samchain/econo-pairs-v1 huggingface dataset:
There are prospects that inflation will gradually pick up and be close to 2½ per cent at the three-year horizon. Since the publication of the June Inflation Report, prices for domestically produced consumer goods have risen slightly less than expected. At the same time, oil prices have been somewhat higher than assumed. Energy prices are pushing up consumer price inflation. New information since the publication of the June Inflation Report does not provide grounds for changing the assessment of developments in the real economy. Growth among trading partners seems on the whole to be approximately as expected in the June Inflation Report, but the risk of more sluggish developments has increased, according to the IMF and the OECD. High oil prices may result in somewhat higher global inflation than previously projected. The objectives of bringing inflation back to the target of 2.5 per cent and anchoring inflation expectations imply a continued low interest rate. On the other hand, there are expectations that high output growth will persist. The objective of stabilising developments in output may, in isolation, imply a higher interest rate. Inflation is gradually picking up. High capacity utilisation may generate a continued sharp rise in property prices and household borrowing. This could be a source of instability in demand and output in the somewhat longer run.

Macroeconomic imbalances have been too pronounced for monetary policy alone to contain them, exacerbated by special conditions that have hindered measures from having the necessary effects. Other aspects of economic policy would have needed to be tightened, in particular the fiscal stance, even though the Treasury is much better placed than in most other countries, with virtually zero net domestic and foreign debt which by itself is a notable achievement. Financial companies would also have needed to show more prudence in their lending decisions and they should be encouraged to display the utmost caution in this respect. In public debate in recent weeks and months, there have been occasional calls for Iceland to adopt a different currency. Without expressing any opinion on the issue here, I would point out that this cannot be done overnight and it is crucial not to act rashly. The current debate appears to be prompted by the recent volatility of the króna. I hardly need to mention the great volatility that has been witnessed in capital markets, exchange rates, interest rates and securities prices around the world in recent weeks. Iceland has not escaped this trend any more than other countries, but the fluctuations it has experienced have not been sharper than in many others. A key precondition for joining a monetary union is to achieve macroeconomic balance. Whatever the outcome of the currency debate, the problems of the  BIS Review 111/2007  5  day will not vanish without being tackled, and that takes time.
These zones are expected to enhance the country’s efforts of promoting value addition to raw materials which will in turn boost the manufacturing sector. They are also consistent with the budget themes for 2009 and 2010 of “Enhancing Growth through Competitiveness and Diversification”. In collaboration with the development partners, Government will provide the necessary support institutions, infrastructure and services conducive to efficient and competitive manufacturing. I would like to strongly encourage Zambian firms particularly members of ZAM to take advantage of the opportunities created under this initiative. Mr President, as I conclude my remarks, I wish you and your members a prosperous 2010. I thank you for your attention. BIS Review 53/2010  3

Although there is a considerable stock of equity in owner-occupied housing, with banks tightening the supply of both secured and unsecured credit, consumers will find it more difficult to borrow to finance spending. So in 2008 it is likely that a less buoyant housing market will go hand in hand with slower growth of consumer spending. Tighter credit conditions mean that, as a nation, we are likely to save more of our income this year than in the recent past. In the short run, that will slow economic activity, possibly quite sharply. And there is a risk that weaker activity and lower asset prices could result in another round of losses for banks and a further tightening of credit conditions. The adjustment which not only the British but the world economy is experiencing is necessary as the imbalances, between spending and saving and between domestic demand and trade, unwind. As part of a longer-run rebalancing of the UK economy, an increase in our national saving rate, both private and public, is necessary. The low level of national saving is apparent from the current account deficit – our new net borrowing from overseas – which in  2  BIS Review 8/2008  the third quarter of last year was, relative to GDP, the biggest in the past fifty years and the largest in the G7. It is possible to run a current account deficit for a considerable period. Australia, for example, has done so in every year since 1974.
This is in fact going to be a growing challenge in much of Asia too. Finally, creating good jobs. In Singapore, the financial industry employs close to 200,000 people, most of them in relatively well-paying jobs. Technology will replace many tasks and even whole jobs in finance. But with proactive upgrading of skills to keep pace with new technologies, and with the continuing growth of our financial centre, we must and will provide good jobs in finance for many years into the future. How finance is being transformed 14. The digitalisation of finance is picking up pace, and will transform banking. 15. There are essentially three key forces driving this transformation: pervasive mobile internet access, the rise of big data, and the growth of platform ecosystems as a major new business 2/6  BIS central bankers' speeches  model in finance. The three forces are also reinforcing each other, and together transforming banking in more fundamental ways than we have seen before. 16. Smartphones and tablets are ubiquitous. Pervasive broadband access has coupled mobility with connectivity – so interaction is real-time and unconstrained by where you are. The smartphone is now our grocery store, our restaurant, our bank, and much more. 17. Second, big data. We have unprecedented computing power, coupled with cloud technologies that allows us to store and retrieve large volumes of information at low cost and ondemand. Firms are also gathering a lot more data from a wide variety of sources, including social media and e-commerce platforms.

