samchain/econo-pairs-v1 huggingface dataset:
Hong Kong can be regarded as being subject to this law of nature. In any event, Hong Kong’s currency board system rules out the creation of money except in exchange for foreign currency, and therefore serves as an operational safeguard against monetary financing of the budget. In order to fund its deficit, the government has a choice between running down its assets (the fiscal reserve) and borrowing, from banks or the markets,. It has chosen for the time being the former route. The monetary impact would in either case be neutral. It may be worth explaining the process. If the fiscal reserve is drawn from the Exchange Fund and the Fund consequently needs to realise foreign currency assets, the foreign exchange is sold in the market. The counterparty surrenders HK dollars. These accrue temporarily to the Exchange Fund and are then transferred to the government, which will in turn pass them to some other party, as the counterpart of the budget deficit. The net result is a change in the ownership of HK dollar money but not in the quantity outstanding. Similarly, borrowing HK dollars to fund the deficit would involve a shift in ownership of those dollars around the economy, but no net increase in quantity. The mechanics of financing the deficit ought not therefore raise any concerns in Hong Kong in the context of monetary stability. Nevertheless, in practice the markets do appear to exhibit a degree of negative reaction to the deficit. Why? A number of possible explanations come to mind.

Mr George takes a look at recent developments in the UK economy against the background of global influences in the international financial environment  Speech given by The Rt Hon Eddie George, Governor of the Bank of England, at the City Council Dinner hosted by the Glasgow Chamber of Commerce on 18 January 2000. *  *  *  Mr Chairman, my Lord Provost, Ladies and Gentlemen, I always enjoy my visits to Scotland. And I’ve been particularly looking forward to this visit since I read a Business Comment headline, in one of your newspapers on Friday, referring to the warm welcome I could expect on this occasion - following last week’s decision by the Monetary Policy Committee to put up interest rates! It has to be said that some of the rest of the article, and some other press comment on Friday was less welcoming! We - the MPC - were variously accused of “ignoring the pain suffered by firms north of the Border”, of “being willing to sacrifice Scotland’s economy just to cool the overheated London property market”; and of causing the Scottish economy once again to suffer because South-East England is overheating. Well I’m a great believer in free speech, but let me give you some relevant facts. The MPC sets interest rates to achieve the Government’s target for retail price inflation in the UK economy as a whole consistently over time. Those are our marching orders.
The ECB does not vote. Where I do agree is that making the presidency of the Eurogroup a permanent position could strengthen the institutional architecture of the euro area. How would the hypothetical independence of Catalonia affect its relationship with the ECB? At the ECB we act according to regulations, and the treaties. We would adhere firmly to the legal provisions and we would not do anything that is not legal. What conditions would need to be met in order to gain a seat at the ECB? Whether this is political fiction or not, I don’t know. But the ECB only acts on the basis of facts, not hypotheses. If the number of countries in the euro area were to increase then we would respect that, but there would be no shortcuts unless they are provided for by the Treaty. The European Commission has launched an investigation into the use of deferred tax assets (DTA) in the banking sector in Spain and various other countries. The ECB was very critical about DTAs when it had to be evaluated during the banking stress tests. There are four countries that resorted to using these measures widely and the legislation that they adopted varies from one country to the next. I believe that we must look at each case separately and in context. Personally I dislike the idea of resorting to attempts to create the impression that a balance sheet’s loss absorption capacity is greater than it is in reality.

