samchain/econo-pairs-v1 huggingface dataset:
Meanwhile inflation on our inflation target measure has also averaged some 2¾% over the past seven or eight years. Helped by the dampening effect on UK inflation of the weakness of the euro against sterling, we have been below the 2½% target now for the past year and a half, and currently - on the standard HICP measure - we have the lowest rate of inflation in Europe at around 1%. Our problem in the UK is the imbalance within the overall economy between those sectors that are competing with producers in the Eurozone, who are under considerable pressure, and the rest of the economy, which is doing relatively well. Believe me, we are very conscious of the desirability of BIS Review 92/2000  2  exchange rate stability with our partners in the single market - even though we recognise that membership of the euro provides only nominal, rather than real, exchange rate certainty, and is, of course, limited to the Eurozone. Why then do we hesitate? The answer - in terms of the economics of the euro - it seems to me - and here I differ from Jean-Claude - is quite straightforward - not a bit paradoxical or bizarre! It is because to join the euro we would have to live with the single monetary policy. It may be that in time we could expect to do so relatively comfortably.

But had we joined at the outset the presumption must be that over the past two years we would have lived with both a lower exchange rate and lower interest rates during a period when we have in any case been operating close to productive capacity and growing at above trend. The likelihood therefore is that we would then have experienced something of an inflationary boom - as they have, for example, in Ireland though I am not sure one can generalise from the Irish experience. The subsequent weakening of the euro since the beginning of last year has not made things any easier for us. Just as, I suggested earlier, the euro is substantially undervalued in terms of the medium-term “fundamentals”, so in the same terms sterling is on most calculations substantially overvalued against the euro. To lower sterling to a more sustainable level in present conditions would again require an easing of monetary policy which would destabilise our overall domestic economy; and this in turn would tend to set in train a process that would lock in a subsequent real UK exchange rate appreciation within the Eurozone (albeit from an initially less uncompetitive level). That might help reduce sectoral imbalances in the short term, only for them to re-emerge. And in the meantime the whole of the economy would have been exposed to accelerating inflation, which we would be powerless to address through national monetary policy.
I trust that in taking part in the competition you have been able to find out more about what we do at the ECB, why we do it, and how our monetary policy works. It seems obvious that you should know what we do at the ECB or what people do in their national central banks. But as a matter of fact, if you do polls, you would be surprised by the amount of confusion that people have. For example, lots of people, about one-third, think that central banks are like other banks, that they are by and large not very different from what other banks do. Now, you will be the selected category that will know that the ECB is a central bank and that central banks are different from banks. And even more importantly, through this exercise, you actually got to have, at a very young age, a European perspective. You understood what is still really missing from lots of people, who still think in terms of national borders. It is very important, of course, but it is not the only reality that we are living through. In fact, the European perspective becomes much more important as time passes. Why is that? Well, because there are many challenges that are in fact supranational by their very nature. That is to say, you can’t really respond to these challenges, and you can’t really address the problems at national level if they are supranational.

We should be the ones to be thankful to you. Finally, let me express a special “thank you” to the teachers here for making this event happen, and for the wonderful guidance and support you have given to your students. Let me also add a “thank you” to some people who are not here, who are your families, for the support they must have given to you to be able to reach such an achievement today. You are very lucky to be so well taught – even if you might not have realised it; or even if your teachers might not be aware of how much good they have given to you; or even if your families are not aware of how much good they do to their children. It just comes with being a father or a mother. So again, let me congratulate you and congratulate everyone who has been involved in your success. Let’s now open our discussion. Thank you. 2/2  BIS central bankers' speeches
Nonetheless, the real exchange rate is still high in historical terms. There is no doubt that the tight monetary stance has been crucial in maintaining the relatively stable exchange rate over the past year or so. BIS Review 60/2007  3  To fight the overheating of the economy that was brought about by increased investment in the aluminium and power sectors and changes in the domestic capital markets, the Central Bank was forced to raise its policy interest rate, as I mentioned earlier, above the prevailing level in other industrialised countries. In a climate of excess liquidity, historically very low global interest rates and risk-seeking investors, it was only to be expected that investors would notice high-yield instruments in Icelandic currency. So no one need have been surprised when the first króna-denominated bonds, known as glacier bonds, were issued in the global market in autumn 2005. Issuance was driven by carry trades and global investors’ search for yields, and partly also by the demand for credit in Iceland. Despite the great deal of information that is generally available about the economic position and outlook in Iceland, and the Central Bank’s very candid appraisal of the exchange rate of the króna in autumn 2005, which I have already described, it seems certain that many investors in glacier bonds, at least during the first months of issuance, had not examined the potential risks properly.

