samchain/econo-pairs-v1 huggingface dataset:
We of course are acutely aware of the importance of promoting market liquidity, especially in the early stages of our development of the CNH market. It was against this background that the HKMA has all along taken a proactive approach in seeking to strengthen the liquidity of the CNH market in Hong Kong. In June 2012, the HKMA launched a Repo facility to provide one-week funds for banks in Hong Kong as a backstop to facilitate banks’ liquidity management. However, the facility was for T+2 settlement and did not fully address the needs of the banks. In order to assist bank treasurers to better manage their liquidity, the HKMA shortened the settlement of the repo to T+1 in January 2013 and again to T+0 in July 2013. 9. Today, I am pleased to announce that, in preparation for the imminent launch of the Shanghai-Hong Kong Stock Connect, the HKMA will implement two additional  2  BIS central bankers’ speeches  measures as backstop facility to assist banks in Hong Kong in managing their RMB liquidity:  10. (a)  In addition to what the BoC HK, as the RMB Clearing Bank, is providing to the Participating Banks through intraday overdraft, the HKMA will provide an intraday Repo facility of up to RMB10 bn to banks in Hong Kong. The HKMA will charge a fee, based on the actual time used during the day, for the use of the facility.

So without further ado, let me quickly turn to the main theme of my remarks this morning: “What does it take to build a successful global hub for offshore RMB businesses?” The key to success, if I may summarise it, lies in the acronym: “PIPs”. 5. “PIPs” stands for “Policy Headroom, Infrastructure and People/Products”. Let me cover these three elements in the reverse order. For People and Products, I have said many times that for any financial centre to thrive and out-compete other centres, the crucial building block would be its people and products. It goes without saying that a world class financial centre must have the right people designing and distributing the right products that serve the needs of the financial consumers. This is an important and core component of the soft power that I have been talking about in the last few years. It is a key attribute that differentiates a global hub from the other financial centres. People and Products fall into the area in which the financial industry, including the individual firms, practitioners and industry bodies like the TMA, can and should play a dominant role. I am sure that you will agree with me  BIS central bankers’ speeches  1  that policy makers and regulators, while having the responsibility to safeguard financial stability and to accord appropriate protection to financial consumers, are not really well suited to get too involved in gauging market demand and designing financial products that would best meet the requirements of the consumers. 6.
The consideration of robustness also implies that monetary policy seeks to mitigate the risk of a build-up of financial imbalances. Hence, house price inflation and debt growth are also important for monetary policy. Norges Bank weighs the different types of risk against each other. Six years have now passed since the global economy was hard hit by the financial crisis. The Norwegian economy has fared well in the years following the financial crisis, stimulated by vigorous activity in the petroleum industry. Growth has slowed in recent years and a decline in oil investment will result in low growth for a period. Against the background of weaker growth prospects for the Norwegian economy and reduced foreign interest rates, Norges Bank lowered its forecast for the key policy rate through 2014 and reduced its key policy rate in December 2014. Chart: Money market rates for trading partners Global economic growth remains moderate, but there are wide differences across countries. The sharp fall in oil prices is positive for most of our trading partners, but is dampening activity in oil-producing countries at the same time. Growth in the US is now on a firm footing, even though developments have been slightly weaker recently. An expansionary monetary policy appears to be working and both consumption and investment have picked up. Unemployment has declined. Euro area activity is picking up, but growth remains low. Household consumption is on the rise, while business investment remains at a low level.

