samchain/econo-pairs-v1 huggingface dataset:
This is seen as exploitation by the donor community of developing countries' need for investment, aid and debt relief, to create conditions that will facilitate their infiltration by globalised financial interests. The following statement in the July 2004 issue of South Bulletin is typical of this perspective: “Whence this striking paradox, inherent in good governance, of calls going out from the international organisations to national governments that these latter adopt, indeed “appropriate”, neo-liberal economic policies imposed from without while the globalised financial markets dispossess them of their sovereignty and insinuate themselves into the countries' ownership structure of capital”. 4  BIS Review 109/2007  The controversy continues on the link between governance and development, and while its proponents claim strong empirical evidence for it, there is strong assertion of the contrary, or at least agnostic, view in other quarters. It would seem that the jury is still out on this debate. Aspects of governance in Sierra Leone The principal donor institutions in Sierra Leone, as in most developing countries, are the World Bank, and the IMF. Donor support programmes coordinated by the World Bank are provided within the framework of the Bank’s Country Assistance Strategy and the Poverty Reduction Strategy Paper. Following implementation of an Interim Poverty Reduction Strategy Paper, the Bank approved a full Poverty Reduction Strategy Paper for Sierra Leone in February 2005, covering the period 2006 – 2009. The major instrumentality for Fund assistance to Sierra Leone is the Poverty Reduction and Growth Facility (PRGF).

This figure is still far from the medium-term structural budgetary balance, convergence to which is required by the so-called “preventive arm” of the Stability and Growth Pact (SGP) applicable in Spain since July. It is therefore a priority to make headway in cleaning up the public finances so as to reduce this source of vulnerability of the economy and to be able to make full use of national fiscal policy as an effective macroeconomic stabilisation instrument in the event of a sharper economic slowdown in the future. In addition, this improvement in the budgetary situation must be compatible with other challenges which the public finances will have to face in coming years, including most notably the consequences of population ageing, which I will discuss later. A third and final area of vulnerability of the economy to which I would like to refer is the external debt. Despite the correction achieved to date in the form of current-account surpluses, much work still remains to be done, as shown by the negative net international 9/18  investment position and the gross debt, which stood, respectively, at around 80% and 170% of GDP in the second quarter of 2019. To continue correcting these two magnitudes, the external surpluses will have to be sustained over time, which in turn will require further headway in the gains in competitiveness achieved in the last few years.
The bank therefore contributes to ensuring that the mediation of capital in the economy functions efficiently; it is sufficient that borrowers can convince the bank of their creditworthiness, they do not need to convince each individual saver. Similarly, savers do not have to assess the creditworthiness of every borrower; it is enough to be satisfied of the bank's solvency. The banks can also supply payment services for households and companies by using the existing financial infrastructure, such as accounts and various routines for transferring funds between financial institutions. As these functions are central to an efficient economy, it is evident that major problems can arise if financial stability is upset. This is aptly illustrated by, for instance, the crises in South East Asia at the  BIS Review 21/2006  3  end of the 1990s and by the bank crisis that Sweden and other countries suffered at the beginning of that same decade. While the target of maintaining price stability is relatively straightforward and intuitive, it is more difficult to specify the task of promoting financial stability. This task has also been formulated in slightly different ways in different central banks’ regulations. For instance, the Bank of England’s charter says that it is ”responsible for the overall stability of the financial system as a whole”, while the corresponding task in the regulations for Sweden’s Riksbank has been expressed in a more indirect manner: ”to promote the efficiency and safety of the payment system” 4 .

