samchain/econo-pairs-v1 huggingface dataset:
Rumors abounded and the shorting of the Hong Kong dollar ahead of the weekend had become a weekly affair. In the first half of August, Hong Kong’s GDP growth for the first quarter was revised down to - 2.8%. Wall Street was down sharply. The yen fell to over 147 against the US dollar. On the approach of the long weekend in the middle of August, rumors of a devaluation of the RMB and/or the abandoning of the Hong Kong dollar’s link with the US dollar intensified, risking the creation of panic and a breakdown of confidence in the currency. Fact number five: there had been much selling pressure on the Hong Kong dollar in the first half of August. In accordance with the discipline of the currency board arrangements, the HKMA would have had to sell foreign reserves and buy Hong Kong dollars passively. This would have created a serious shortage in the Hong Kong dollar monetary base, thus sending interbank interest rates sharply higher and the stock market sharply lower. Given, however, the need to fund the budget deficit for this financial year, the opportunity was taken to switch some of our accumulated fiscal reserves held in foreign currencies back into Hong Kong dollars, leaving the monetary base and therefore interbank interest rates largely unchanged. The amount of Hong Kong dollars absorbed in this manner was large, exceeding the $ billion accumulated by the hedge funds.

The purists would say no to this, but they should really come down to earth and recognize that in modern day finance the majority of transactions are conducted electronically without the use of cash. For the effective operation of currency board arrangements, the organisation responsible for running the system has to manage the electronic interbank clearing system as well. This requires that the banks operate clearing accounts with the currency board and that the aggregate of the balances in their clearing accounts forms the crucial part of the monetary base which is subject to the monetary rule of the currency board. This puts the responsibility for the provision of liquidity to the banking system squarely on the currency board. But this arrangement need not involve any significant departure from the discipline of currency board arrangements. The important issue is how liquidity for the purpose of facilitating the clearing of interbank transactions is provided. In Hong Kong this is provided through the repurchase of debt issued by the currency board and fully backed by foreign reserves. There is therefore no departure from the discipline of currency board arrangements. The fourth accusation is that we were too late in introducing our technical measures to strengthen our currency board arrangements and that had we done so earlier we could have avoided having to intervene in the stock market. Frankly, I do not think that we could have turned around the market sentiment with just part of the package of actions.
However, the slackening in price trends is a result of many interacting factors that are partly connected with globalisation: –  Increased world trade and more operators lead to greater competition  –  Deregulation and privatisation will also mean that competition increases  –  A greater degree of specialisation and utilisation of comparative advantages (what is known as global labour reallocation) lead to increased productivity and efficiency  –  More production in typically low-wage countries leads to lower costs  All of this indicates that international price pressure should be lower during the coming years at a given point in the economic cycle. To gain a more comprehensive picture of the significance of the structural changes for prices, it may be useful to illustrate how they interact with other factors that might influence international price pressure, such as global demand and commodity prices. Over the past few years, international economic activity has been weak, which has probably contributed to the low rate of price increase. Until a year or so ago, commodity prices were also developing weakly, but since then a relatively large upturn has occurred, while manufacturing activity has improved and global demand has increased. Despite this, prices of manufactured goods have remained subdued.

A study by Catherine Mann at the Institute for International Economics shows that trade and global production accounted for 10-30 per cent of the price fall on hardware products in the United States during the 1990s. This led to growth being approximately 0.3 percentage points higher each year between 1995 and 2002 than it would otherwise have been. Today, expenditure on software is increasing at twice the rate as on hardware, and this process has scarcely begun in large areas of the economy. If prices for software also begin to fall, thanks to globalisation, the second wave of productivity gains can be even greater than the first, particularly within the services sector, which has the greatest potential. We have seen that globalisation of trade and production patterns has led to more operators, who also have lower costs, participating in the world economy. This has led to international competition becoming stiffer and prices being pushed down. Similarly, the increasing trend towards deregulation and privatisation over the past two decades has contributed to making production more efficient and raising productivity, which in turn has had a subduing effect on price trends. The question of how globalisation and structural changes may affect the future path of inflation will probably attract increasing attention in central bank circles. If, on the one hand globalisation and new  BIS Review 21/2004  3  technology have led to economies having a lower inflation propensity, it may be possible to achieve a higher level of resource utilisation without inflation accelerating.
But it is positive that their establishment on the labour market looks like it is starting to go faster. As you know, there are no guarantees in the forecasting business. It has taken a decade, but it seems as though the global economy has finally recovered enough from the after-shocks of the financial crisis to start a new chapter and that central banks in our part of the world will gradually be able to raise interest rates again. For the small Swedish economy, with its reliance on foreign trade, altogether premature or rapid rate rises would jeopardise the strong economy and development of inflation. For the Riksbank, it is a question of remaining vigilant. A prerequisite for inflation to continue to develop in line with the target is that economic activity remains strong and has an impact on price developments. Monetary policy therefore needs to remain expansionary for a while. But if everything goes as expected, the time to start normalising monetary policy will come closer. The assessment we made in February was that it is probably time to slowly start raising the repo rate during the second half of this year. But such a turnaround requires considerable caution, in my opinion. I occasionally hear somebody say that it feels wrong to have a negative policy rate when the economy is going as well as it is now. But the Riksdag has assigned the Riksbank to conduct a monetary policy that contributes to suitably low inflation.

