samchain/econo-pairs-v1 huggingface dataset:
To complement this, we need to put in place a stronger framework of oversight authority over the critical parts of the payments system, not just the centralized payments, clearing and settlements systems but the infrastructure that underpins the decentralized over-the-counter markets. The Federal Reserve should play a central role in this framework, working closely with supervisors here and in other countries. At present the Federal Reserve has broad responsibility for financial stability not matched by direct authority, and the consequences of the actions we have taken in this crisis make it more important that we close that gap. Crisis management No financial system will be free from crises, whatever the design of the regulatory framework or the rules of the game. The framework of lender-of-last-resort policies and the regime for facilitating an orderly resolution of a major non-bank financial institution are critical to our ability to contain financial crises. In response to this crisis, the Federal Reserve has designed and implemented a number of innovative new facilities for injecting liquidity into the markets. These facilities have played a significant role in easing liquidity strains in markets and we plan to leave them in place until conditions in money and credit markets have improved substantially. We are also examining what suite of liquidity facilities will be appropriate in the future, with what conditions for access and what oversight requirements to mitigate moral hazard risk. Some of the mechanisms we have employed during this crisis may become permanent parts of our toolkit.

The combined balance sheets of the then five major investment banks totaled $ trillion. In comparison, the total assets of the top five bank holding companies in the United States at that point were just over $ trillion, and total assets of the entire banking system were about $ trillion. This parallel system financed some of these very assets on a very short-term basis in the bilateral or triparty repo markets. As the volume of activity in repo markets grew, the variety  BIS Review 74/2008  1  of assets financed in this manner expanded beyond the most highly liquid securities to include less liquid securities, as well. Nonetheless, these assets were assumed to be readily sellable at fair values, in part because assets with similar credit ratings had generally been tradable during past periods of financial stress. And the liquidity supporting them was assumed to be continuous and essentially frictionless, because it had been so for a long time. The scale of long-term risky and relatively illiquid assets financed by very short-term liabilities made many of the vehicles and institutions in this parallel financial system vulnerable to a classic type of run, but without the protections such as deposit insurance that the banking system has in place to reduce such risks.
It is certainly a welcome achievement for the Icelandic economy to have triumphed over inflation. I sometimes think people take inflation rather too lightly and some of them feel that too much effort is devoted to constraining it. This may be normal, since the business community is now dominated by generations who do not know inflation at first hand and perhaps therefore fail to realise the great problems that accompany it. I would caution against such views and feel that the same principles apply to Iceland as to other industrialised countries with which we tend to compare ourselves, namely that a low rate of inflation is one of the cornerstones of economic growth and public welfare and the Central Bank should therefore continue to have price stability as its main goal, as stipulated in current legislation, the Central Bank Act of 2001. As I pointed out earlier, the new monetary framework involved abandoning the fixed exchange rate regime, and instead the króna was floated and determined by market forces. A foreign exchange market had been established in Iceland in 1993 and the Central Bank was supposed to maintain the exchange rate within a relatively narrow target band of 2¼% in either direction around the central value of the króna. With increasing exchange rate deregulation the target band was gradually widened and set at 9% in either direction in the beginning of 2000.

