samchain/econo-pairs-v1 huggingface dataset:
The HKMA is delighted to work with Euroclear Bank and J.P.Morgan, the two premier global tripartite repo system operators, to bring this concept to fruition. With security pools valued at EUR 10.8 trillion and $ 17.9 trillion respectively, both institutions provide a huge reservoir and a highly sophisticated platform to support cross-border cross currency lending with ample choices of securities as collateral. Linked up by the HKMA’s Central Moneymarkets Unit (CMU) as an agent, CMU members will be able to enjoy the collateral management service of the global repo operators which include functions like auto-selection and auto-substitution of collateral, collateral eligibility filters, daily mark-to-market and prudent haircut execution, all of which will help financial institutions in their collateral management processes. As a further development, we are working with our two partners to expand the repo service to allow financial institutions in Hong Kong to use their securities kept with the CMU, Euroclear and J.P. Morgan as collateral to obtain foreign currency liquidity such as US dollars from the global broker dealers in the second half of 2012. This will help local companies and financial institutions to obtain foreign currency liquidity as they expand their business overseas. Finally, the HKMA has a long term vision for repo financing to become a more important source of funding for companies and banks in Hong Kong.

Liquid financial markets are not the cure to the crisis, but they remain a necessary precondition to any solution. Unconventional instruments are fast becoming a natural part of the policy toolkit of major central banks. Central banks across emerging markets – including Albania – are also exploring the possibility of employing unconventional instruments. However, it is not without risks and it might not be easily implemented in emerging economies. In particular, we believe emerging markets’ central banks should avoid raising the risk profile of their balance sheets and should strive to preserve the credibility of their policy frameworks and independence. The second set of challenges is to acknowledge the long-term impact of the pandemic on our economies and societies, and to account for them in our policy frameworks. The spectrum of potential implications is wide but I will try to concentrate my remarks on a few items: The pandemic may drive a greater gap in terms of inequality, both among the advanced and developing economies as well as within an economy. An economic consequence of this pandemic is that it may slow down the catch-up process of developing economies relative to advanced ones. An additional one may be inequality within an economy, given that unemployment hits more the young population and those less educated. How these divergences may shape the future of social and economic policies aiming at addressing these divergences, this remains to be seen.
From the onset of the financial crisis that started towards the end of 2007 real output in the UK has fallen about 10% relative to the upward path it might have been expected to follow. In Ireland the fall in economic activity has been greater: the level of output is about 13% lower than at the end of 2007; if one had expected growth of 3% a year – significantly lower than the average in the preceding 10 years – output is now more than 20% below where it seemed likely to be. I want to ask two questions about monetary policy prompted by the financial crisis and the resultant recession. First, should we fundamentally re-think the inflation targeting framework for monetary policy? Is the focus on a target for consumer price inflation flawed? This is a long-term issue. There is a second, in some ways more immediate, question. How should monetary policy be set now in what I hope it is not too optimistic to call the aftermath of the financial mess? In considering that issue I will be talking specifically about the UK, as befits a member of the Monetary Policy Committee (MPC) at the Bank of England. I want to start with the longer-term issue of the appropriate goals of monetary policy.

