samchain/econo-pairs-v1 huggingface dataset:
Dudley, “The Transition to a Robust Reference Rate Regime,” May 24, 2018, offers perspective on the outlook for LIBOR as a reference rate. 5 Potter, “Money Markets after Liftoff: Assessment to Date and the Road Ahead,” February 22, 2016, provides a detailed discussion of the new framework. For a discussion of the new and old frameworks see Ihrig, Meade, Weinbach (2015) 6 See Logan, “Operational Perspectives on Monetary Policy Implementation: Panel Remarks on The Future of the Central Bank Balance Sheet,” May 4, 2018, for a comparison of the technical operation of the pre-crisis and current frameworks. 2  and it has proven to be extremely effective at controlling federal funds rates. As shown in Figure 1, it has maintained the effective federal funds rate within the FOMC’s target range on all but one day over the entire period. 7 Looking at the distribution of traded rates within both the federal funds and overnight bank funding markets, as shown in Figure 2, it is also clear that the framework has broadly fostered trading at rates within the target range. Indeed, the difference between the 25th and 75th percentiles of the rate distribution has consistently remained very tight over the course of normalization.8 Of course, monetary control does not stop at the federal funds market: our framework must ensure that the stance of monetary policy is passed through into other money markets. It has also been very successful in this sense.

Fortunately, we need to adopt much less drastic measures than those countries that have had to make deep cuts in public sector staffing levels, wages and social benefits in order to stave off the financial collapse of the state itself. And yet, people in Malta continue to expect the Government to hand out money it does not have. This attitude must change, for not only can it lead to bankruptcy, but it is also indefensible on moral grounds. Politicians, trade unions, NGOs and other opinion shapers must explain that we do not have money for everything and that you cannot have gain without pain. The intelligent thing to do is to work together so as to minimize the pain and then ensure that it is equitably shared. In my view, the priority of the welfare state should be to provide equal opportunities for all, but a safety net only for those who need it most. Universality – dispensing free goods and services to all irrespective of income – is a wasteful and unaffordable principle. In the words of the renowned economist, Jeffrey Sachs, “Even playgrounds should collect tolls, when it is billionaires who are playing in the sandpit.” The social welfare system, including health care, has long been identified, including by the European Commission and the IMF, as offering the greatest potential for savings. Effective measures implemented elsewhere which could be adopted range from user fees for certain public services to policies designed to make work pay.
14  BIS central bankers’ speeches  Figure 12 Currency mismatch (1) (2) (3) (percent of total assets)  12  800  10  750  8  700 Exchange rate (right axis) (4)  6  650  Mismatch (SVS)  4  600  2  550  0  500  -2  450  -4  01  04  07  08  09  10  11  12  13  14 14 15  400  15 III.15  (1) Mismatch is calculated as dollar liabilities minus dollar assets minus net derivatives position, over total assets. (2) Annual data up to 2006; from then onwards, quarterly data. (3) State-run, mining and financial firms not considered. Firms using accounting books in dollars are excluded. (4) Average exchange rate for the last month of the quarter (or year) on secondary axis. Source: Central Bank of Chile based on SVS data. Figure 13 New housing sales in Santiago (thousands of units)  14  Turnkey  14  Other  12  12  10  10  8  8  6  6  4  4  2  2  0  0 01  02  03  04  05  06  07  08  09  10  11  12  13  14  15  16  Source: Chilean Chamber of Construction.