2  BIS Review 49/2005  However, meeting this ambitious objective implies a significant evolution of the current retail infrastructures towards a pan European infrastructure, the so called PEACH, which will aim at reinforcing the global efficiency of payments in Europe. The main achievement with regards to infrastructures until now has been the launch of STEP2, since it is the first infrastructure compliant with the PEACH requirements, as defined by the EPC. But there is still a significant way to go since STEP2 handles low volumes, 170.000 payments in May 2005, and can still not offer the same level of service as national ACHs. In that context, it must be seen as a positive prospect that most national retail payment systems are now preparing themselves to the implementation of SEPA, through the spreading use of standardisation, which will allow the interoperability of infrastructures. In France for example, several banks have initiated the STET project in view of SEPA. However, one should note that the idea of consolidating the retail systems platforms is for the time being not really at the forefront of market initiatives, even though consolidation is a source of cost savings and efficiency. Why such a gap in the level of integration between large-value payment systems and retail payment systems? I see two main explanations. First, large value payment systems have benefited from the incentive of the adoption of the single monetary policy in the Euro area, which made the creation of TARGET mandatory.
The prolongation of the Spanish economy’s current growth phase over the coming months will essentially be based on the strong pace of expansion of national demand, although the external sector will continue – as seen since 2016 – to maintain its positive contribution. In particular, buoyant employment and the favourable conditions of access to credit are boosting household consumption and the pick-up in spending on residential investment and on equipment. 3/8  In the medium term, there will foreseeably be a gradual convergence towards more moderate growth rates, as a result of the disappearance of certain factors that have contributed to boosting activity. Such factors have been the declines in oil prices, the moderation of financing costs, supported by the ECB’s monetary policy, and the expansionary fiscal policy stance over the two-year period 2015-2016. As in the euro area as a whole, since late last year the year-on-year rate of change of the CPI has been highly volatile; it stood in May at 1.9%, the outcome – as earlier stated – of energy price fluctuations and, also, of the effect of the Easter holiday week in April, given that in 2016 Easter fell in March. These temporary factors will progressively peter out in the coming months, although the average rate for the year is expected to stand at around 2%. In 2018 and 2019, in the absence of further shocks, the rate of increase of the CPI might settle below this reference.

High volumes of deficit and public debt over long periods are usually associated with higher interest rates and, therefore, lower rates of private investment and growth in the medium term. Also, correcting a very high debt-to-GDP ratio normally requires significant primary budget surpluses, which must be achieved through higher taxation or lower spending, other than on interest payments. 7/8  Large deficits and high levels of public debt reduce the scope for fiscal policy to play a countercyclical role in adverse economic situations, a particularly necessary and valuable lever in a monetary union. Also, the need to resort constantly to the financial markets to refinance a substantial level of debt and the current deficit increases the vulnerability of the economy to potentially adverse reactions by investor sentiment, as seen in recent years. Facing up to these challenges and minimising these risks requires completing fiscal consolidation, by gradually correcting the budget deficit and reducing public debt. This must be one of the main priorities of economic policy in the coming years. Thank you very much for your attention. 8/8
Technology allows market participants to better connect across potentially fragmented execution options, but has the central price discovery mechanism emerged stronger, and is liquidity as resilient? Further, dealers increasingly are internalizing customer flows―that is, matching their clients’ buy and sell orders in-house rather than executing them through the open market. But what does this do to the quality of pricing in the open market? And does reduction in potential open market trading have negative consequences for market functioning? Moving toward more robust practices in the FX market These changes in market structure and their potential implications for the functioning of the market are important to monitor, but market integrity does not rest solely on the ability to transact. It also requires that parties in the market behave in accordance with appropriate standards of behavior – standards that help to ensure that parties treat each other fairly. This is an area where further work is clearly required to support, and in fact to rebuild, the integrity of the market. As this audience is well aware, the foreign exchange market has recently been rocked by broad, unethical misconduct, which is unacceptable, and this has shaken the public’s trust and faith in the market. A recent series of investigations in the United States and abroad established that serious misconduct and collusion had occurred in the spot foreign exchange market. The investigations led to a string of regulatory actions and fines against some of the largest banks active in this market, and criminal pleas across multiple jurisdictions.

In its earlier years, the Committee worked closely with comparable committees sponsored by central banks in other major jurisdictions, as well as with the Financial Markets Lawyers Group here in the United States, to improve standardization in the market, including through developing standardized documentation in the FX market, such as master agreements. Over the years, the Committee has evolved as the market has changed. For example, as entry to the FX market has expanded and as nondealer firms have come to play important roles in the market, the FXC expanded to include buy-side representatives. I believe that this has strengthened the FXC’s ability to contribute on FX market issues, including the work now required to help strengthen the best practices landscape on a global basis. Before turning to these global efforts, I would like to briefly highlight a couple of recent changes to the Committee’s Charter, which I believe will further support the FXC’s ability to contribute in particular to this global work. 12 First, the revised Charter language places a more direct emphasis on the role of Committee members to help promote the efficiency and integrity of the market through, for example, the development and implementation of best practices. Second, the revised Charter better highlights the importance of incorporating an even broader set of perspectives and expertise directly on the FXC.
So much then, Mr Chairman, for the past, let me turn now to the challenges and prospects for the future. The most immediate challenge is to get through to the next millennium without significant mishap - to demonstrate that we have indeed succeeded in overcoming the Y2K bug. In fact I have no misgivings on that score as far as the City is concerned. The preparation has been immensely thorough. The Bank, with our colleagues in the FSA, and with our counterparts abroad, has worked with the financial markets, both on that technical preparation and to ensure that the necessary liquidity will be in place. That in turn has provided a degree of reassurance - to financial intermediaries and to the public more broadly - that should help to avoid undue precautionary behaviour which might otherwise prove disruptive. A second challenge is the advent of the euro - and on this score, too, I have very few misgivings. Even before the introduction of the new currency the City played a very positive role in its technical preparation - and one which has been widely acknowledged. And since that introduction the City has continued to play a very active part in the development of the broader, more liquid, financial markets which the euro has made possible, and which are vital to its success as a widely-used international trading and investment currency. This activity is in fact the greatest contribution that the UK can make to that success from the outside.