Also important are the requirements for complaints to be handled promptly by financial institutions. Ladies and Gentlemen, The Malaysian experience Let me briefly take a moment to share with you the experience of Malaysia in developing an enabling environment to promote financial literacy. For several decades, Malaysia has made significant economic progress. The economy grew by an average of 7% per year, while the per capita income has increased from USD 300 in 1970 to USD 4,236 in 2004. From a commodity-based economy, Malaysia now has a highly diversified economy, with significant contribution from the manufacturing and services sectors. Women account for about half of Malaysian population, and have played an important role in this economic transformation process. Women account for about 45% of the labour force, with increasing representation at the professional, managerial and technical levels. Such progress is achieved following increased educational opportunities that have been made available to women. Female primary and secondary students account for half of total enrolment, while at public universities, female students account for 55% of total enrolment. While women continue to play a major role in household financial planning, a new generation of women who are financially independent and sophisticated is emerging. The financial sector in Malaysia has also experienced significant progress, with greater diversity of players, products as well as delivery channels with extensive distribution nationwide. The widespread distribution of financial institutions has been a conscious and deliberate policy to ensure the widest reach of financial services to both the urban and rural areas.
In Malaysia, the introduction of investment accounts as opposed to deposit accounts in the Islamic financial system is an example, where savings are matched with the funding required by small and medium scale enterprises for financing of specific projects – has resulted in an investment intermediation function by the banking institutions. In addition to innovation, technology is also an agent to deliver quality financial services. Technology can lower cost, increase outreach and expand the range of financial services. The Kenyan mobile payment services, M-PESA, leverages on mobile technology to provide the poor with high frequency, small value transactions and affordable financial services. Priority 2: Building on the Sasana Accord for measurable goals The second area relates to the identification and adoption of the measureable and timebound targets as included under the Sasana Accord. Clear and measurable outcomes provide a shared understanding that will align the different stakeholders towards the common goal of delivering results to the financially excluded segments of society. A key aspect of realising the Sasana Accord is to collect and compile the relevant data in a reliable and timely manner. This will also form a basis for better policy formulation and effective monitoring and assessment of the effectiveness of policies. Data coverage needs to involve both the mobilisation of savings and financing activities, including information on the profile of the new entrants into the formal financial system. This is not only to promote effective participation in the financial system but to avoid conditions of over leverage and indebtedness.

Ms. Lomax’s vast knowledge of the financial area, as well as, of European policies is successfully shared as she is currently member of the Board of the prestigious Breugel ThinkTank, President of the Institute of Fiscal Studies (IFS) and trustee of Imperial College London. Now, let me give the floor to our keynote speaker, Ms. Rachel Lomax. After her speech we will proceed with the first panel – Global markets volatility and potential risks for Romania. Thank you! 2/2  BIS central bankers' speeches
Figure 6 CPI inflation (*)  CPIEFE inflation (*)  (annual change, percent)  (annual change, percent)  6  6  6  5  5  5  5  4  4  4  4  3  3  3  3  2  2  2  2  1  1  1  1  0  0  0 11  12  13  14  15  16  17  Dec.2015 MP Report  6  0 11  12  13  14  15  16  17  Sep.2015 MP Report  (*) Gray area shows forecast, as from the fourth quarter of 2015. Sources: Central Bank of Chile and National Statistics Institute (INE). BIS central bankers’ speeches  11  Figure 7 MPR and expectations (percent) 6  6  5  Financial asset prices, December MP Report(*) MPR  4  5  4  9  3  EES, December 2015  3  FBS, first half December 2015 2  2 11  12  13  14  15  16  17  (*) Built using swap contract interest rates up to 10 years. Source: Central Bank of Chile.

BIS central bankers’ speeches  7  Figure 1 Inflation indicators (*) (annual change, percent) 8  8 Services EFE  6  6  4  4 CPI  2  2  CPIEFE  0  0  Good EFE  -2  -2  -4  -4  -6  -6 11  Jul. 12  Jul. 13  Jul. 14  Jul. 15  Jul. (*) As from January 2014, the new indexes with annual base 2013=100 are used, so they are not strictly comparable with earlier figures. Sources: Central Bank of Chile and National Statistics Institute (INE). Figure 2 Labor market (percent; annual change, percent) 12  12 Unemployment rate(1)  10  10  8  8 Wages (2)  6  6  4  Employment (1)  4  2  2  0  0  -2  -2 00  05  10  15  (1) Spliced series using monthly variation in February 2010. (2) For nominal wages, average ULC and IREM were used. Spliced series using monthly variation in February 2010. Sources: Central Bank of Chile and National Statistics Institute (INE).
Ultimately, protectionism could also change the long-run equilibrium values, i.e. the levels to which an economy tends over the long term. These play a decisive role in determining the monetary policy stance since they serve as a compass for central banks. Increased uncertainty regarding the growth potential of a more closed off economy could result in misdirected monetary policy. If a central bank’s estimate of growth potential on the basis of previous  6  Empirical evidence that increasing globalisation has made prices less sensitive to domestic demand can be found in International Monetary Fund (2006). Cf. also Bank for International Settlements (2018). Page 6/9  conditions is too high, there is the risk of overly expansionary monetary policy delivering unnecessary stimulus to the economy and generating inflation. All in all, we can say that a wave of protectionism would create a lot of uncertainty, be it with regard to the short-term development of the real economy and prices, or with regard to the longer-term macroeconomic context. It is true to say that central banks have to constantly contend with structural change in the economy in any case; that is indeed part and parcel of what we do. However, protectionism would additionally complicate monetary policy. The risk of monetary policy mistakes would increase, at least while the economy is in the process of adapting to the changed market conditions. Rules rather than isolationism As a small open economy, Switzerland would be hit hard by a trade war.

