samchain/econo-pairs-v1 huggingface dataset:
G7 Current Account Imbalance, Sustainability and Adjustment, NBER y Chicago University Press. Gorton, G. (1988), “Banking Panics and Business Cycles”, Oxford Economic Papers, 40, pp. 751-81. Gourinchas, O. and H. Rey (2007), “From World Banker to World Venture Capitalist: The US External Adjustment and the Exorbitant Privilege”, in Clarida, R. (ed.) G7 Current Account Imbalance, Sustainability and Adjustment, NBER y Chicago University Press. Hausmann, R. and F. Sturzenegger (2006), “The Implications of Dark Matter for Assessing the US External Imbalance”, CID Working Paper No. 137, Harvard University. Muellbauer, J. (2007), ‘Housing, Credit and Consumer Expenditure’, presented at Housing, Housing Finance, and Monetary Policy, organized by the Federal Reserve Bank of Kansas City, Jackson Hole, WY. Laxton, D. and G. M. Milesi-Ferretti (2005), “How Will Global Imbalances Adjust?”, in World Economic Outlook, Appendix 1.2, International Monetary Fund. Obstfeld, M. and K. Rogoff (2007), “The Unsustainable Current Account Revisited”, in Clarida, R. (ed.) G7 Current Account Imbalance, Sustainability and Adjustment, NBER and Chicago University Press. Terrones, M. (2004), “The Global House Price Boom”, in World Economic Outlook, chapter II, International Monetary Fund. 8  BIS Review 124/2008  Figure 1 Current Account by regions (% of world GDP) 2 1 0 -1 -2 90  92  94  US  96  98  00  Japan  Euro area  02  04  06  Rest of the world  Source: International Monetary Fund.

Figure 4 Mortgage failure in U.S.  Mortage deliquency  Mortage in foreclosure process  (% of total credit)  (% of total credit)  8  21  6  14  4 3 2  4  7  2  0  98  00 Total Prime  10  02  04  06  Subprime  08  1 0  98  00 Total Prime  02  04  06  08  Subprime  BIS Review 124/2008  Figure 5 Monetary Policy rates in G3 (percentage) 7 6 5 4 3 2 1 0 01  02  03  04  US  05  06  EU  07  08  Japan  Source: Bloomberg. Figure 6 Spreads between LIBOR and Overnight Index Swaps (OIS) (basis points) 160  Spread Libor/OIS 1 month Spread Libor/OIS 3 months Spread Libor/OIS 6 months  140 120 100 80 60 40 20 0 -20 Jan.07  Apr.07  Jul.07  Oct.07  Jan.08  May.08  Ago.08  Source: Bloomberg. BIS Review 124/2008  11  Figure 7 Real interest rates (percentage) 6 5 4 3 2 1 0 -1  92  93  94  95  96  97  98  99  US (1)  00  01  02  03  04  05  06  07  08  OECD (2)  (1) 10 year nominal bond return, minus same period expected inflation.
Although during the 2008 MMF run, investors also fled from prime to government MMFs, the characteristics of the run differed substantially: outflows were large but quickly reverted following the guarantee; they largely occurred across—and not within—fund families as investors became wary of particular counterparties; and investors moved to the safest sub-segment of the government MMF industry, that is, funds investing only in Treasuries and Treasury-backed repos. 19 These contrasts further illustrate a difference between investors’ demand for money-like assets in normal times, when regulation changes, and their demand for safety in non-normal times. Public sector provision of money-like assets There is a view that regulation and supervision alone are not sufficient to fully mitigate the financial stability risks associated with private maturity and liquidity transformation, and thus, the official sector should consider providing more money-like assets.20 The argument is that when the official sector increases its supply of money-like assets, it reduces the convenience yield on very short-term securities, thereby weakening the private sector’s incentives to create short-term runnable securities.21 Some recent market pricing helps to illustrate this characteristic.