The Bank’s capital was also boosted. The main rationale for increasing the reserves and capital was to strengthen the Bank in performing its functions in a much expanded financial sector, and to address comments from rating agencies and others about the Bank’s inadequate foreign liquidity relative to Iceland’s large foreign debts, which are overwhelmingly in the private sector. There was no other motive behind boosting the reserves and the Central Bank has underlined the importance of not creating moral hazard. Unease in the markets lasted until mid-2006, when it calmed down significantly. By then, the króna had depreciated by one-quarter and around mid-year the real exchange rate was close to the twentyfive-year average. In historical terms it was much more normal than in the second half of 2005, i.e. before the depreciation in the first half of last year. This is an important fact to bear in mind, i.e. that the króna depreciated from an unsustainable and far higher real exchange rate than was compatible with external balance of the economy. The change was actually normal and necessary, and formed part of the pressing external adjustment of the economy. Since the middle of last year, the króna has been fairly stable. It has fluctuated within a relatively narrow corridor which it has only moved beyond in a few exceptional cases. So far this year it has strengthened. Since the beginning of 2007 the nominal exchange rate has on average been 14% weaker than the average for the last quarter of 2005.
However, it must be noted that the economy desires much lower lending rates than so far recorded to make credit affordable and effectively contribute to expansion of economic activity. The external sector has continued to score remarkable improvement as lately reflected in a the resilience of the Kwacha against major foreign currencies, and the country posting in 2006, an estimated overall balance of payments surplus of US $ million compared with a deficit of US $ million in 2005. For instance, the Kwacha appreciated by 12.0% against the US dollar while the local currency gained by 10.4% against the South African Rand during the period end-December 2006 to 21st September 2007. This improvement largely occurred due to increased export, which mainly arose from continued high copper prices and complimentary higher export volumes coupled with the buoyant growth in non-traditional export earnings. The maintenance of an appropriate monetary policy, in the wake of a higher than expected inflation outcome in the first quarter of the year, also contributed to the resilience of the Kwacha. The developments in the Kwacha should not only enhance competitiveness of the country’s exports, particularly the non-traditional exports but should overall have a positive bearing on inflation developments in the coming months. Esteemed colleagues, the financial sector has continued to enjoy stability and growth this year, characterised by improved banking services and emergence of new products. The overall financial condition and performance of the banking sector has been assessed as satisfactory.

Paul Tucker: A few remarks on current monetary policy in a rebalancing economy Speech by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at The Joint 1900/City Club Lunch, London, 22 November 2011. *  *  *  The outlook for economic activity has deteriorated over the past few months. The MPC has responded with a further round of quantitative easing to underpin demand, and so reduce the chance of inflation undershooting our target in the medium term. Monetary credibility: accommodating the price level shocks Our ability to provide and sustain that stimulus depends absolutely on the credibility of our commitment to the 2% inflation target. If our credibility were to slip and medium-term inflation expectations were to rise, we would have to run with a tighter monetary stance than otherwise in order to put the genie back into the bottle. The Committee’s most important judgment over the past year or so has, accordingly, been that the elevated rate of inflation, now about 5%, is temporary. We have had conviction in that judgment because of the observable upward impulses to the price level from sterling’s depreciation, the VAT increase, and the rise in commodity prices. There is occasionally a rather odd debate about whether the MPC could have avoided the consequent increase in inflation. Big picture, the answer is that we could have done, but we chose not to. We have, in effect, accommodated something like half of the cumulative impulse to the price level.
Zeti Akhtar Aziz: The Malaysian banking industry reinvention and transformation Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the 11th Malaysian Banking Summit "The Malaysian Banking Industry Reinvention and Transformation", Kuala Lumpur, 19 July 2007. *  *  *  In this recent decade, the Malaysian banking sector has been significantly transformed and reinvented. The restructuring, consolidation and rationalisation efforts that were undertaken in the banking sector have placed the financial sector on a stronger foundation. This decade has also been a period of favourable performance and increased resilience. This has been achieved with the successful integration of business processes and the redeployment of resources to support new areas of growth. Financial reforms have also changed the environment. Progressive deregulation and liberalization have increased the flexibility to financial institutions, while also resulting in new business opportunities and increased competition. These developments have also further strengthened the incentives for improved performance. Significant structural changes during this period have also reshaped the landscape. The introduction of capital market intermediaries, investment banks, an increasing presence of new international players in Islamic finance, and a significantly more developed bond market, has resulted in a significantly more diversified financial system. The resulting payoffs for the financial system, and the economy generally, have clearly been positive. Today, the financial sector has evolved from being an enabler of growth to become an important source of growth in its own right.