Therefore, key departments to the functioning of a modern central bank, such as monetary policy, economic research, banking supervision and regulation, had to be built from scratch. As we have come a sufficiently long way to remember this with a smile on the face, I would like to share with you two amusing stories I deem illustrative for the hardships of the beginning. One dates back to the autumn of 1990. Having been recently appointed at the helm of the National Bank of Romania, I held a press conference during which I stated that the banking system would operate on two tiers or two floors, with the central bank on the first floor and commercial banks on the second. The head of the institution’s commercial banking operations – the same person who would later manage Banca Comercială Română after its separation from the National Bank of Romania – took these words literally and immediately complained that he had just moved to the first floor of the building and warned me that he had no intention of moving again! 1/5  BIS central bankers' speeches  At around the same time, in the early days of my term in office as Governor, someone “encouraged” me with the words: “Welcome and good luck running an empty bank!”. Unfortunately, the trials and tribulations of the first post-communist year had practically depleted the country’s foreign exchange reserves in nine months’ time.
The same conclusion would be reached by looking at the measures required to achieve a balanced budget, which largely consist of reversing the decisions taken over the last ten years in respect of public sector wage rises, expenditure increases and the adoption of standard structural reforms which would bring Greece in line with other euro area countries. Just to give an example, if, over the last 10 years, Greek public sector wages had gone up at the same pace as inflation, and public employment had not increased, in 2010 the Greek budget deficit to GDP ratio would have been around 4 percentage points lower and the debt to GDP ratio about 30% lower.4 The key question is whether the Greek government and the Greek people are willing to implement these measures. The answer to this question largely depends on the alternative scenario, which is a default or restructuring of the public debt. A rational analysis comparing the economic, financial, social and political costs of implementing the needed adjustments, including privatisation, and the costs of a default/restructuring would conclude that the former costs are lower. A rational decision-maker would thus opt for the adjustment and, on that basis, Greece should be considered solvent and should be asked to service its debts. The second difference between debt workouts in the corporate and public sectors is that, unlike a company, a sovereign cannot be liquidated.

As you will have so many other matters to discuss, apart from the economy and the euro, you must forgive me for dedicating so much time to my own specific subjects. To conclude, I am sure these present Tertulias will, as in all the previous meetings, be successful, that the participants will enjoy themselves, and that our British friends will have very good memories of this visit to Madrid. Thank you. 2  BIS central bankers’ speeches
Two points are worth mentioning at this stage: -  First, due to the scepticism I already mentioned and for credibility reasons, it would have been damaging for the euro not to build on the credibility of the most efficient and successful participating national central banks, that had previously chosen 2% as the ceiling for their definition of price stability;  -  second, this criticism has abated recently and it is interesting to note that the definition of price stability has converged towards a level close to, if not below, 2%: in December 2003, Gordon Brown, then Chancellor of the Exchequer, announced a new inflation target for the Bank of England, based on the HICP, and set at a level of 2% for the 12-month increase; in the US, Ben Bernanke, while he was a member of the FOMC, advocated for a quantitative definition of the FED’s price objective comprised between 1 and 2% over the medium-term. The Eurosystem’s monetary policy is “medium-term” oriented What exactly are the implications of the medium-term orientation of the Eurosystem’s monetary policy strategy? The first is that the single monetary policy does not have a fixed horizon, defined once and for all ex ante, but aims, as far as possible, to take account of the “long and variable lags of monetary policy” dear to Milton Friedman.

In operational terms, this means that, in the conduct of their duties, neither the European Central Bank nor the national central banks of the Eurosystem may request or take instructions from the Community institutions, national governments or any other body. They are entirely institutionally, operationally and financially independent. Transparency and accountability are also essential for gaining credibility Naturally, the independence of these institutions requires transparency in their decisionmaking processes and accountability vis-à-vis the general public and their representatives. As regards new institutions such as the ECB, transparency is even more important for gaining credibility and building up economic agents’ confidence in the new currency. In order to establish this credibility and gain the confidence of agents, it is imperative to be understood, which in turn calls for transparency. For the sake of transparency, the Governing Council has specified and quantified its definition of price stability (inflation below but close to 2% over the medium-term). Second, the ECB has gone beyond the accountability requirements laid down by the Treaty by instituting regular testimonies by the President of the ECB before the European Parliament and regular informal meetings with the Eurogroup of Finance ministers. Another channel for transparency is constituted by the regular publication of reports on economic developments and Central Bank analysis, of the Eurosystem’s and ECB’s staff projections exercises, most prominently in the ECB’s Monthly Bulletin.
At the same time, price stability contributes to a “safe and efficient payment mechanism” and facilitates stability in the financial system in general. The question discussed is whether the central bank’s responsibility for financial stability also means that financial stability should be an objective for monetary policy. I interpret the literature as there being a great deal to indicate that financial stability should in principle be an objective not only for macroprudential policy but also for monetary policy, although it will be a practical and quantitative question to determine in each given situation how much financial stability should be considered in monetary policy decisions. 29 In principle, it would be best if monetary policy and macroprudential policy could be coordinated, but there are also relevant arguments against such coordination. 30 It is claimed that macroprudential policy and microprudential policy should be the “first line of defence” against financial stability risks and that monetary policy should focus on stabilising inflation and growth in the real economy. But given the strong links between financial stability, price stability and real economic stability, it cannot be ruled out that monetary policy sometimes needs to be used to mitigate financial stability risks. How much depends, among other  26  In the preparatory works for the Sveriges Riksbank Act, it was stated that the Riksbank, without prejudice to the price stability target, should support the goals of general economic policy with a view to maintaining a sustainable level of growth and high rate of employment.

