samchain/econo-pairs-v1 huggingface dataset:
2  BIS central bankers’ speeches  implemented various restrictions to the use of wholesale funding and foreign exchange derivatives. Despite their prevalence, it must be said that the effectiveness of many of these policies, as well as their unintended costs, are still to be determined. Further research is needed here to eventually establish best practices in their conduct.4 Today we will see two examples of such research. The first is a paper by Guido Lorenzoni that looks at capital controls from a different perspective and studies the role they have in the dynamic manipulation of terms of trade. The second is a paper by Marcos Chamon that studies the desirability of sterilized interventions under inflation targeting. The worries about potential reversals in capital flows have been partially borne out by the events of this year. After the Federal Reserve hinted earlier this year the possibility of starting tapering the purchases of long‐term bonds and MBS, financial markets quickly reacted with declines in the prices of US government bonds and increases in mortgage interest rates. At the same time, the spreads of emerging market debt increased importantly, their currencies depreciated against the dollar, and capital flows into these countries declined, albeit with some heterogeneity across countries that seems related to fundamentals. While more moderate than in previous occasions, this pattern is still reminiscent of the sudden stop episodes I previously mentioned. The simultaneous increase in the yields of sovereign bonds of many countries, issued in different currencies, has captured the attention of researchers and policymakers alike.

But even if we believe these factors to be important some key questions remain open. For instance, why did this time emerging markets recover relatively quickly from the global shock, while advanced economies stagnated? Was it due to better policies, or to the new relevance of China for their external demand, or to another factor? We need to know more of the ultimate causes of this two‐ speed recovery, and more research on this front would be helpful. 1  IMF, Regional Economic Outlook, May 2013. BIS central bankers’ speeches  1  Despite the likely role of pull factors, the fact that these phenomena coincided with the timing of the monetary expansion in advanced countries suggests there is a link between them. In fact, many believe that this “push factor” played a major role, and recent research lends some support to this view.2 This afternoon we will be discussing one avenue through which low interest rates in advanced countries may channel capital toward emerging markets: carry trade flows, whose relevance will be addressed in a presentation by Craig Burnside. The likely role of push factors is not a total surprise, since the recovery of advanced economies in the context of a deleveraging process requires a rebalancing of global demand toward emerging economies. This rebalancing needs the right price signals and quantity responses. Two presentations this morning by Philippe Bacchetta and Gian Maria Milesi‐ Ferretti will touch on the topic of global rebalancing and external adjustment to the crisis.
In other words, the situation around six or seven years ago was such that we were more or less prepared to believe we had found the final solution as to how monetary policy should be conducted, and that financial crises no longer offered a severe threat. An illustration The international financial and debt crisis made it painfully clear that things were not that simple. There are several lessons that can be learned from the crisis. But if one were to choose the most important, for me there is no doubt that it is that a substantial increase in indebtedness in society can entail major problems, particularly if it is linked to price increases on an important asset market, in particular the housing market. This danger was definitely underestimated prior to the crisis. The underlying problems can be illustrated using a stylised figure (see Figure 1). The red line represents the usual cyclical fluctuations in the economy – the business cycle. Figure 1 Business and credit cycles  Business cycle Credit cycle  2  2  This so-called Jackson Hole Consensus is described by, for instance, Issing (2009). BIS central bankers’ speeches  Let us, for the sake of simplicity, assume that inflation follows the business cycle, so that the curve can also represent developments in inflation. Of course, the business cycle and inflation do not normally coincide so well in reality, but this has no significance for the points I will make here.

