samchain/econo-pairs-v1 huggingface dataset:
c.  Also from 1 July 2002, QFBs may offer Supplementary Retirement Scheme accounts, accept CPF fixed deposits, and offer agent bank accounts under the CPF Investment and Minimum Sum Schemes. Liberalising the CPF Investment Scheme alone will open up a large pool of funds that could be placed with the QFBs. About $ bn of funds in CPF Ordinary and Special Accounts are still available for investment under the CPF Investment Scheme. These measures will significantly enhance competition in retail banking in Singapore. With 6 QFBs permitted to share ATMs among themselves, the increase in locations could result in a QFB ATM network of 90 or more locations across Singapore. Together with access to a nationwide EFTPOS network, this provides QFBs with significant scope for expanding their presence in the domestic market. For consumers, these changes will mean more choice and greater accessibility. The only part of the retail payments system not yet liberalised will be access by the foreign banks to the local banks' ATM networks. Foreign banks have not been allowed to provide their customers with ATM services on the local banks' networks. We will maintain this restriction for now. Safeguards These changes to the wholesale and retail banking markets represent a substantial opening up of the industry. We expect foreign participation in Singapore's banking industry to increase as we liberalise. More people will invest and deposit their money with foreign banks. MAS is therefore looking into two measures to safeguard depositor interests – subsidiarisation of systemically-important foreign banks and deposit insurance.

Customers, especially the more sophisticated ones, will take their business to the foreign banks already in Singapore. The local banks cannot rely on government protection forever. Even if we had not liberalised the banking industry, the foreign banks here would still have been able to use technology and new delivery channels to compete for retail business. In fact, the most innovative foreign banks have been growing their market share despite the restrictions that we have placed on them. Over time, local banks that cannot compete would become marginalised. This would not be a good outcome. In the event of a crisis, we want to be able to count on strong institutions with a major stake in the country, whose interests will be aligned with those of the long term interests of the Singapore economy. Banks which are tied more closely to Singapore will be more likely to act in support of financial and economic stability. That is why MAS remains committed to building strong local banks with a significant share of the domestic market. This is the reality that Singaporeans must understand and accept, as we debate the pros and cons of bank mergers. If small banks were economically viable, we would not be meeting tonight with every Singaporean bank either a bidder or a takeover target. The fact that they are bidding and being bid for proves not just that the smaller local banks are vulnerable, but also that the bigger ones themselves feel insecure, and rightly so.
So while the Bank of England may not be as directly – or reluctantly – involved in the provision of liquidity and finance to the midlands economy as we were in Geach’s day we remain very much engaged in these issues. 15  All speeches are available online at www.bankofengland.co.uk/speeches  15  th  Our Birmingham office, which celebrated its 190 birthday this year, no longer discounts bills of exchange in competition with the Midland bank, which is itself soon to return to Birmingham. Rather it is our eyes and ears in the region. Along with our network of Agents' offices in other parts of the country it helps us to understand what is going on, on the ground, in the economy. Indeed, the large and representative survey I have drawn on so heavily today, was only possible through our Agents' network using their contacts with firms. I hope Charles Geach would have been pleased. Thank you. 16  All speeches are available online at www.bankofengland.co.uk/speeches  16

The financial system in the aftermath of the crisis  The financial industry is supposed to be the lubricant of the economic engine and ensure its smooth and efficient functioning. To grasp the sheer scale of its task, just imagine the billions of savers and investors whose interests have to be matched by the financial system, each of them having a particular behaviour, often driven by emotions. In doing so, financial institutions use specialized resources to assess and manage risks, including complicated mathematical models. Just think of the many Nobel prizes that were awarded for achievements in this field. The complexity of financial intermediation explains some of the seemingly peculiar features of the financial system as, for instance, the fact that the volume of transactions on the forex market is many times larger than what would be required by the actual exchange of merchandise. BIS central bankers’ speeches  3  The major positive contribution of the financial system is its ability to deal with asymmetric information problems. Adverse selection and moral hazard are issues emerging from asymmetric information. They are a cost to society, as they hamper lending. Financial system expansion has been the natural solution of the society in order to overcome asymmetric information problems. Financial institutions put their capital at risk and derive income from the spread between lending and deposit rates. In doing so, they use specialized resources to assess credit risk and discipline the borrower.
But since the target is set at 2.5% on a symmetrical basis, the concept of “prudence” cannot be applied in the same way. The result is that we worry as much about being below the target as we do about being above it. And I believe this makes good economic sense: the problems of severe deflation are at least as great as severe inflation. The particular indexed measure of inflation the Chancellor has chosen is RPIX, that is the headline RPI number after excluding - this is the X bit - mortgage interest payments. Some believe that we should move to the Harmonised Index of Consumer Prices (HICP), widely used in Europe and, accordingly, making comparison with Euroland inflation easier. HICP inflation in this country has been running consistently below RPIX by about 1%. This reflects differences in the construction of the index, in particular the treatment of depreciation of property costs. Some have argued - most recently the Engineering Employers’ Federation - that if we moved to HICP, then interest rates could immediately be lowered. But this does not follow. If we moved to a different calculation of inflation, it would seem natural to revise the target at the same time. A 2.5% target for HICP would mean that we are targeting a higher level of inflation than we are at present.