Williams, J. C. (2009), “Heeding Daedalus: Optimal Inflation and the Zero Lower Bound,” Brookings Papers on Economic Activity, No 2, pp. 1–37. Woodford, M. (2012) “Inflations Targeting and Financial Stability,” Economic Review 2012:1, Sveriges Riksbank. BIS central bankers’ speeches  19
To be a little drastic, one can say that the task facing the central banks is to avoid ‘The Great Inflation 2.0’, and to do so at the lowest possible cost in terms of lower production and higher unemployment. The conditions are better than before I intend to stick my neck out a bit here and say that the conditions for coping with this balancing act are quite good for Sweden and at least considerably better than they were when inflation began to rise in the mid-1970s. There are several reasons for this. None of these are news, but it is still worth reminding ourselves of them. Firstly, since 1993, we have had an inflation target in the Swedish economy. During the most recent period of lastingly high inflation, the idea was that inflation would be kept down by means of the fixed exchange rate. The fixed exchange rate was expected to have a disciplinary effect on price-setting and wage-formation, as excessive inflation in relation to the rest of the world would lead to difficulties for the export industry and increased unemployment. However, as I have pointed out, this did not work very well. Expressed in economist terms, there was no credible nominal anchor in the economy, that is, a clear, quantified benchmark for price-setting and wage-formation. Today, we have one in the form of the inflation target. During the period of inflation targeting, long-term inflation expectations, in the way we can measure them, have remained fairly stable at around 2 per cent.

The European panel's responses are presented at https://www.igmchicago.org/surveys/ukraine/ and the American at https://www.igmchicago.org/surveys/ukraine-2/. The results are summarised by Vaitilingam (2022). 10 [14]  For a monetary policy decision-maker, supply shocks are more difficult to deal with than demand shocks. If inflation rises because demand has risen unexpectedly, the remedy is simple: The central bank raises the policy rate and thus suppresses both inflation and demand, thereby reducing the risk of the economy overheating. But if inflation rises as a result of a negative supply shock, the problem is more complex. If most people assume that the effect on inflation is transitory, the problem does not need to be so great. The central bank can then simply wait until inflation falls back again. However, one risk that is always present is that price impulses spread to other prices and start to affect economic agents’ expectations. These may then expect inflation to remain high, or even rise further. The signs of such second-round effects have now begun to increase in many economies. This creates a tricky balancing act for monetary policy: At the same time as one wants to maintain confidence in the inflation target and prevent inflation from becoming entrenched at a high level, one wants to avoid pursuing a policy so tight that the economy enters a recession. As we saw, this was what happened after the First World War, although the motive then was to return to the previous price level rather than bring down inflation.
Commodity prices remain high by historic standards, consistently with the strength of emerging economies, some specific supply-side elements and the depreciation of the dollar. Worth noting are the recent sharp increases in the international prices of some foodstuffs and the copper price peaking at $ per pound (figure 4). The baseline scenario in the IPoM we are presenting today assumes that some of these factors will persist over the projection scenario. In the case of copper, even if it will not be as high as today, it will exceed September’s projections, at $ and $ per pound in 2011 and 2012, respectively. The price outlook for WTI oil is also revised up from September, to $ per barrel in the two years. The baseline scenario for the international economy is good, albeit with important associated risks. We expect an average growth rate of 4.2% for the world economy over the next two years, fairly high by historic standards, but around 0.3 percentage points below the market consensus forecast. This differential is based on the effects of the financial turbulences in Europe, tighter fiscal adjustment plans in the region and the absence of a vigorous recovery of demand in developed economies. In addition, because of the inflationary pressures present in some emerging economies, it is obvious they cannot continue to grow at the same pace they did this year (table 1).