This assessment is also reflected in the September 2010 ECB staff macroeconomic projections for the euro area, according to which annual real GDP growth will range between 1.4% and 1.8% in 2010 and between 0.5% and 2.3% in 2011. Compared with the June 2010 Eurosystem staff macroeconomic projections, the range for real GDP growth this year has been revised upwards, owing to the stronger than expected rebound in economic growth in the second quarter as well as better than expected developments over the summer months. For 2011 the range has also been revised upwards, reflecting mainly carry-over effects from the projected stronger growth towards the end of 2010. In the Governing Council’s assessment, the risks to this improved economic outlook are slightly tilted to the downside, with uncertainty still prevailing. On the one hand, global trade may continue to perform more strongly than expected, thereby supporting euro area exports. On the other hand, concerns remain relating to the emergence of renewed tensions in financial markets and to some uncertainty about growth prospects in other advanced economies and at the global level. In addition, downside risks relate to renewed increases in oil and other commodity prices, and protectionist pressures, as well as the possibility of a disorderly correction of global imbalances. With regard to price developments, euro area annual HICP inflation was 1.6% in August, according to Eurostat’s flash estimate, compared with 1.7% in July. The small decline in inflation is likely to reflect base effects in the energy component.
It is possible that a policy-rate path with a higher policyrate in the near future will be deemed to dampen asset-price increases in the near future and also reduce the risk or size of a collapse in the more distant future, thus undershooting the inflation target in the near term but providing a more stable development of inflation and resource utilization in the medium and longer term. These are examples of situations when the central bank may choose to respond to asset-price developments. However, the reason for these responses is that the central bank is concerned with the repercussions for inflation and resource utilization, not with the asset prices as such. That is, asset prices are not target variables; they do not enter the loss function. It goes without saying that in most realistic situations it will be very difficult to judge whether a particular asset-price movement is a bubble or is grounded in expectations about reasonable  5  See the box “Monetary Policy at Low Interest Rates” in the February 2009 Inflation Report (Bank of England 2009, p. 44). My own view is that the “zero interest-rate mystique” may have been somewhat exaggerated, see the discussion in the Riksbank’s minutes of its September 2009 policy meeting (Sveriges Riksbank 2009). BIS Review 112/2009  3  fundamentals, and whether there are repercussions on inflation and resource utilization that motivate adjustment of the policy-rate path. 6 This is obviously an area where good judgment is crucial.

205, www.bis.org.Woodford, Michael (2007a), “The Case for Forecast Targeting as a Monetary Policy Strategy”, Journal of Economic Perspectives, Fall 2007. Woodford, Michael (2007a), “The Case for Forecast Targeting as a Monetary Policy Strategy”, Journal of Economic Perspectives, Fall 2007. Woodford, Michael (2007b), “Forecast Targeting as a Monetary Policy Strategy: Policy Rules in Practice”, in Koenig, Evan, and Robert Leeson, eds., From the Great Moderation to the Great Deviation: A Round-Trip Journey Based on the Work of John B. Taylor, forthcoming. BIS Review 112/2009  9
We talk often about credit risk, market risk, liquidity risk, conduct risk in it’s several forms. You can add to that, hubris risk, the risk of blinding over-confidence. If I may say so, it is a risk that can be magnified by broader social attitudes. Ten years ago there was considerable reverence towards, and little questioning of, the ability of banks and bankers to make money or of whether boards demonstrated a sufficient diversity of view and outlook to sustain challenge. How things have changed. Healthy scepticism channelled into intelligent and forceful questioning of the self-confident can be a good thing. In turn, culture matters to us as financial regulators because it can, left alone, tend to shape and encourage bad outcomes, but it doesn’t have to do that. What can we do therefore as regulators to shape and influence better outcomes on a more consistent basis? Let me start with one thing that we cannot do. As regulators, we are not able, and should not try, to determine the culture of firms. We cannot write a regulatory rule that settles culture. Rather, it is the product of many things, which regulators can influence, but much more directly which firms themselves can shape. We seek to ensure that firms have robust governance, which includes appropriate challenge from all levels of the organisation; and promote the acceptance that not all news can be good and the willingness to act on and respond promptly to bad news.

The Fund has invested considerable efforts in promoting transparency and developing standards and codes in cooperation with the World Bank, the Bank for International Settlements and other organizations. Remarkable progress has been made in this area but we realize that broad implementation of these standards will take time, although this is time well spent as improved practices and comparability will increase the stability of the international financial system. We believe that the next steps should be to harmonize accounting standards at world level. The Nordic-Baltic Constituency encourages all member countries to support the efforts of the International Accounting Standards Board to reach a consensus on accounting standards and principles. Furthermore, we welcome the new steps taken to increase the Fund’s transparency, especially the policy of moving to presumptive publication of all Article IV reports and the required publication of documents in exceptional access cases. Promoting Economic Progress among Low-Income Countries One of the greatest challenges of our time is to win ground in the battle against poverty. All parties must be fully engaged in this campaign. Many initiatives in recent years have borne fruit but there is still a long way to go and the international community must do better in order to achieve the Millennium Development Goals (MDGs). Here, I would like to focus on trade and its importance for development.
But what should not be in doubt is that the MPC will take whatever steps are necessary in order to keep inflation on track to meet the 2.5% target. The challenge for monetary and fiscal policy is to restore domestic demand growth to sustainable levels. This would permit the stabilisation and eventual reduction of the trade deficit, while maintaining  2  BIS Review 26/2002  low and stable inflation, and high and stable employment, at the same time as resources move from private consumption to the provision of better public services. It is possible, perhaps likely, that the transition to lower growth rates of consumption will occur smoothly. And lower inflation now than in the past may ease the adjustment - the future is not what it was. For the Monetary Policy Committee the challenge is to keep inflation close to the target during a period in which a significant re-balancing of the British economy will take place. That will be a challenge, not just for the MPC, but for all of us. BIS Review 26/2002  3

