samchain/econo-pairs-v1 huggingface dataset:
But the decision about when to begin to  13  See, for example, Hansen and Sargent (2008). BIS central bankers’ speeches  5  raise rates shouldn’t be made prematurely. Rather, the decision for policy liftoff has to be made for the right reasons – that is, it should be dictated by economic conditions. I have said many times that I agree with Minneapolis Fed President Narayana Kocherlakota: Policy at all times must be goal-oriented. 14 Our experiences since the crisis began and current economic conditions are highly unusual. The FOMC should not simply set its policy instruments by mechanically aligning them with historical norms if those norms are not relevant harbingers for the attainment of both of our dual mandate goals. Rather, our policy instruments should be set to achieve our ultimate goals as efficaciously as possible given current and prospective economic conditions, all the while with an eye on managing against important risks to the outlook. What does that mean now? I believe that the biggest risk we face today is prematurely engineering restrictive monetary conditions. In this scenario, the FOMC could misjudge the presence and magnitude of economic impediments and misread the recent progress we have made as evidence of sounder economic trends. If we were to presume prematurely that the U.S. economy has returned to a more “business as usual” position and reduce monetary accommodation too soon, we could find ourselves in the very uncomfortable position of falling back into the ZLB environment.

Subsequent events in London changed that, however, including the FSA´s action against the Kaupthing subsidiary. The three leading commercial banks, representing about 85% of total banking assets, all collapsed. The Icelandic Financial Supervisory Authority took over their operations on the basis of newly adopted legislation, and they were divided into two entities, the new banks and the old. I will not expound on that process here, except to say that top priority was given to the maintenance of smooth payment intermediation and uninterrupted banking operations, and that efforts in that regard were successful in spite of measures such as the “freezing order” imposed on Landsbanki by the British authorities under the Anti-Terrorism, Crime and Security Act – a freezing order that originally extended as well to the Icelandic government, Central Bank, and Financial Supervisory Authority, among others. In fact, in the circumstances, the relative ease with which banking operations and payment intermediation continued to function bordered on the miraculous. The International Monetary Fund conducted an FSAP appraisal of the Icelandic financial system during the summer of 2008. The resulting staff report can be found on the Fund’s website. Another report, which was submitted to the Fund’s Executive Board in connection with the Icelandic government’s November 2008 request for a Stand-By Arrangement, includes the following statement:  BIS Review 22/2009  5  “Iceland’s overstretched, over-leveraged banking system was ill-positioned to cope with the global financial turmoil.
But it also raises the equally interesting question of why no such acceleration has yet been detected in the UK (or continental Europe) despite huge ICT investment in the late 1990s. The possible answers to this question cover the full range from the pessimistic - it is never going to happen because there are institutional and other barriers to realising the benefits of ICT, in the shape of regulations, planning restrictions, or restrictive labour practices - to the optimistic - it will definitely happen given time, but the lags are long and variable. The truth is, of course, that we don’t really know, despite much research both in the US, here and elsewhere. For what it is worth, I take it as read that realising the benefits from investment in ICT is about much more than buying kit. As anyone who has ever run a business knows, investment in ICT must be accompanied by changes in the way the job is done. Managing change is a notoriously costly and disruptive business. So some temporary slowdown in productivity growth in the wake of heavy investment in ICT is not surprising. If that’s right, the questions for monetary policy makers become harder: namely, when, where and by how much will productivity growth eventually pick up? What’s the likely impact on potential supply?