Central banks probably invest greater resources than any individual agent into studying the economy, assessing the economic situation and making forecasts. Reasonably, central banks should also know more about their own intentions than any other agent. It is therefore possible to construct theoretical cases where a lower degree of transparency is preferable to a higher degree. But on the whole the research appears to indicate quite clearly that a high degree of transparency is something the central banks should aim at. It is easy to agree with this conclusion. Here I think that the demands on a public authority in a democracy have great importance. Then I believe that in practice there are limits as to how transparent a central bank can be. In some respects it is quite simply difficult to be open and clear. This applies, for example, to how much emphasis the central bank places on stabilising the real economy relative to stabilising inflation. In theoretical models this is usually represented by a special parameter in the central bank’s so-called goal function. However, placing a value on this parameter which is then published would probably be  2  Morris, S. and H.S. Shin, (2002), "The Social Value of Public Information”, American Economic Review 92, 1521-1534. 3  Svensson, L.E.O., (2006), “Social Value of Public Information: Morris and Shin (2002) Is Actually Pro Transparency, Not Con,” American Economic Review 96, 448-451. BIS Review 40/2007  3  very difficult in practice.
We will then, as usual, take a stance on how the new statistics that have become available affect the prospects for inflation and economic activity and the repo rate forecast. At the same time, we will of course closely follow developments and be prepared to take action if and when necessary. Some concluding reflections The events of last autumn clearly illustrate that with a credible monetary policy framework it is possible to conduct a flexible monetary policy that can quickly be adapted to sudden changes in circumstances. The fact that the actual rate of inflation has been far above the target has not been an obstacle to significant and rapid cuts in the interest rate. The forecasts for both growth and inflation have been adjusted downwards considerably and have indicated scope to reduce the interest rate in order to bring inflation back to the target a couple of years ahead. Monetary policy is and must continue to be forward looking. As I suggested earlier, the theme of deflation has begun to appear in the international debate. I commented on this at our latest monetary policy meeting. My view was that the threat of deflation should not be exaggerated and that there are major differences compared to the 1930s, the period that people often refer to in this context. One important difference is that central banks and governments around the world are taking strong measures to support the financial system and stimulation packages have been launched to counter the economic downturn.

The idea was that a fixed exchange rate for the krona would mean that inflation in Sweden was adapted in the long term to inflation in the countries with currencies to which the krona was pegged. Confidence in the fixed exchange rate would mean that the expectations of inflation in Sweden would largely be the same as the expectations in the countries to which we were thus linked. But in Sweden, as in many other countries, it proved impossible to prevent inflation soaring with a fixed exchange rate regime. Other countries which tried to control inflation by means of targets for the money supply also faced problems. The Riksbank announced its inflation target in January 1993, after the krona had been allowed to float earlier in the autumn with a great hullabaloo. The Bank then announced that the target for monetary policy would be to hold the annual change in the consumer price index at 2 per cent. The target would formally apply with effect from 1995. In this way Sweden became one of the first countries to choose to formulate its monetary policy in terms of an explicit inflation target. BIS Review 2/2008  1  Despite being aware that it would be difficult to attain the target exactly, the Riksbank chose to formulate the target with a specific figure for inflation. One of the most important reasons for this was to try to create an anchor around which inflation expectations could be stabilised.
The decline in demand in the economy is documented by the following: Household consumption, which is crucial for the future course of demand-pull inflation, fell for the sixth consecutive quarter. The saving rate is now 21.7%, while the long-term average is 12%. The decline in demand is also illustrated by the fact that prices of new apartments are already falling quarter on quarter. This is accompanied by the fact that the economy is below potential output and we have a negative output gap. I would like to mention two important problems: (1) the CNB's large balance sheet and (2) government debt. Regarding the CNB's large balance sheet, over the last ten years, interest rates were too low, in fact zero for a long time. In addition, in early 2017, interventions led to an increase in the CNB's balance sheet within four months, or rather in the banking sector's liquidity. It increased from CZK 1,300 billion in December 2016 to CZK 2,300 billion in April 2017, i.e. there was an additional CZK 1,000 billion in the balance sheet, or an almost doubling of the balance sheet within four months of 2017. During these interventions, demand for Czech government bonds from non-residents increased. This further expanded the country's borrowing options. Budget constraints  3/7  BIS - Central bankers' speeches  were eased. Then, during Covid, in particular at the end of March 2020, interest rates were reduced too close to zero.