BIS Review 59/2008  3  In relation to this, Malaysia has taken a three-prong strategic initiative to promote greater mutual respect of the Shariah views. The first is to recognise the principle of mutual respect in Shariah opinions issued in other jurisdictions by a recognized Shariah committee for transactions undertaken in Malaysia. In addition to the key role of a centralized Shariah Advisory Council as the reference point for all Shariah matters in Islamic finance, Malaysia welcomes Shariah rulings by other Shariah committees that are deemed to be deduced through generally accepted rigorous principles, processes and rules. The second initiative is to have strong resource foundation supported by a pool of qualified and competent Shariah talent, as well as to accord more emphasis on extensive Shariah research in Islamic finance. Given the rapid global growth of Islamic finance, there is an urgent need to meet the talent demand for Shariah scholars with strong interest in the strategic development of the Islamic finance industry. From the supply side, the International Centre for Education in Islamic Finance (INCEIF) established in 2006 has made significant progress with more than 1000 registered students in its professional Islamic finance certification. It also has 28 PhD students and has recently launched a Masters Programme in Islamic finance. The Islamic Banking and Finance Institute Malaysia (IBFIM) also offers a structured, modular training solutions for Shariah advisers focusing on practical and operational aspects of Islamic banking and takaful.
There are now no more “Banking” or “Note Issuing” departments as first so clearly expounded in Bagehot’s “Lombard Street” written in 1873. It is sad when one has to move away from what has become an institution of central banking, but we have to move with the time, as so many central banks have had to do in the past decade. Work on reorganising the management side is now fully complete and we are working on reorganising the departments and its work system which will take about another two years. We have of course over the last two years been developing control over the money market. Developing the debt market and improving our supervision examination capabilities. We can truly say that we have very good information in the form of database daily on the money markets in the country and have developed the instrument to fairly effectively control offshore activities. In terms of the debt market, we have developed a government bond market and a yield curve, and our next move is in the area of the private sector debt instruments which we have formally formulated into project, using A T Kearney’s methodology to execute our plan. In the area of examination and supervision, we have now finalised a system where we train and with the assistance of outside authorities certify our supervisors to be of high and uniform-standard apart from changing the method of supervision from individual-based to one of approval-by-peer-groups comprising a supervision and examination committee inside the central bank.

This means having an effective regime against: •  market misconduct and misdemeanours; and  •  illicit finance, namely money laundering and terrorism financing. MAS is stepping up enforcement action against misconduct such as insider trading, false trading and front running by individuals and traders in the securities market. •  We have sought criminal actions or higher civil penalties to send the right deterrent message. •  In April last year, MAS imposed a civil penalty of close to $ million for insider trading – the highest quantum in a single case so far. BIS central bankers’ speeches  5  When it comes to anti-money laundering and countering the financing of terrorism (AML/CFT), the rules are strict and in line with international standards. Financial institutions must: •  know their customers;  •  assess the risks and perform additional due diligence where the risks are higher;  •  monitor transactions on an ongoing basis and report any suspicious activities. Supervision of financial institutions is rigorous. •  In recent years, MAS has stepped up its onsite supervision of AML/CFT controls – increasing the number of inspections by six-fold. •  This is resource-intensive business: each AML/CFT inspection of a bank takes about 4–8 weeks and involves 4–6 supervisors. We have now set up a dedicated AML Department.
So, even if the proposals of the Riksbank Inquiry were to be realised, there would be nothing to prevent shops and other establishments from refusing to accept cash. Neither is there any way to induce consumers to use cash. This development seems to be steered at least as much by demand as by supply. 8 In other words, the tendencies that led us to start our analysis of the e-krona are continuing. And neither is the Riksbank alone in analysing this issue. Many other central banks are expending resources in investigating digital central bank money and a number have already conducted experiments or developed pilot versions. 9 The Riksbank has met with many other central banks, politicians with responsibility in Sweden and representatives of the private sector. Reactions have varied from great enthusiasm to great scepticism. The banking sector in particular often argues that an e-krona is not needed and that launching one would be an intrusion into the private sector. But the Riksbank’s presence on the market and competition with the private sector’s payment services are actually nothing new. When private banknotes were first issued in the 1830s, the Riksbank had already been active in the issuance of banknotes for over 100 years. 10 The state started Postgirot in the mid-1920s to secure a national payment system, over 30 years before the private banks got started with Bankgirot.

