samchain/econo-pairs-v1 huggingface dataset:
This dinner, in fact, provides us with an opportunity to meet together and discuss what went well, and  Page 1 of 10  what went less well, in our economy in a less formal environment than that usually associated with discussions on economic and financial developments. Traditionally, the Central Bank avails itself, through its Governor, of the opportunity of this occasion to give an extensive panoramic review of Malta’s economic performance, of what in our view drove these results, outline the challenges ahead and conclude with policy recommendations. This year we will depart from this tradition. While we will start with an overview of this year’s developments and discuss briefly the outlook for 2018, we will use this as a basis for a broader, more thematic, discussion. In recent years, definitely since the European sovereign debt crisis, we have increasingly come to realise that whilst we are a very open economy dependent on foreign trade and investment, our economy has shown a degree of resilience and adaptability that has defied expectations, surprised foreign institutions and, indeed, ourselves too. All forecasters including the International Monetary Fund, European Commission, European Central Bank and the credit rating agencies, as well as the Central Bank of Malta, were proven to have been conservative. One could argue that the comment on GDP projections is a bit unfair in as much as the December 2015 projections would have been based on the information available at that time. Since those projections were made, historical data would have been revised.

The need for long-term investment Let’s now shift to a more critical gear. At present, financial institutions deposit with the Central Bank close to four times the average of the previous ten years. In essence, all the growth this year in deposits from Maltese residents has ended up being deposited with us  Page 6 of 10  at the Central Bank. Loans to the private sector have essentially remained flat. Taking a longer term perspective, bank lending to nonfinancial corporations has fallen from 62% of GDP in 2009 to 31% in the first half of this year. From a situation where credit to the nonfinancial sector amounted to more than half of all bank loans, the share has fallen to slightly more than a third. Now, the usual explanation is that banks welcome any feasible projects that comes forward, and that the decline is therefore demand and not supply driven. Moreover, stricter regulation on bank capital and liquidity has made life tougher for bankers, and this, it is argued, has warrants a higher level of caution regarding which projects are financed. Permit me, however, to submit some other facts for your consideration. The recent IMF mission concluded that the cost of bank borrowing for corporates in Malta is among the highest in the euro area, and the spread has been widening in recent years. In their forthcoming report in January 2018 they will furthermore show that credit supply constraints impact SMEs disproportionately.
15  Figure 7  Current-account deficit (percent)  2  Current account: percent of GDP in last 12 months Current account: percent of quarterly GDP  0 -2 -4 -6 -8 -10 -12 -14 18  19  20  21  22  Source: Central Bank of Chile. Figure 8  Inflation in developed economies  Growth forecast for 2023 (1)  (annual change, percent)  Headline 15  10  U.S. Eurozone U.K.  (percent)  Core 8  6  U.S. Eurozone U.K.  3.0 3,0 2.5 2,5 2.0 2,0 1.5 1,5  4  5  1.0 1,0 0.5 0,5  2  0  U.S. Eurozone 6.0 6,0 Latin America (2) China (rt. axis)  5.5 5,5 5.0 5,0 4.5 4,5  0.0 0,0 0  -5 05 08 11 14 17 20 23  05 08 11 14 17 20 23  -0.5 4.0 -0,5 4,0 Jan.22 Jul.22 Jan.23  (1) March 2023 forecasts were made in different periods during March. For this reason, in some cases, these forecasts contain only partial information on the recent financial developments. (2) Considers Brazil, Argentina, Peru, Colombia and Mexico. PPP-weighted growth, shares of each economy according to WEO (IMF). Sources: Bloomberg, Consensus Forecasts and IMF.