Aleš Michl: The road to the target Speech by Mr Aleš Michl, Governor of the Czech National Bank, at the University of Economics and Business, Prague, 15 May 2023. *** Dear Rector, esteemed guests, It was a privilege for me to study and obtain my master's degree and Ph.D. here at the University of Economics and Business. I have good news for the public today: inflation is finally falling. Annual headline inflation peaked in September last year, when it reached 18%. We managed to stop it. In line with our expectations, a gradual downward trend in inflation started in February this year. Inflation fell to 16.7% in February and then to 15%. And finally, in April, it stood at 12.7%. Within three months, it should be below 10% in annual terms. This is not a victory. In the second half of the year, inflation will still be at a level we must not put up with. We must not get used to it. We must not adapt to it. Interest rates will therefore remain high for longer. A strong koruna is also important for the economy. Based on FRA rates, the market is expecting a rate decrease as early as in the next quarter. We consider the market expectations regarding the timing of the first decrease in rates to be premature. We must continue to fight for long-standing low and stable inflation. A strong koruna played an important role in the turnaround in inflation. We adjusted the monetary policy strategy in July 2022.
A rising China is a formidable competitor for investments and in global markets, but Southeast Asia is better off with a prosperous and modern China, than with a poor and backward China. International trade is not a mercantilist zero sum game. As China’s exports have grown, so have its imports. Southeast Asian exports to China have been expanding rapidly. Between 1999 and 2001, Singapore’s own exports to greater China (i.e. PRC, Hong Kong and Taiwan) grew by an average of 14% p.a., and now exceed our exports to the US. These exports range from integrated circuits, disk drives, scientific measuring instruments, oil and chemical products to food and beverages. In services too, China’s rising affluence offers great opportunities to Southeast Asia. China is one of the fastest-growing sources of tourists to Thailand, Malaysia and Singapore. A growing Chinese middle-class will want high-quality healthcare and education services. And wealthy Chinese – whose numbers are already not insignificant – will need more sophisticated financial services. In manufacturing, China is rapidly expanding into activities previously carried out in Southeast Asia. But that does not mean that Southeast Asia will revert to agriculture and primary production. Attractive as China is to investors, it will not soak up all manufacturing investments, nor will it out-compete all other countries in every industry and every product.

Background charts: Chart A: Short-term MFI interest rates on new loans (percentages per annum, monthly averages)  12  BIS Review 129/2009  Chart B: Long-term MFI interest rates on new loans (percentages per annum, monthly averages)  Chart C: MFI loans to households in the euro area: contributions by country (percentage points; annual percentage changes; quarterly, quarterly data are averages, nsa)  Source: ECB. BIS Review 129/2009  13  Chart D: MFI loans to non-financial corporations in the euro area: contributions by country (percentage points; annual percentage changes; quarterly, quarterly data are averages, nsa)  Source: ECB. 14  BIS Review 129/2009  Chart E: MFI loans to households in the euro area: annual growth by country (percentage changes)  Source: ECB. BIS Review 129/2009  15  Chart F: MFI loans to non-financial corporations in the euro area: annual growth by country (percentage changes)  Source: ECB. 16  BIS Review 129/2009
Since these instruments can absorb losses in the event of difficulties, their interest rates upon issuance are usually higher than those of ordinary debt instruments, so there is much more room for them to decrease, particularly in comparison with deposits. Analysis of the average loan-deposit spread, in terms of outstanding balances, shows that there is indeed a historically positive relationship between this variable and the level of market interest rates. However, since 12-month EURIBOR turned negative in February 2016, not only has this spread not narrowed, but it has actually widened. There are three reasons for this. First, average loan remuneration has been underpinned in recent years by the decline in non-performing loans, which has lowered the proportion of loans that do not generate any interest. Second, banks have to a certain extent rebuilt their portfolios, focusing more on business such as consumer lending that provides higher net interest income, albeit at the expense of increasing the risk profile of their credit portfolios. Third, in February 2016 there was still some room for a further decline in the cost of deposits which averaged 0.35% for outstanding balances and 0.20% for new business. Since then deposit rates on new business have fallen by an amount similar to the decline in average loan remuneration. However, the cost of deposits is currently very close to zero, so it will be more difficult to pass through any further falls in loan remuneration.

