samchain/econo-pairs-v1 huggingface dataset:
A set of policies might be socially efficient—that is, on the frontier when risk and return are measured for society as a whole – but perceived as inefficient by the industry or the public, who may focus on the private impact on individual firms or sectors. This can lead to some debate about the stated goals and assessment of the efficacy of a particular policy mix. I believe this is an area where better communication can help and the official sector can be clear on expected outcomes and explain any divergence between social and private perspectives. Distinguishing Policy Changes  4/7  BIS central bankers' speeches  A third issue is that it is not always easy to distinguish policy changes that move outcomes along the frontier from policy changes that move outcomes toward the frontier. For example, is the shift to an 18-month exam cycle for community banks or a shift to less frequent stress testing for some banks an increase in policy efficiency or a shift to a different policy stance with different risk/return features? As I mentioned, both can be defensible policy moves, but they do have different implications. Moreover, a given policy change might have both effects as the stance of policy changes and the policy mix becomes more efficient. The proposal around the stressed capital buffer, for example, simplifies the capital regime and also relaxes some assumptions. 13 Finally, these policy changes might interact and blend together.14 How do you know the policy intent?

In choosing for such an option, Curaçao and St. Maarten could continue to benefit from the financial soundness of the dollar, while still maintaining a certain degree of monetary independence. Last but not least, I would like to point out that the currency choice, whether at the end it would be a local currency or the US dollar, is purely a stage for an economic act. Depending on the actors, the outcome of the play would be a drama or a happy one. In the choice of a dollarization, the role of the central bank would be limited if not nihil, while that of the government would become even more prominent. There is a significant shift of responsibility. While the starting fiscal position for both St. Maarten and Curaçao would be advantageous as autonomous countries, meaning a low debt stance, it is critical that fiscal rules and benchmarks are legally imbedded, and that accountability is a normal way of life. This would ensure that internal fiscal discipline is guaranteed, and it does not need to be forced upon by an external party. That is true independence. I would even go a step further and recommend the creation of special reserves, which would be used to counteract any financial stress. This would provide the necessary confidence to promote financial and economic stability. There is no doubt that these are exciting times in the Netherlands Antilles. I strongly advise you to learn from the experiences of Aruba, the good but also the bad ones.
But in practice we tend to say that there are prices that are beyond the control of monetary policy, that are somehow disconnected from the conduct of monetary policy, or that are “completely different”. Real estate prices, asset prices etc. Interesting, isn’t it? And conversely, in practice we know what financial instability looks like and what it is. But in theory we haven’t created a rigorous operationalised theoretical system for achieving financial stability, or even for defining financial stability. There is no single, universally accepted definition of financial stability, as quantifiable as the definition of price stability. And what is worse, many believe there will never be one. Again, quite interesting. So this, in my eyes, is the first constraint we face. At least in the area of financial stability, theory lags behind practice. Inflation targeting is a formalised, practical and handy system, while “financial stability targeting” is not, despite huge steps forward recently. And I can’t resist dreaming of a day when we have a system in the financial stability area that is as operationalised as inflation targeting. After all, back in 1978, the U.S. economic historian Charles Kindleberger, in his now classic book “Manias, Panics, and Crashes: A History of Financial Crises”, pointed out that financial upheavals had virtually always been preceded by credit booms, property price and asset price booms and increased leverage in the financial system. All these are, in a sense, monetary phenomena. So why couldn’t we go further here as well?

1  2  Borio, C.: Monetary policy and financial stability: what role in prevention and recovery?, BIS Working paper No. 440, January 2014  BIS central bankers’ speeches
Krzysztof Rybiński: Globalisation and its implications for monetary policy Address by Mr Krzysztof Rybiński, Deputy President of the National Bank of Poland, at a series of seminars by the Centre for European Regional and Local Studies and the UNESCO Chair, Warsaw University, Warsaw, 6 April 2006. *  *  *  Ladies and Gentlemen, Globalisation is a term used frequently in the economic debate nowadays, and it would be difficult to find an area of economic research that is “globalisation-free”. However, its meaning is so broad, that when globalisation is referred to in a discussion, various people understand various things. For this very reason, a discussion on globalisation and the monetary policy should commence with an attempt to define the term. One of the definitions of globalisation is provided by the International Monetary Fund (IMF) 1 , where it is construed as “the growing interdependence (integration) of national economies, in particular as a result of the growing international trade and financial flows”. Moreover, an element of globalisation that is worth mentioning is the fast flow of information and knowledge, which is the driving force behind globalisation processes. One should keep in mind that globalisation is not a completely new phenomenon 2 . In view of the existence of political barriers to international trade, the flow of capital and goods was equally as possible one hundred years ago as it is today.