At this level, Octopus must be one of the largest stored value card systems in the world. As regards electronic delivery channels, five banks have already launched transactional websites in Hong Kong, and a further twelve have told us that they are at the planning and development stage. Mobile phone banking is also very much a live issue. Once Y2K is out of the way, I think that we will see a spate of further activity in this area. This reflects the fact that banks are increasingly becoming aware of the need to supply the e-banking product while Hong Kong has a population very ready and willing to accept new technology. Moreover, with 200,000 km of fibre optic cabling, linked to more  1  BIS Review 108/1999  than 1,500 buildings, Hong Kong has one of the finest telecommunications infrastructures in Asia. The financial infrastructure is also one of the most advanced. On the legal front, the Government has already introduced a draft Bill into the Legislative Council to facilitate electronic commerce by granting legal recognition to digital signatures and by establishing a licensing system for certification authorities. Hong Kong Post is establishing a public key infrastructure for Hong Kong and will launch its Certificate Authority service before the end of this year. The HKMA welcomes and fully supports these initiatives. Implications for banks The prospects for e-banking in Hong Kong are therefore favourable. However, there are also risks to be managed, and I shall be looking at these more closely.
Within academia, economic theorists began constructing models where policy credibility was absolutely central if people’s expectations were to remain anchored and the economy 4  kept stable. Establishing credibility called for clear policy targets and policy actions. Secrecy about policy actions, whatever its potential shorter-term benefits, came at a potentially significant longer-term cost. Monetary policy “surprises” might provide a short-term jolt to the economy. These surprises were especially likely when policy was in the hands of politicians, perhaps seeking re-election. But these actions nurtured longer-term suspicions that policymakers might neglect inflation, causing inflation expectations to rise and policy credibility to fall. 2 3 4  Kynaston (2017) discusses this era of the Bank of England’s history. Brunner (1981). Kydland and Prescott (1977), Barro and Gordon (1983). 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  If so, monetary surprises could prove self-defeating even in stimulating the economy. They would instead 5  merely stoke expectations of higher inflation. In the academic jargon, an “inflation bias” would emerge. This theoretical story found empirical support in the behaviour of a number of advanced economies during the 1970s, who experienced a so-called “Great Inflation”. 6  In part in response to the Great Inflation, a number of central banks began to be given new policy responsibilities to reduce the potential for electorally-driven monetary surprises. Perhaps the most important of those was operational independence for the setting of monetary policy.

Diversity of thought simultaneously increases the chances of creative solutions being found, while reducing the chances of terrible solutions being adopted. It fattens the upper tail, and thins the lower tail, of the insight distribution. Diversity delivers higher return for lower risk. 28  These benefits arise, in part, from having a wider pool of ideas in which to fish and a deeper pool in which to dilute risks. But they also arise from the collective benefits of having these new ideas and risks challenged and filtered by a group. The benefits of diversity arise as much from interactions within the group, as from the new ideas each person brings. But both are important for good ideas to emerge and for bad ideas to submerge. And it is this which fattens returns and slims risks, whatever the decision. 27 28  Surowiecki (2004). Haldane (2016). 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  These benefits have been demonstrated in a number of real-world settings. In his book The Difference, Scott Page goes a step further with a “Diversity Trumps Ability” theorem. 29  This states that the  highest-performing team is very unlikely to arise from bringing together the individually-best experts. Instead it comes from combining insights from diverse sources, expert and non-expert. It comes from a cocktail of experience, some specialist, some generalist. The returns to diversity are not limitless. When choosing the optimal asset portfolio, most of the benefits of diversification come from the first few assets.
In the European Union, the recently approved Bank Recovery and Resolution Directive (BRRD) – which will come into force next year – provides for an ambitious resolution approach that fully incorporates the new bail-in culture. As of 2016, the BRRD envisages a system under which before any external funds are used to recapitalise a bank, at least 8% of its total liabilities must be used to absorb capital shortfalls. The activation of the bail-in tools would follow a hierarchical order in which neither uninsured retail deposits nor the claims of the deposit guarantee scheme would be excluded, although they would enjoy a preferential status vis-à-vis junior creditors and bond holders. Further actions may be needed in order to provide credibility to these bail-in arrangements and to reinforce the special treatment of deposits. In particular, it might be advisable, at least for the systemically important financial institutions, to add to the ex-post minimum global 8% bail-in threshold an ex-ante minimum amount of specific instruments that could be readily converted into equity immediately after the point of non-viability is achieved, e.g. through specific clauses in the subscription contracts of those instruments. This ex-ante requirement – which is now being discussed at the level of the FSB under the concept of minimum gone concern loss absorbing capacity (GLAC) – may indeed be a useful complement to the EU Directive that already permits competent authorities to instruct banks to adjust their balance sheets to facilitate bail-in pre-emptively.