Carney, Mark (2018), From protectionism to prosperity, speech given at the Northern Powerhouse Business Summit, Gateshead, 5 July. Carstens, Agustín (2018), Global market structures and the high price of protectionism, speech given at the Federal Reserve Bank of Kansas City’s 42nd Economic Policy Symposium, Jackson Hole, Wyoming, 25 August. Frankel, Jeffrey and David Romer (1999), Does trade cause growth?, American Economic Review, 89 (3), pp. 379–399. International Monetary Fund (2006), World Economic Outlook, April. International Monetary Fund (July 2018), G-20 Surveillance Note, G-20 Finance Ministers and Central Bank Governors’ Meetings, Buenos Aires, Argentina, 21/22 July. International Monetary Fund (October 2018), World Economic Outlook, October. OECD (2016), OECD Economic Outlook, Volume 2016, Issue 2. Ricardo, David (1817), On the principles of political economy and taxation, London: John Murray. Sachs, Jeffrey and Andrew Warner (1995), Economic reform and the process of global integration, Brookings Papers on Economic Activity, 1995 (1), pp. 1–118. World Trade Organization (2017), World Trade Report.
It has to equip firms with capability to move toward higher  BIS central bankers’ speeches  3  product sophistication and flexibility to cater to changing global consumer demand. It has to nurture innovation, given that meaningful growth spurt tends to come from either new products or new ways of producing and delivering them. The strategic focus is thus to create the right environment and give the right incentive for firms to invest and innovate. Physical infrastructure is where we lack behind and suits to be the starting point. Hightech, capital-intensive industries tend to benefit greatly from knowledge spillovers and concentration of economic activities. Therefore, more specialized hubs and clusters – in the spirit of, for instance, Singapore’s Biopolis and Japan’s Tsukaba Science City – are needed. For industries with lower capital intensity, establishing industrial hubs and zonings of related industries would be beneficial, so that these industries can reap localized benefits such as the availability of specific inputs and better labor market pooling. Supporting these less capital- intensive industries will also serve toward the agenda of inclusive growth, for these industries contribute significantly to employment in rural areas. Last but not least, wellintegrated and cost-efficient logistics systems are called for, in order to ensure connectivity and efficiency of domestic production chains. Along with physical infrastructure upgrading, “soft” infrastructure has to be upgraded. In addition to educational reforms that I talked about earlier, improvements on the legal front are also needed.

Given how significant the monetary system is, it is only right and proper that the associated developments are also the subject of regular public debate. With this conference dedicated exclusively to the issue of sound money, you are making an important contribution in this regard. Sound money is a fragile accomplishment, and is thus essentially always at threat. However, against the backdrop of the global financial crisis, concerns that our good money could turn bad have increased markedly across broad sections of society in recent years. On the one hand, this is understandable. Central banks’ crisis management has led to an extraordinary expansion in money supply and interest rates are at record lows – in the past, these phenomena have often been indications of imminent inflation and thus currency depreciation. On the other hand, it is a demonstrable fact that the value of money has never been as stable as it has been in the past 20 years (cf. chart 1). Viewed from this perspective, central banks’ expansionary monetary policies have simply satisfied the enormous demand for central bank money. The strength of this demand is actually testament to a high level of trust in central banks. The fact that inflation has been held in check for so long may also explain the increasing popularity of ideas from an entirely different perspective. The proponents of modern monetary theory would like to see central banks being put at the service of state financing.
By contrast, merchanting – which is less well known but has a long tradition in Switzerland – has grown significantly over the past ten years.8 And since 2010, net income from merchanting has been higher than net income from banks’ financial services in the current account. Merchanting refers to trade, denominated primarily in U.S. dollars, that does not cross the domestic border.9 The dynamics of Swiss merchanting can be partially explained by the relocation of commodity houses to Switzerland and the commodities boom before the financial crisis. Over the past five years, merchanting has accounted for almost one-third of the current account surplus. Allow me to recap the main points regarding the Swiss current account. Switzerland’s large current account surplus is determined by three structural factors: the strong net international  4  Already then, the savings surplus was based on net income from capital investment abroad and net receipts from trade in services with foreigners. See also T. Schlup, “Zahlungsbilanz”, in Historisches Lexikon der Schweiz, electronic version (e-HLS). 5  See Figure 1 in Fratzscher, M., A.J. Mehl, and I. Vansteenkiste (2011): “130 years of fiscal vulnerabilities and currency crashes in advanced economies”, IMF Economic Review, Vol. 59, Issue 4, 2011, pp. 683–716. It shows real exchange rates from 1890 to 2009 for Switzerland, and the major economies and emerging markets. Switzerland and the Netherlands are the only countries whose exchange rates have appreciated continuously and uninterruptedly since 1950.

