samchain/econo-pairs-v1 huggingface dataset:
In my opinion, we are now entering the third phase of the crisis, which banks are facing from different starting points, according to the extent to which they have been penalised in the first two phases. The basic characteristic of this phase will be the sharp slowdown in the most developed economies which will, in turn, be adversely affected by the global slowdown in lending. The recessionary tendencies are going to pose further problems for banks in the next few quarters although they will be more traditional, limited and familiar than those experienced so far. The factors which have given rise to such a dismal outlook as that described are diverse and have all interacted with one another. Let me present them now, merely so as not to bore you,  BIS Review 133/2008  3  as a chain of errors committed by all the agents that have participated in the financial system. To start with, the institutions that granted loans made mistakes, especially in the United States, where the originate-to-distribute model became widespread. In the United States, in the years preceding the summer of 2007, lenders granted mortgage loans against collateral (real estate), whose value rose ever higher, generating incentives to lend to individuals with the lowest credit quality.

Another mistake made by many institutions, in an attempt to recover past levels of profitability, was to significantly increase their levels of leverage. The rating agencies also made mistakes, of almost scandalous proportions. They surprised investors by downgrading some securities from triple AAA to junk bond status overnight. In many countries, indeed, regulators and supervisors also made mistakes, failing to limit the perverse effects of the dynamics and incentives that I have just mentioned. The weak regulation to which some financial market participants were subject, an over-complacent view of financial innovation, which failed to identify those developments that had proven themselves incapable of contributing value to the economy, and the lax interpretation of the international accounting standards in relation to the need to consolidate off-balance-sheet vehicles like conduits and SIVs, are illustrative in this respect. Finally, central banks have not been free from mistakes either. The long period of low interest rates in the United States and, albeit with some differences, in Europe and in the rest of the world too, led financial institutions, firms and households to become very highly leveraged. Although this stimulated economic growth, it also allowed the large imbalances that are now so starkly revealed to build up. This world-wide expansionary policy, the risks of which were clearly signalled by the BIS, has probably been the most important factor contributing to the present crisis.
As a result, real pay growth has ranged from minus 2% to plus 3%. But, due in no small part to the stickiness of nominal pay and its apparent insensitivity either to inflation or a very rapid fall in unemployment, domestically generated inflation pressure has remained low. A similar evolution of unemployment and pay has been seen in other advanced economies – particularly the 2  US. Indeed, the apparent disappearance of the relationship between pay and unemployment is for me the second big puzzle in advanced economies post-crisis. The first is the related puzzle of the disappearance of productivity growth which has almost certainly been responsible for some of the weakness in pay growth but that does not explain the full weakness (Chart 2). 3  Why does this matter? The Bank of England does not target unemployment, let alone pay growth. Monetary policy makers learned, painfully, around the time unemployment was last at 4.3% that monetary policy cannot in the longer run determine real things like unemployment. Attempts to do so can result in very perverse effects. Rather, they should direct their efforts to controlling nominal things like inflation. 4  1  Of the 22 quarters over 2012-2017, whole economy total (regular) wage growth fell below 1% in five (four) of them and breached 3% in one (none). 2  While some indicators of US pay growth have partially recovered (Yellen, 2017), the general picture remains one of relatively modest pay growth.