The MyInfo platform allows banks to more effectively and efficiently obtain authenticated and updated information for account opening and other applications, doing away with the tedium of manual physical authentication and resulting in time saving of as much as 80% for banks and their customers. 25. Second, we are reviewing our regulatory framework to balance the tension between encouraging innovation and managing risk. The Payments Services Act is a forward looking and flexible framework for the regulation of payment systems and payment service providers in Singapore. It gives regulatory certainty to new players to pursue innovation and growth, while at the same time providing sufficient safeguards for consumers. 26. Third, we are creating more channels to promote the exchange of ideas and collaboration among financial and technology firms. Since 2016, MAS has partnered industry players to bring together financial and technology players from all over the world in the week-long Singapore FinTech Festivals. Turnout has more than quadrupled over the past three years with 45,000 participants from 130 countries in 2018. It is early days yet, but the results of our efforts are encouraging. Singapore is widely regarded as one of the leading FinTech hubs in the world. A report by Ernst & Young finds that nearly 7 out of 10 Singaporeans have made use of FinTech solutions in 2019, making us a leader in the Asia-Pacific region. 27. Another important development has been among our local banks themselves. They have been expanding their digital platforms to better cater to customers’ needs, and grow markets abroad.
But the difference is that, prior to the crisis, the net capital flow problem was there for everybody to see, in the form of global current account imbalances – or, in my country, huge capital inflows, a double-digit current account deficit, excessive credit growth, and an asset price bubble. But the gross capital problem was hidden and not much talked about. To take an example, the euro area as a whole had a more or less balanced current account position. A factor that garnered little attention before the crisis, however, was that European banks had built up huge USD-denominated balance sheets that were also balanced to a large extent – except, of course, in maturity. This became a major problem when there was a run on such dollardenominated bank liabilities post-Lehman, and many big European banking names might not still be with us were it not for the USD swap lines granted to the ECB, the BoE, and the SNB. The gross capital problem is basically a financial stability problem that can turn into a macroeconomic problem. So the financial crisis revealed a major fault line in cross-border banking, in the form of large foreign currency balance sheets featuring significant maturity mismatches, but with limited lender-of-last-resort (LOLR) facilities in terms of foreign currency.

Maturity mismatches are the bread and butter of modern banking, of course, and we know how to deal with the risk in a domestic setting: with central bank LOLR operations and deposit insurance, complemented by regulation and supervision, partly to deal with the moral hazard issues created by this safety net. Of course, central banks can lend out their foreign exchange reserves, but there is a well-known limit on that process. Some form of global liquidity provision is therefore called for. The swap lines granted during this crisis were precisely that, and most studies seem to support the conclusion that they made the crucial difference in relieving the strain in banks’ foreign exchange funding. To a significant degree, this was the domestic LOLR process replicated at the international level. We have a solution, then, at least at the conceptual level. But it is not clear that it is a reliable, practicable solution. At present, the swap lines are not a permanent and reliable feature of the international monetary system; for instance, they have been challenged vehemently in political discussion in the US. Furthermore, there are important unresolved governance issues, such as who should decide which countries get a swap line and which do not. It is thus an important item on the reform agenda to clarify the extent to which standing foreign currency LOLR facilities for solvent cross-border banks can be set up without going through national governments. This is one of the key issues currently under review in the case of the Spanish banking crisis.
William C Dudley: Oversight of the Federal Government's intervention at American International Group Testimony of Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Committee on Financial Services, US House of Representatives, Washington DC, 24 March 2009. *  *  *  Good morning, Chairman Frank, Ranking Member Bachus, and other members of the Committee. Thank you for giving me the opportunity to appear before you today. As you know, on January 27, 2009, I became the president of the Federal Reserve Bank of New York. Before I assumed that position, I served as the head of the Markets Group at the New York Fed. I appreciate having this opportunity to discuss the Federal Reserve Bank of New York's involvement with American International Group, Inc. (AIG). Role of the Federal Reserve Bank of New York At the outset, it is important to note that before the New York Fed became involved with AIG as a lender on September 16, 2008, the Federal Reserve lacked any kind of authority to oversee AIG. The lack of effective consolidated supervision over AIG was a critical contributing factor to the debacle that occurred at the company. The Federal Reserve made its decision to lend based on a judgment that a failure of AIG would cause dramatically negative consequences for the financial system and the economy – consequences worse than what occurred in the aftermath of the failure of Lehman Brothers. We stand by that judgment today.

