samchain/econo-pairs-v1 huggingface dataset:
According to one theory, similar mechanisms could emerge in response to an asymmetrical policy vis-à-vis asset prices. If central banks took action to stop asset prices falling below a certain level, the players in financial markets might attach less importance to a rigorous analysis of economic fundamentals. The strategy of waiting for bubbles to burst by themselves might then establish a climate that actually encouraged bubbles. This must of course be regarded as an unproven but interesting theory, and it certainly calls for a great deal more careful thought. Conclusion In my speech today I have dealt with some issues that at the moment are being debated particularly in the USA. This is not due to a special interest in developments in the USA but because the conditions 5  BIS Review 128/1999  under which monetary policy is pursued in the USA and Sweden are quite similar. Many of the problems and issues that are being addressed there are also of interest here, or may be so in the future. Therefore I feel that we have something to learn from them. As I see it, one important lesson is that monetary policy, at least today, should take a greater interest in the “long boom” than the “new economy”.

Norman T L Chan: Development of e-Cheque usage in Hong Kong Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Electronic Cheque (e-Cheque) service Launching Ceremony, Hong Kong, 11 December 2015. *  *  *  Ms Helen Wong, Mr Allen Yeung, Mr Wong Kuen-fai, distinguished guests, media representatives: 1. Welcome to the official launch of the Electronic Cheque (e-Cheque) service jointly organised by the Hong Kong Association of Banks and the Hong Kong Monetary Authority. For the first phase of the e-Cheque service, nine banks have started offering the e-Cheque issuance service, while all banks in Hong Kong can already accept e-Cheques deposited by their customers. 2. Traditional paper cheques have been widely used in Hong Kong, but there are limitations. For example, the payer must deliver a physical cheque to the payee, and the payee must also physically deposit the cheque at a bank. These steps involve quite some time. Besides, paper cheques consume a lot of paper and are not environmentally friendly. In view of this, the HKMA began work with the banking industry on developing the necessary infrastructure for the electronic form of cheque service three years ago. Benefits of e-Cheques 3. As e-Cheques have a number of obvious benefits over their physical counterparts, I believe they will become a popular form of electronic payment soon. I. The e-Cheque issuance and deposit service is available via Internet banking platforms and the Hong Kong Interbank Clearing Limited’s portal on a 24-hour basis.
We must adapt to new demands from outside and implement changes where we or others find scope for improvement. Evaluation and constructive debate contribute to making us better at what we do. My introduction on monetary policy here today will in a way deal with evaluation and development. I shall talk about the contents of our Monetary Policy Report – our view of inflation prospects, the decision at the end of October to raise the repo rate by 0.25 percentage points and what interest rate policy we believe will be required over the coming years. The report is one of the best tools for examining how well we do our job. But I will also talk about some changes we have made to better meet the requirements made of us, not least in our role as independent authority. Because if I summarise what has happened in monetary policy since I was here in February, it is not merely a question of the forecasts and interest rate decisions we have published. We have also made changes in the way we communicate, to become clearer and more open. There have been fairly lively discussions of this over the past year. It is good that the Riksbank’s strategy is discussed. But I sometimes think that it has been difficult to distinguish whether the criticism concerns our forecasts not being considered good enough or whether it concerns our changes in communication.

This means in turn that it is reasonable to assume that wages will rise more quickly (slide 8). And the agreements signed so far support this picture. The new agreements will make an impact in 2008, and the labour shortages will also become more marked then. We are therefore counting on wages increasing more during next year than in 2007, by around 4.5 per cent. Labour costs per hour are also expected to increase. How this affects companies’ costs for the goods they produce will in turn depend on how productivity develops. Productivity growing more slowly and labour costs increasing If one looks back at the past decade, productivity in the Swedish economy has improved significantly (slide 9). This meant that production could increase more quickly than costs. It also contributed to employment showing fairly weak development over a long period, despite good growth. But more recently employment has increased, while productivity growth has been lower. We believe that the slower productivity growth is to some extent temporary. There can be several  BIS Review 132/2007  5  reasons for this. One reason is probably that new persons are being employed in the companies and that it quite simply takes time before they are fully productive. Another could be that new groups are entering the labour market. For instance, the service sector normally increases fairly late in an economic cycle and then the productivity measured is slightly weaker.
The peso/dollar parity, with ups and downs, is somewhat lower than in the previous Monetary Policy Report, while the real exchange rate (RER) has shown no significant variation. The Board continues to estimate that, with the prevailing nominal exchange rate and currency parities, the RER is in the lower part of the range of values consistent with its long-term fundamentals (figure 3). In the baseline scenario, y-o-y CPI inflation will stand below the tolerance range in the coming months, to start rising later and approach 3% by the end of 2013 and over the projection horizon, this time the last quarter of 2014. There are several factors explaining the lower figures foreseen for the near future, including the high basis for comparison of late 2011 and the turn of 2012. Core inflation will post y-o-y variations below 2% over most of 2013, then it will rise gradually to near 3% over the course of 2014 (figure 4). This path assumes that wages will grow in line with productivity and target inflation. In addition, it relies on the methodological assumption that, over the projection horizon, the RER will be fairly unchanged from its recent values. Finally, the baseline scenario uses as a working assumption that the MPR trajectory will be stable, as suggested by the latest surveys available at the statistical closing of this Monetary Policy Report (figure 5).