Our fundamental policies are enshrined in the Basic Law: among these are fiscal independence; maintenance of Hong Kong as an international financial centre; and a financial system governed and protected by locally enacted laws. Most important, the Basic Law prescribes a separate currency for Hong Kong - the Hong Kong dollar - which is to continue to be freely exchangeable and fully backed by reserves. These points are worth stressing, because there has been much misunderstanding about Hong Kong’s position. The challenges ahead  I believe we should also look to the future, and not just dwell on current anxieties or deal with the political fall-out from our recent measures against market manipulation. As I see it, there are two main challenges ahead. One is the challenge before every economy in the region, including Hong Kong, to pull ourselves out of the economic difficulties that now face us. The other is a challenge to the global financial community as a whole. For Hong Kong, the challenge is to see through the economic adjustment that is now in train, to continue to promote our competitiveness, and to plan for economic recovery. There is no denial that this is a painful process. Nor can there be any pretence that the current downturn will be over quickly, whatever the positive signs in the markets over the past few weeks. In the financial markets we need to be vigilant against future attacks and to introduce further safeguards in our financial system.
As we near completion of the New Accord, I am frequently asked the same question that you proposed as the title of my presentation: “what next for Basel?” Rest assured that we will not rest once we’ve introduced the New Accord. Indeed, some hints of topics that the Committee may wish to tackle next emerge even in the comment letters sent by the industry. One good example might be to consider the incorporation of full credit risk models in the calculation of minimal capital requirements. In theory, a bank’s capital requirements would then reflect to a greater degree the economic benefits of diversification in its balance sheet. Some respondents have long asked the Committee to climb this mountain now in the New Accord. As you may know, the Committee early in the process evaluated proposals that would have allowed advanced banks to estimate the degree to which their assets might behave similarly or default together. We know that some banks are making commendable progress in thinking about ways to estimate the value of diversification. Nonetheless, we remain concerned about the degree of confidence one might have in those estimates, given the relative lack of data available on which to base them. Furthermore, we are concerned that it would be difficult for third parties to validate any estimates at this time. Finally, we are not convinced about the consistency of application of these diversification effects.

The Board has welcomed the results of stress tests made by the Financial Sector Assessment Program Mission which showed a rise in the levels of liquidity and capital held by the Saudi banking system, representing preventive reserves that impart more confidence to the banking system ability to withstand shocks. The Board members praised the monetary policy of the Kingdom which aims to enhance the strength of the banking system and price stability. Custodian of the Two Holy Mosques, Despite the remarkable achievements fulfilled at all levels, there are still some challenges that you spare no effort to follow up and strive to overcome, such as: First: Creating more decent work opportunities for the sons and daughters of this country. Despite the good achievements in employment of citizens, estimates show that the unemployment rate among Saudis is still unsatisfactory. Taking into account the composition of the population in the Kingdom, which is mainly dominated by young people, it is imperative to face this issue, exert more efforts and overcome the difficulties encountering the process of creation and Saudization of jobs, including continued improvement of education and training outputs in line with the requirements of the labor market, determination of Saudization rates by activities and increasing them gradually. It is also important to achieve flexibility in the labor market to stimulate production and innovation and preserve the rights of workers and employers. Second: Diversification of income sources and reducing reliance on oil as a major source of income.
Looking ahead, we expected that positive fundamental factors – notably strong global demand and robust earnings in the euro area – would contribute to a certain pick up and a broadening of economic activity. The latest data and indicators have not changed this assessment. According to Eurostat’s flash estimate, real GDP grew at a quarter-on-quarter rate of 0.3% in the second quarter of this year, compared with 0.4% in the first quarter of 2005, confirming that the underlying growth dynamics remained subdued in the first half of 2005. At the same time, the most recent survey indicators have, on balance, supported the view that economic growth could improve in the second half of this year. Looking further ahead, conditions continue to be in place for positive fundamental factors to influence the outlook and for economic activity to pick up beyond the short term. On the external side, ongoing growth in global demand and improvements in euro area price competitiveness should support euro area exports. On the domestic side, investment should benefit from the exceptionally low level of both nominal and real market interest rates prevailing across the entire maturity spectrum, as well as from the robust growth of corporate earnings and ongoing improvements in corporate efficiency. Consumption growth should gradually rise, broadly in line with expected developments in disposable income. This picture is consistent with the most recent ECB staff projections, which envisage euro area real GDP growing at rates of between 1.0% and 1.6% in 2005 and between 1.3% and 2.3% in 2006.