Going forward, the changes in the global economy and international financial landscape will continue to accelerate beyond expectations. The ability of financial institutions to remain relevant in the future will depend on the actions that are taken now in the current environment. The leadership of the industry will be instrumental in charting the future growth path and cultivating a performance culture that will steer financial institutions towards continued success. There therefore needs to be an awareness of the emerging cyclical and structural forces that will impact the economy as well as their linkages with the banking industry , to anticipate new developments and opportunities, and most importantly, to be equipped to respond to the new opportunities and to remain competitive and relevant. The challenge for banking institutions is in being able to balance between demands of the immediate term with a longer term outlook and how this would feed into the organisation's continuous renewal and transformation process. On that note, I wish you a successful Seminar. 6  BIS Review 83/2007
Conventionally, in the framework of the Capital Asset Pricing Model, ‘alpha’ would refer to excess riskadjusted return (a nice thing if you can get it!). In practice, the term seems to be deployed rather loosely, being used variously to cover allocations to assets whose returns have in the past been relatively uncorrelated with a fund’s liabilities; leveraged – that is to say, risk-enhancing – plays across almost any asset class; and giving greater freedom to fund managers. For pension funds, one motivation has probably been to diversify asset portfolios, perhaps evidenced by bigger allocations to private equity, commodities etc. Another motivation, both here and overseas, seems to be to try to close deficits partly by earning high investment returns on some proportion of their asset portfolios. Cast in that light, it appears to be part of the broader ‘search for yield’, which has been offered by some as contributing over the past couple of years to the compression in credit spreads and other market-based indicators of risk, such as the price of options on most asset classes. Two responses to this have circulated amongst market participants, both intermediaries and asset managers. One is that falls in implied risk premia truly have reflected a reduction in risk. The other is that, while that story might hold up to a point, risk has been under-priced. It is certainly plausible that structural change has caused risk to decline somewhat over the past decade or so. First, monetary policy regimes have become more credible.

This phenomenon has gained some interest in international media over the last couple of years. Let me give you some figures: The value of cash in circulation in relation to GDP has decreased steadily from approximately 10 per cent in 1950 to around 1.5 per cent today. Over the past decade even the nominal amount of cash in circulation has decreased, which is quite unique. The decrease has been substantial, between the peak in 2007 to 2016 the number of outstanding notes and coins decreased by more than a third. Most of this * I would like to thank Erik Lenntorp for his help in writing this text  1 [4]  decline has taken place in the last two to three years, driven partly by changing consumer habits, partly by our ongoing changeover of banknotes and coins. Value of banknotes and coins in circulation SEK billons (annual average)  Cash in Circulation/GDP  120  12,0%  100  10,0%  80  8,0%  60  6,0%  40  4,0%  20  2,0%  0  0,0% 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Nominal value (SEK bn, left scale) Value in relation to GDP (per cent, right scale)  Note: Banks’ holdings are excluded. Sources: Statistics Sweden and Sveriges Riksbank. Although there are many drivers explaining the move from cash to electronic payments, I would like to highlight two actions by the Riksbank.
But change and development are also linked to new risks that need to be managed by governments and authorities. I have today spoken about some of the changes and the developments that have taken place in the financial system in recent decades, and what consequences they have for the Riksbank’s different fields of operation: payments, monetary policy and financial stability. Changes in the payment market is very rapid. Many of them benefit households and companies as they simplify payments. But changes also create new risks. For the Riksbank, this has entailed developing the systems the banks use to make payments to one another. The new RIX-INST will offer instant payments 24/7. But perhaps of greater interest to ordinary citizens is that we are also working on supplementing cash with ‘digital’ cash – a so-called e-krona. The financial system has become more integrated – and risky. An increasingly rapid integration of the financial markets has led to financial capital being able to move rapidly and more freely between different countries. This has led to monetary policy becoming more dependent on international developments and less independent. National financial market policy has also become more restricted. Avoiding financial crises therefore requires more cooperation at a supranational level, which indicates for instance that Sweden should join the Banking Union. To enable the Riksbank to manage its tasks and deal with the challenges offered by the changes on the financial markets, the monetary policy tools need to be fitfor-purpose and flexible.

