samchain/econo-pairs-v1 huggingface dataset:
The teething problems with the Stability and Growth Pact have been an example of these challenges. One of the key motivations of the Pact was an effort to avoid free riding by national governments in a multinational currency area. In other words, the desire to achieve a proper policy mix was present at the birth of this rule. In spite of that, the Pact is now criticised for being too rigid, not allowing for a proper policy response in times of distress, and thus ultimately leading to poor real economic performance. This naturally undermines its credibility and supports calls for various “escape clauses”, to use the inflation-targeting terminology. The Pact is thus fighting the same battle that the conservative central banker was some time ago. It should evolve towards a “constrained discretion” system that will fulfil its major goals - sustainability, credibility and co-ordination of stabilisation policies - yet at the same time be sufficiently flexible to allow for proper responses in adverse periods. It has yet to convince policy-makers and the public that it can deliver the lunch without them having to pay too high a price for it in terms of cyclical stabilisation. So far, the Pact has seemed to be losing the battle. This is somewhat unfair, as the adverse period came before most EU countries had achieved the target of balanced structural budgets, which reduced their manoeuvring space considerably. In a sense, the Pact is thus paying a price for being too lax in the previous period, i.e.

Zdeněk Tůma: The role of rules in public finance Introductory remarks by Mr Zdeněk Tůma, Governor of the Czech National Bank, at the International Institute for Public Finance, Prague, 25 August 2003. *  *  *  Ladies and gentlemen, dear colleagues, It is a great pleasure and honour for me to join the previous distinguished speakers with some introductory remarks to this high level conference. As a central banker, I would not pretend to be an expert in specific details of public finance. Therefore, I have chosen a general topic that is common to both central banking and fiscal policy. That topic is the application of rules in stabilisation policies Over the last twenty years, the philosophy of stabilisation policies has evolved substantially. The rules-versus-discretion debate has led to a preference for a rule-based approach to policy making. This has been supported by the negative historical experience with discretionary policies, as well as by a realisation that successful public policies in first place have to be credible and transparent, so as to direct private expectations in a desirable way. In terms of the actual institutional design, monetary policy has played a leading role, the shift to greater central bank independence with a clear anti-inflationary mandate marking this trend. Nonetheless, three serious questions have emerged as a result. First, whether independence and reliance on strict policy rules has too high costs in terms of macroeconomic instability. Second, how to co-ordinate monetary policy with governmental actions to make a consistent policy mix.
I therefore, urge the donors to the Foundation to increase their allocation in the coming year and in future. I also call on other well wishers in this room and outside to support this noble cause. Remember, an educated population is a pre-requisite to a country’s economic development. This year, the Masomo Scholarship is conferred on three exceptional and deserving young individuals in Ms Lenganji Nalwamba who is studying Electrical Engineering, Mr. Wapatwa Silungwe, studying Civil Engineering and Mr. Emmanuel Mwila who is pursuing Agricultural Economics. In congratulating you on this deserved achievement, let me remind you that as you accept this scholarship, you have an obligation and duty to the Masomo Foundation and to the nation at large. It is this strong sense of obligation, duty, and commitments to serve the nation that enabled our fathers and fore fathers serve the Nation wholeheartedly and brought us where we are today. As students with a Masomo Scholarship, each of you will be given a unique opportunity to prove yourself. I urge you to work hard and learn from others around you including those different from you and less endowed than you. Let me also mention that as a Masomo Scholar, your progress and performance will be closely monitored and you will be looked upon as role models. I urge you to set the standards for others to emulate. I am confident that all three of you will live up to the highest standards and will not disappoint us.