3  Pier Carlo Padoan, A Shared European Policy Strategy for Growth, Jobs, and Stability, February 2016. BIS central bankers’ speeches  3  Member States would be free to join, and the Convergence Fund would be allocated to financing common goods such as European infrastructure investment or refugee settlement. In a second stage, this budget could become a stabilisation instrument, centralising a welldefined set of policy instruments, such as a European layer of unemployment insurance. The third and final stage of fiscal integration would only be achieved if agreement can be found both on financing (direct revenue-raising capacity and common debt issuance) and on the desirable level of business cycle synchronization. This perspective would be a powerful incentive for national discipline and commitment as shown during the march to the Euro. How to set up a legitimate institution with a genuine administrative capacity? Further integration and democratic accountability should progress together, as discussed in my recent article with Jens Weidmann. We need to enable the European economic administration to be more efficient, while establishing strong enough political legitimacy to ensure balance between liability and control. These institutional changes obviously require a new Treaty. First, we need a legitimacy-enhancing appointment process. The Finance Minister could thus be appointed for a five-year period by the European Council acting by qualified majority on a proposal from the president of the EU Commission.
We want debt investors to have the information they need to price risk and so support the proposals in the TLAC term sheet and Basel’s Pillar 3 Framework that require banks to disclose the rank ordering of their liability structure at legal entity level. As I have described, we want debtholders and other stakeholders to understand how we will use out resolution powers and so have published a document setting out our approach to resolution – otherwise 15  known as the Purple Book. The latest edition in October indicates how far we have come since we first  published the Purple Book in 2014. But we have further to go. It is our intention – which we indicated to the Treasury Select Committee in March – to publish summaries of the resolution plans for the major UK banks and our assessment of their resolvability. We will do this after the start of 2019 when ring-fencing, the first level of TLAC requirements and operational continuity in resolution arrangements are in place. As an institution we want to be open and accountable. As a resolution authority we need to be for it to work. There is a famous Chinese proverb that notes a journey of a thousand miles begins with a single step. On the resolution journey there have been a lot of steps – in fact we could all be forgiven for feeling footsore – but the thousand mile marker is coming into view. 15  See the Bank of England’s approach to resolution https://www.bankofengland.co.uk/-/media/boe/files/financialstability/resolution/boes-approach-to-resolution.pdf?la=en&hash=8213BE00D67C4CADB948D51FEBD164E136A70BE6 .

The logic there was that at that level failure of the material entity might trigger resolution of the group as a whole; problems for smaller entities, even those that might house functions that are critical to the host jurisdiction, should be more of a recovery matter. -  by including a provision that internal MREL for subgroups should be scaled in single point of entry (SPE) groups to 75-90% of the requirement that would apply to the subgroup on a standalone basis. The logic was that given the interdependence in the business models of SPE firms, prepositioning in this range would be sufficient to secure cooperation and deter hosts from ring-fencing, and home authorities from cutting off, foreign subsidiaries. Prepositioning of resources in this way will provide concrete underpinning for cooperation that goes beyond the paper commitments to cooperate in Memorandum of Understandings (MOUs), honoured in the breach in previous cross-border failures. Even with these restrictions there may still be a sum of the parts problem in which the sum of TLAC requirements at solo level pushes up external requirements. If internal TLAC requirements are high they are also likely to stand in the way of holding a surplus at the top of the group that could provide flexibility in covering losses if they are concentrated in a particular part of a group. Thus in our internal MREL policy our intention is first to consider setting internal MREL generally for the firm at the bottom of the 75-90% range.
This approach is quite unique to Singapore and it has served us well. 8  BIS central bankers’ speeches