7  All speeches are available online at www.bankofengland.co.uk/speeches  7  My colleague Ben Broadbent has suggested that one effect of the crisis and perhaps of other changes in the world of work and in workers’ perceived pricing power has been to lower or remove that ‘norm’. 15  I suspect changes in workers’ perceived pricing power and perhaps their appetite for risk have been responsible for some of the behaviour of pay and employment post crisis. If this has happened, and I will come onto why it might have done in a moment, the effect could indeed have been to lower the Phillips curve. With one caveat, the policy implications of a lower Phillips curve are the same whether the driver is a lower natural rate, lower/more anchored inflation expectations, or some change in real pay increase norms net of changes in productivity growth. The evolution of unemployment and pay growth will trace the same shape of curve, but pay growth, and hence domestic inflation pressure, will be lower for any given level of unemployment. All else equal the policy maker can therefore tolerate a lower level of unemployment before worrying about domestic inflation pressure in the pipeline. The caveat, and it is a very important one, is that if the Phillips curve has been lowered by the anchoring effect of central bank credibility on inflation expectations, attempting to exploit that change might damage the central bank’s credibility and increase expected inflation, shifting the curve back up again.
Much money market activity is over the counter, potentially leading to search frictions and bargaining. Anecdotal evidence suggests that lenders typically interact directly with a small number of counterparties, perhaps because a portion of the activity is derived from costly relationship lending. These factors may contribute to imperfect competition. 18  Money market funds account for a substantial majority of take-up, and their participation is particularly responsive to rates on ON RRPs relative to those in the tri-party repo market. Government-sponsored enterprises account for the next largest share of take-up, with participation sensitive not only to market rates but also to non-price factors like their intra-month cash flow cycles. Not surprisingly, participation by banks and primary dealers tends to be more limited, because banks have access to higher-yielding IOER and primary dealers are typically net cash borrowers in the repo market. However, primary dealer take-up does increase when repo rates, particularly in the inter-dealer market, fall below the ON RRP rate. Take-up data by counterparty type, updated with a quarterly lag, are available under “Historical Data” at http://www.newyorkfed.org/markets/omo/dmm/temp.cfm. BIS central bankers’ speeches  7  quarter-end operation. Indeed, requested bids in the September 30 operation exceeded the cap by about $ billion, some bids were only partially filled, and ON RRPs were awarded at a stop-out rate of zero percent.

This move should curb growth in household debt: if customers take more loans than they can service, it is a threat to their personal well-being and the stability of banks. We believe that this move is well timed because the consumer lending market is expanding rapidly, outpacing growth in corporate lending, and we should keep retail lending under control. The average level of household debt burden for the country may seem low: it is currently roughly 10%, which means that on average, households use this share of their income to repay loans. However, when measured for borrowers only, the indicator suggests that they have to spend as much as 44% of their income on repaying loans. Therefore, we need to calculate the debt burden for each individual borrower. Development of the banking sector Last year, banks increased lending and cut interest rates on loans. Lending to the economy rose by 5.8% compared to 3.7% in 2017. In the first four months of this year, corporate lending expanded by 2.5%, whereas in the same period of the previous year this figure was 2.3%. Interest rates on loans went down most of the year until inflation risks turned to growth and the Bank of Russia raised its key rate. We are currently expecting interest rates to resume their downward trend on the back of falling inflation. Banks can further increase lending, as they have both capital and liquidity. We are introducing incentive-based regulation measures, which should encourage lending to the real sector.
These developments could have significant implications, including for financial stability, national security interests, and international cooperation. In my role as manager of the Federal Reserve’s System Open Market Account, I am looking at these issues from the vantage point of monetary policy implementation. And in my remarks today, I will discuss some key issues that digital innovation in money and payments raises for policy implementation. In particular, I will examine how digital currencies might impact interest rate control and central bank balance sheets. In the spirit of this workshop, I won’t speak to the U.S. context specifically, but rather intend to discuss conceptual issues for policy implementation across jurisdictions. And, I won’t take a position on regulation, design choices, or a preference for a private or public solution. As always, the views I express today are my own, and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.1 Private and Public Innovation I would like to start by describing two types of monetary instruments that could, in the future, be significant for policy implementation. In the private sector, a broad range of digital assets are emerging.

Currently, over 60 jurisdictions have launched faster payment services.5 In addition, central banks are building expertise and investing in technology to examine the potential applicability of CBDCs.6 Monetary Policy Implementation in An Evolving Monetary System As we consider the potential impact of this array of innovations, it is useful to start with a view into the current monetary system. For decades, central bank reserve balances have been the safest and most liquid asset, at the core of a smoothly operating financial system. Most economies operate with two-tier monetary systems, in which households and businesses hold and make payments  Regulation, supervision, and deposit insurance help keep commercial bank money safe. In turn, deposits fund growth in the economy through loans to households and businesses. And central banks provide liquidity backstops to ensure that the banking system can meet its liquidity obligations to the public. Most policy implementation frameworks around the world are designed based on this two-tiered system. In these frameworks, central banks control the aggregate supply of their liabilities and the rates at which these liabilities are remunerated, which in turn influences the market interest rates that are transmitted to the economy.7 In considering the impact on implementation frameworks of an environment including private and public digital currencies, I would like to raise two key questions that central banks might consider. First, what are the implications for the tools of interest rate control? And second, how might the central bank balance sheet adapt?
The capital can be regarded as the buffer necessary to avoid tax-payers having to bear the costs in a crisis. If one has regulated how various lenders should contribute, the need for a buffer is reduced. With these reflections, it is time for me to wind up. Not just my speech here today, but in a few days my time as a member of the Executive Board of the Riksbank. As I said, it has been thirteen very eventful years. At present the international debate is intensive and there are many tricky questions to be resolved – not least in crisis management and supervision of the financial markets. The job is still interesting. But there is a time for everything, and we all know that it is best to stop when you are still having fun. BIS central bankers’ speeches  11

