitality of the wonderful state of Hawaii. Sadly, this is my first visit here in 25 years. In fact, the last time I was here was back when I worked for a small business in the San Francisco Bay Area after I graduated from college. The business owner sent me on an all-expenses-paid, weeklong vacation as a reward for hard work. Throughout my career at the Federal Reserve, I’ve tried to convince my bosses of the productivity-enhancing benefits of such an enlightened management practice. Unfortunately, I never succeeded. Now, as President of the San Francisco Fed, it is my pleasant duty to visit all nine states in the 12th Federal Reserve District. I plan to be diligent in fulfilling that duty. So, I assure you, it won’t be another 25 years till I’m back.
Fora such as the one this afternoon play an important role in bringing together various stakeholders to deliberate on possible strategies to address these challenges, facilitate the development of waqf assets and increase their productivity. Limiting waqf to land and immovable property is another misconception. With the emergence of contemporary reinterpretations of fiqh rules and Islamic finance, there are new techniques that can inject new life into waqf. One such concept is cash waqf, which is a waqf of a liquid asset that gives returns which can be utilised to meet the intended objectives under the waqf charter. In this regard, I welcome the Waqf Fund initiative by the Association of Islamic Banks in Malaysia (AIBIM) whereby six islamic banks have come together to collaborate with State Islamic Religious Council of ten states to provide channels to collect and manage cash waqf in a more coordinated and structured manner. The returns have so far been utilised for economic empowerment, education and health projects. In addition, the concept of temporary cash waqf, introduced by ISRA and endorsed by the ISRA Council of Scholars in 2016, opens up a new interesting potential. Funds collected through temporary cash waqf, such as through sukuk, can be used to develop Shariah-compliant profitgenerating projects. The completed projects would be declared as waqf assets upon maturity of the sukuk, and its future benefit could be enjoyed by waqf beneficiaries in perpetuity.

Over the past few months, the staff of our institutions have been in very close contact, preparing together the terms of the contract and finding appropriate solutions to a rather diverse set of challenges. I would like to ask you, Mr Chairman, to extend our warmest thanks to the staff of the Bank of Russia for their efforts to address all pertinent issues. The new three-year cooperation programme will start on 1 April and will focus on banking supervision and internal audit. In the area of banking supervision, the Eurosystem will support the Bank of Russia in its gradual implementation of the internationally accepted principles of the Basel Committee on Banking Supervision that are commonly known as the Basel II framework. The financial market turmoil that emanated from the US subprime mortgage crisis has highlighted, among other things, the importance of transparency and of sophisticated and effective risk management standards and practices in banks. The Basel II framework provides an advanced approach to capital measurement and capital standards. It represents the regulatory response to the increasingly complex and globally integrated financial markets, where credit risks are often passed from the originators of bank loans to a wide range of investors, instead of remaining on the books of the originating banks. Indeed, the Basel II framework was conceived to support banks in the implementation of advanced risk management standards with the overall aim of improving the stability and soundness of the financial system in all the economies around the world.
The increase in the current account deficit of the balance of payments has been cause for concern in the latest Reports. As has been noted, this deficit is largely explained by FDIfinanced investment flows into the tradable sector (i.e. mining). In recent months some of the necessary adjustments have begun to take place to correct this situation: the real exchange rate has depreciated and domestic demand has slowed. This will help to reduce the current account deficit in the medium term, beyond the transitory effects of fluctuations in the terms of trade. Still, this risk becomes even more significant if the copper price falls further, external financial conditions worsen and domestic demand remains strong. Our previous Financial Stability Report identified as a risk factor the performance of the real estate sector. Incoming data points to a moderation of some of the trends reviewed at the time. However, factors remain that call for careful monitoring by financial intermediaries and relevant policy makers. No acceleration has been observed in mortgage lending, against our worries in the last Report, while residential home sales have slowed, banks have been more cautious in lending to companies in the industry and the leverage of real estate firms has stabilized. Despite these developments, housing sales are still fairly high and aggregate price indexes maintain their pace of expansion in a context where the standards of mortgage lending have not changed much. Keep in mind that the main factors that have pushed these aggregate prices up (i.e.