Inflation targeting is thus much more demanding than a fixed exchange rate regime with regard to the central bank’s analytical work and its ability to communicate its policy. Whether this is something that should be regarded as a disadvantage or not is of course a question of judgement. For the Riksbank, the transition to inflation targeting heralded the start of a fairly comprehensive increase in competence in the field of economics. The number of PhD economists at the Riksbank has risen sharply in recent years and our research in areas related to monetary policy has expanded considerably. Financial stability Let me now move on to the other central component of an efficient payment system. This concerns the stability in the financial system; particularly in the financial institutions that supply payment services, i.e. primarily the banks. Financial stability is currently regarded, parallel to the price stability target, as the main task of a modern central bank. The financial system has essentially three main tasks: converting savings into financing, managing risk and providing efficient channels of payment. Let me give a basic example. A bank receives savings from households which it then lends to other households or to companies that need to invest. Banks are specialists at valuing, monitoring and managing credit risks in the households and companies to which they lend.
Furthermore, the NBR applies the approach known as the “Chinese wall”, which separates the departments in charge of monetary policy formulation and implementation, on one hand, from the departments entrusted with other statutory tasks, on the other. The second line of defence is functional on certain business segments with high-risk financial exposure, e.g. international reserve management. This line of defence monitors compliance with the risk limits approved by the bank’s executive management and reports any breach. A major role in this line of defence is played by the decision-making/advisory committees within the central bank. Apart from the two committees dedicated to monetary policy and supervision that I have already mentioned, particularly significant is the Foreign Reserve Management Committee. In addition to the risk monitoring by the operational structures, the NBR’s Internal Audit Department – which functions as the third line of defence – examines the overall controls in place and determines whether they are properly designed and functional, so as to ensure the reliability and integrity of financial and operational information, the effectiveness of the activities carried out, asset protection, as well as compliance with applicable legal and contractual provisions. 5. Different institutional arrangements for banking supervision and financial stability As we all know, the responsibility for banking supervision rests in some countries with the central bank, whereas in others it lies with a distinct authority. Both options are valid and a one-size-fits-all solution will probably not be reached, given the country-specific financial conditions and institutional arrangements.

Of course, no matter how much or how responsibly the central bank would get involved in safeguarding financial stability, this public good can only be delivered through cooperation and coordination with the other institutions tasked with financial market supervision and regulation. Relevant in this respect is that in Romania a National Committee for Financial Stability was established as early as 2007. The Governor of the National Bank of Romania, the Minister of Public Finance, the President of the Financial Supervisory Authority and the Chairman of the Bank Deposit Guarantee Fund are members of this committee, whose key objective is to ensure the exchange of relevant information, as well as to prevent, appraise and manage any issues with a potentially systemic impact. Efforts are currently underway to turn this entity set up based on an agreement among member institutions into a National Committee for Macroprudential Oversight, whose composition, tasks and areas of competence shall be set forth by law. This inter-institutional structure will act as a macroprudential authority, within the meaning of ESRB Recommendation 2011/3. 4. NBR: the internal control layers I imagine we all agree that improving the governance structure is essential for a central bank and I strongly believe the sharing of views and experience made possible by reunions such as the one we are attending is extremely beneficial for the process.
Mark Carney: Global economic outlook, financial reform and UK monetary policy Remarks by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Davos CBI British Business Leaders Lunch, Davos, 24 January 2014. *  *  *  When a banker invites a regulator to a meeting on a mountainside, the regulator gets suspicious. At 5000 feet, “cliff effect” takes on a whole new meaning. That’s one of the reasons why I am pleased to have so many distinguished witnesses here today. While Douglas Flint may have had terminal velocity in mind for me, I am more interested in discussing the prospects of the global and British economies achieving escape velocity. In physics, escape velocity refers to the speed necessary to escape from a planet’s gravitational pull. The economic analogue is the momentum necessary for an economy to escape from the many headwinds following a financial crisis. A few quarters of above-trend growth driven by household spending represent a good start, but they aren’t sufficient. It will take sustained growth, more balanced demand and a recovery in the supply side for advanced economies to break free into a more normal universe. Today, I would like to speak to the contribution of central banks to make this happen. 1. Global economic outlook  Over the past year, the global economy has picked up and tail risks have decreased.

It is not just that nearly three quarters of a million more people are out of work than before the crisis; another three quarters of a million more people are involuntarily working part time. The effect of this slack in the labour market is evident in wage inflation, which is at around 1% so that, even with weak productivity, unit labour cost growth remains below 2%. The fact that underemployment is exerting downward pressure on costs also reflects better than expected performance on the supply side of the labour market. In the jargon, the extent to which high unemployment has caused hysteresis seems to have been less than in past recessions. It now seems likely that the rate of unemployment consistent with stable inflation in the medium term is somewhat lower than the MPC assessed back in August.2 In part that is because rates of transition into jobs, even for those who have been unemployed for more than a year, have been sustained at high rates, minimising the extent of skill atrophy. In addition, other measures of slack in the labour market, such as involuntary part-time working remain high. 2  “Monetary policy, trade-offs and forward guidance” Bank of England Monetary Policy Committee, August 2013, p 34.
With greater financial literacy and awareness, consumers will be protected from being exploited by predatory  2  BIS Review 4/2010  lending and investment scams, and will be able to make better informed financial decisions. To protect the rights of consumers, a Consumer Protection Framework has been developed to enhance the disclosure standards of financial products and services, the various dispute resolution mechanisms and to institute fair practice amongst the financial service providers. The Central Bank has also established a one-stop service centre for the public, providing advisory services on financial matters. Finally, a Credit Counselling and Debt Management Agency has been established to provide counselling related to credit and debt management for individuals as well as to inculcate responsible money management habits. Fifth, the supporting financial infrastructure to facilitate the operations of financial institutions is an important feature of the financial system. A hurdle to access to financing is the lack of credit history. In this regard, credit bureaus have been established to enhance access to financing by encouraging borrowers to build such credit records. In Malaysia, the Central Credit Reference Information System or CCRIS, has provided credit information via an on-line system since 2001. More recently in July 2008, the SME Credit Bureau commenced operations to assist SMEs to build track records thereby providing a balanced profile of the credit standing of SMEs thus, enhancing access to financing on more favourable terms. Sixth, sufficient well trained finance professionals is vital to the performance of the financial sector.