I have argued, however, that, given the global nature of the problem and the risks that even the best regulated economies are exposed to, the most lasting and fundamental solutions must lie in long-term prevention and joint action. These preventive measures should include urgent reforms to the international financial architecture to enable it to cope with changing market practices and to reduce the extreme volatility in fund flows that has been such an important factor in this crisis. In the medium and longer term, they should also include efforts to develop stable and transparent debt markets in the region, and greater monetary cooperation, which might also include the development of an Asian Currency Unit. At today’s symposium we are both celebrating a fiftieth anniversary and addressing some of the difficulties that we currently face in this region. This is not a time for complacency, but it is perhaps useful to step back for a moment from present difficulties to reflect on how far we have come, as a region, in the past fifty years. Fifty years ago most of this region was still recovering from the devastation of World War Two; many countries were to face more upheaval in the years that followed. But over the last few decades the region has, through a variety of economic strategies and in differing degrees, enjoyed growing prosperity, greater stability, advancing crossborder co-operation, and, increasingly, freedom from the poverty and strife that confronted earlier generations. This has all been achieved in a context of globalization and economic liberalization.
We expect that to weigh heavily on demand. We judge the appropriate degree of monetary tightening taking that into account. What I reject is the argument that in our response to Covid the Bank’s Monetary Policy Committee let demand get out of hand and thus stoked inflation. The facts simply do not support this. On the latest number, UK GDP in March was only 0.6% above its pre-Covid level, and it is substantially below the path it was expected to follow pre-Covid. What we do have is a very tight labour market. But that does not look like a story about rapid demand growth. The labour force has shrunk by around 1% since the onset of Covid. It looks much more like an impact from the supply of labour. The job of the Bank of England is to return inflation to target at a time when a very large headwind from external shocks, and an internal shock from a fall in the labour force, are reducing real incomes but risk leading to persistence in domestic wage and price setting, socalled second round effects. The Bank of England will, as always, take monetary policy decisions to ensure that the inflation target is met over the medium term. We have raised the official rate four times so far and have made clear that in order to bring inflation down to target we are prepared to do so again based on the assessment at each of our meetings.

For the advanced economies, it is the uncertainty about the timing of exit policy, and whether the commitment to fiscal consolidation by the major economies can be sustained given the adverse implications for growth. For emerging markets, there is uncertainty about the policy approach that emerging markets will use to manage large capital inflows particularly in Asia. This involves the policy choice between exchange rate management, monetary policy, and the use of macro-prudential and capital control. In my view, uncertainty about policy has been of most concern for financial markets, resulting in increased volatility and a constant shift in investor sentiment between risk aversion and risk appetite. As for Thailand, in addition to the global uncertainties, we also have our own home-grown uncertainty linked to domestic political developments, which have added another dimension of risk to economic recovery and to the prospect of Thailand’s growth in the longer-term. How has the Thai economy performed so far amidst all this risk and challenges? Today, an important decision was made by the Bank of Thailand’s Monetary Policy Committee to begin a process of policy normalization by raising the policy interest rate by 25 basis points to 1.50 percent. The decision represents the first increase in fifteen months since the policy rate was reduced cumulatively by 2.5 percentage points to cushion the economy from the global recession. But more importantly, it also marks an important turning point in our assessment of the economy’s growth and inflation outlook, taking into account the impact of the political situation.
The issue is whether this world, however desirable, is realistic. There are some reasons for doubt. Financial system reinvention One of the likely consequences of the crisis, and the resulting regulatory response, is that the financial system will reinvent itself. Financial activity will migrate outside the banking system. And with that move, risk may itself change shape and form. What previously had been credit and maturity mismatch risk on the balance sheet of the banking system may metastasize into market and illiquidity risk on the balance sheets of non-banks. This could have important implications for the stability of the financial system and the broader economy. With more activity outside the banking system, and with the banking system itself better protected, the financial system and economy may become less prone to the low-frequency, high-cost banking crises seen in the past. But that is not the end of the story. Risk, like energy, tends to be conserved not dissipated, to change its composition but not its quantum. So it is possible the financial system may exhibit a new strain of systemic risk – a greater number of higher-frequency, higher-amplitude cyclical fluctuations in asset prices and financial activity, now originating on the balance sheets of mutual funds, insurance 4  BIS central bankers’ speeches  companies and pension funds. These cyclical fluctuations could in turn be transmitted to, and mirrored, in greater cyclical instabilities in the wider economy. In this world, it would be very difficult for monetary, regulatory and operational policy to beat an orderly retreat.