Surely, a growthfriendly strategy is one that minimizes the risks of major financial disruptions in the future, that does not impede the smooth functioning of financial intermediation and that does not block the transmission of monetary policy. In several countries of the euro area, sovereign spreads are still at penalizing levels. In so-called “core” countries, including France, the situation is different with historically low interest rates. While, in some cases, this reflects the consolidation achieved in fiscal accounts, there are also other temporary factors at work. Low interest rates are the product of low growth expectations in the short run; and they also result from exceptionally accommodative global monetary and liquidity conditions. This environment offers a unique window of opportunity to consolidate and bring public debt to a more appropriate level. Ultimately, growth in the euro area will depend on the ability to undertake the necessary structural reforms and enhance competitiveness. The euro area, like all advanced economies is facing a double challenge. First, it must absorb the consequences of the crisis, resorb financial imbalances, eliminate excessive indebtedness and restore the normal functioning of capital markets. And second, it must adjust to the deep changes taking place in the world economy. Looking past current difficulties, it is clear that the euro area is well equipped to confront the challenges of the 21st century. With 370 million consumers and high purchasing power, it remains the biggest market in the world. It is also the most economically integrated area, with highly qualified manpower and very good infrastructures.
The accent has been on assessing the vulnerability of the UK financial sector to cyber attack. We are doing that in two ways: a crosssector review of current risk management practices with regards to cyber and vulnerability testing via CBEST. Let me describe these in turn. As a first step in diagnosing the sector’s cyber resilience, the UK financial authorities 3 issued a questionnaire to thirty six firms that make up the “core” of the UK financial system. This included the largest UK and foreign banks active in London and the key payment and settlement systems, clearing houses and exchanges that together are critical for delivery of the financial services that the wider economy depends on. The questionnaire provided for a detailed self-assessment by firms of how they organise their cyber defences. Its purpose was to enable UK authorities to take stock of resilience across the sector and identify best practice across firms. Part of this was to be able to play back to individual firms where they stood relative to best practice. But lying behind this is the objective of raising resilience in individual firms by ensuring that the network as a whole is resilient. And given the importance of these firms to the stability of the financial system, this implies a level of resilience that goes beyond basic cyber hygiene but aims instead to ensure that firms are in a position to manage Advanced Persistent Threats (APT) that are the hallmark of some statesponsored attackers.

Despite oil prices more than tripling from the beginning of 1999 to the end of last year, inflation expectations stayed at the Riksbank’s target. If expectations also increase, monetary policy must be made considerably more stringent to expel inflationary expectations from the economy. From this point of view, it is important that monetary policy is reviewed and that a discussion takes place on the Riksbank’s actions, although the importance of the bank should not be exaggerated. Having said that to provide a perspective on the tasks we have at the Riksbank, I should like to move on to discuss the economic situation in Sweden. Favourable growth During the past three years, GDP has increased in Sweden by an average a bit more than 3.5 per cent. The rate of growth is increasingly higher than what is possible in the long term. The Swedish economy has expanded approximately a half per cent more quickly per year than the euro area in the past four years, although over one per cent more slowly than in the United States during the same period. BIS Review ? ?/2001  1  Strong foreign trade has made a positive contribution to growth in Sweden for large parts of the 1990s and since 1994, the current account has been in surplus. The weak exchange rate for the krona throughout almost the whole of this period with a floating exchange rate, combined with the vigorous growth in the telecommunications sector have been the driving forces underlying the increase in exports.
Policymakers’ judgments on these costs, such as financial stability impacts, political economy ramifications, and the effect on the consolidated fiscal situation, will be critical in assessing the overall costs and benefits of LSAPs.12 These caveats are particularly important to bear in mind in looking at the agency MBS market, since many might argue that the main issuers in the agency market gained private benefits at the expense of the taxpayers in the period prior to the financial crisis.13  Overview of the U.S. Agency Mortgage Market In depth and liquidity, the agency MBS market is second only to the U.S. Treasury market domestically; it is also deeper than most foreign sovereign debt markets. The fixed-rate agency MBS market currently has roughly $ trillion outstanding, with an estimated average daily trading volume of approximately $ billion in 2016 year-to-date.14 In contrast, the slightly larger U.S. corporate market has an average daily trading volume of only $ billion per day.15 The substantial trading volume and liquidity of the agency MBS market are due, in large part, to the existence of the to-be-announced (TBA) MBS trading convention. This structure provides investors with the ability to trade a wide range of MBS with similar characteristics without requiring them to analyze the underlying details of each individual mortgage security, since any security with the same agency issuer, original maturity term, and coupon can be delivered into a single TBA contract. 16 This transforms a market of hundreds of thousands of individual mortgage securities into a limited number of homogenous TBA contracts.