But I think that we could go further in the direction of setting up minimum requirements for a crisis resolution framework for banks and other institutions covered by the financial safety net. Here one can draw some parallels to the work on fiscal policy frameworks, where the EU has come a long way in terms of coordination and codes of conduct in the event of macroeconomic crises. Where do we go from here? It is time to sum up. My message is that it is important for us to get in place an efficient regulatory framework for weak banks. A framework which combines the need to maintain stability and minimise costs to the public sector in the short term with the requirement for long-term market discipline. Returning to the health-care metaphor I started out with, we need to be able first of all to deal with the ordinary flus and broken bones of the financial system. But we also need to be prepared to deal with a more serious event. A possible outbreak of avian flu in the financial system. I have tried to outline the broad lines of such a framework.
In its simplest version, welfare is maximised by fully stabilising inflation at its target level, a policy which simultaneously delivers a zero output gap. 11 This so-called “divine coincidence” 12 implies that policy-makers who care only about stabilising inflation will deliver an efficient path of economic activity. And, symmetrically, policy-makers who focus solely on keeping output at an (appropriately defined) potential level will deliver low and stable inflation rates. A relatively simple Taylor-like monetary policy rule could achieve these desirable outcomes. In this benign world, traditional monetary policy trade-offs appear to have disappeared! 9  See M.A. King (1997), “Changes in UK monetary policy: Rules and discretion in practice”. Journal of Monetary Economics 39, pp. 81–97. 10  See L.E.O. Svennson (1998), “Inflation targeting in an open economy: Strict or flexible inflation targeting?” Victoria Economic Commentaries 15(1). 11  At least when the output gap is defined in a “model-consistent” manner, i.e. as deviations of output from the level it would achieve in the absence of nominal rigidities. 12  See: O. Blanchard and J. Galí (2007). “Real wage rigidities and the New Keynesian model”, Journal of Money, Credit and Banking 39(s1), pp. 35–65. BIS Review 45/2010  5  It is widely recognised that even modest deviations from the simplest version of the canonical model introduce caveats to these very strong conclusions.

For example, measures that exclude energy prices can offer a false impression of the underlying dynamics of inflation if energy prices are trending upwards. Clearly, policy-makers with a mistaken view of the conjunctural situation are liable to make policy mistakes. In a stylised Taylor-rule setting, errors in assessing inflation or the output gap will lead to flawed guidance on interest rate decisions. Such considerations may have led to overly accommodative monetary policy prior to the financial crisis. 20  See: A. Orphanides and S. van Norden (2002), “The unreliability of output gap estimates in real time”, Review of Economics and Statistics 84(4), pp. 569–583; and A. Orphanides and S. van Norden (2005), “The reliability of inflation forecasts based on output gap estimates in real time”, Journal of Money, Credit and Banking 37(3), pp. 583–601. 21  L. Bini Smaghi (2009), “Monetary Policy and Asset Prices”, Freiburg University, 14 October 2009. 22  Such as seasonal movements in food prices. 8  BIS Review 45/2010  Figure 3 Spring vintages (2002–2009) of US output gap estimates by the IMF (WEO)  Source: IMF (WEO) data Note: Output gaps are defined as the percentage deviation of actual output from potential output. To give one example, I have already discussed how the forces of globalisation at the turn of the century weighed on the prices of manufactured goods. This was an important factor underpinning the benign outlook for inflation. Yet the rapid growth of emerging market economies had other implications for global price developments.
In particular, we follow measures of market activity, such as trading volumes, bid-ask spreads, trade sizes, quote sizes, financing costs, and settlement fails, as well as other indicators. We also monitor indicators related to our operations, which can provide some direct insight into potential market functioning issues. These include the prices at which we can execute in comparison with prevailing market quotes, the extent and concentration of dealer participation in operations, and the ease of settlement of our MBS purchases. As an example, Figure 3 and Figure 4 show daily trading volumes and failures to deliver in the Treasury and agency MBS market. Based on these types of measures, our operations are going smoothly and market liquidity is holding up well. In addition to this monitoring, we have developed active policies to help prevent market dysfunction as a result of our operations. In the Treasury market, the Desk ceases purchases of a specific security once SOMA holdings of that security reach 70 percent of the outstanding stock. In addition, when SOMA holdings of a specific issue exceed 30 percent of outstanding securities, the Desk limits the rate at which it acquires new holdings of that issue based on a predetermined, graduated schedule. The Desk also refrains from purchasing certain Treasury securities in its operations if investors’ demand for those specific securities as collateral in the repurchase market or as deliverables into Treasury futures contracts is relatively high.