In collaboration with other parties in society, we need to discuss which characteristics should be prioritised for an e-krona and make costbenefit analyses of various alternative solutions to the problems we see that the e-krona could solve. For example, if we conclude that the e-krona is needed for contingency purposes, this may lead to characteristics such as offline functions being prioritised, while other characteristics may be prioritised if other aspects turn out to be more important. As the payment market is an infrastructure that is fundamental for Sweden’s economy to function, questions of this type must ultimately be determined by our legislators in the Riksdag. In our talks with agencies that make state disbursements, we have noticed that these could be rationalised with the help of an ekrona. It is possible that the best route would be to build the e-krona together with others. The Riksbank also intends to review the legislative amendments that may need to be implemented to provide us with a clear mandate in the issue. If the e-krona is to be realised, I believe that the best solution would be for the Riksbank to provide the e-krona via our balance sheet but that the private sector then be involved in its distribution. Private companies are better at handling customer contacts and finding the tailor-made solutions that the general public demands.
Clearly more stringent capital requirements on banks will be part of any new regulatory framework. I believe that moving capital requirements on banks is a very useful tool to work alongside monetary policy in achieving a stable economic environment. But there are other tools such as time-varying liquidity standards or limits on loan-to-value ratios on secured lending that could be used to limit the growth of credit over the cycle. However, it is not my role as a member of the MPC to comment on the exact design of macro-prudential instruments. But I do believe there is a strong case for having monetary policy tools – which for most of the time means the level of interest rates – set to achieve stability in nominal conditions; which means that they are focused on inflation. Using the interest rate as a tool to maintain the stability of the banking system strikes me as a strange assignment of policy tools to targets. Changes in interest rates have an uncertain impact on financial stability; often it would be unclear in which direction to move interest rates to help make the banking sector more robust. But in the UK changes in interest rates have a powerful – and relatively predictable – impact on the wider economy. In contrast capital requirements may have a powerful and relatively clear impact on bank robustness and an uncertain – but quite likely relatively small – impact on the wider  12  BIS Review 100/2010  economy.

Table 1 The costs of higher capital requirements Benefits  Costs  Required Marginal Probability  present value,  present value,  of 1% rise in risk weighted  % of GDP  % of GDP  capital ratio  Extra Months in the Average Gap between Crises from 25 years  (1) Baseline  55%  4.25  0.077%  5.9  (2) 30% Modigliani-Miller effect  55%  3.25  0.059%  4.5  (3) Tax offset  55%  1.67  0.030%  2.3  (4) More Substitutes to Bank Finance  55%  0.80  0.015%  1.1  (5) Less Sensitive Investment  55%  0.32  0.006%  0.4  Temporary Impact on GDP from Crises  20%  0.32  0.016%  1.2  How do these costs measure against the benefits of a more robust banking sector and a lower frequency of banking crises? I will make the same assumptions as in the FSR, namely that if a bank crisis occurs the initial impact is to reduce output by 10% of GDP. That is almost exactly the amount by which UK GDP is now below the level it would have reached had it continued on the trajectory it was on up to 2007. I assume that three quarters of this reduction lasts for just five years, but that the other 2.5% of lost GDP is gone forever.
The third challenge is that of re-establishing confidence abroad in Iceland’s institutional framework, economy, and financial system; repairing the relationship with the international financial market; and ensuring that the Icelandic Government and Icelandic companies have access to foreign credit markets once again. I will touch on these three tasks later, but first I would like to shed some light on where we are in the adjustment period I mentioned earlier, and what the immediate future could have in store. First, the contraction in GDP to date has been less pronounced than was forecast early in 2009. The same can be said of unemployment. On the other hand, the króna depreciated more than expected, and inflation has proven more persistent. The Central Bank’s January forecast assumed that GDP would contract by 10% between 2008 and 2009, while the most recent figures indicate a contraction of 6½%. On average, the króna was some 15% weaker than was forecast at the beginning of the year. For this reason, among others, inflation was higher than projected, or just over 6% in the first quarter of 2010,  BIS Review 39/2010  1  excluding tax effects. The January 2009 forecast assumed that we would already have attained the 2½% inflation target by now. These deviations stem from a variety of sources other than normal forecasting errors. First of all, measures have been taken to support households, and these measures have reduced the contraction in private consumption.