It must invest to develop talent. Remuneration that is competitive is one part of the solution. Sadly, the remuneration of employees of takaful operators is not competitive. Among highly skilled employees, we estimate that those in the takaful industry earn 15% less than those in insurers. So long as this difference exists, it will not be the employer of choice for the best talent. The other part of the solution is in building skills and competencies. The industry needs to take this seriously if it wants to break new ground in realising the potential of takaful. Takaful operators must set a clear vision and culture of continuous learning and development. Programmes such as the Chartered Professional in Islamic Finance, Certified Shariah Advisor and Certified Shariah Practitioner play an important role in elevating the technical and ethical standards of the takaful workforce. The industry needs to get behind these standards and invest in upskilling employees across all levels, starting with those in key senior roles. This can take the form of sponsorships for professional qualifications, alignment of incentive systems and development pathways for staff. Agents are also an important component of the takaful eco system. Many of the imperatives that I mentioned earlier are also applicable to them. In particular, professionalising the agency force is a priority. The life insurance industry association is already taking steps to require agents to be accredited by the Financial Accreditation Agency. I hope to see MTA doing the same, and being proactive in providing the support and resources for its implementation.
The more we can rely on risk-focused supervision and ongoing surveillance informed by periodic stress tests, the less we need to design one-size-fits-all rules and regulations that seek to cover all risks. Outcome-focused regulation and minimising compliance burden The third aspect of smart regulation is to focus on desired outcomes. This means articulating and communicating clearly the desired outcomes of regulation and allowing financial BIS central bankers’ speeches  3  institutions the latitude to achieve these outcomes in ways that make business sense and minimise compliance burden. Consultation on proposed rules and even co-creation of new rules together with industry is therefore an important aspect of MAS’ regulatory approach. •  Consultation helps MAS better understand the likely impact of new regulation and how it might best be implemented. •  By involving industry and stakeholders in co-creating regulatory requirements, we are able to minimise unintended consequences and foster better industry understanding and support. Singapore as an Asian insurance hub Even as we strengthen and update our regulation and supervision of the insurance industry, MAS has been promoting Singapore’s development as an Asian insurance hub. Emerging Asia as an insurance growth market The demand for insurance services is growing rapidly in Emerging Asia. For a long time, insurance growth lagged economic growth in Emerging Asia. But this is changing, and changing fast. •  Munich Re projects that Asia will account for 40% of the global insurance market by 2020.

This is almost double the 7 percent job loss on the mainland from the employment peak to its trough. Furthermore, the recession in Puerto Rico has lasted about five years – three times as long as the mainland downturn. The recovery has also lagged that of the mainland. While the mainland’s economy began to recover in mid-2009, Puerto Rico’s economy continued to decline for another year. But, since mid-2010 there have been promising signs: Recently released revisions suggest that job growth on the island, while still very weak, improved modestly since last summer. And most of the weakness since then has not been broad-based, but instead concentrated in construction and manufacturing. The unemployment rate has come down by a full percentage point since its peak. However, at just over 16 percent, it remains unacceptably high. Inflation generally remains subdued on the Commonwealth – although there has been some recent volatility. After a period of falling prices in 2009, inflation picked up in December 2009 with annualized rates of around 4 percent for a few months – with medical care a key driver for these increases. Since June 2010, reported inflation rates have reverted to a range  4  BIS central bankers’ speeches  between 1 percent and 2 percent. However, the rise in food and energy prices is likely to push inflation somewhat higher over the next few months.
The region’s equity markets account for about 40% of global equity market capitalisation, doubling its share over the last 20 years; [5] The growth of Asia’s bond markets has been phenomenal, with annual issuance volume rising 9-fold [6] in 20 years, and accounts for about a quarter of annual global bond issuance volumes today; https://www.mas.gov.sg/news/speeches/2021/riding-the-growth-momentum-in-asia  2/11  12/02/2021  "Riding the Growth Momentum in Asia" – Keynote Speech by Ms Jacqueline Loh, Deputy Managing Director (Markets & Development), …  Capital inflows to Asian equity and bond markets are expected to continue at a strong pace as the weightage of Asian securities in benchmark indexes rises further, reflecting Asia’s rising economic importance; Asian wealth is also expanding at a faster rate, with assets under management growing at 10% compound annual growth rate in the past 5 years, outpacing the 5 – 6% growth in Europe and North America [7] ; and Based on the BIS’ FX and OTC derivatives survey in 2019, Asia is home to three out of five top FX centres by volume today. [8] 9. Singapore, as a key financial centre in Asia, plays a critical role in connecting global markets and supporting Asia’s development. Asset managers in Singapore have facilitated a good portion of investment flows in Asia. In 2019, assets under management (AUM) in Singapore grew 16% to reach $ trillion, with 76% of the AUM originating from outside of Singapore, and 69% of AUM being invested into the Asia Pacific region [9] .