With respect to the first metric, we have seen labor market improvement since the program began last September. Over this time period, the unemployment rate has declined to 7.3 percent from 8.1 percent.4 However, at the same time, this decline in the unemployment rate overstates the degree of improvement. Other metrics of labor market conditions, such as the hiring, job-openings, job-finding rate, quits rate and the vacancy-to-unemployment ratio, collectively indicate a much more modest improvement in labor market conditions compared to that suggested by the decline in the unemployment rate. In particular, it is still hard for those who are unemployed to find jobs. Currently, there are three unemployed workers per job opening, as opposed to an average of two during the period from 2003 to 2007. With respect to the second metric – confidence that the economic recovery is strong enough to generate sustained labor market improvement – I don’t think we have yet passed that test. The economy has not picked up forward momentum and a 2 percent growth rate – even if sustained – might not be sufficient to generate further improvement in labor market conditions. Moreover, fiscal uncertainties loom very large right now as Congress considers the issues of funding the government and raising the debt limit ceiling. Assuming no change in my assessment of the efficacy and costs associated with the purchase program, I’d like to see economic news that makes me more confident that we will see continued improvement in the labor market.
Naturally, a European safe asset would facilitate the development and integration of capital and financial markets in the euro area, as flight-to-quality movements would no longer imply flight-to-core-countries movements. The existence of a common euro-based safe asset would be particularly important in times of stress, as it could mitigate the possibility of monetary policy transmission being hampered in a context of fragmented bond markets. The effectiveness of monetary policy should be independent of the existence of country risk in the euro area. Similarly, a sufficient supply of safe assets would also facilitate the transmission of non-conventional monetary policy, by expanding the assets available in the event of a large asset purchase programme. It would allow monetary policy to expand the ECB’s balance sheet without squeezing liquidity in national sovereign markets. More generally, the literature has shown that a shortage of safe assets leads to a lower economic growth environment when monetary policy is constrained by the effective lower bound on interest rates. This is so because the scarcity of safe assets pushes the natural rate downwards. If central banks are constrained in their ability to lower nominal rates, a disequilibrium emerges in asset markets, giving rise to a “safety trap”. In this case, households, faced with deflationary pressures and (relatively) high real rates, have an incentive to save and postpone consumption, and firms, faced with low demand and high risk premia, to postpone investment.

Let me expand on these aspects. The normal operation of markets and financial intermediaries requires the availability of a broad spectrum of assets with sufficient liquidity and bounded counterparty risk, including so-called “safe assets”. This is even more the case in turbulent times, as investors tend to react to increases in uncertainty by turning to assets with a lower level of perceived risk. As Holmstrom and Tirole1 put it, a safe asset is an instrument that allows wealth to be transferred from one point in time to another without any nominal loss. If you allow me the metaphor, the supply of a broad enough set of assets is the infrastructure in an electricity grid. A large enough infrastructure is needed to ensure the grid’s smooth functioning, in  1  Holmstrom, B. and J. Tirole, “Private and Public Supply of Liquidity”, Journal of Political Economy, Vol. 106, No 1 (February 1998), pp. 1-40 (40 pages). 4/8  particular, to allow it to withstand episodes of high demand. If not, the system is prone to disruptions and even blackouts. There is a wide consensus regarding the existence of a secular shortage of safe assets at global level. To put it simply, there is not much highly-rated paper available once holdings in monetary policy portfolios are discounted. This phenomenon has become more acute since the outbreak of the European sovereign debt crisis, given that some eurodenominated sovereigns have seen their ratings downgraded, in part due to the persistence of an incomplete EMU.
However, increasing credit to GDP ratio in all countries, ranging from 23 percent in Macedonia to 76 percent in Croatia also raises the concerns for a possible credit boom. There are some important trends worth being noted: Credit composition is dominated by consumer credit and less oriented to enterprises; Credit/deposit ratio has steadily increased indicating banks willingness to extend their lending activity at a faster pace than the growth of savings. However, the average of credit/deposit ratio of the region is still below the level of the new EU member; Lending is mostly in foreign currency as a result of high euroization of the economies and lower interest rates in foreign currency; Another structural change in credit portfolio relates to the upward trend towards longer-term lending, which at least in three countries of the region (Albania, Macedonia and Bosnia & Herzegovina) consisted of 50 percent or more than total lending; The spread between interest rates of deposits and credits remains high. There are several explanations to this such as lack of efficiency and competitiveness among banks, high premium risks of the economies in the transition period, collateral problems, legal system obstacles etc. However, it’s worth mentioning that the spread between deposit interests and credits has declined in the recent years, as a result of increased competition in the banking system. Despite these characteristics must be admitted that the share of the banking system in the economy is relatively small by European standards.