Asset purchases promote this mandate by putting downward pressure on longer-term interest rates, supporting mortgage markets, and helping to make broader financial conditions more accommodative. The current purchases reduce interest rates and ease financial conditions through the same transmission channels as previous purchase programs. As has been widely discussed in the academic literature, one of the most important channels is the portfolio balance effect.4 This theory relies on the premise that financial assets are imperfect substitutes in investors’ portfolios, and, as a result, a rise in the demand for a particular financial asset relative to its supply – reflecting the Federal Reserve’s asset purchases, for example – will increase its price and reduce its yield. After selling that asset to the Federal Reserve, investors may rebalance their portfolios by investing in other assets, raising the prices of those assets, lowering their yields, and easing overall financial conditions. The Federal Reserve’s asset purchases are designed to remove risk from the portfolios of private investors. For example, Treasury and agency MBS purchases remove duration risk, thereby lowering longer-term interest rates and reducing private-sector borrowing costs. Furthermore, agency MBS purchases also remove prepayment risk from the market, since homeowners have the option to prepay their mortgages at any time. Investors generally demand an extra return to bear this risk, which is incorporated into agency MBS yields and passed along to borrowers in the form of higher primary mortgage rates.
We need qualified professionals to fill not just front office jobs like relationship management and investment advice but also mid to back office functions in risk management and compliance. There are two reasons why we cannot be complacent. One, the markets have changed. Average investment returns are likely to be lower over the next decade than they were in the last, as the developed economies deleverage and global demand rebalances. The wealth manager can no longer sit back and let a buoyant market do the job. He needs to chart clear strategies and manage his clients’ portfolios amidst a more uncertain and volatile environment. Two, the clientele has changed. Post-Lehman, the client is more cautious and less trusting. He wants better service and clearer value. Asian clients with different backgrounds and needs will demand more tailored solutions. The wealth manager must be well-attuned to their social, cultural, and generational considerations, and be able to provide advice on not just wealth accumulation and preservation, but also wealth transfer across generations. MAS is committed to working with the industry to help expand the talent pool and to enhance capabilities and skills in the industry. The Financial Industry Competency Standards, or FICS, is a good example. Supported by MAS, but developed by the industry, and for the industry, FICS provides a practice-oriented approach for finance professionals to attain the competencies they need to do their jobs well.

Ladies and Gentlemen, The history of economic thought in the twentieth century has seen macroeconomics evolve through a series of intellectual transformations from the Keynesian Revolution to Monetarism, and finally to the New Classical or Rational Expectations paradigm. Likewise, monetary policy has shifted through successive frameworks. From the system of fixed exchange rates under Bretton Woods, to monetary targeting during the Great Inflation in the 1970s, to inflation targeting in the context of the Great Moderation, and finally to an assortment of unconventional monetary policies in the wake of the Great Recession. Today, as we navigate our way through the Great Transition, the search for a new framework is ongoing. The limitations of prevailing approaches focused on short-term stabilization of output and inflation gaps has become clear. The onus on our generation is to ensure that the transition leads us to a new and better place, rather than to more of the same. My contribution to that end today has been to hopefully steer you towards the relevant and pressing questions. At an institution of learning as esteemed as this, it is your role to undertake meticulous scholarship that moves us towards the right answers. Thank you very much. 10