8  BIS central bankers’ speeches  Table 1 Economic growth and current account (annual change, percentage) 2011  2012 (f) 2013 (f) MP Report MP Report MP Report MP Report Sep. 12 Dec. 12 Sep. 12 Dec. 12  GDP  6.0  4.75-5.25  5.5  4.0-5.0  4.25-5.25  Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Exports of goods and services Imports of goods and services  9.4 10.2 17.6 7.9 4.6 14.4  5.6 5.5 7.0 5.1 3.5 4.0  6.6 6.8 11.3 5.3 2.7 5.5  5.5 5.8 7.1 5.4 3.6 5.8  5.7 6.0 7.6 5.5 3.0 5.9  Current account (% of GDP)  -1.3  -3.2  -3.8  -4.4  -4.6  (f) Forecast. Source: Central Bank of Chile. Table 2 International baseline scenario assumptions 2011  Growth Trading partners World at PPP  2012 (f) 2013 (f) 2014 (f) MP MP MP MP MP MP Report Report Report Report Report Report Sep. 12 Dec. 12 Sep. 12 Dec. 12 Sep. 12 Dec. 12 (annual change, percentage) 4.2 3.5 3.3 3.8 3.5 4.3 4.0 3.8 3.1 3.0 3.6 3.3 4.1 3.8  United States Eurozone Japan China India Rest of Asia (excl. Japan, China & India) Latin America (excl.
Developments towards the end of last year were marked by lower demand for oil. In December, the OPEC countries together with Russia, Mexico and Norway decided to limit oil production. This may have contributed to increasing the oil price during the last months. The risk of war in the Middle East and the decline in commercial oil stocks in the US may also have contributed to increasing the oil price. Oil prices plunged by around 40 per cent between autumn 2000 and the end of 2001. Developments towards the end of last year were marked by lower demand for oil. In December, the OPEC countries together with Russia, Mexico and Norway decided to limit oil production. This may have contributed to increasing the oil price during the last months. The risk of war in the Middle East and the decline in commercial oil stocks in the US may also have contributed to increasing the oil price. BIS Review 20/2002  1  2  BIS Review 20/2002  The global slowdown started to have ripple effects on the Norwegian economy during autumn and winter. Prices for important Norwegian export products fell, and markets for many export industries have weakened. Salmon prices dropped by close to 20 per cent in 2001, after reaching record levels the previous year. The trade policy in the EU stipulates a minimum price for salmon exports, to the benefit of ineffective and high cost producers. The volume of traditional exports fell in autumn last year.