This reflects the deceleration of the first quarter and the prospect of a smoother trajectory of sectors other than natural resources in the remainder of the year, partially offset by higher growth in mining. Partial second-quarter indicators show an ongoing deceleration of investment, but milder than earlier in the year. Private consumption, although receding somewhat, continues to show robust fundamentals related to labor market conditions and strong real wages, which should normalize as economic activity slows. Despite the slower growth of domestic demand, a lower copper price will result in a wider current account deficit this year, at 4.7 percent of GDP (table 2). Annual inflation is expected to return to the tolerance range once some transitory elements are reversed, hitting 3 percent during 2014. At the end of the projection horizon, this time the second quarter of 2015, it should stand at 3 percent. Core inflation will take somewhat longer to converge to 3 percent (figure 4). This forecast assumes that nominal wages will be adjusted in line with productivity and the inflation target. It also uses as a methodological assumption that in the projection horizon, the real exchange rate (RER) will remain fairly stable. This is based on the estimation that  4  BIS central bankers’ speeches  with the nominal exchange rate and currency parities in force today, the RER is in the range consistent with its long-term fundamentals (figure 5).
And thus, Willem Buiter and Erik Nielsen in their recent paper (2007): “Mundell on His Head: Asymmetric shocks are good for you, thanks to Economic and Monetary Union in Europe”, argue that home bias has been receding in the Eurozone, so an increasing number of households and companies now hold a Euro-wide portfolio. In finance it is good when returns on particular assets are negatively correlated, because it helps you to diversify risk and achieve the better risk-return tradeoff. Therefore, if asymmetric shocks hit monetary union, it will result in negatively correlated returns on euro-zone assets portfolio, so such portfolio holders will be better off in comparison with a scenario of a symmetric negative shock. Of course this train of thought may seem too narrow, since it boils down merely to the capital income analysis and loses sight of other effects of asymmetric shocks, such as those on the labor market situation. Nevertheless, this example provides a clear evidence that our cost and benefit analysis may change every so often in tandem with new ideas that smart people come up with. However, before I proceed, I would like to make two important points. First, I would like to note that views presented here are my own and they do not represent the official position of the National Bank of Poland. Second, my economic background allows me to speak in terms of standard economic variables: output, consumption, prices etc. On the other hand, I do not feel competent to speak about highly immeasurable values like national pride.

As we just noted, in our reserve tiering system, banks with excess reserves have an incentive to lend those reserves to banks whose reserves fall short of their thresholds. Unless the borrowing capacity of these banks is substantial, there may still be excess reserves in the system even after all interbank trading is accounted for. This is precisely what we see in the 9  For each bank that is subject to the minimum reserve requirement, the individual threshold corresponds to the moving average of the minimum reserve requirements over the preceding 36 reference periods, multiplied by the applicable threshold factor. The instruction sheet governing interest on sight deposits provides further information. 10 We gained the insight that reserve tiering promotes interbank trading during the time when our policy rate was negative. As we applied a negative interest rate to reserves that exceeded bank-specific exemption thresholds, we were essentially making use of reserve tiering during this period. Fuhrer et al. (2021) investigate monetary policy implementation via reserve tiering both theoretically and empirically. Page 5/10  case shown on Slide 7. Even after factoring in interbank trading, there are still excess reserves, here depicted in light blue. In such an environment, the equilibrium interest rate that would prevail in the interbank money market would be relatively close to the lower remuneration rate on reserves, which is currently 0%.
This naturally served to temper the degree of exuberant risk-taking. Partners or managers in a bank were in for the long haul, with their investments and family wealth tied into the firm until retirement. So it was not just their next year’s bonus that was at risk. This evident “alignment of interest” between the bank owners or managers and the bank’s customers and creditors clearly helped promote trust. 8. That said, although some US investment banks only moved from the partnership to public ownership model in the past 25 years, it is the case that other commercial banks have been structured as public joint stock banks with limited liability since the 19th century. So if limited liability has existed for two hundred years, in at least commercial banking, with the attendant potential “agency” risks (i.e. shareholders with limited skin in the game and managers with relatively little capital invested), what else has been at work to create the problems which so vividly surfaced in the Global Financial Crisis? What has changed: bank management 9. First, bank employees’ time horizons have shifted. By this I mean that in the past employees, for a variety of reasons, tended to be much more “stable” in the sense of their ties to a given employer. An employee might join a bank, work their way steadily up through its ranks and then, on retirement after 30 or 40 years of service, receive a pension from the bank.

Norman T L Chan: How can the banking industry regain the moral and ethical high ground it once enjoyed before the Global Financial Crisis Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Asian Banker Summit, Hong Kong, 15 April 2015. *  *  *  Emmanuel (Daniel), Helen (Wong), Hans (Eichel), Gary (Stern), Ladies and Gentlemen, 1. It is always good to see the Asian Banker Summit return to Hong Kong. It has been four years since our city last hosted the Summit in 2011 when I talked about the Monetary Authority’s supervisory philosophy on universal banking. A lot has happened since then. But of particular relevance to us here today are the significant waves of regulatory activity we have witnessed in those intervening years. Activity both in terms of rolling out new standards but also, very visibly, in enforcement action. Libor manipulation in 2012, followed by Forex rigging, sanctions breaches, money laundering and a fairly constant stream of mis-selling allegations – structured bonds, mortgages, Payment Protection Insurance. 2. Against this background, I have to say that I was pleased to see the thorny subject of ethical behaviour within the financial services industry as a key theme for this Summit, although I would like to confine my remarks today to the banking industry and not the entire financial services industry.