To date, this rise in house prices has not translated, on available estimates, into an overvaluation of residential real estate assets. That said, we must continue to monitor this market closely in case this risk materialises, and to analyse other facets of the conditions under which mortgages are granted that are less influenced by the collateral value. 24/29  A second relative facet is the effort that repaying the mortgage entails for agents that have incurred this debt. Once again, empirical evidence shows that loan-to-income and debt service-to-income ratios are relevant variables for determining the probability of mortgage default, although the low interest rate environment mitigates the risk. In any event, as more than half of new mortgage loans continue to be taken out at a variable rate, high loan-to-income ratios continue to be a source of possible vulnerability for households. However, in this instance too, mortgage lending standards appear to be prudent, with no evidence that they have recently eased. Third, an additional dimension that is also relevant for estimating the probability of default is the maturity of the mortgage loans granted. Longer maturities are usually related to more foreclosures. Likewise in this case, standards have become stricter following the crisis and have not eased in recent months. Empirical evidence further shows that it is the combination of some of these dimensions that may prompt disproportionate increases in the probability of loan default. These mortgages with very lax conditions in several dimensions have also become much less significant in recent years.
Good practices are therefore, essential to guide behaviour in the FX market, and to anchor a strong ethical culture within firms. The Code will support the nurturing of good practices and in turn, the growth of the FX market across key financial centres, including Singapore. Unique features of the Code Codes of conduct have been in existence and are not new. So why will this Code be different? There are several factors why this may be the case, including: what the Code captures; who the Code will apply to; how the Code was developed and will be maintained; and how it will be implemented. First, the content of the Code is relevant and reflects good practices that should exist in the FX market. The Code provides guidance in areas where clarity is needed. For example, after the misconduct came to light, many market participants swung to the other extreme and became highly reluctant to share market colour. This negatively affected market liquidity. The Code includes principles on information sharing, stating explicitly that “the timely dissemination of Market Colour can contribute to an efficient, open, and transparent FX market”. Additional guidance has been provided on how to apply this principle e.g. while communications should not include specific client names, aggregated and anonymised information can be shared. Both positive and negative examples also provide additional practical guidance. Second, it will apply to all market participants. Previous codes were catered to sell-side participants.

Sharing the experiences of related countries that spread in a vast geography on financial policies and central banking is invaluable for all of us. In conclusion, I would like to thank once again the staff of the SESRIC and the Central Bank of Turkey for their efforts during the preparation of the meeting, and all the participants who have contributed to the meeting with their scientific works and valuable experiences. Hoping for a successful meeting, I once again would like to say welcome. 2  BIS Review 121/2009
However, a large part of these outflows have been official and they have not been in RMB. This in fact touches at the heart of what is known as the Triffin Dilemma. China has been sending USDs abroad because that is what it has been receiving through its current account surpluses and FDI inflows. Sometime in the future, China may develop a structural current account deficit, but I do not see that happening in the foreseeable future. Opening up the capital account and domestic financial system to non-resident investors could lead to even more foreign currency capital inflows. On both accounts, China will not only continue to export USD capital but could find itself confronted by persistent appreciating pressure on its exchange rate due to the high demand for RMB. Promoting RMB for trade settlement will only go so far in resolving this. If more of China’s trade is settled in RMB, less USD will flow in, and China would need to intervene less and would have less USD to send abroad. But the question remains, with more RMB flowing in through the current and capital account, how do you get more RMB out of China in the first place? There are in fact numerous possibilities for China to create a significant pool of RMB liquidity abroad without necessarily running a current account deficit.

This include RMB outflows through official aid, international loans by banks in China, foreign issuance of debt in Chinese markets, direct investment abroad, inter-company loans, repatriation of corporate profits, resident spending abroad and so on. Some of these are already happening. Offshore RMB balances in Hong Kong, Chinese Taipei and Singapore for example rose almost 40% between late 2013 and early 2014 to RMB1.4 trillion. These numbers are indeed encouraging, except for one thing. When the RMB is abroad, it gets homesick, terribly homesick. It yearns to return home to the land of its birth. When the legal avenues for it to do so are limited, it desperately seeks other ways to do so. And as the size of overseas RMB pool increases, the pressure of the homeward bound flows will also increase. Will the Qualified Investor Schemes, RMB clearing banks and the eventual introduction of the China International Payment System alleviate this situation of the offshore RMB? Yes, it would, but not entirely. In the current situation, despite the sharp increase in RMB related trade and investment transactions, the data I have seen suggests that the use of RMB remains rather lopsided and favours the flow of RMB into China rather than out of China. A significantly greater proportion of China’s exports were paid for in RMB, then its imports. Similarly, while 63% of the FDI into China was in RMB, only 16% of the direct investment out of China was in RMB.