It may take time for a weakening to spill over to output and employment, but when the turnaround first occurs it takes place rapidly and on a large scale. Primary industries, in contrast, are scaled back gradually. These developments will take place in addition to the effects associated with the increased spending of petroleum revenues. All in all, employment in manufacturing and agriculture may fall by 2 - 5 per cent of total employment in the period to 2010. Employment in manufacturing may drop towards 10 per cent of the total. Agriculture may employ less than 2 per cent of total employment. BIS Review 20/2002  7  Changes in industry structure, with an increase in the number employed in services and a decrease in manufacturing, will probably reduce the role of pay increases in manufacturing as a benchmark for wage determination. Among many of Norway’s trading partners, similar developments have occurred. However, the share of employment in manufacturing and agriculture in Norway is already relatively low. Pensions While high oil prices have resulted in sizeable revenues and surpluses on the current account and government budgets, growth in mainland output has been low over the last three years, at only 1 ¼ per cent per year. The sluggish growth rate may be attributed to the supply side of the Norwegian economy. Extensive labour reforms have limited the supply of labour. Measured by person-hours, employment has fallen by 0.4 per cent annually in this period.
If a more expansionary monetary policy had been conducted instead, as advocated by my colleague Karolina Ekholm and myself, inflation would have been higher now and closer to the target, and unemployment would have been lower and closer to a long-run sustainable rate. So what are the most important objections to monetary policy stabilising inflation and unemployment as expressed in the monetary policy discussions at the Riksbank and which can thus justify conducting a different policy? An overall objection appears to be that monetary policy should have more objectives than stabilising inflation and unemployment, or other real economic objectives than stabilising unemployment. Objectives that could thus justify neglecting the objective of price stability and highest possible sustainable employment. BIS central bankers’ speeches  5  In line with this, it has been claimed that it is too narrow to merely focus on unemployment, that is, there are other or further variables than unemployment and employment that should be real-economy target variables. It has been claimed that it is resource utilisation more generally that should be stabilised and that a broad approach to the assessment of resource utilisation is preferable. This means that resource utilisation in a more general and abstract sense would be the target variable, and not unemployment. Using several different measures of resource utilisation is highlighted as desirable as individual estimates are uncertain and a single measure does not capture the different dimensions of resource utilisation.

But it is our own individual responsibility if we want to be relevant and useful to society, to learn new skills, knowledge and behaviours. In central banking, we are also preparing for a future where the landscape of the financial sector will be dramatically different. In the medical field, which both of you are in, the role of the various medical professionals will change as we strive to continuously improve the quality of care with new technologies. The world’s greatest innovations have been born out of a willingness to embrace change, adapt and push the boundaries for a better future. Third, on perseverance. When speaking of perseverance, I am reminded of a Japanese proverb 1/2  BIS central bankers' speeches  that says, “Fall down seven times, get up eight”. Both of you have a long journey ahead of you. Do not be surprised, there will be many challenges, hurdles and speed bumps in your journey. Life does not progress in a linear fashion. Each time you face a challenge and fall, do not be afraid to get up, adapt, improve and try again. The fact that you have come this far is a testament that there are more than a few people who believe in you and are rooting for you to succeed. Take encouragement from that and nurture and develop your ability to persevere. This can be nurtured and developed from facing and overcoming hard knocks and refusing to be defeated by them.
The risk profile’s covariation with the return on human capital has to be considered, too; perhaps a 16  8  Merton, R.C. (2000), Finance and the role of financial engineering in the 21st century, unpublished, Harvard University. BIS Review 5/2001  stockbroker, for example, should be wary of exposing even her/his personal financial savings to the stock market. Other risks lie in fluctuations in the price of a home that one either owns or is saving up for, as well as in the financing costs and, not least, the cost of refinancing; even if the mortgage rate is fixed, when the time comes to renew the loan it may be too high. The risks inherent in price fluctuations apply to other capital goods, too. It is also necessary to consider the risks in any saving plan for children’s education or for personal supplementary health insurance and life assurance. Perhaps it would even be advisable to allow for the risks that are covered today by insurance against fire, theft and accidents. Merton’s point is that there is a composite package of risks that is specific to each person and needs to be identified and covered. The management of all these risks calls not only for professional advice in the construction of such a plan but also for tailor-made financial products. The plan can include a variety of financial instruments but these must be easy for the individual household to understand in order to form a picture of and decide about the potential risks.