Annual spending from the Fund is subject to a spending rule, whereby the government commits to limit spending. Over time spending should not exceed the estimated expected real return on the Fund’s investments, set at 4 per cent per year. This implies that the Fund is expected to become a permanent savings account. 4. At the outset, there was already an investment management operation in the Bank, for the foreign reserves. But when it became clear in 1997 that the Pension Fund would be growing fast, we decided to set up a separate management unit, now called Norges Bank Investment Management (NBIM). Our challenge was to build a business organisation within a traditional civil service culture. The new unit recruited investment professionals from outside the Bank as well as people from the existing reserve management operations. NBIM was explicitly defined as a business unit, which should be different from the rest of the central bank in many respects. To avoid any suspicion that NBIM would benefit from proprietary central bank information, the new unit was placed completely outside the decision-making processes in the monetary policy and financial stability area, with no access to confidential information. The fact that the Pension Fund does not invest in Norwegian markets is also important to avoid conflicts of interest: There is no direct link to our monetary policy operations. 5.
This results in a classic coordination game with multiple equilibria. Table 4 Payoffs in a two-bank game Bank 2  Bank 1  Risky  Tight  Risky Tight  Now suppose the regulator forces Bank 2 to set tight policies whenever it realises low returns. So if Bank 2 announces positive earnings, it must be because the macro state is good. But given this, Bank 1 does not want to signal low ability by playing {Tight} when it makes a bad loan since doing so would be taken by the market to imply low ability. If the spillover from Bank 2’s actions to the market’s assessment of the macro state is strong enough, {Tight, Tight} may no longer be an equilibrium. Instead, Bank 1 may play Risky. The resulting equilibrium is {Risky, Tight}. In this way, bank-specific intervention may have perverse consequences for risk-taking. Fourth, this co-ordination problem suggests systematic, across-the-system actions are needed to curtail effectively credit booms and busts. This is one dimension of macroprudential policy. To be effective, these policies need to increase the long-term cost of credit extension to banks during booms and, as importantly, to lower these costs during busts. These actions would help smooth out credit supply over the cycle. There are a variety of macro-prudential tools which could have this effect, including pro-cyclical capital and liquidity requirements, or remuneration packages that tie individual earnings more closely to long term performance (Bank of England (2009), Kashyap et al (2010), G30 (2010)).

It is fairly uncomplicated to observe business profitability and cost efficiency in a bank with the aid of measures such as return on equity and the C/I ratio. But a high return on equity and low C/I ratio is not necessarily a sign of an efficient banking sector, but can just as easily indicate weak competition and high margins. Similarly, from an economic point of view it is hazardous to place too much trust in the equity market’s valuation or a rating agency’s credit rating since these partly represent a different perspective. For example, for investors it is only positive if a bank – all other things being equal – operates in a market where competition is low and margins are high. Against this background, it is important to supplement the business analysis with an assessment of the quality and the price of the financial services provided by banks. I suppose the best indicator of the quality of a bank’s service range is how well the bank’s services fare in the competition from other banks and financial institutions. If the barriers to entry are high and there are few alternative suppliers, a high market share can hardly be taken as a sign that the bank’s service offering is particularly high quality or worth its price, even though that can of course be the case.
Eddie Yue: Hong Kong Monetary Authority’s work on market development Keynote address by Mr Eddie Yue, Deputy Chief Executive of the Hong Kong Monetary Authority, at the 2nd Asia Treasury and Trade Summit 2016 “Treasury Re-imagined”, organized by The Asset, Hong Kong, 11 May 2016. *  *  *  Daniel (Yu), distinguished guests, ladies and gentlemen: 1. Good morning. I would like to thank The Asset for hosting its Asia Treasury and Trade Summit in Hong Kong again. And, it is my great pleasure to welcome all of you to this event, in particular those who have travelled from overseas. As CFOs and treasurers, you are important users of Hong Kong’s financial services. Over the years, we have listened to and worked with many of you, not just to better serve your business needs, but also as partners to help develop Hong Kong as an international financial centre. Let me therefore start this morning by sharing with you a few examples of the HKMA’s work on market development. Some of you here today may have heard these facts before, so apologies for that, but we like to repeat the good news whenever we can! Development of Hong Kong as IFC 2. First, the promotion of renminbi business. And, I’m delighted to see that discussion of the renminbi “as a treasury currency” is high on your Summit agenda today! Indeed, Hong Kong is the largest global offshore renminbi business hub, with a liquidity pool of close to RMB900 billion, the largest outside Mainland China.