As it happens the projections in the February Inflation Report do project a pick up in supply over the next few years, but that reflects improved labour availability rather an assumption that there is an ICT led productivity miracle in the making. But we could easily be wrong. Given recent experience, there is clearly some risk of undue pessimism, though it has to be said that past policy errors have more often been the result of too much optimism. One thing is for sure: we can’t afford to sit back and wait for the data to tell us the answer. By the time we have that degree of certainty policy will have moved on. So productivity will remain a key issue for us over the coming years. Conclusion Which brings me to my final challenge for policy makers: how to handle uncertainty in taking and presenting policy decisions. The MPC has met this challenge head on from the beginning. Within the discipline imposed by a shared inflation target, the Committee has been very open both about uncertainty and about the disagreement that is likely to go with it. Published MPC forecasts have explored rather than glossed over risks and uncertainties. The individual accountability of MPC members reduces the incentive to search for consensus.
There is this question: why has the developed world ended up where it is now? We know how a household or company would suffer under the pressure of excessive debt. Households or companies troubled by significant debt overhang have to curtail their spending or investment, which has huge negative effects. In the end, they have to go into bankruptcy if they cannot repay their debts when due. But there is a lot of misconception when it comes to a country owing excessive debt. It is true that a country cannot technically go bankrupt in the same way as a person or company. However, it does not mean that a country cannot go into default if it borrows more than it can pay back. Even if a heavily indebted country manages to survive a debt crisis with debt restructuring, just like Mexico in the 1980s and more recently Greece, the debt overhang will still impede its economic growth and inflict huge costs and pain on its people in the form of rising unemployment and sharp drop in living standards. So how can one explain the common trend in the last 30 years of the developed world spending beyond their means and incurring debts to levels that clearly cannot be repaid by the current generation of people? One answer that I can think of is that, until quite recently, many people in the developed world had taken prosperity for granted and regarded good life as their right.

In a similar vein, some forms of “good” deflation could be accepted as conducive to stronger growth. To me, this approach is very misleading. I will indulge here in a little bit of history. As you know, at the inception of the euro, the definition of price stability was set as “lower than 2%”. That definition was quickly perceived by markets and economists as meaning we took a benign view of low inflation or, even, stood ready to accept deflation. As a result, the Governing Council felt the need, in 2003, to change the wording and specify the definition of price stability as “lower but close to 2%”. Third, the validity of the 2% target is widely acknowledged. That definition of close to 2% has today been broadly adopted in major advanced economies, including in the US and Japan. This is no coincidence. There is a robust rationale for aiming at 2% or close to 2% and, therefore, not tolerating persistent lower inflation. First, since the work of the Boskin Commission, which, I believe, is also valid for the euro area, we know that available measures tend to overestimate this rate. So it is legitimate to consider that, technically, an inflation rate of 1% may, in reality, be zero. Then, if the central bank aims at 1%, any negative shock would plunge the economy into deflation. To absorb such a shock, some margin – in the order of an additional 1% – is necessary. This simple reasoning provides a very strong basis for the current definition.
The architecture of our current monetary system is characterised by flexible exchange rate regimes, free capital flow and independent monetary policy. This global landscape has expanded the cross-border exchange of goods, services and capital. Importantly, the transition to more market-based foreign exchange rate system has accorded policymakers greater control over domestic policies, accelerated the development of financial sector, and, ultimately, boosted economic growth. Nonetheless, this international monetary system also has obvious shortcomings. In the postBretton Woods period, the frequency of banking and currency crisis has increased dramatically with large output and employment losses. At the centre of this international monetary system, policy adjustments in major economies have led to significant volatility in the financial markets. The initial hint of tapering by the Federal Reserve in May 2013 resulted in large reversal of capital flows and exchange rate over-shooting in emerging economies. Today, the complexity of managing an economy is compounded by the impact of global shifts in capital on domestic financial markets and real economic activities. Given our high degree of openness, Malaysia was not spared by these developments. For example, global concerns over monetary policy normalisation by the Federal Reserve continue to impact the ringgit. Ringgit volatility since September 2014 has exceeded levels in previous episodes of sharp adjustments such as the European Sovereign Debt Crisis and Taper Tantrum. The weak ringgit performance was further amplified by the misperception about Malaysia’s reliance on commodities and our position as a net oil exporter.