The importance of the wage setting process and efficient labour market practices was evident in the statement, issued by the European heads of government in Brussels on October 26. In this regard, the statement specifically referred to commitments made by the Italian and Spanish governments with respect to structural reforms that included important changes in their labour markets. Spain will enact “labour market changes to increase flexibility at firm level and employability of the labour force …” Italy will “reform labour legislation and in particular the dismissal rules and procedures and … review the currently fragmented unemployment benefit system …”4 In the local perspective it is relevant to mention that collective agreements are negotiated at the level of the individual firm, and that helps to ensure that wage growth is compatible with the realities of the markets where the firm sells its products. Nevertheless, various steps could be taken to increase employment or enhance productivity. These could include measures that would encourage an increased participation rate, as well as measures to facilitate part-time employment and thereby increase employment rates. Increased flexibility and productivity are also important in the public sector. Any wage increases negotiated need to be moderate, taking into account the current uncertain economic environment. They should also be backed by improvements in productivity, so that the burden on state finances is kept to a minimum and justified by enhancements in quality and quantity of services provided. A further ingredient for economic growth is the smooth functioning of the financial system.
As a matter of fact, whenever accelerated growth in credit and money aggregates occurs simultaneously with soaring asset prices and loose lending standards, increased inflation becomes very likely over the three years that follow (Roffia and Zaghini, 2007). 8 In this context, one can argue that an increase in lending with inflation prospects can be fought with a tightening of monetary policy. However, if the boom was triggered by lack of regulation or supervision, monetary policy tightening by itself could probably be ineffective – or even counterproductive – if the financial system is weakened because of excessive risk taking. Thus, financial regulation plays a major role in granting financial integrity. At the beginning, regulation focused on the strength of individual institutions. However, the tensions we are seeing now exemplify, once again, how individual fragility may quickly evolve into systemic problems. The interrelationships among financial institutions and the proper operation of the markets where liquidity is traded are essential ingredients of a market economy, but these characteristics are also the channels of financial contagion, as recently seen. So it is crucial to have a systemic vision, not only from the perspective of how the different institutions relate to each other, but also how the different types of financial and operating risks are intertwined, creating potential vulnerabilities. The Financial Stability Reports that many central banks put together periodically – including us – seek to evaluate the resiliency of the system as a whole to large disruptions, by carrying out stress tests.

Vergara, R. (2003). “El Dinero Como Indicador de Política Monetaria en Chile”. Cuadernos de Economía 40(121): 707-715. 8  BIS Review 150/2008
In a situation in which extensive repo-rate changes have very large direct effects on the CPI, I consider it to be more appropriate to focus on stabilising the CPIF around the inflation target, instead of the CPI. BIS Review 32/2010  9  However, the assessment of the majority of the Executive Board was that the lower repo-rate path was not appropriate. At the monetary policy meetings held during the course of the year, the view of several members of the Executive Board was that the effects of the very low repo-rate levels on the economy and the financial markets were uncertain and that there was therefore reason to be cautious about reducing the repo rate below 0.25 per cent. It is not easy to make reliable estimates and forecasts of potential production and resource utilisation. The Riksbank’s estimates and forecasts for potential production and hours worked are in need of improvement and development. Such development work is currently underway. In 2009, the financial crisis reduced potential production so that resource utilisation in the economy is not as low for a given level of production as before. There is no doubt, however, that resource utilisation is very low and will remain lower than normal during the forecast period (see Figure 7). 10  BIS Review 32/2010  The numerical inflation target has entailed great progress for practical monetary policy and made it possible to measure and evaluate the target fulfilment of monetary policy in a much more efficient manner than before.

However, from December, market expectations have approached the Riksbank’s forecasts (see Figure 4). So how can the gap between market expectations and the Riksbank’s repo rate forecasts in 2009 be explained? Some of the deviations may be explained, for example, by the possibility that statements on the lower bound of the repo rate were interpreted to mean that there were only upside risks for the repo rate, but this does not explain them all. A major part of the deviations thus remain to be explained. One possible explanation may be that money market participants have taken a more positive view of economic development. For example, they may have expected GDP growth and inflation to be higher in the future than stated in the Riksbank’s forecasts, and thus require a tighter monetary policy. However, this hypothesis is not supported by surveys of the expected economic development. These show that the money market participants expected both lower inflation and lower GDP growth in the period ahead than the Riksbank. 12 The market participants seem to have believed in a different reaction pattern from the Riksbank than that expressed in the repo-rate path. The disagreement among the members of the Executive Board may have contributed to this. At the monetary policy meetings in July, September, October and December, reservations against the published repo rate path were entered by members who considered that the repo rate path in 2010 should be slightly higher.