Holding firm during the financial crisis has paid off. The economic recovery may have taken some time in many areas, but the global economy is now back in fairly good shape. But it is at this very moment, when a lot of countries are able to post respectable economic growth, that protectionism appears to be rearing its head again. Trade disputes between several countries are jeopardising the global upturn. Burgeoning protectionism also entails considerable challenges for central banks – and thus for the Swiss National Bank (SNB), too – as it brings with it the threat of negative consequences for monetary policy. Free trade as a scapegoat Before I come to the actual subject of my speech, namely the relationship between protectionism and monetary policy, I would like, if I may, to take a step back for a moment and look at where the calls for protectionism stem from. Numerous academic and empirical studies 1 have demonstrated that the free exchange of goods and services improves people’s standard of living.
Lim Hng Kiang: Impact of current issues to Asia’s growth and the global environment ahead Keynote address by Mr Lim Hng Kiang, Deputy Chairman of the Monetary Authority of Singapore and Minister for Trade and Industry, at the Merrill Lynch Asia Rising Stars Conference 2008, Singapore, 14 May 2008. *  *  *  Ladies and Gentlemen, It gives me great pleasure to address this gathering of industry leaders and rising businesses in Asia. I find the term “Rising Star” a very apt description of Asia. It reflects the rising importance as the region, and its companies, many of which are growing rapidly and looking towards the world. The Asian story has taken on a more pan-regional character with a vibrancy underpinned by strong growth in intra-Asian trade and investments. Indeed, there are many rising stars. Asia and its companies have featured strongly in an increasingly interconnected world. The globalization trend can be seen from many aspects – movement of products and services, capital and talent. Through these links, there is greater access to global markets and resources. At the same time, there is also greater interdependence and susceptibility to contagion effect during crises. This presents a unique set of challenges and opportunities to Asia and its companies. This conference is a good opportunity to take stock of these challenges and opportunities. You will get to hear from many expert speakers on what holds for the rising Asian business and for the investors considering Asian opportunities.

More often than not, there will be a number of possible interest rate paths that might be said to provide a reasonable balance, in view of the uncertainty involved. The results of this trade-off are presented in the Inflation Report in the form of a chart that presents baseline scenarios for the interest rate, the exchange rate, inflation and capacity utilisation in the economy. The formulation of a precise inflation target, our projection for the interest rate 3 – 4 years ahead in time and our desire to achieve a balance between output stability and inflation may perhaps give an impression of excessive optimism with respect to managing the economy and invite a repeat of earlier attempts to fine-tune the economy. But it is important to bear in mind the lessons drawn from the 1970s and 1980s, i.e. high stabilisation policy ambitions may lead to wide fluctuations in the economy, with high and variable inflation. In our conduct of monetary policy, we must not underestimate the uncertainty surrounding the decisions taken. Even if the Bank publishes a forecast for the interest rate, this does not mean that the interest rate will follow the forecast throughout the projection period. Forecasts of inflation, output, the interest rate and other variables are based on an assessment of the current situation and a perception of how the economy functions. Disturbances to the economy may result in changes in the forecasts. Data revisions imply that the current economic situation is not fully known.
As I said, the last inflation figure was 2.9% in twelve months, practically right on the monetary policy target. Financial risks are well contained and the Chilean economy has successfully weathered a period of significant slowdown without much trouble. As an institution, the Bank inspires credibility and trust. Over the past several years, inflation expectations two years out have remained stable at the policy target. Also, the voice of the Bank has been heard when it has identified risks emerging in the financial sector, and its model of organization and autonomy has inspired every agent searching for institutional schemes granting a transparent and equitable operation in key functions. It is important to recognize the contribution of the Central Bank of Chile’s staff, Board members and Governors that came before me to achieving those high standards. Getting to this point wasn’t easy, in either substantive or institutional terms. During the past few years, the evolution of the economy has been determined largely by the swings in the 7 / 19  BIS central bankers' speeches  world economy. The end of the so-called commodity boom, the persistence of very expansionary monetary policies—both conventional and unconventional—, deflation replacing inflation as a macroeconomic risk and the profound transformations that the Chinese economy has experienced, among others, are some of the large-scale phenomena that have generated major, even atypical, changes in the external scenario facing the emerging economies. These changes have been perceived especially clearly in Chile.

