samchain/econo-pairs-v1 huggingface dataset:
In this context, perhaps the biggest advances of monetary policy of the last 20 years leading to the GFC had to do with the transparency and the overall macroeconomic coherency of interest rate decisions, which led, among other transformations, to the adoption of explicit inflationary objectives in a number of advanced and emerging market economies. In the aftermath of the global crisis, it soon became clear that traditional MP was simply not going to cut it, especially given the limitations of other policy options, such as fiscal expansion, to reactivate the global economy after the major blow it suffered. Central bankers were forced to be creative and think outside the box of traditional monetary tools in order to make a difference. A useful framework to understand how policy tools have evolved is to think about interest rates in the following way. The price of a given form of debt, issued at a particular maturity and by a specific counterparty, is the sum of three main components. The first is the expectations of short-term, risk-free debt over the maturity of the instrument. Let’s call this component the path of risk-neutral rates. The second is the compensation for risk that must be offered to an investor to account for the fact that longer maturity instruments are more volatile (have higher duration) than short-term rates, let’s call it the term premium channel. The third is simply default risk.

But this is not only a conference about monetary policy in developed economies. Indeed, securities from emerging markets fit naturally into the category of riskier assets that are expected to be affected by investors’ search for yield in an environment of low interest rates, as has been documented by a growing and exciting empirical literature. This will be the topic  2  BIS central bankers’ speeches  of the third and final session of the conference, and will include presentations by Helene Rey, Simon Gilchrist, and Elias Albagli. This topic is of particular concern for central bankers and policymakers in LATAM and other emerging regions, which have good reasons to be worried with the consequences of US monetary normalization in an environment where further exchange rate pass-through will put increasing pressure on our inflation targets, while at the same time interest rate pass-through puts increased pressure on subpar levels of growth. Before giving an official start to our nineteenth annual conference, let me end by stressing a related but perhaps less appreciated aspect by which the events of the last few years have changed, I believe in both a fundamental and desirable manner, the way monetary policy is handled and communicated. And if you permit me, I will illustrate the point using the recent Chilean experience. In Chile, although economic conditions have been far less complex than in developed countries, we have also experimented with unconventional policies ... and frankly, I think the experience has been successful.
In addition, there was already uncertainty before the war with regard to the development of the US economy, which was connected with the large saving deficit, including a very large current account deficit. In my opinion, therefore, one cannot rule out the possibility of more interest rate reductions than that decided at the last Executive Board meeting, because of the present uncertain situation for the global economy. Labour supply, productivity and growth in the long term As I mentioned earlier, the economy’s long-term production capacity is very important for monetary policy. It affects the rate at which the economy can grow and thereby how rapidly our prosperity can increase. Deciding factors for the speed at which the economy can grow are investment, labour supply and technology developments - e.g. machines becoming more modern or utilised more efficiently. Labour supply, in particular, will affect the growth of the economy in future. If we use Statistics Sweden’s population forecast as a starting point, we can see that the population will increase up to 2009 by an average of 0.5 per cent a year, which is slightly lower than the increase during the 1990s. Thereafter the population will decline by an average of 0.3 per cent a year. This forecast is relatively certain, compared with forecasts of economic activity. This means that population growth in the long term will undermine welfare. Most other European countries share this problem - in most of the larger EU countries the population growth is expected to be even poorer than in Sweden.

While the IMF used to be the guardian of the system of fixed exchange rates established in Bretton Woods in 1944, it now works to promote international financial stability. In this role, it oversees the overall economic and financial position of its member countries. More than ever before, its activities are primarily aimed at crisis prevention. BIS Review 111/2006  1
Rest assured that the ECB Governing Council is fully committed to rein in inflation, and to ensure that it returns towards 2% by end 2024 or end 2025. II. Paris' momentum as financial centre Amidst this geopolitical and economic uncertainty, and despite the recent turmoil in the United States and in Switzerland, financial stability has been preserved in Europe. EU banks are robust, with substantial capital and liquidity buffers: they are in their overwhelming majority subject to stringent Basel requirements – which makes a big difference with the many mid-sized US banks. We have in the euro area no "Sorgenkind" or "problem child", such as Crédit Suisse; and since 2014 we have had a single and strong supervisor thanks to Banking Union. As President of the French prudential authority (the ACPR), I can in particular attest to how solid and diversified French banks are nowadays. Four of them are categorised as global systemically important banks (G-SIBS), and they act as catalysts for Paris as a financial centre. Indeed, Paris stands out as unique in the network of European financial centres: it is the only one to offer such a wide range of financial activities, from global asset management to insurance and banking, and it has further reinforced its position since Brexit.