Amidst this changing global landscape, Islamic finance must continue to evolve to address the emerging issues and new challenges and leverage on the emerging opportunities in this increasingly more globalised environment. With the theme “Islamic finance: Opportunities for tomorrow”, the Global Islamic Finance Forum 2010 follows from the massive global interest and the widening sea of opportunities in Islamic finance that has come from its growing internationalization and global expansion. The  2  BIS Review 140/2010  Forum aims to provide an opportunity for the global Islamic finance communities to share experiences and discuss key developments in Islamic finance and to explore the way forward for the international Islamic financial system. The Forum will feature plenary talks and multitrack sessions, which include the Regulator’s Forum, the International Shariah Forum and the Islamic Liquidity Management Workshop. On the side of this Forum, the inaugural IILM Board Meeting will be convened to pave the way for its operationalisation. Another important meeting taking place is the ISRA Council of Scholars Meeting which gathers eminent Shariah scholars from around the world. This gathering of minds will importantly contribute towards greater global understanding and harmonisation in the field of Shariah. A series of high-level meetings and several important signings of MoUs will also be taking place, highlighting increased international cooperation.
But it is perhaps in the nature of financial flows that they do more often than not lead to overshooting in financial markets. The strong growth track record of Asia and indeed of other emerging markets has, with the benefit of hindsight, brought about excess optimism in these markets, producing a compression of yield spreads which underpriced the underlying credit, market and other risks that are typical of emerging markets going through financial liberalization. Indeed, Alan Greenspan said recently that “in retrospect, it is clear that more investment monies flowed into these economies than could be profitably employed at modest risk”. With the sharp correction seen in financial markets in Asia, against the background that the economic fundamentals have largely remained sound, whether in isolation or relative to other emerging markets beyond the region, it is possible that there might now have been overshooting in the other direction. 22. I am sure, however, that the markets will eventually find their right levels, reflecting new circumstances, for better or for worse. I am not convinced, in any case, that the devaluation brought about by floating the exchange rate is necessarily the panacea for the ills of our Asian neighbours. First year economics tells us that the four elasticities of demand and supply of imports and exports may not interact to produce a clearly positive contribution to the balance of payments position from devaluation.

Furthermore, when stable exchange rates are replaced by flexible, volatile and, in all likelihood, depreciating ones, the demand for hedging in the more volatile environment and under liberalized arrangements may drive exchange rates to such debilitating levels that many would regret the lack of resolve in pursuing sensible policies and in the defence of stable exchange rates in the first place. There is no doubt that confidence in the stability of a few Asian currencies has now been badly undermined and rebuilding it may take more than just time. Nevertheless, as the very productive Asian economies find their feet again, they will soon be on their way with renewed vigour. 23. For Hong Kong, as very much a service-oriented economy, any erosion of competitiveness, as a result of our currency holding stable against the US dollar while others have fallen, is likely to be mild. Our economy is not particularly sensitive to exchange rate changes. The IMF forecast for Hong Kong’s growth rate next year is 4.25%, only a shade below our trend growth rate of 5%, representing a healthy consolidation in the circumstances. BIS Review 115/1997
By contrast, the financial regulator’s task is solely focussed on delivering and maintaining rules that are fit for purpose for their regulated sector only – there is no competition for other initiatives and the process and timetable provides certainty to industry. In a second model, prudential regulatory-setting powers could lie with government ministers. This model would be dynamic because the government would be able to adjust prudential regulation. It would be legitimate since the government is directly accountable to the parliament and ultimately the electorate. But it may not be time consistent because it creates the possibility that prudential regulation will be influenced unduly by the electoral cycle, as was deemed to have happened to monetary policy prior to central bank independence. Alternatively and in a third model, these powers could be given to an independent regulatory body. This model is likely to ensure that prudential regulation is both dynamic and time-consistent. An expert regulator would be able to identify and implement necessary dynamic adjustments, and, for reputation reasons, it would have an incentive to maintain prudential standards provided that it avoided industry capture. But, absent further accountability mechanisms to enhance it, it would lack legitimacy. In summary, each of these models lacks one of the ideal features for the institutional structure of prudential regulation.