Rather, the New York Fed's actions have consistently been directed at securing its objectives as lender. As any lender in our position would do, the New York Fed has put into place a loan agreement that contains covenants designed to help ensure ultimate repayment of the loan – but these creditor's rights do not create an ability to manage AIG. Responsibility for AIG's day-to-day affairs continues to rest with AIG's chief executive officer, Edward Liddy, under the oversight of AIG's board of directors. Mr. Liddy, who has only become involved with AIG in a public-spirited attempt to resolve its troubled affairs, has  BIS Review 35/2009  1  made strides in dealing with AIG's opaque corporate structure, lack of centralized controls and complex risk exposures, but much remains to be done. In light of the inherent conflicts that would arise from either the U.S. government or the Federal Reserve exerting ownership control over the world's largest insurer, the Federal Reserve, with the support of the Treasury Department, directed in the loan agreement that an approximately 77.9 percent equity interest in AIG be issued to an independent trust established for the sole benefit of the United States Treasury. The trust, which now holds that controlling equity interest, is overseen by three independent trustees who are of the highest integrity and who have considerable experience leading major companies.
But the frictions perform an amplifying role only; the initial impetus comes from an exogenous shock over which the behaviour of agents exerts no influence, directly or indirectly. That is because agents – firms and households, as normal people call them – do not make any ex ante mistakes. Shleifer describes a different kind of world altogether. It is a set up in which the myopia of the agents – investors, bankers, intermediaries –leads them, and the economy more widely,  1  A short summary of the first two volumes is in Jonathan Israel, Revolution of the Mind, Radical Enlightenment and the Intellectual Origins of Modern Democracy. BIS central bankers’ speeches  1  towards trouble, sometimes disaster. Because they are effectively blind to certain lowish probability risks, they generate and invest too heavily in securities that carry precisely those risks. The effects of innovation get out of hand. This is a nice complement to papers by academics and policymakers attributing the ballooning of ABS issuance in the West to a combination of (i) an ex ante excess of savings from the East in the hands of investors with a preference for low risk fixed-income assets, and (ii) a shortage of precisely those highly rated fixed-income instruments.

The effect, on that view, was initially to drive down credit risk premia relative to equity risk premia, and to spur the issue of synthetic securitisations to fill the gap in supply.2 If that story drives expansion of ABS/CDO issuance, Shleifer’s model helps motivate a lot of those securities being fundamentally mispriced. During the good times, everyone feels that they are achieving a nice balance of risk and return. They are getting, they think, safety, liquidity and return! But something eventually happens to cause them to wake up, and to see the risks they have neglected. Investors can then react in a dramatic way. They stop buying, sell; prices collapse etc. But an exogenous shock is not needed to generate that unravelling. If the overpriced securities have led to credit conditions being too loose, then somebody – households, firms, sovereigns, or everyone – will have accumulated too much debt, and so eventually fundamentals assert themselves: defaults rise, and realisation sets in. As a younger colleague said to me, “the model’s key features are all way outside what I was taught in the ‘90s”. But doesn’t it sound ever so slightly like the real world? For me, one of the strengths of Shleifer’s paper is that he cites good examples, not only from the recent crisis but earlier ones too.
Barbro Wickman-Parak: The Riksbank and monetary policy – perspectives on interest rate forecasts Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at a Statistics Sweden seminar, Stockholm, 3 October 2007. *  *  *  Thank you for inviting me to this seminar. Economic forecasts have long been my special field and this of course plays an important role in my job at the Riksbank. But as you know, the Riksbank’s communication policy means that we do not usually send any signals on how we intend to act with regard to changes in the policy rate at the next meeting. This limits the possibilities for me to actively participate in a discussion of the most recent yield of statistics, which is the theme of this meeting. So the view of the economic situation I intend to present in brief today applies to my assessment at the time of the monetary policy meeting held in September. I shall instead take the opportunity to say a few words about our experiences so far of the Riksbank’s publication of its own forecast for the repo rate. What lessons can we learn? The monetary policy decision on 6 September In September we Executive Board members decided to raise the repo rate from 3.50 to 3.75 per cent. I supported both the raise in the interest rate and the assessment that the repo rate should be raised further at around the pace we presented in June.