Beyond the large number of subsidiaries established in or relocated to Paris since then – at least thirty banks, twenty asset managers, several market platforms for instance –, we should also consider the activities performed through branches in Paris, especially trading rooms and desks, which are sometimes far more significant than the subsidiaries to which they are legally bound. Contrary to other cities, which have attracted one or two kinds of financial services, Paris is the only one to have benefited from relocations on all segments of the financial industry. More importantly still, these moves were not one-off events: the momentum has lastingly shifted from London to continental Europe. We observe a steady shift, which shows no sign of losing steam. Combine this with the strength of some key sectors of our economy; the result is that Paris now stands as the first stock market capitalisation in Europe, ahead of London.3 Whatever your field of activity, you will find in Paris a convenient and safe harbour, with all facilities and fast speed train connections to other major cities, in Europe and  2/3  BIS - Central bankers' speeches  beyond. It has also attracted regulatory bodies, which can only be viewed as comforting neighbours after recent turmoil elsewhere. The EBA (European Banking Authority) moved to Paris in the wake of Brexit, thereby joining ESMA (European Securities and Markets Authority). Having a "regulatory hub" will facilitate cooperation between European agencies, in a world that requires such enhanced cooperation between authorities.
Following the efforts made by the Central Bank of Sri Lanka, cheques/bank drafts are now being cleared on t+1 or t+2 in most parts of the country, and that has clearly enhanced access to finance through retail transactions. The receipt of remittances through non-bank sources or various money transfer systems has also been enhanced following  BIS Review 40/2008  5  countrywide IT and payment system advancements. In more recent years, therefore, financial exclusion in Sri Lanka has been greatly reduced. Initiatives for financial inclusion of women There are some initiatives taken, not only by Sri Lanka, but also in the South Asian region towards financial inclusion. By 2005, micro finance institutions covered at least 35mn of some 270mn people in the South Asian region and met around 15% of the overall credit requirements of low-income families. In Sri Lanka, the coverage is particularly high at 60%. The high outreach in Sri Lanka is based on an extensive network of community-based organizations that receive considerable government subsidies. Almost all rural financial institutions in Sri Lanka have provided easy access to women, particularly in the villages, estates and among fishing communities. Financial institutions that are directly involved in this area, are the licensed commercial banks, licensed specialized banks, micro finance institutions, cooperative rural banks, the SANASA Thrift and Credit Cooperative Movement, SEEDS and other non-governmental organizations.

This initiative has helped to enhance financial inclusion as post offices are patronized by women as well;  •  Setting up of a credit and debt management council by the Central Bank: to provide advice to individuals and companies on their credit problems and denial of access to finance, the Central Bank of Sri Lanka has initiated this process; and  •  Preparation of a Micro Finance Regulatory Act by the Central Bank of Sri Lanka: One of the impediments in Sri Lanka is that the system does not enable an effective monitoring system through a regulatory framework, which monitors progress of women accessing credit and their financial inclusion. To remedy the problem, the Central Bank is now working on a Micro Finance Act, through which micro finance institutions will be brought under a prudential regulatory framework. Need for a comprehensive program to increase financial inclusion of women It is important to note that initiatives cannot be taken and implemented by the Government alone. Government could perhaps be the main motivator and driver. The promotion of women entrepreneurial activities and financial inclusion has to be elevated to a policy debate. There should be a serious commitment by banks and financial institutions, and their business development sections should be proactive and ensure that credit delivery to women engaged in relevant sectors is given priority. In addition to the major infrastructure development projects, many village level enterprises and projects are coming up within a short period of time.
On balance, the Bank’s analysis and empirical studies suggest there are no strong reasons to think that the housing tools have any significant negative long-run impact on the growth of supply capacity. The housing tools will bind more when housing activity is stronger and lenders are loosening underwriting standards, increasing both the gross benefits (i.e. reducing GDP-at-risk in a downturn) and gross costs (i.e. reducing demand by excluding some borrowers from the market). To test if net benefits are positive across different states of the world the FPC reviews central, upside and boom scenarios.20 In each scenario we first estimate the distribution of borrower indebtedness absent the tools (shown in blue shading, Chart 13, for the boom scenario). This includes an assumption about how lenders’ underwriting standards would have evolved without the tools in place. A second simulation then estimates how the distribution of indebtedness evolves differently with the tools in place (shown in pink shading, Chart 13, for the boom scenario). The gross benefits of the tools arise from a reduction in GDP-at-risk associated with the less risky debt distribution with the tools in place, compared to the risker scenario without the tools. To weigh these benefits off against the costs (the temporary reduction in housing activity) requires assumptions about the persistence of each, society’s discount rate, the probability of a downturn occurring – as the benefits are only realised in a downturn, and the preferences of the policymaker (as encapsulated in parameter 𝜙).