Conversely, as the recovery became more firmly entrenched, Malaysia was the first in the region to normalise interest rates in March 2009 from the record-low level, well ahead of the regional counterparts. We shall continue to strive to make monetary policy decisions based on prevailing data and the assessment to the best of our ability, even if it might be against conventional wisdom or no matter how unpopular the decisions might be. In managing the exchange rate, a similar philosophy of pragmatism is applied. We should recognise that in today’s world of greater interconnectivity, we are all susceptible to the vagaries of the global financial markets. But to distance ourselves from the global financial markets is not an option. In this regard, despite the extreme volatility experienced in recent years, our thinking has 6/8  BIS Central Banker's Speeches  remained the same – market forces ought to determine the direction and level of the exchange rate. The central bank’s role should be to contain the degree of volatility, which we know has significant implications for an open economy like ours. As such, there will be times when the Bank’s presence is apparent in the market, to manage the degree of volatility, but there will be times when the ringgit movements will be more volatile than normal so that it will take its course in line with demand and supply in the market that reflects underlying trade transactions.
Finally, in the case of the leverage ratio and the NSFR it is too early to say whether the minimum requirements in Basel III are enough for Sweden or not. As yet, the Basel Committee has not decided on a quantitative requirement for the leverage ratio and it is therefore not possible to determine today how a Swedish requirement should relate to the international requirement. With regard to the NSFR, the Riksbank has recommended the major Swedish banks to extend the maturity of their funding in order to be able to reach the NSFR once it is in place. The revised proposal for the NSFR means that the reference point for this recommendation has moved somewhat. However, irrespective of the technical design of the NSFR, the large Swedish banks need to extend the maturity of their funding. What the appropriate levels for the Swedish banks’ leverage ratios and NSFRs are, and thus whether the Riksbank needs to work for the introduction of higher levels than those that will apply internationally, are questions that we will need to consider carefully and return to in the period ahead. The Basel regulations provide a good foundation, but more may be needed I hope that I have now succeeded in giving you a better insight into the work of the Basel Committee and my view of its importance to Sweden. The Committee has recently taken important steps towards finalising Basel III and hopefully a complete regulatory framework will be available at the end of 2014.

Central banks can benefit from, and rely on, extended access to supervisory information and intelligence, especially on systemically relevant intermediaries, in order to better assess risks and vulnerabilities of the financial system as a whole (A. Orphanides, May 2010). It is not necessary to say, because it is obvious, that I share the same opinion. IV. policy. The crisis also showed that there is no financial stability by pursuing profligate fiscal  The latest developments in Europe whetted this issue. The decisions of the governments, as one of the basic economic actors, have enormous influence on the aggregate demand. Therefore, the fiscal policy has key role as a shock absorber, contributing to the maintenance of the financial stability. However, we witness that many governments are ignorant to that. Why it is so, is not hard to guess, but watching this “sobering” in Europe, it is obvious that the crisis helped to firm up the following perspectives: 1) The fiscal policy should be countercyclical. It should have cyclically adjusted balanced budget rules adopted; 2) The fiscal policy must not be a source of shocks. If looking over the fiscal deficits in certain countries, it can be perceived that, there, it is far from that;  BIS Review 90/2010  7  That is why the old ideas for the need of establishing independent fiscal agencies and minimal framework which will guarantee independence to the statistical agencies competent for the national accounts, resurrected. It is impressive what Germany commenced.
There is research underway at the Bank of England which studies the effect of credit growth abroad on 4  financial stability at home, in particular, on the probability of experiencing a banking crisis . It finds that even when domestic credit growth is moderate, elevated credit growth abroad could result in financial instability at home for example by boosting cross-border lending, through spillovers into domestic asset prices or by creating the potential for contagion in the event of a banking crisis abroad. 5  In terms of magnitudes, a one standard deviation in foreign credit growth over five years increases the 6  probability of a domestic banking crisis by around 2 percentage points - a relatively large number given the  3  IMF (2016). Cesa-Bianchi et al. (forthcoming). 5 In this research, domestic credit growth is defined as credit extended by domestic banks to the private non-financial sector in a given country. Foreign credit growth is defined as the average of the growth in credit extended by domestic banks to the domestic private nonfinancial sector in all other countries. 6 On the basis of modelling and assumptions set out in Technical Appendix 1: Foreign credit growth and domestic financial stability. 4  3  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  3  7  overall frequency of these crises is about 3% .