This reality was starkly demonstrated during the Asian Financial Crisis in 1997/98, where the emerging Asian economies were at the mercy of “original sin”. With the relatively cheaper dollar being the vehicle currency of the world, these economies became reliant on the dollar for its borrowings, despite proceeds being largely in local currency. The corresponding currency mismatch, evident during the AFC, made these economies vulnerable to shifts in capital flows. The impact of sudden stops were amplified, causing the currencies to devalue and the cost of servicing the external debt to escalate, leading to a vicious cycle of default and instability. Capital flows to the region went from a USD93 billion inflow in 1996 to a USD12 billion outflow in 1997. As a consequence, growth of the economies in this region contracted between a range of 16% and 10%, a big contrast to the robust growth of 7% in the period before 1998. Since then, emerging Asian economies have learnt their lesson. The reliance on external financing was reduced. Sources of domestic financing were diversified through the development of the domestic bond market. Regional bond markets have expanded significantly. The region has replaced foreign currency borrowings with local currencies and addressed the inherent weaknesses in currency mis-matches in funding. However, there are unintended repercussions. An open and well-developed bond market attracts non-resident participation and the diversity of market players is said to enhance market liquidity. However, we have discovered that beyond a certain threshold the presence of non-residents participation is a source of instability.
Krzysztof Rybiński: Monetary policy challenges resulting from the rapid credit growth in the CEE Panel discussion by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at the National Bank of Poland International Conference of Central Bankers and Economic Educators “Monetary Policy Challenges Resulting from the Rapid Credit Growth in Converging Economies”, Warsaw, 23 November 2007. *  *  *  Ladies and Gentlemen, In recent years we have witnessed a rapid growth of credit in CEE countries. Today, I would like to focus on globalisation as one of the main causes of such development. First, I will explain how globalisation contributed to recent credit growth in the CEE and then I will discuss what could be the possible consequences for the monetary policy of vanishing globalization “tail wind” in the nearest future. To start with, let us define the term globalisation, as its meaning is so broad, that when it is referred to in a discussion, various people understand various things. One of the definitions of globalisation is provided by the International Monetary Fund 1 , where it is construed as “the growing interdependence (integration) of national economies, in particular as a result of the growing international trade and financial flows”. Moreover, an element of globalisation that is worth mentioning is the fast flow of information and knowledge, which is the driving force behind globalisation processes. One should keep in mind that globalisation is not a completely new phenomenon.

Since 2003 major stock exchange indexes in CEE increased on average by almost 300 percent. While part of this asset price and credit growth may be explained by structural factors often referred to as “convergence”, the observed rates of growth are clearly unsustainable and they contribute to economic imbalances. With the benefit of the hindsight one could argue that monetary policy in the last few years did not properly take into account the possibility that prolonged period of historically low interest rates may contribute to asset bubbles and hence contribute to greater inflation  1 2  See IMF (2000) Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovenia, Slovakia. BIS Review 137/2007  1  volatility in the future. As argued by Rogoff (2006) when faced with a tail wind monetary authorities in both developed and developing world should have temporarily lowered the inflation target rather that reduce interest rates too much for too long. But there is another issue. It seems that globalisation tail wind is reversing these days and that in the coming few years central banks can face “globalisation headwind” amid rising food and energy prices. 1. Agflation is the rise of inflation due to increase of food prices. In recent months we have witnessed a significant increase of food prices, grain and oilseeds being the leaders. Prices of food products on international markets has risen by almost 40 per cent within last two years and prices of grain and oil seeds has almost doubled within this period.