25  All speeches are available online at www.bankofengland.co.uk/news/speeches  25  When there is an economic shock, the FPC can release the CCyB to 0%, reducing banks’ capital requirements. This frees up capital to absorb losses and preserve lending capacity. By continuing to lend, banks help to cushion the economic shock, and promote a quicker economic recovery. That is, the ability to cut the CCyB reduces GDP-at-risk, improving overall welfare.27 To give you some idea of scale, a cut in the CCyB from 2% to 0% today would preserve banks’ capacity to lend to UK households and businesses by £ By comparison, net lending was around £ over the past year. This is a stark departure from the pre-crisis framework. Banks’ capital requirements were determined by microprudential supervisors focussed on the safety of individual institutions. When shocks hit, this incentive created by a purely microprudential objective was more likely to motivate supervisors to conserve capital at all costs, with the consequence that banks restricted lending and exacerbated the macroeconomic downturn. The CCyB also supports the central GDP forecast by ensuring banks do not have to carry at all times sufficient capital for an elevated risk environment, with the associated knock-on to borrowing costs, investment, and output. For example, Bank of England work suggests that - had the current capital framework been in place before the crisis - the CCyB would need to have been between 3.5% and 5% to absorb losses.
This is what our “balanced approach” implies. Given my outlook for above-trend growth and inflation gradually drifting higher, the inevitable question is what this means for the monetary policy outlook. Over the near-term, if circumstances evolve relatively close to my forecast, I would continue to favor gradually reducing the pace of asset purchases by staying on the same glide path of a $ billion reduction in the monthly purchase pace following each FOMC meeting. Assuming asset purchases end sometime this fall, the focus will shift to the timing of lift-off, the pace of tightening once lift-off occurs and where short-term rates are ultimately headed over the longer-term. The issue of how the Fed will manage its balance sheet will also be relevant, as well as how monetary policy will be conducted during a period when the amount of excess reserves in the banking system is unusually large. I will give you some of my early thinking on each of these issues in the remainder of my remarks. Turning first to the timing of lift-off, how the outlook evolves matters. We currently anticipate that a considerable period of time will elapse between the end of asset purchases and lift-off, but precisely how long is difficult to say given the inherent uncertainties surrounding the outlook. If the economy is stronger than expected, causing the excess slack in the labor market to be absorbed sooner and inflation to rise more quickly than forecasted, then lift-off is likely to be pulled forward in time.

13 As another example, the MAS recently issued a consultation paper on changes to our Recognised Market Operator (or “RMO”) regime. Under the current approach, Singapore-based market operators must be Approved Exchanges if they are systemically important, or else regulated as RMOs. But new forms of market places have emerged – such as trading facilities that make use of blockchain technology or peer-to-peer platforms without intermediaries. Our regulatory framework will need to be flexible to accommodate innovative business models by market operators with rules that are commensurate with the risks including factors such as retail access and scale of business. 2/4  BIS central bankers' speeches  14 There have been some queries on our regulatory stance towards crypto-currencies, or more generally, digital tokens and ICOs (initial coin offerings). We have issued a public advisory to caution those who “invest” in crypto-tokens to do so with caution and to understand their characteristics including being volatile and non-legal tender. 15 MAS has also issued a guide on digital token offerings last year to explain that our regulatory treatment depends on the digital tokens’ inherent characteristics. For utility tokens, which are for restricted usage within a defined set of products or services, these are not subject to MAS regulations. On the other hand, for payment tokens which are designed to be an alternate form of a medium of exchange, the intermediaries processing these tokens will come into our regulatory ambit under the proposed Payment Services Bill.
First, we have spent too much time and energy on protracted discussions on prerequisites and pre-conditions, such as a full EDIS, itself pre-conditioned by sovereign de-risking. Second, we should not focus on the creation of new instruments and their financing, but start by making existing ones work better. Third, in order to move beyond political divisions, we need to abandon the sequential approach in which the issues are discussed one after another, so that the smallest obstacle can bring the whole process grinding to a halt. I would like to call for simultaneous, parallel movements on several fronts and to broaden the scope of possible action. While welcoming the ambition of the Eurogroup’s “package” and its President, such a pragmatic method of small and parallel steps could help to move forward again. None of these steps is sufficient, but each of them taken separately would be welcome. Or if you prefer a restaurant analogy, call this proposal “à la carte” rather than a “set menu”… bearing in mind that at the end our lunch must be just as substantial and significant. II. Four pathways towards reigniting the Banking Union Building on this approach, I would like to share with you four possible and broader pathways towards a stronger Banking Union. 1. Moving beyond home/host issues. On this topic, I would like to start by issuing a wake-up call on the effective implementation of cross-border liquidity waivers within the union, as prescribed by the European legislation. They remain far too limited in practice.