The Bank of Albania is an active supporter of financial and economic integration, considering it as one of the most important pillars to release the potential of the economy and boost its resilience to shocks. 3. On the Memorandum All the above, underlines the great importance of our economic and financial cooperation with Turkey. This cooperation imposes even us – the policy makers – to intensify the exchange of information and opinions, and seek to promote the finding of common solutions to common challenges. In this spirit, the Bank of Albania and the Central Bank of the Republic of Turkey are signing today this Memorandum of Cooperation, which may be well considered as the coronation of the insofar cooperation, as well as of our efforts to continue with drafting the relevant institutional framework for clarifying the operational cooperation protocols, in a series of central bank fields. This memorandum elevates the relations between our two countries to a new dimension. It confirms the will to elevate the level of cooperation and consolidate the ties between the two countries, providing for both institutions the necessary space for the intensification of mutual exchange of information and expertise in various fields of central banking, such as: supervision, financial stability, research, and financial education, and the regular dialogue at technical and political level. It is an important step for obtaining maximum benefits from the positive effects of integration and minimising the negative ones.
The credibility that the SNB has acquired over decades guarantees a stable currency. This constitutes a perfect numeraire for banking activities. Second, the money issued by the SNB, i.e. deposits that banks hold at the SNB and banknotes, is the Swiss legal tender. It represents the anchor of the Swiss monetary system. If their customers wish, banks exchange the money in customers’ deposits against banknotes issued by the SNB. Third, banks use the SNB’s infrastructure, the Swiss Interbank Clearing system, for their payment transactions. And fourth, the SNB provides liquidity to the banks, which they hold in the form of deposit accounts or banknotes. In this way, the SNB ensures that the payment system functions well and the demand for banknotes can be satisfied. By fulfilling its mandate, the SNB thus provides fundamental services for the operations of banks and the financial sector. At the same time, the SNB needs the financial sector in order to fulfil its mandate. The financial sector transmits the SNB’s monetary policy actions to the Swiss economy through its lending and borrowing decisions. Based on short-term money market conditions set by the SNB, banks adjust the cost of borrowing for households and firms. Through their core business, banks thus contribute to monetary policy transmission. More generally, the financial sector transmits changes in the short-term policy interest rate to other assets of different maturities. The resulting change in overall yields on Swiss assets influences their relative attractiveness. This also affects Swiss franc exchange rates.

For example, large institutional investors, including sovereign wealth funds, have started to channel more funds to firms with sustainability commitments. Admittedly, the progress made on this front has been rather modest thus far, but it does have the potential to enable a wider range of stakeholders to determine the sustainability of finance and its role in facilitating sustainable economic growth. Conclusion I have not actually finished my story on the Challenger shuttle disaster at the beginning of my speech. After the harrowing accident, President Reagan formed the Rogers Commission to investigate the incident, and it was found that the accident could have been avoided entirely. The special commission reported that NASA’s organisational culture and decision-making processes were key contributing factors to the catastrophic event. NASA managers had been aware of the potentially fatal flaw in the O-rings since 1977, but did not respond appropriately. And on that fateful morning, warnings from engineers about the risks of launching in the low temperatures were met with contempt, and the superiors were not adequately notified of these technical concerns. Therein lies the importance of governance structures and how decisions are made. Governance influences decisions, and decisions shape outcomes. It is no different for financial governance. Be it financial decisions at the international or national level, public or private, corporates or financial institutions, households or individuals, sound financial governance is the bedrock of stable and robust economies.