Chart 1: Regulatory-Supervisory Independence and central bank independence, 1999-2019 (a)  (a) The data on central bank independence is drawn from Bodea and Hicks (2015) and Garriga (2016). Weighted versions of the indices are used to aid comparison. The weighting is based on Cukierman et al (1992). The second step in the analysis was to examine whether there is an association between the Regulatory-Supervisory Independence index and financial stability. Defining an ex ante quantitative indicator of the success or otherwise of prudential regulation is hard, unlike with monetary policy where such measures are easier to arrive at. But fortunately, this is less of a problem for this analysis because we have ex post observations of distress in the banking system. The authors used rates of non-performing loans at banks as a measure of financial (in)stability.9  They analyse whether reforms that increased regulatory-supervisory independence were associated with subsequent a reduction in the rates of non-performing loans. Panel data regression show a 9  That is, non-performing loans as a proportion of total gross loans. I would like to thank Matthew Willison, Hugh Burns, Nicolo Fraccaroli and David Swallow for their assistance in preparing these remarks 9  negative and statistically significant association between independence-increasing reforms and rates of non-performing loans – see Table 3.
•  One major process that left its mark on the 1990s is the breakthrough in technology, above all for computers and telecommunications. This had been on the way for a number of decades and began to flourish in many parts of the world as it became increasingly clear what the microchip had to offer. It can be likened to the development of the steam engine in the late 18th century or the combustion engine and the electric motor a century later. As we know, those earlier technical breakthroughs had far-reaching consequences for the development and transformation of our society. The process is not - either then or today - a simple progression. But the setbacks are manageable and pave the way for new advances. Many of the setbacks originate in faulty expectations of the new technology’s impact. •  The other major process has to do with the financial system’s deregulation in recent decades. As a result, we now have a world where capital markets and capital flows are about as free as they were before the outbreak of World War One. With the Great Depression and World War Two, the idea of returning to a less restricted financial system failed to catch on. It was not until the 1980s that deregulation reached Sweden, after starting somewhat earlier in many other industrialised countries, including the United States. A free financial system is needed in order to promote the development of new technology and a genuine social transformation.

20 [30]  However, the interdependence between monetary and fiscal policy is not reflected in the monetary and fiscal policy frameworks. The frameworks are designed so that the two policy areas function independently of each other. The Riksbank has a high degree of autonomy and a mandate that prioritises price stability. The budgetary policy objective of fiscal policy is to ensure that fiscal policy is stable over time, which in practice means that government debt should be sustainable in the long term. This approach is based on the view that fiscal policy has little impact on inflation; that monetary policy has negligible fiscal consequences; and that a fiscal policy mandate that stabilises government debt and budget deficits is sufficient to support the central bank's inflation target.38 Central banks' difficulties in bringing inflation up to target without relatively drastic measures after the financial crisis may indicate that this view has been too simple. A fiscal policy that is expansionary when inflation is too low and contractionary when it is too high makes it easier to achieve the inflation target.39 It may of course be politically easier to conduct an expansionary fiscal policy, but it is important that it is symmetrical so that the national debt does not risk becoming too large.
As well as country case studies, this is likely to draw on models which explore how micro-economic interactions shape macro-economic phenomena. For example, the Bank has recently begun using a Product Sales Database (PSD) compiled by the UK’s Financial Conduct Authority (FCA). This covers almost all UK mortgage transaction since 2006, containing around 13 million transactions. This large micro database can be used both to understand the dynamics of the UK housing market and to help calibrate macro-prudential interventions to shape it. For example, Chart 19 shows the regional distribution of loans made at a loan-to-income multiple in excess of 4.5 at two dates – 2009Q1 and 2014Q2. Cooler colours signify a smaller proportion of loans. As can be seen, there was a discernible warming in the UK housing market up to 2014, at least for higher loan-to-income loans. At around this time, the Bank of England’s Financial Policy Committee (FPC) made a macroprudential intervention, constraining to 15% the proportion of mortgages with a loan-toincome multiple in excess of 4.5. This was the first time such a macro-prudential measure had been taken in the UK, though a number of other countries have capped mortgage loanto-income or loan-to-value multiples (IMF (2013)). This was not, however, a step into the dark for the FPC. The calibration of its intervention drew explicitly on the micro-evidence contained in the PSD database.

How they respond is one important determination of economic growth this year. Usually, one of the more positive aspects of an exchange-rate depreciation is that, by raising their profitability, it encourages the expansion of firms in the tradable sector. With the world economy in better health than for some time, there is certainty every incentive to do that today. On this occasion that response might be more muted than usual, however, because it’s not clear how long the sweet spot will last. If the currency market is right the UK’s future trading relationships will be less favourable; if it’s too pessimistic sterling is likely to rebound. Either 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  way, future returns in the tradable sector may not be as healthy as they are right now. This may act as something of a deterrent to longer-term, sunk-cost investments in that sector. In what follows I’ll begin by looking at sterling and what economics has to say about its reaction to the referendum result. I’ll then say something about how depreciations work in small open economies, in particular their impact on profitability and investment in the tradable sector. There’s a short concluding section. Sterling’s response to the EU referendum: some exchange-rate economics So let’s begin with the depreciation and its proximate cause, the outcome of referendum. The link between the two was clear long before the vote itself.