However, towards 2017 non-mining investment should restart growing at a pace matching the recovery of the overall economy (figure 4). About the current account, we believe that this year’s deficit will be smaller than we thought in March and will show no big changes in 2017. In particular, the trade balance outperformed the March forecast in the first quarter, driven mainly by volume exports of goods, especially copper, and tourism-related services. Furthermore, a slowdown in capital goods imports is expected because of adjustments in investment. In addition, there are generally upward revisions to non-copper export prices. Consumption, meanwhile, continues to grow at around 2 percent. Details of the domestic economy’s baseline scenario are shown in table 1. In this context, we foresee further adjustments in the labor market in the coming quarters. Lately, annual growth in salaried employment slowed down significantly, to 0.5 percent in the last moving quarter. The national unemployment rate has adjusted more gradually, thanks to increased self-employment, so it is still low by historic patterns (figure 5). By regions, in the north of the country unemployment has risen more sharply than in other areas. Firms interviewed for May’s Business Perception Report – a quarterly publication of the Bank – reveal increased labor availability together with lower wage claims. Looking into the March survey of the University of Chile, we also see an increase in the unemployment rate in Greater Santiago, to 9.4 percent, confirming the weakening of the labor market.
In some countries the authorities already have the option of splitting up a bank and subsequently selling it in parts, or the option of transferring vital parts to a bridge bank for continued operation. A newer instrument in the international debate is what is called internal recapitalisation – or bail-in. Internal recapitalisation means in principle that debt is converted into equity capital. This can provide a basis for the bank to continue operating. Creditors have to take the losses and the authorities do not have to provide capital. With such a crisis management system, lenders will have a stronger financial incentive to monitor banks’ risk-taking. They can price funding so that it reflects to a further extent the risk taken by banks. This will reduce the risk of excess debt growth and lessen the likelihood of crisis. Conclusion As I mentioned by way of introduction, our most important task in the work on financial stability is to contribute to containing imbalances and secure a robust financial system. Prevention is thus a key component of the work: that is to say prevention by means of a sound, general framework that does not stimulate risk-taking among financial market participants; prevention through surveillance of financial imbalances and through active use of instruments when we see clear signs of a build-up of serious imbalances. It is unlikely that we will be fully immune to financial instability. But with solid work in the area of prevention we will be better poised, also in turbulent times. Thank you for your attention.

The relations and cooperation of the CBRT in the international scene go well beyond our bilateral dialogue with your esteemed Bank and cover also the financial level (swap agreements signed with certain countries), as well as the educational level (the establishment of an international central banking research facility and regional training centre, the İstanbul School of Central Banking). BIS central bankers’ speeches  1  I would like to thank the Bundesbank for opening a Representative Office in İstanbul, for signing the MoU agreement and for all the support and assistance you have provided us in diverse fields and at various platforms. Closing my remarks, I would like to welcome my friend and colleague, Dr. Andreas Dombret, a member of the Executive Board of the Deutsche Bundesbank, and thank him for his tremendous efforts in bringing this project to life. Now let us celebrate our achievements. Thank you for your attention. 2  BIS central bankers’ speeches
Until there are equally secure electronic means of providing that anonymity, eliminating currency is not warranted. Economists have proposed many clever ways to implement the taxation of currency, or, equivalently, the payment of interest on currency holdings. Some of the proposals entail decreasing the value of the currency by imposing a negative rate of interest. This can be likened to making currency out of ice. As you can imagine, such cold currency would slowly disappear as the ice turns into liquid water. (Other proposals would, in effect, attempt to raise or lower the temperature of the air surrounding the ice money.) One might conjecture that the loss of purchasing power is the same whether a person holding a dollar for a period of a year sees the value of that dollar decline owing to inflation of 1 percent, or because he had to pay a penny of interest in an environment of stable prices. However, there is a subtle difference between a negative rate of interest charged on currency, and inflation decreasing the value of currency. With inflation, a dollar remains a dollar, but its purchasing power declines. In contrast, with negative interest rates, the dollar of currency is slowly whittled away as one makes interest payments, even though its purchasing power can remain unchanged (this would be the case if prices fell by the same rate as the negative interest rate). In other words, the value of the unit of account is unchanged when a negative interest rate is charged on currency.

An even more far-reaching change that many have suggested would be the creation of a new institution to handle and store currency on behalf of others; this could dramatically reduce the costs of holding currency. The institution contemplated would have a single, highly trusted, party start a currency warehouse, which would consist of a large secure vault and excellent record-keeping and shipping facilities. Individuals could then deposit currency in the currency warehouse, receive receipts for their deposit, and then make payments with the warehouse receipts. Such an innovation could conceivably lower the cost of holding currency as an investment, and yield investors a return close to zero, but still slightly negative. Because of these dynamic considerations involving innovative actions to avoid negative rates, we could add a corollary to our proposition. Specifically, we posit that different economic agents will be less willing to invest in negative rate investments over time to the extent that innovations reduce the costs of handling currency or make available other zero, or near-zero, interest rate economic arrangements. Some economists since Silvio Gesell – notably, Willem Buiter, Marvin Goodfriend, Miles Kimball, and Ken Rogoff – have suggested that currency be eliminated, taxed, made nonredeemable for deposits in banks, or made redeemable only in units that reflect an exchange rate that varies over time. 2 These are all other ways of imposing negative nominal rates universally across the alternative means of payment people use.
The experience of the crisis increased the advantage from being perceived as TBTF, and, thus, strengthened the incentives to become bigger, more complex, and interconnected. The Dodd Frank Act (DFA) set out to end TBTF. One means was by eliminating the Federal Reserve’s discretion to provide emergency financial support through a program open only to a single financial institution, and, in general, raising the bar for broader-based emergency interventions under section 13.3 of the Federal Reserve Act. But, as the DFA recognized, simply tying the Fed’s hands on intervention is insufficient. It does not reduce the cost to society from the failure of a large and complex firm. In order for the non-intervention strategy to be both fully credible and consistent with the public interest, we need to tackle the underlying externalities and incentive problems that give rise to TBTF in the first place. Tackling too big to fail As I see it, solving the TBTF problem requires working on a number of different margins. These include measures that are firm-specific and those that address the structure of the financial system more broadly. One set of measures works to reduce the incentives for excessive risk-taking and to lower the probability that large financial firms fail or come close to failure. Another set lessens the disruption to the financial system and hence the cost their failure imposes on the broader economy and society as a whole.