John C Williams: Attaining and maintaining price stability Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Money Marketeers of New York University, New York City, 19 April 2023. ***  As prepared for delivery Thank you for that kind introduction. Good evening, everyone. It's great to be here with the Money Marketeers. One of the big issues facing the economy is inflation. Inflation is far too high, and high inflation is hardest on those who can least afford essentials like food, shelter, and transportation. So today, I'm going to talk about the actions the Federal Reserve is taking to restore price stability. I'll also give my views on the economic outlook. But before I go any further, I need to give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or others in the Federal Reserve System. The Dual Mandate For a group like the Money Marketeers, the economic and financial events of the past few months-and even years-have provided a lot to talk about. In fact, the high inflation we see today stems from imbalances between demand and supply that started with the pandemic. A more recent issue has been the stresses that emerged last month in parts of the banking system. Conditions in the banking sector have stabilized, and the banking system is sound and resilient.
Manufacturing output rose around 1922 and annual growth in the following years up to 1929 averaged as much as 4 per cent. So what was the attitude to economic policy in those days? On the whole, the depression, with falling prices and rising unemployment, was seen as a necessary evil, a purgatory that would result in a spontaneous recovery to economic balance. As regards stabilisation policy in one form or another, the primary responsibility rested with the Riksbank. In practice, however, policy was passive and tardy. A look at the wholesale price index from 1913 to 1920 shows that the increase in Sweden was almost twice that in the United States, for example. In time, the interest rate was raised and the supply of credit was restricted. However, the tighter monetary stance was then retained even after activity had turned downwards. The reason was that the Riksbank tried to bring the Swedish krona back to its par value in 1913 in order to rejoin the gold standard. As a result, at the beginning of 1921 the interest rate was around 6 per cent at a time when prices were falling about 20 per cent. 1  Schön, L (2000), En modern svensk ekonomisk historia (A modern Swedish economic history), SNS Förlag, Stockholm. BIS Review 81/2001  1  Fiscal policy was based on other criteria than those of stabilisation policy.

Unfortunately, there are individuals who try to take advantage of owners of new businesses by providing them with poor advice or overcharging them for credit. Researching the backgrounds of these service providers and lenders is difficult and time intensive, leaving small business owners too often uncertain as to who to deal with. In some cases, this uncertainty can discourage a business owner from seeking assistance. I believe that we need a better system of certification for organizations that work with small businesses. The certification will assure a business owner that the organization has been properly vetted and has the requisite skills to assist the owner. This not only provides assurances to business owners, but saves them the time and resources required to do this due diligence on their own. Finally, in addition to certification, it would be helpful to have consistent standards and transparency requirements for organizations that lend to small businesses. Such standards and requirements exist for lending to households, and I believe the same justification exists to extend these requirements to small businesses. As a result, small business owners would have greater confidence that they fully understand the terms and conditions of their loan. This, in conjunction with the access to more financial information and education, will help small business owners make better decisions about their use of credit. Conclusion In summary, economic conditions in the Bronx are improving but more progress is necessary.
First, Asian financial markets are transforming in significant ways and we need to equip our workforce with the relevant skills to adapt and transform in tandem. Firstly, the markets will continue to grow in breadth, depth and connectivity, to support the growing needs in this region; The use of technology will be increasingly pervasive, and will transform how financial institutions and markets professionals access and deliver financial services; Jobs will need to be redesigned and transformed to harness the potential of technology and financial institutions would need to support employees to adapt to new work requirements; These winds of change also open up significant opportunities for individuals to acquire new skills and convert to new careers in a wide range of roles. 14. There are immense opportunities as markets expand, and as the potential of technology is harnessed. Last August, a Singapore-based fintech company BondEvalue partnered Northern Trust to complete the world’s first blockchain-based bond transaction on its exchange. This innovation was enabled through MAS Sandbox Express. It allowed investors access to secondary market and purchase bonds at fractions of $ instead of typical bond trades of at least $ making bonds more accessible to a wider investor pool. In September, the Singapore Exchange completed Project Hash, Asia’s first digital syndicated public corporate bond using smart contracts to capture the rights and obligations of parties involved in the issuance and asset servicing, such as the arrangers, depository agents, legal counsel and custodians.