[15]  For a thorough analysis of the crisis- and demographics-based burden of young generations, see the European Commission’s 2015 Fiscal Sustainability Report: http://ec.europa.eu/economy_finance/publications/eeip/pdf/ip018_en.pdf. [16] See for an overview ECB (2015), “Progress with structural reforms across the euro area and their possible  impacts”, ECB Monthly Bulletin, February. [17]  See Koske, I., I.Wanner, R. Bitetti and O. Barbiero (2015), “The 2013 update of the OECD product market regulation indicators: policy insights for OECD and non-OECD countries”, OECD Economics Department Working Papers, No. 1200, and “Protecting jobs, enhancing flexibility: A new look at employment protection legislation”, Chapter 2 of the 2013 edition of the OECD Employment Outlook (2013)  [18]  The official Eurostat aggregate for the euro area unemployment rate is unfortunately only available from 1998, but back-data can be estimated based on individual country data. A good analysis, based on a long historic sample is given in the IMF’s “Chronic Unemployment in the Euro Area: Causes and Cures”, WEO 1999:1. [19]  See IMF (2016a), “Time for a Supply-Side Boost? Macroeconomic Effects of Labor and Product Market Reforms in Advanced Economies”, World Economic Outlook, Chapter 3, April, pp. 101-142  [20]  See Font, P., Izquierdo, M. and Puente, S. (2015) “Real wage responsiveness to unemployment in Spain: asymmetries along the business cycle”, IZA Journal of European Labor Studies, Springer, 4:13, June. [21]  See Cacciatore, M., R. Duval, and G. Fiori (2012), “Short-Term Gain or Pain?
But as it progresses and we at the global level get closer to the limiting case of free and frictionless capital movements, then real risk adjusted asset returns increasingly become equalised across countries. As that happens, less and less of the transmission of monetary policy goes through what I call the interest rate channel. There would still be an interest rate channel at the global level, but that would be determined by the big countries. The small, open economies that have adopted a floating exchange rate could still achieve their inflation targets through the exchange rate channel. The scope for short run output stabilisation would be more limited, however. Is this necessarily a problem? If the exchange rate channel were relatively well behaved – i.e., if it provided smooth adjustment based on fundamentals and uncovered interest rate parity broadly held over relevant horizons – then the answer might be no. The problem is, however, that experience has shown that uncovered interest parity does not hold except perhaps over long horizons. Interest rate differentials give rise to widespread carry trading, which is by nature a bet against UIP. Exchange rates therefore diverge from fundamentals for protracted periods, followed by sharp corrections. So the exchange rate often seems to be as much a source of shocks and instability as a tool for adjustment and stabilisation.

Furthermore, there are complex unsolved issues involved regarding potential conflicts between domestic and global objectives. That leaves us with what individual countries can do. In principle, they have three avenues to mitigate the problem. The first is to adjust macroeconomic policy frameworks. The second is to use prudential regulation and supervision aimed at reducing vulnerabilities and increasing resilience in face of volatile capital flows. The third is to introduce tools aimed directly at the financial integration part in order to regain greater monetary independence and shift the effect of monetary policy more to the interest rate channel and towards the non-traded goods sector. This could, for instance, be some form of a variable tax or reserve requirement that would make the relevant capital inflows more expensive and thus limit the increase in the effective interest rate differential vis-à-vis abroad when domestic interest rates are raised. There are complex design, governance, and international issues involved that I do not have time to expand on here. What should be stressed, however, is that it is not optimal that countries are increasingly forced to take unilateral action in this domain. Credible and reliable co-insurance is better than self-insurance. At least, the IMF should monitor the process, and further ahead, some rules of the game regarding capital flows would be welcome so that we are not faced with excessively sub-optimal outcomes and unintended consequences for the global system.
It is important that we have both insight and influence in this process in order to be able to do a good job at the Riksbank and also to be able to contribute to creating the best possible conditions for the Swedish financial sector. 8  BIS Review 29/2003  Finally, I mentioned the Riksbank’s own activities after a potential entry into monetary union. Media interest in the Riksbank would certainly diminish somewhat if we no longer set the repo rate. However, our work tasks and operations would not be affected that much. Most important would be changes in the area of monetary policy. Our perspective would have to become more European, while we would also be an important part of the domestic debate on economic policy. In conclusion, allow me to note that a “no” to the euro would not entail any major changes for the Riksbank’s day-to-day business. I expect that we would continue to conduct our operations in much the same way as before. There is a risk, however, that our significance in the international arena would diminish further. BIS Review 29/2003  9

The problem with this argument is that insurers are beginning to dominate a number of these markets, notably equity release mortgages. 8  Similarly, the Solvency II capital requirement for an insurer with an internal model on a Matching Adjustment bond portfolio is based on a one-year default and downgrade stress as opposed to a one-year credit spread widening stress. The insurer is not exposed to a stress in secondary bond markets. But it is exposed to credit deterioration of borrowers. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  In at least some of these markets, it seems likely that they are now the marginal lenders and returns should therefore reflect the risks that they face. Another possibility is that the Matching Adjustment is capturing returns in excess of an appropriate risk premium. If insurers are finding niches where other types of investors face barriers to entry, they may be able to earn profitable returns. The fact that the Matching Adjustment is calculated as a residual means that it captures any factor causing the yield on an asset to be higher, not just compensation for risks to which the insurer is not exposed. If true, it is possible that the Matching Adjustment on some illiquid assets will decline over time as other investors spot the opportunities and markets become more competitive. As a prudential regulator, my primary concern is that the Matching Adjustment is being calculated correctly.