During the years of highlypriced commodities, especially when they were coupled with particularly low interest rates, our economy grew more than 5% annually, the real exchange rate dropped substantially, and investment boomed. Despite this, they were years of particularly low inflation, driven by the drop in many tradable goods’ inflation. The situation changed dramatically in late 2013, when Chile’s terms or trade reversed significantly. Since then growth has been near 2% and investment has receded, as has the current account deficit. Between 2013 and 2015 the peso depreciated largely, pushing inflation above the tolerance range for longer than expected. The transition from high growth and low inflation to low growth and high inflation is certainly uncomfortable for any central bank. More so if this transition features an autonomous confidence shock as happened in our case. But we do not choose the shocks that hit us. What we can do is to deal with them and cushion their impact on the overall economy. This has been possible, to a great extent, because of our appropriate policy framework. This framework consists of an inflation-targeting monetary policy with a floating exchange rate. This makes it possible to adjust the monetary impulse so that projected inflation two years out stands at 3%, allowing relative prices to adjust to changes in external conditions.
The BIS FXWG formed a Market Participants Group (MPG) which includes representatives across the globe and includes the sell-side, buy-side, and market infrastructure communities. The regional FX committees are also integrally involved in the work. Issues addressed by best practices Let me now highlight how, in my experience working with New York Fed-sponsored committees, best practices can play an important role in addressing a range of issues. For example, best practices can identify emerging risks, solve “first-mover” problems, challenge long-established practices, improve market function, and assist control functions. Collaboration between market participants and central banks in groups like the TMPG or the FXC can promote identification of evolving or emerging risks and resulting best practices can publicize those risks, and suggest mitigants for them, to the broader market. For example, the FXC, recognizing the risks associated with the increased use of automated trading, published a set of recommendations in 2006 around “auto-dealing” in FX markets. The TMPG provided similar guidance in 2015. 12 Importantly, best practices can be a way to resolve first-mover problems. For instance, a sizeable portion of the non-centrally cleared forward-settling agency MBS transactions prior to 2013 remained unmargined, posing counterparty risk in the event one trading party were to default, and potentially systemic risk to the overall financial system. Margining such transactions is a common and sensible way to reduce counterparty exposures and systemic risk.

Moreover, even these estimates may overstate the future path of interest rates implied by financial markets. Market interest rates are probability-weighted averages of different possible interest rate paths – they are a mean. Model estimates of the modal – or most likely – path for interest rates are lower still (Chart 3). Estimates of the modal path of interest rates are drawn from estimated models, so are no more than illustrative. Nonetheless, the modal interest rate three years ahead in the US is  1  Expected lift-off here refers to a 25 basis point increase. 2  The path of forward interest rates will also be affected by term premia. See Shafik (2015). BIS central bankers’ speeches  1  only 1.1%. In the UK it is 0.8%, little changed from current levels. According to these estimates, the glue holding interest rates to the floor looks stronger still. There is an old English aphorism, due to Walter Bagehot in the 19th century: “John Bull can stand many things, but he cannot stand 2%”. Prior to 2009, the Bank of England had been careful to avoid the wrath of Mr Bull: Bank rate had never been below 2% in its then-315 year history. For the past six years the MPC has been testing the patience of Mr Bull, with the 2% threshold consistently breached. If financial markets are to be believed, Mr Bull, Mrs Bull, and their children are set to have their patience tested further: UK rates are not expected to reach 2% until 2019.