A key aspect to underline is that a potential CBDC could coexist perfectly well with physical cash, which serves an important role and for which -at least in the euro area- there is still strong demand.1 In other words, traditional cash and a CBDC might be natural partners, rather than potential substitutes for each other as they are often presented. However, before taking any major decision on the issue of a CBDC, several important questions need to be answered: What precise complementary roles would cash, bank accounts and digital coins play? Should central banks focus on securing a sound regulation that offers appropriate safeguards and leave the private sector to come up with viable alternatives? Or should we ensure the provision of a safe asset by issuing a CBDC? As you can see, when faced with a case of practical use, even one as apparently simple as this, embracing the opportunities that new technologies offer is not always crystal clear. What’s more, when approaching this topic in more detail, many questions and far-reaching implications arise, thus suggesting the need to tread cautiously in unknown territory. I refer to the myriads of design and operational aspects, such as whether this “new digital cash” should preserve all the features of traditional banknotes and coins (for instance, anonymity), or whether some of the key processes such as Know Your Customer or compliance with AML requirements should remain in the hands of the private sector for efficiency reasons.
In view of this, it was decided to impose broad-based capital account restrictions and thereby create the scope for less restrictive monetary policy than would otherwise have been feasible. As is usually the case, there were probably other options available at the time. But because I prefer to focus on the current situation and the road ahead, I would prefer not to spend time rehashing the past and ruminating about hypothetical options. Such speculation cannot change the past. Generally speaking, however, it seems to me that other options would have entailed significantly higher interest rates – initially, at least – and more risk to the exchange rate. But that doesn’t change the fact that, although the capital controls provided a certain temporary shelter, they also entail significant cost and inconvenience, which probably vary directly with the length of time the controls are in place. That cost will ultimately cut into GDP growth for the short term and reduce the level of GDP in the longer term. Understandably, then, we do not wish to maintain the capital controls a minute longer than necessary. Strictly speaking, monetary policy is not based on an inflation target at present – at least, not for the short term – as the interim goal of arresting the fall of the króna and then stabilising it has taken priority. Ultimately, of course, this policy is consistent with the attainment of the inflation target.