In contrast, the Federal Reserve’s experience conducting sales of agency MBS is limited to a few small value exercises.30 Central banks that are currently buying non-sovereign assets in LSAPs have a similar lack of experience with sales. There may be separate lessons to be learned from selling agency MBS.31 Current FOMC guidance states that the sale of agency MBS is not anticipated, other than potentially to eliminate residual holdings well in the future, and that in the longer run, SOMA will consist primarily of Treasury securities. 32 From a practical standpoint, sales may be complicated in that they would likely be conducted through the sale of individual securities, not through the use of the TBA market, because the securities in the SOMA portfolio might be more valuable than TBA cheapest-to-deliver. 33 This complication could eliminate the liquidity advantage provided by transacting in TBA.34 However, it is prudent for the Desk to be prepared for a wide variety of scenarios, including sales or the need to purchase additional agency MBS. This flexibility is particularly important given the complex nature of agency MBS and the specialized knowledge and systems required to hold and transact in the agency MBS market. From an implementation perspective, the Federal Reserve is fortunate to have the option of implementing monetary policy in a large and liquid non-sovereign market with direct implications for existing and prospective homeowners. We have spent the past two days discussing monetary policy implementation in the long run.
He made this point clear in his Report as follows: “The danger that a government will make use of the power of a central bank to overexpand credit is a real one and might appear a strong argument against having a central bank at all. But, as already indicated, if a government wishes to engage in the irresponsible creation of money, it can do so without a central bank. Paper money has come to stay. The only real safeguard against its abuse is responsible government”. So the blame should not go to Exter. It is the absence of responsible governments that would erode the value of money through excessive creation of central bank credit. An example for such irresponsibility could be found in a reported statement by Robert Mugabe, President of Zimbabwe that, if money is not found for projects, he would print the same, at a time when inflation was rising at more than 4500 % in his country. (Time, 13 Aug 2007) Elimination of the seigniorage from the books of accounts The issue of paper based fiat money at a fractional cost of the face value has enabled sovereigns to earn a substantial profit known as the seigniorage. Since there is no requirement for the issuer to back such money with an equivalent reserve, there is no limit to the issue of money by a sovereign.

While these criticisms may have some validity, Exter’s wisdom was to create an environment for both the government and the Central Bank to have a peaceful and  8  BIS Review 92/2007  amicable cohabitation. Exter argued in his report that “….there are, however, many important problems of monetary policy, especially those relating to fiscal policy, on which a central bank should work in close harmony with the government”. Accordingly, a degree of independence has been afforded to the Central Bank unlike other governmental bodies. This independence extends to the budget of the Bank, job security of key central bank officials and power to make monetary policy without consulting the government. The wisdom of Exter was that the Central Bank should as far as possible work in consultation with the government, rather than in isolation. He believed that the true independence of the Central Bank could be preserved only through that consultative process. In the words of Exter, “the ideal is….one in which there will be continuous and constructive cooperation between the Monetary Board and the government. The principal instrument for achieving this co-operation should be the Permanent Secretary to the Ministry of Finance whose membership on the Board will ensure at all times that his Minister’s views will be known to the other members of the Board”. However, Exter did not expect this arrangement to be effective at all times. Hence, he made the proviso that “it would depend on the men occupying the key positions” and not on any legal formula.
The HKMC runs on commercial principles and its main role is to offer financial products that would facilitate market development as well as achieve desirable social objectives. The core products offered by the HKMC include the purchase of mortgage loans from banks for securitization, the Mortgage Insurance Programme to help eligible homebuyers with their down payments, and the SME Financing Guarantee Scheme that supports SME financing by banks. In addition, two HKMC products, the first one launched in 2011 and the second one a few months ago, are of particular relevance to the financial wellbeing of the retirees. Reverse Mortgage 5. The first retirement protection product is the Reverse Mortgage Programme, which enables homeowners to convert or monetize the equity in their self-occupied homes into guaranteed monthly payouts over 10, 15, 20 years or for life, while still enjoying the use of the properties. For example, a married couple at the age of 65 with a property value of $ million would get a guaranteed payment of $ per month for life and be able to live in the property for life. There is no need for them to worry about repayment at all. Their monthly payouts are guaranteed for life even if the value of the property falls in subsequent years, or the interest rates rise significantly, or the couple enjoys very long life.