*  *  *  The resurrection of the financial system is well advanced, and the capital base and ownership structure of the new banks have been determined. The next step is to complete the financial restructuring of the savings bank system. The Minister of Economic Affairs has presented a bill of legislation on financial undertakings, which addresses a number of the shortcomings that emerged in their operations during the run-up to the crisis, including large exposures, related party lending, and owner eligibility. A number of projects must be tackled afterwards. The banking system is still too large for domestic needs. Our financial institutions are operating in the shelter of capital controls, and the future arrangements for their links to foreign financial markets are still undetermined. Furthermore, many domestic financial institutions have sizeable currency mismatches between their foreign assets and liabilities. This is risky and increases their need for capital. The financial institutions themselves will have to work diligently in order to reduce the imbalances in their currency composition, but because the hedge market is not functioning properly at present, it is possible that the Central Bank might assist them in repairing their foreign exchange balance through swaps with institutions that have an opposite mismatch. In addition, the Bank will soon review its precautionary rules on financial institutions’ liquidity and foreign exchange balance, in light of recent events. The Central Bank of Iceland has collaborated with savings banks and the Ministry of Finance on a solution to the recapitalisation of the savings banks.
William C Dudley: The national and regional economic outlook Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Buffalo-Niagara Partnership, Buffalo, New York, 13 April 2012. *  *  *  Good morning, I am pleased to be here in Buffalo to address the Buffalo-Niagara Partnership. It is always a pleasure to speak with the business community because of the leadership role you play in the economy of the region. I thank you all for inviting me here today. I try to get out of my office in New York City as much as I can to get a sense of regional economic conditions across the second Federal Reserve District. I was last here in Buffalo in 2010 and, more recently, I traveled to West Point and the Capital region and Long Island. These visits are just as important as any trip I might take to Washington, D.C., to help formulate monetary policy, or to Switzerland, to help shape international bank regulation. Each visit within the region helps me to deepen the relationships with the people I represent. I believe that the understanding of issues and concerns that I gain today will help ensure that the Fed’s policy decisions reflect the public interest. Today, I want to talk a bit about the Fed – what we do and why we do it. Then I’ll provide some thoughts about the economic outlook nationally and locally.

Real GDP expanded at a 3.0 percent annual rate in the fourth quarter of 2011, the fastest growth since the first half of 2010. The average monthly job gain was 212,000 in the first quarter of 2012, up from 164,000 in the fourth quarter. Sales of light-weight motor vehicles were about 14 ½ million at an annual rate in the first quarter, the best quarter for vehicle sales in four years. Survey measures of business activity have rebounded from their dips in the middle of last year, and are now at levels that typically indicate solid overall growth. Even housing starts have firmed somewhat in the last few months, although they remain at depressed levels. While these developments are certainly encouraging, it is still too soon to conclude that we are out of the woods. To begin with, the economic data looked brighter at this point in 2010 and again in 2011, only to fade later in those years. Moreover, the United States experienced unusually mild weather over the first quarter, with the number of heating degree days more than 20 percent below the average of the preceding five years, which may have pulled forward some economic activity and hiring. In this regard, the somewhat softer March labor market report that was released last Friday may reflect the earlier positive influence of the mild weather on job creation in January and February, although other less sanguine interpretations are also plausible.
It is tempting, therefore, to think of these clauses as being the enduring legacy of Magna Carta, while at the same time allowing ourselves to patronise the juxtaposition of these apparently fundamental principles alongside so much  6  BIS central bankers’ speeches  antiquated gibberish about fish-weirs, the obligation to construct bridges, and the theft of wood for building castles. This would, I think, be a mistake. The specificity of the clauses animates the general principles. It is because they are detailed and targeted at the concerns of the time that they are a genuine attempt to place a boundary on the authority of the King, rather than relying on vague platitudes. 19 Magna Carta was nowhere near the first attempt to encapsulate ideas of justice and good government, nor was it the last. Indeed, it was a spectacularly unsuccessful attempt – and it was anyway concerned only with the interests of a very small segment of society. But, largely because King John’s heirs were forced into a tight corner and therefore obliged to reissue the charter again and again after 1215 (in 1216, 1217, 1225, 1234, 1253, 1265, 1297 and 1300, to cite only the more famous reissues), it is Magna Carta that has become the icon of the principle that the exercise of authority requires permission from those subject to that authority – and that, once granted, this permission can just as easily be withdrawn.

Therefore, looking ahead, acting in a firm and timely manner to ensure price stability in the medium term remains warranted. As regards fiscal policy, there is growing confirmation that the favourable cyclical developments led to better than expected budgetary outcomes in 2006 in a number of countries and in the euro area as a whole. However, updated stability programmes foresee only moderate progress with fiscal consolidation in the coming years. In this respect, some countries’ consolidation targets appear not  2  BIS Review 23/2007  fully in line with the requirements of the revised Stability and Growth Pact. Risks stem in particular from a lack of well-specified and credible measures, notably on the expenditure side of budgets. Given the favourable economic environment, the Governing Council considers it essential that procyclical policies are avoided in all euro area countries and that sufficiently ambitious fiscal consolidation efforts are made in the countries with remaining budgetary imbalances and/or high public debt outstanding. The opportunity should be seized to attain sound public finances within the programme horizons and by 2010 at the latest in all euro area countries. Fiscal consolidation that is part of a medium-term-oriented, credible and expenditure-based reform strategy would support longerterm output and employment growth and help prepare for the fiscal impact of population ageing. As regards structural reforms, the European Council will discuss the current state of, and future progress in, the implementation of the Lisbon strategy at its meeting which starts today.