The absence of any particular component could reduce the effectiveness and efficiency and thus affect the viability and sustainability of the system. While the Islamic banking system has an important role in mobilizing deposits and providing financing, the Islamic capital market has an equally important role in providing a stable source of long-term funds for financing large investments and development projects as well as for capital and business expansion. The development of the Islamic capital market not only allows for a more balanced allocation of financial and economic resources within an economy but more importantly, ensures greater diversification of risks within the Islamic financial system. This enhances the resilience and robustness of the Islamic financial system to withstand financial shocks and contributes to the overall stability of the Islamic financial system. BIS Review 47/2004  1  In terms of the development of our Islamic financial system, as at June 2004, the assets mobilized by the Islamic banking sector have increased to RM89.1 billion, accounting for a market share of about 10% of the banking system. At the same time, deposits have also increased to RM64 billion, constituting a market share of 10.4% while financing mobilized amounted to RM54 billion to garner 11% of the market share. Product offerings have also increased in sophistication from the deposit products to hybrid products that are able to enhance returns to depositors. A further advancement was made with the introduction of the Islamic variable rate financing mechanism that provides an alternative to the fixed-rate financing.
The NGFS has acted quickly in looking into nature-related risks, well ahead of the financial industry. We collaborated with INSPIRE2, an independent research network, to produce reports setting out the importance of biodiversity for the macroeconomic and financial systems. These reports also made preliminary recommendations on how central banks and supervisors might align themselves with the structural transformations required to deliver a nature positive global economy. The NGFS, in the next phase of its work, will aim to equip central banks and supervisors with a common base of knowledge of nature-related risks. We will provide recommendations on how nature-related risks can be integrated into the other work programmes of the NGFS, including supervision, scenario analysis, and monetary policy. We will make nature-related risks more tractable, by focusing on nature-related risks with a nexus to financial risks. We will identify a few local case studies to work through concrete examples where the link from ecosystem degradation to climate change is clear, such as in deforestation. Finally, CAPACITY BUILDING AND TRAINING. The NGFS will provide guidance on how central banks and supervisors can build up their capabilities in climate-related and environmental risks. The importance of building capacity and expertise on climate issues within the central banking and regulatory community has been consistently espoused by the NGFS since its beginning. Our members are at different stages of progress in their ability to address climate-related and environmental risks. We want to make sure they have the support they need to make meaningful progress in addressing these risks.

in the past ten years to the level of 48% of GDP in 2017. However, despite the positive trends, the need for further increase in the total domestic savings is evident, which is a common feature of the CESEE countries. Thus the IMF analysis of May 20163 mainly indicates "insufficient" domestic savings4 in CESEE countries, i.e. the average savings rate (as a difference between gross domestic product and consumption) of about 20% of GDP, which is lower than the current investment rate, lower than the estimated optimal rate of investment (25% of GDP), as well as the rate in countries with a relatively faster process of real convergence in the past (28% of GDP). The rate of total domestic savings is particularly low in 1/3  BIS central bankers' speeches  the SEE countries, where in 2017, on average, it is 17% of GDP, including in the Republic of Macedonia where it is close to the average in the region. The relatively low domestic savings are an obstacle for stronger investment support, partly explained by the fact that, even after more than 25 years from the beginning of the transition, the level of accumulated capital per capita in most CESEE5 countries is still relatively low, corresponding to about one-third of the levels in developed European economies. In RM the capital level per capita is lower than the average of the EU-28 countries, and it equals around 24%.
Yet in spite of being the oldest, Matero has not seen any growth in modern infrastructure, let alone banking facilities. For this reason therefore, as Governor of the Central bank, it gives me tremendous pleasure to see a reputable, privately owned commercial bank taking the bold step of bringing banking services, of international standards, to the doorsteps of a community like Matero. In this regard, the opening of the Stanbic Branch today has given me enormous optimism and re-assurance that banking facilities can, indeed, be extended to ‘financially excluded’ communities, like Matero. Ladies and Gentlemen Developments, like the one we are witnessing today, must not be taken for granted nor taken lightly. I am reliably informed that this has come about as a result of the policy reforms, undertaken by the Standard Bank Group, which have culminated in Stanbic Bank Zambia being conferred with the status of a ‘Universal Bank’. By assuming this status, Stanbic Bank Zambia has been given the authority to offer banking services to all the segments of the market. For obvious reasons, this move is not only uplifting to the technological advancement and capability of the Matero community through the provision of modern banking services like the AutoBank, but also goes a long way in assisting the Bank of Zambia, as a monetary authority, to have a firm control over the implementation of monetary policy.

You would agree with me that it is quite difficult for a central bank, like ours, to implement monetary policy effectively in an environment characterised by inadequate banking facilities. It is for this reason therefore that I commend the Management of Stanbic Bank Zambia for bringing banking facilities closer to the people. In this regard, I wish to assure you that on our part we shall continue to support you in your endeavours to open more of such branches, because we firmly believe that you are making our work and that of the Government much easier. However, may I take this opportunity to advise the Management of Stanbic Zambia that if you want this branch or many of such branches you intend to open in future to be beneficial to the communities in which they operate, kindly be flexible on the requirements for opening accounts as well as lowering  BIS Review 13/2005  1  the minimum account balances to be maintained by your clients. I say so because communities like Matero and the surrounding areas comprise mainly of people who are in the informal sector. Therefore, it would be unreasonable for you to ask an unemployed prospective customer to bring a letter from their employer before an account could be opened with your branch! In other words, I strongly urge you to tailor your banking services to the needs of the community you operate in.