At the moment, we consider that the global impact will most likely remain limited and temporary, but we will of course continue to monitor very closely any available further evidence. Turning to price developments, recent increases in oil prices have pushed headline inflation rates to levels in excess of 2% over the last months. According to Eurostat’s flash estimate, annual HICP inflation was 2.1% in August, compared with 2.2% in July, and inflation rates are expected to fluctuate around current levels over the next few months, with some further increases towards year-end. At the same time, when analysing underlying domestic inflationary trends, there continues to be no significant evidence of upside pressures building up in the euro area. In particular, wage increases have remained contained over recent quarters and this trend should prevail for the time being, given the current labour market situation. This picture is broadly in line with the new ECB staff projections. ECB staff project average annual HICP inflation to lie between 2.1% and 2.3% in 2005 and between 1.4% and 2.4% in 2006. These projections constitute significant upward revisions to the Eurosystem staff inflation projections published in June, mainly reflecting the fact that oil prices have once again increased by more than was suggested earlier by forward rates. Upside risks to this new baseline inflation scenario remain, relating to potential further rises in oil prices, administered prices and indirect taxes.
If China’s economy has a hard landing, there really aren’t many sources of strength left in the global economy. Let me move now to what this all means for Fed policy. As I noted earlier, our statutory mandate is to achieve maximum employment and price stability.5 We are far short of maximum employment. And I expect inflation to fall this year below the 2 percent level that we view as consistent with our mandate. This is clearly a situation in which we have to keep applying monetary policy stimulus vigorously. The Fed’s monetary policy body is called the Federal Open Market Committee, or FOMC. As you know, the Fed influences the economy through its ability to affect interest rates. In December 2008, when the recession was hitting with full force, the FOMC lowered the federal funds rate, the rate banks pay to borrow from each other on overnight loans, close to zero. It’s been there ever since. Given the weakness in the economy, standard monetary policy guidelines indicate that the federal funds rate should have gone deep into negative territory. But, of course, it’s not possible for interest rates to go much below zero. So the Fed has had to look for alternative ways to stimulate the economy. For example, we’ve purchased over one-and-three-quarters trillion dollars of longer-term securities issued by the U.S. government and mortgage agencies. This raises the prices on these securities, which lowers their yields. And lower yields on longer-term Treasury securities tend to push down other longer-term interest rates.

Øystein Olsen: A decade of forward guidance in Norway Speech by Mr Øystein Olsen, Governor of the Norges Bank (Central Bank of Norway), at a seminar, held at Columbia University, New York City, 8 April 2014. *  *  *  Accompanying charts can be found at the end of the speech or on the Norges Bank’s website. Please note that the text below may differ from the actual presentation. Thank you for inviting me to Columbia University. Economists in Norges Bank have been greatly inspired by researchers from this institution, and we have had the pleasure of hosting scholars from Columbia at a number of conferences in Norges Bank. Some of our economists have also been here as visiting scholars. It is therefore a particular pleasure for me to be here today. “Forward guidance” as an element of monetary policy has attracted attention in the aftermath of the international financial crisis. With key policy rates in some countries constrained at a lower bound, statements about central banks’ future actions have been used to affect interest rate expectations. Norges Bank has published explicit numerical interest rate forecasts as a regular part of our monetary policy communication for ten years. The interest rate forecast is our preferred way of guiding economic agents’ interest rate expectations. As such, our version of forward guidance has been reasonably successful. The topic of my talk is our framework for forward guidance and the experience gained over a decade of practising our approach.
For the regions, dots show the median of Bloomberg's survey to analysts on the expeted MPR for June 2011, September 2011, December 2011, March 2012 and June 2012. Chile uses June's EES for the rate expected for July 2011, November 2011, December 2011 and May 2012. (2) Includes the Eurozone, Japan, the U.K. and the U.S. (3) Includes Brazil, China, Colombia, the Czech Republic, Hungary, Mexico, Peru, Sources: Central Bank of Chile, central banks of respective countries, Bloomberg and the International Monetary Fund. BIS central bankers’ speeches  9  Figure 5 Real exchange rate (*) (index, 1986=100) 120  120  110  110  100  100  90  90  80  80  70  70 91  93  95  97  TCR  99  01  03  1991-2010 average  05  07  09  11  1996-2010 average  (*) Information at 14 June 2011. Source: Central Bank of Chile.

In particular, it considers that the economy posted healthy growth in 2018, driven by investment, an impulse that is expected to continue in 2019. Externally, growth in the main economies has shown a sharper-thanexpected deceleration, which has led its authorities to implement further economic stimulus packages. The main difference with respect to December’s baseline scenario was seen in local inflation. Measured by the benchmark Consumer Price Index (CPI) calculated by the National Statistics Institute (INE) based on the updated basket and new methodology, annual CPI variation is significantly below the forecast. This differential between forecast and actual inflation occurs in a context where activity and demand have behaved as expected, which in this Report is explained by a lower-than-expected peso depreciation pass-through, favorable supply factors in some markets and greater capacity gaps than had been estimated until now. Said gaps do not originate in weaker demand, but in the labor force effects of massive immigration to the country, an issue that the Bank has brought up in its presentations to this Commissions for some quarters now. In this context, our projections yield that the convergence of inflation to the 3% target will take almost a year longer than we estimated in December. This provides room for the withdrawal of the monetary stimulus to proceed at a slower pace than was announced before by the Board. This scenario plays out in a context of greater uncertainty in the world economy, where global financial markets remain very susceptible and more negative scenarios may occur.