However, once we announced the launch of the HKMC Life Annuity Scheme in 2017, there has been marked increase in the awareness and interest in annuity products. Many insurance companies have seen sharp increase in the volume of business in underwriting other forms of annuity products to customers; The HKMC solutions, when implemented more fully, will not only help those who have retired but also provide a strong incentive for the middle income citizens to save. With the Life Annuity Scheme, they can see the prospects that their hard earned savings accumulated over their working life could be entrusted to a reliable manager (c) to produce reasonable, hassle-free and guaranteed cash flows that support their retirement. This is particularly helpful to those who feel that the small amounts that they save today would not add up to support their retirement, hence find it tempting to spend more now and save less, relying instead on the social security net provided by the government when they retire. 10. Ladies and gentlemen, it may be a bit too early to assess the success or otherwise of the Hong Kong experiment. However, I am very excited by the prospects of the two HKMC schemes in helping retirees in Hong Kong to create self-made life pension.
Central banks had to quickly learn that this situation required switching from normal operating mode, based simply on setting short-term interest rates, to crisis mode, aimed at sidestepping the obstacles to the standard channels of monetary policy transmission. This experience has given us an opportunity to deepen our understanding of monetary policy and, in particular, to reject the textbook dichotomy that either the central bank is able to rely on the “interest rate channel” for the transmission of its intentions, or else the economy is condemned to lasting instability. It is now clear that additional channels and conduits are available. The second challenge I want to discuss is the sovereign debt crisis and the associated fragmentation of credit markets across national borders. Starting in 2010, the financial crisis began to unfold in the euro area by turning into a debt crisis for some sovereign issuers. This quickly spilled across markets and countries. And more recently, it was exacerbated by investors’ fears of the reversibility of the euro. The challenge faced by monetary policy in this environment is enormous and is testing the ability of the ECB to act as the central bank of a single monetary area with 17 fiscal jurisdictions. It has been increasingly challenging to preserve the singleness of the monetary policy and to ensure the proper transmission of the policy stance to the real economy throughout the currency area.

Of course, accommodating global monetary and financial conditions also contributed to highrisk appetites, high leverage and search for high yields. At this point we do not know the scale of economic fallout from the ongoing financial turbulence, nor its duration. It is, however, conceivable to expect some regulatory backlash by major industrialized countries. For example, just a few days ago the U.S. Treasury Department announced a new plan to overhaul existing financial regulatory structure to make it compatible with modern financial instruments. This is of course just a beginning and we should not be surprised to witness similar steps by other countries. Distinguished guests, Let me turn to the Turkish case and discuss recent developments in Turkey. As you may remember, throughout 1990s the Turkish economy was shaped by high and chronic fiscal deficits, high inflation rates and a weak institutional environment. The economic crisis in Turkey in 2001 was not only the lowest point of this period, but also a major turning point for our economy. Since then we have witnessed a very ambitious reform agenda taken towards reaching better economic governance. I classify these steps under four main categories: (1) Monetary policy, (2) Fiscal policy, (3) Financial stability and (4) Structural reforms. Taking into consideration the fact that I am a central banker, I think it will not be surprising if I start with the topic of monetary policy. Central Bank independence that was granted by Law in 2001 was the key step on the monetary policy side.
A long-term, credible commitment to meet the inflation target also reduces uncertainty when assessing future income, which ultimately determines the (fundamental) value of various types of asset, such as shares. The larger the risk that one will not receive one’s invested funds plus the desired return on the investment, the greater the compensation one requires for investing/lending one’s money. Compare, for instance, with the situation in Sweden during parts of the 1980s (after deregulation) when the system of tax relief on interest, combined with inflation shocks, meant that in principle one could earn money by borrowing while it cost money to save! The conditions for making wise economic decisions will thus become better when the price stability target has been met. The same reasoning can be applied to wage-setting. During the 1970s and 1980s wage-earners were repeatedly forced to make large demands for nominal wage increases as inflation was “eating up” their purchasing power. Real wage increases were almost non-existent, while nominal wage increases pushed up prices, resulting in recurring cost crises. A low, stable inflation rate provides entirely different conditions for more stable and better developments in real wages. Monetary policy and the stock market As I have the privilege of speaking to a group of shareholders, I would like to take the opportunity to make a small digression into the connection between monetary policy and the stock market. I have already mentioned that a low, stable inflation rate creates good conditions for favourable economic growth and long-term developments in the stock market.

If this occurs without a simultaneous rise in consumption in the euro area, there could be a problem for the Swedish economy, as such a large part of our exports are to the euro area. The signs of an upturn in Europe are so far few and growth in the United Kingdom has slackened considerably. Such a situation would require more measures than a single monetary policy in Europe. Weaker growth in the United States could also lead to a decline in interest from China in investment in US government securities, which could further push up long-term market rates. This would occur during a downturn, while the effects of oil price rises continued to push up inflation. In my opinion, there is thus an evident risk that international economic activity would decline, possibly as soon as next year or the following year. The dilemma is that in this case it would occur in a situation where interest rates were already low in many countries, which limits the scope for monetary policy to counteract developments. If we look at Sweden alone, the economic outlook is favourable and the conditions for a positive economic development are in place. Companies are showing good profitability, investment is beginning to pick up and there are signs of improvement in the labour market. It is the international picture and its effects on Sweden that I consider to be worrying.