While that is a secondary listing, it certainly underlines the unique position of Hong Kong as an international financial centre that connects the fast growing Mainland market to global investors. 4. I know some of you may have doubts that the Chinese economy is actually slowing down in face of trade dispute and deleveraging. That is true if we compare to the days when Mainland GDP was growing at double-digit every year. But let’s remember, a real growth of 6% is still a very respectable pace compared to economies around the world. And with Mainland China’s sheer size, a 6% GDP growth means adding some $ trillion nominal value to the world’s GDP in a single year. This is more than the total size of the Indonesian economy, or close to that of Australia. 5. With such economic expansion and its deepening capital markets, China continues to be a compelling investment theme for global investors. As an investment manager ourselves, we are among the first offshore players in the Mainland’s capital markets. Surely, for the past eight or nine years since we invested in the Mainland, there had been some very challenging times, such as the RMB exchange rate reform, the stock market turmoil and fear of economic hard landing. But looking through these short-term ups and downs, two unmistakable trends are consistently borne out by actual developments. The first is the progressive opening of the markets, and the second is the growing momentum of international investors’ allocation to Chinese assets.
It is easy to say that now you have to encourage consumption in Greece, Spain, Italy, Portugal, USA, etc. Who will finance this consumption? Just as banks refuse to provide new loans to overindebted customers, investors are not willing to finance increased spending of budgets. In the economics there is a saying that “there is no free lunch.” In the end someone has to pay the bill. The time has come for the developed economies to pay the bill and now there is no other choice but austerity. This is a time of painful structural reforms, revision of the generosity of social care in accordance with the possibilities of the economy. As for Macedonia, as a result of many years of prudent fiscal policies, we had room for stimulus in these few years. But this room in the medium term will be exhausted and we will have to save more. BIS central bankers’ speeches  3  Macedonian companies lend to their parent companies in the Euro area What are the expectations for the deposits in 2013? Can we expect further growth, especially of Denar deposits? Households’ saving is likely to continue at the usual growth rate of at least 10 percent per year, mostly in Denars. It is harder to predict the trend with companies. This year there were significant capital outflows in the form of dividends and loans from foreign-owned companies to their parent companies abroad.

The experience gained from the listing of these foreign companies has equipped Singapore with the necessary expertise to help companies from both mature as well as emerging markets meet their capital-raising needs. In particular, the Singapore Exchange has had a long track record of being home to the IPOs of many Southeast Asian and Chinese companies. The Singapore Exchange will be able to share their expertise with our Vietnamese friends on what are some of the areas that you should look out for, as you plan for your listing. I am also especially glad that the Singapore Exchange will be signing a memorandum of understanding (MoU) with the Hanoi Stock Trading Centre this morning. The inking of the MoU can only mean more opportunities for both our stock markets to seek greater collaboration, and I urge officials from the SGX and Hanoi STC to move beyond just the MoU document to plan for even deeper level of partnership and cooperation. I understand as well that a couple of the Vietnamese State-owned Enterprises have also made plans to explore a listing on Singapore’s bourse – these are indeed concrete demonstrations of the close synergies between our two marketplaces. The stage is now set for an enduring relationship between Vietnam and Singapore that will last for years to come. I am confident that the Vietnam-Singapore Listing Preparatory Program will be but the first of many other initiatives that will further cement the growth of Vietnamese companies in Singapore.
It is not without some pride that I recall that, in a sense, Sweden was actually something of a pioneer in explicitly focusing monetary policy, with a flexible exchange rate, on a specified target for prices. Back in 1931, after Sweden had been obliged to abandon the gold standard, its government and the central bank declared that the overriding objective of monetary policy would be the stabilisation of prices. More specifically, the finance minister of the day described the task of the central bank as that of, “using all means available, preserving the domestic purchasing power of the Swedish krona”. In this way, the Riksbank became the first central bank to declare price stabilisation as its policy norm with a floating exchange rate. The norm was based on a proposal made much earlier, in 1898, by Knut Wicksell, often regarded as Sweden’s greatest economist at the time. Wicksell’s rule for monetary policy, which stemmed from his extension of the classical quantity theory of money, was simple: “The central bank is to raise the discount rate as long as prices are rising, lower it as long as prices are falling and keep it constant when prices are stable”. In other words, price stability was to be achieved through interest policy. Although the rule applied to the price level rather than to inflation and was not forward looking, it is a clear parallel to the rules of thumb that are used today by those central banks that target inflation.