06  07  08  Sources: The NIER, Statistics Sweden and the Riksban  Figure 8. Repo rate with uncertainty bands Per cent, quarterly averages  7  7  90% 75% 50% Outcome  6  6  5  5  4  4  3  3  2  2  1  1  0 Jun-02  0 Jun-03  Jun-04  Jun-05  Jun-06  Jun-07  Jun-08  Jun-09  Jun-10  Source: The Riksbank  BIS Review 111/2007  9  Figure 9. Expectations of the repo rate according to implied forward rates Per cent  8  8  Repo rate Implied forward rates  7  7  6  6  5  5  4  4  3  3  2  2  1  1 0  0 99  00  01  02  03  04  05  06  07  08  09  10  11  12  Source: The Riksbank  Figure 10.
If productivity growth were high, one might expect that the return on capital might also be elevated, putting upward pressure on real rates. The late 1990s surge in productivity growth during the internet technology boom seems to be a good example of this type of phenomenon. If the growth in labor input and productivity were positively related with the equilibrium real short-term rate, then in the current environment this would be consistent with a relatively low r*. The potential labor force has grown very slowly in recent years (less than a ½ percent annual rate over the past five years), and productivity growth has been subdued – running at only 1 to 1½ percent annual rate on average over the past few years. In sum, by focusing on the components rather than on the overall real potential GDP growth rate, one might find stronger and more persistent relationships with the equilibrium real short-term interest rate. The second issue that I want to briefly explore concerns the degree of uncertainty about the equilibrium real short-term rate and its implications for monetary policy. The paper argues quite convincingly, I think, that when this uncertainty is high, then an inertial policy rule may be preferable – that is, would lead to higher expected welfare. While I think this is true, I also think it is important not to overstate the implications of this conclusion in today’s environment. Currently, short-term rates in the U.S. are low relative to the standard formulation of the 1999 Taylor Rule.

This seems especially germane in the current environment in which very low longterm government bond yields in Europe and Japan appear to have been an important factor in pulling U.S. long-term yields lower over the past year or so. •  Given the uncertainties about the current and future levels of the equilibrium real short-term rate, an inertial policy rule may lead to better outcomes. As a consequence, the process of normalization of monetary policy should proceed cautiously, with short-term interest rates more likely to rise only gradually toward the equilibrium real short-term rate. BIS central bankers’ speeches  1  That said, I think the paper leaves some open questions worthy of further exploration. First, although the equilibrium real short-term interest rate, which I will refer to as r*, is only loosely related to real potential GDP growth, could we do better if we were to decompose real potential GDP into its components – such as the growth rates of labor input and productivity – and examine the relationship between r* and each component separately? Second, accepting the principle that an inertial monetary policy rule performs better as uncertainty about the level of the equilibrium real short-term rate increases, what does this imply for monetary policy under current circumstances? Third, in light of the evidence on the volatility of the equilibrium real short-term rate, what are the implications of adopting a Taylor-type rule as a benchmark for monetary policy evaluation?
Having said that, you may rest assured that the HKMA is committed to continue its collaboration with the SFC and the industry to make sure that our regulatory framework and rules remain friendly to users without compromising investor protection as we go forward in the months and years ahead. The third and final question is: are private banks fully equipped and ready to capture the rapidly growing business opportunities? The answer to this, I would say, is again “yes” followed by a “but”. This is because much more needs to be done by the industry if it wishes to realise Hong Kong’s full potential in the medium and long term. As I said earlier, the adoption of a portfolio approach in private banking would be a move welcomed by private banks and their customers, but private banks must ensure they have the proper systems and controls in place. A portfolio based approach cannot be taken as an excuse to compromise investor protection. For instance, when more Mainland clients open private banking accounts in Hong Kong, our banks must have in place sufficient number of account managers who are professionally competent and linguistically proficient. It is hard to imagine that quality service can be provided to a Mainland customer who does not speak English or Cantonese if the account manager cannot communicate in Putonghua. Moreover, it would also be helpful if important contracts or documents are written in bilingual forms so that Mainland customers find it easier to understand what they have signed or bought.

Global banks’ misconduct costs have now reached over $ billion – capital that could otherwise have been used to support up to $ trillion of lending to households and businesses. The FSB’s misconduct action plan addresses these issues through: (i)  improvements to financial institutions’ governance and compensation structures to align better risk and reward;  (ii)  new global standards of conduct in fixed income, commodities and currency markets; and  (iii)  reforms to major financial benchmark arrangements to reduce the risks of their manipulation. Authorities cannot and should not try to legislate for every circumstance, watch every transaction, or anticipate every market innovation. So while fines and sanctions have roles in deterring misconduct, they will not, on their own, bring about the cultural change we need. In the view of UK authorities, we must move from an excessive reliance on punitive, ex post fines of firms to greater emphasis on more compelling ex ante incentives for individuals, and ultimately a more solid grounding in improved firm culture. In the UK a significant proportion of variable compensation for senior employees now must be deferred for a period of seven years. This ensures that it can be clawed back over the time scale it generally takes for conduct issues to come to light.