4  BIS central bankers’ speeches  Economic environment and the introduction of the minimum exchange rate Now I’d like to discuss the motivation for introducing the minimum exchange rate. The rate was not implemented to stimulate exports, but rather to ensure that the appropriate monetary conditions prevailed and that the SNB could fulfill its mandate of price stability. The European sovereign debt crisis escalated dramatically in the summer of 2011. It became increasingly evident that, in addition to Italy and Spain being engulfed by the crisis, France also was potentially exposed. At the same time, the debt-ceiling negotiations in the United States and the consequent downgrade of the U.S. by Standard and Poor’s added to the tension. During these months, the Swiss franc appreciated rapidly against all major currencies. This development is shown in Figure 5 for the exchange rate of the Swiss franc against the euro and the U.S. dollar. The increase in the value of the franc, which reflected market panic rather than economic fundamentals, drastically tightened domestic monetary conditions. With annual inflation already close to zero, Switzerland risked falling into a deflationary trap. What policy options were available? The massive Swiss franc appreciation left the SNB with few options to combat the restrictive monetary conditions. As a result of the response to the global financial crisis of 2008/2009, our policy rate was already at the lower bound.
Food price indices (*) (annual change in US dollars, percent)  CRB Grains CRB .Czech Rep Chile Brazil CRB Food China Poland Turkey Colombia Philippines Russia Israel Hungary New Zealand Euro Zone Peru Australia Thailand Canada Singapur Romania Taiw an Malay sia Japan Hong Kong Indonesia Mex ico South Africa United Argentina USA Korea  0  10  20  30  40  50  60  70  (*) Figures as of January or February, as available. Sources: Each country’s central bank, Bloomberg, Commodity Research Bureau (CRB), each country’s statistics bureau and International Monetary Fund  6  BIS Review 39/20086  During 2007, inflation in Chile rose to numbers way above the inflation target of 3% and the tolerance ceiling of 4%, largely due to the commodity price hikes. Measured in US dollars, Chile is one of the countries where foodstuff increased the most. Nevertheless, about 30% of the price rise obeyed to country-specific climatic factors that translated into a dramatic fall in crop yields. In addition, the oil price increase, from $ to $ and beyond, affected not only the prices of gasoline and diesel, but also power rates. Again, an idiosyncratic problem compounded with the international shock. In Chile, 50% of electricity is generated in hydroelectric plants. Given the low rainfall of 2007, it was necessary to intensify diesel-based generation, which significantly raised marginal upstream costs and ultimately consumers’ electric bill (households, industrial producers, etc.).

I agree that this would be the case if all property buyers used their savings and did not need to borrow from banks. However, I do not believe that none of the purchasers of luxury properties borrow from banks. Some buyers do not approach banks for mortgages because they still have time before completing the transactions, or because they do not intend to hold the flats for a long time. I also do not believe that the markets for small and medium-sized residential flats could have become so active without abundant credit from banks. I therefore believe that the prudential measures that we have taken and good risk management by banks will help stop asset-price bubbles from forming. 10. While banks will help to control the risks, members of the public and corporations in Hong Kong also need to be more alert. They should consider what they can afford and not borrow too much at a time when interest rates are so low to avoid getting into financial difficulties when interest rates rise again. But I can see that this is not easy. As hot money continues to flow into Hong Kong, it pushes the market higher. If this continues, people may get into a mistaken mindset that the market can only go up and overlook the risk that capital and hot would might one day reverse course without warning. 11. Finally, I would like to share with you an article I read last week.