The “second pillar” is seen as more technical while it is at least as important. It currently leaves unaddressed several issues relating to the European banking sector, namely non-viable banks and overcapacities. In this respect, the targeted review of the crisis management framework, which is being carried out by the Commission, should aim at ensuring that the resolution mechanism is more consistent and applies to a larger scope of banks – including small and medium. This does not mean that all banks should be preserved by resolution but that the tools of resolution should also be usable to favor the exit from the market of unviable banks. There is no need to further increase the size of the Single Resolution Fund for this, as we have introduced a backstop by the ESM. But we shouldn’t forget about another subject: how to ensure the provision of liquidity in resolution. Indeed, even if a resolution successfully restores a bank’s solvency, the bank may not be able to obtain sufficient market liquidity while it is in resolution. In the case of a systemic bank, the amounts needed could be very significant. A “Eurosystem Resolution Liquidity” could be provided by the ECB at this end as discussed in 2018. This raises the issue of the guarantee framework that should support this facility in order to comply with the European legal framework. Another difficult but meaningful way forward for the resolution framework is the harmonisation of bank bankruptcy regimes across Europe.
With a somewhat tighter labour market in the years ahead and rising inflation, wage growth may pick up. Over the past year, low consumer price inflation has probably contributed to keeping nominal wage increases lower than implied by labour market tightness in isolation. Low inflation has resulted in high growth in household purchasing power, even with moderate pay increases. With a path for the interest rate and the krone exchange rate in line with the baseline scenario in Inflation Report 1/05, inflation may increase gradually from less that 1 per cent today to close to 2 per cent in mid-2006. Under these assumptions, inflation may stabilise at around 2½ per cent at the threeyear horizon. However, continued shifts in trade patterns, with higher imports from Asia and intensified competition in retail trade, may prolong the period of low inflation. Developments in the krone exchange rate are uncertain. The real krone exchange rate measured by relative labour costs is strong. Historically, the real krone exchange rate has tended to return to an average measured over a longer period. Should this occur in today’s situation, through a depreciation of the nominal krone exchange rate, inflation will pick up somewhat faster than projected. If the krone appreciates, on the other hand, there is a risk that inflation will not move up as quickly as projected. Developments in line with the projections imply that the output gap will increase to about 1¼ per cent in 2006.

Second, there will have to be an additional buffer to meet banks’ underlying demand for reserves. We expect that the demand for reserves will be considerably higher than it was prior to the financial crisis because reserves can be used to satisfy the more stringent liquidity requirements that are in place today, and because the opportunity cost of holding reserves is much lower now since the Fed pays interest on reserves. Together, as a rough starting point, we have suggested that the necessary amount of excess reserves could be in a range of $ billion to $ trillion.6 Coupled with uncertainty about the likely growth in other factors, such as currency outstanding, this implies a normalized balance sheet size of, perhaps, $ trillion to $ trillion in the early 2020s. 5/6  BIS central bankers' speeches  After reaching that level, one should anticipate that the Fed would resume purchases of Treasury securities. These purchases would allow the balance sheet to expand to accommodate the growth in currency outstanding and in banks’ demand for reserves as the economy grows. They also would make up for ongoing paydowns of the agency MBS that remain in our portfolio. Although there is considerable uncertainty about the long-run size of the Fed’s balance sheet, I would stress that the balance sheet is likely to shrink by much less than it grew between 2007 and 2014.