Indeed each of these elements could be hotly debated, and doubtless will be if we proceed to a consultation. For example, what should the “x” in £ be? On the one hand it would be good to have as many firms as possible benefit – but on the other hand, as “x” gets higher the scope to simplify will probably diminish. And to give you a sense of the distribution, out of the PRA’s current population of 110 UK deposit-takers a cut-off of £ would capture 48 firms, £ 78 firms, £ 84 firms, £ 91 firms and so on. Of course in thinking about these thresholds one immediately runs into two issues. First, the barriers to growth problem – by creating a new step in the regime we might add to the difficulty of growing. One solution to this could be to make the simple regime optional – firms that have no great ambitions to grow could opt in, while those who want to become large and prefer to get to grips with the whole regime early could opt out. Second, those firms who don’t meet the definition might feel hard done by and lobby against it, or lobby for other changes which make the overall regime less strong. There is no avoiding this, other than to appeal to the greater good. The second design question is how to simplify. There are two main options, which are not mutually exclusive: replace existing requirements with simpler versions; and/or narrow the set of applicable requirements.
Philipp Hildebrand: Lessons from the crisis for global financial market infrastructure Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Zermatt Symposium, Avenir suisse, Zermatt, 25 August 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The financial market infrastructure, in other words, the systems for trading, clearing and settling payments and financial instruments, is essential for the operation of the financial system. Thus far in the financial crisis, financial market infrastructure has stood up well overall and helped to prevent the existing uncertainty in the financial system from becoming even greater. This holds true both for payment and settlement systems in Switzerland and for the global financial market infrastructure. However, time and again, it becomes apparent that the infrastructure for clearing and settling transactions is not keeping up with rapidly growing financial markets. In recent years, this has been most obvious in the OTC derivatives market. Pressured by supervisory authorities and central banks, market participants are now developing safer and more efficient clearing and settlement arrangements for OTC derivatives. These efforts include the establishment of central counterparties, which facilitate market participants’ risk management, promote market transparency and reduce the complexity of the financial system. To the extent that the market infrastructure reduces the interconnections between individual financial institutions, it contributes to the long-term strategy aimed at finding ways of liquidating large and complex financial institutions in an orderly way.

But it is testimony to the strong credentials that Carney brought to these jobs: •  a solid academic grounding – with a PhD in Economics from Oxford University;  •  extensive experience in the private sector – having spent more than a decade at Goldman Sachs;  •  a background in public policy – working on a variety of economic issues at the Canadian Department of Finance; and  •  most important, a commitment to serve the larger good of society. •  Carney’s topic today is The Future of Financial Reform. He is uniquely well placed to talk about this, having lived and breathed financial reforms in the aftermath of the Crisis, especially as the Chairman of the Financial Stability Board. •  Under Carney’s leadership, the FSB has worked intensely to correct the fault lines that led to the Global Financial Crisis. •  The FSB, in partnership with various standard setting bodies, has presided over perhaps one of the boldest and most far-reaching set of regulatory reforms in recent memory. •  We look forward to hearing from Carney the progress and implications of that work, the new risks emerging on the financial horizon, and the forward agenda of the FSB. I have had the pleasure and privilege of working with Mark at many international meetings over the last three-and-a-half years, at the BIS, the FSB, and the IMF. There are many smart central bankers on the international circuit. There are also many sharp financial regulators.