It could set in motion a complex of effects on aggregate supply and demand, on inflation, equity prices and interest rates. Just to give a few examples, let me briefly mention the following effects: First, a positive productivity shock raises the economy’s potential growth rate. It also affects aggregate demand through new, profitable investment opportunities, higher equity prices and expectations among households of higher permanent income. One question for policymakers is whether the demand effects are so powerful that they have the potential to outpace the growth of aggregate supply in the short and medium perspective. Second, there could be temporary disinflation effects at work if the increase in productivity is unexpected initially. If wages are slow to adjust, higher productivity growth lowers unit labour costs and thereby reduces price inflation. Here again there are important questions for policymakers. Should this effect be allowed to result in a temporary reduction of price inflation or unemployment? Third, an increase in the trend rate of productivity growth could also result in a higher equilibrium real interest rate, when the output gap is closed, in order to balance saving and investment. Fiscal policy and the development of public financial balances could at least partly offset this effect, as could the economy’s degree of openness. All this implies that monetary policymakers, also in Europe, could face quite a few challenges. One of them is to identify structural changes and distinguish these from cyclical variations. Another challenge is to detect the magnitude of the effects.
So much of the funding now in the Irish property market is not coming from mortgages. You give the example of global institutional investors. What is driving the overall pricing of housing, also rental accommodation and so on, is not the mortgage situation in Ireland. Those global factors will be there no matter what happens to these mortgage rates in Ireland. It’s a very important issue for the individual in terms of coping with the mortgage they face. But in terms of saying this will somehow contribute to a repricing of the value of property, I don’t think that’s how it will work. We’ve just had an election. We probably won’t have a government for some time. What economic advice would you give to any incoming government? Every six weeks when we make our monetary policy statement, the last part of our statement essentially gives the list of our advice. One thing is that we do think the European economy will be better off the more governments do to improve the functioning of the economy. There is a long list of recommendations, called the country-specific recommendations that the European Commission offers to the member countries. Ireland has a long list in terms of improving infrastructure, productivity, etc. There are many dimensions to it, but I think everyone can identify 2/4  BIS central bankers' speeches  the same list. We also say that those countries with a strong enough fiscal position can do more to raise the level of economic activity in the euro area.

All of this can be summed up with two observations and one implication. The first observation is that the resolution strategy will govern decisions on MREL. The second is that TLAC can and will be applied for G-SIBs through the setting of MREL requirements. In other words TLAC is just one particular expression of how we will set MREL for firms where, as authorities, we are likely to face no choice other than bail-in in order to continue the firm’s economic functions. The implication is that there needs to be some level of disclosure about resolution strategies and liability structures at the legal entity level. Otherwise investors will not be able to price the risks they are exposed to. The Basel Committee intends to consult on new Pillar 3 standards for this purpose by the end of this year. This is welcome. But it is welcome too that banks are starting to do more to provide this kind of information to investors. 2  2  Bail-in is used here to cover imposing losses on creditors either through use of a bail-in tool or through a bridge transaction. BIS central bankers’ speeches  Let me turn to my second theme – the relationship between setting MREL and TLAC and resolution planning. The TLAC standard describes an end-point. Beyond proposing a conformance date of 2019 at the earliest, it does not describe how the standard will be implemented and what will happen in transition.