The big banks’ published plans on strategy and capital-building envisage a further improvement in their capital situation. According to these plans, and measured in terms of loss-absorbing capital, by the end of 2014, Credit Suisse and UBS are likely to have already met the risk-weighted capital requirement of 13% which will apply from 2019. Moreover, these plans will lead to a substantial increase in their leverage ratios by the end of 2014. The SNB acknowledges the big banks’ progress to date and recommends that they consistently and fully implement their plans, in order to further strengthen their resilience and, in particular, to improve their leverage ratios. Improving the leverage ratio is all the more crucial given the growing importance of this indicator as a measure of banks’ resilience. Credibility of model-based risk-weighted assets The risk weighting of assets plays a key role in determining the capital requirement for a bank. All of the bank’s on and off-balance-sheet positions are multiplied by a risk weight. The riskier the position, the higher the weight. The figure for risk-weighted assets (RWA) represents the sum of these risk-weighted positions. Required capital, in turn, is defined as a percentage of RWA. There are two different approaches for setting risk weights. Under the standardised approach, risk weights are prescribed for broad asset classes. Under the model-based approach, by contrast, banks can use their own internal models to determine the risk weights for different assets.
Charlotte Gerken: Adaptability and resilience in the mutuals sector Speech by Ms Charlotte Gerken, Executive Director of Insurance Supervision of the Bank of England, at the Association of Financial Mutuals Conference, London, 4 October 2021 * * * Good afternoon and thank you very much for the invitation to speak today. Colleagues who have attended the AFM conference previously have valued this opportunity to meet AFM members face to face and I have already enjoyed that privilege today. I can’t say how pleased I am now, not to be speaking to a camera dot on a laptop screen. Over the last 18 months, supervisory colleagues at the Prudential Regulation Authority (PRA) have been working closely with insurers as they addressed the financial, economic and operational aspects of the pandemic, and the human impact it has had on their own people, the staff they rely on in other organisations and their customers and members. We have seen the mutual sector demonstrating its adaptability and resilience, through moving many of its in-person processes online and by providing financial support to members, such as premium rebates and payment holidays, where appropriate. Through the challenges of Covid-19, the PRA has taken a proportionate approach to supervision of mutual and other firms, by delaying thematic reviews, scaling back reporting requirements and extending regulatory deadlines all in the interest of ensuring a greater degree of flexibility, and where possible support for firms, during challenging times.

In this Discussion Paper, we make clear that when we think about diversity, we focus on ‘diversity of thought’, also known as ‘cognitive diversity’. We are now reflecting on responses received with the intention to communicate these in due course. Our aim with DP 21/2 was to gather views on how we can most helpfully accelerate the pace of meaningful change across the sector. We see a clear link to our objectives: diversity helps bring a mix of views and experiences to the table; inclusion helps create an environment where these views and concerns can be aired and listened to. Research 2/6  BIS central bankers' speeches  shows evidence of correlations between diversity and inclusion and positive outcomes in risk management, good conduct, healthy working cultures, and innovation. These outcomes directly contribute to the stability, fairness, and effectiveness of the firms making up the financial sector, including mutuals. In the same way, poor diversity and inclusion can lead to poor outcomes. The 2008 crisis, as well as other scandals, including the misconduct issues the London market faced more recently, highlights the risks of unhealthy cultures and groupthink, where views, actions, and decisions go unchallenged. This is not just a case of do as we say: the PRA and the Bank of England have plenty of room for improvement on diversity and inclusion, and have committed to make changes to achieve the same positive aims for ourselves that we seek in the wider financial sector.