Their validity in ensuring the convergence of transition economies is an issue that is hotly contested by several economists (see Buiter et al., 2002). 3  See Buiter and Grafe (2002) and Begg et al. (2002). 2  BIS Review 1/2007  (IV)  The Bank of Albania approach to EU accession  The monetary policy of the Bank of Albania focuses on maintaining price stability through the control of monetary aggregates which are used as intermediate target. Indirect instruments are used to transmit interest rate and liquidity signals to the market. Repo rate is the leading indicator for short term interest rates while repo and reverse-repo operations are used to manage liquidity. Over the last five years the Bank of Albania stability oriented monetary policy has generated low and stable inflation; it has also ensured that medium and long run inflation expectations have been well contained. The economic growth has been robust at around 5-6 percent of GDP, while enjoying a high degree of financial stability. (In other words, it seems like we are already close to the ERM II standards.) Such results reflect the opinion that economic convergence should not be held back by the political one. Political processes dictate that ERM II and EMU should be preceded by entry into the EU. The Bank of Albania has a clear view of the EU accession process. The design of the current and future monetary policy strategies is in line with the ultimate objective of EU accession.
Innovation is important, but it must not come at the expense of stability or confidence in existing payment systems. The fourth challenge relates to the downside of digitalisation: cyber risks. Cashless payments are a particularly attractive target for cyber attacks. A lot is at stake for central banks in this regard too, as a loss of confidence in the payment system could ultimately undermine confidence in money. Tackling such risks may open up new business opportunities. Achieving significantly greater resilience to cyber risks could give Switzerland an important competitive edge in the future. In particular, it might be worth investing in a new, robust and secure data communications infrastructure. Promising solutions are currently being developed right here on our own doorstep. For example, a team from ETH Zurich has created SCION, a new internet architecture which enhances the security and reliability of internet communications considerably. This technology could form the basis of a secure Swiss finance network. For the  10  While such tokens would be backed by an official currency like the Swiss franc, they represent a claim on a given private sector provider, not on the central bank. Page 8/9  Swiss payments ecosystem in particular, this would allow secure and flexible communication between participants. To meet these four challenges and prepare for the digital future, the Swiss financial centre needs to engage in an open dialogue on strategic options. It is important that we reach consensus on what a robust, attractive and future-proof payment system in Switzerland should look like.

To do so, you have undoubtedly used your strengths, which I believe most notably include your close relationship with your customers, your extensive knowledge of the local economic situation and your down-to-earth management (far removed from speculative business models and focused on harnessing your knowledge of those customers and their needs). Furthermore, on a day like today, I feel that it is fair to highlight as one of your strengths your ability to support one another when necessary. You know better than I do that mutual support is one of the basic principles of the cooperative movement, and over these 50 years you have demonstrated that solidarity is an essential means for overcoming problems and difficult situations. Indeed, if we look back in time we see that today’s society – and economy – are very different from those of 50 years ago. So another key to your success lies in your ability to adapt to that changing reality. The crisis triggered by COVID-19 is clearly a dramatic test of how changeable things can be. It is obvious that, for once, the origin of the crisis is not financial and is not linked to macroeconomic imbalances. Nevertheless, although this crisis is unrelated to previous ones, there is something that still holds true in this type of situation: the strengths that we have built up when the crisis hits will be the strengths that enable us to weather the storm.
The reserves were above the minimum aimed at during the prelude to capital account liberalisation. Relative to GDP, Iceland’s reserves are currently at their largest since the end of World War II. There is no doubt that we have already benefited greatly from these relatively large reserves. They have enabled us to lift the capital controls without taking excessive risk with economic and financial stability. The reserves play a key role in Iceland’s recent credit rating upgrades, as can be seen in the press releases from the rating agencies. The upgrades will lead to an improvement in the borrowing terms offered to the Treasury, the banks, and large companies in foreign credit markets. And last but not least, large reserves provide a buffer against shocks in the future. They greatly increase the probability that if the króna depreciates because the equilibrium exchange rate has fallen and the positive output gap has closed, it will not pose a threat to stability. Many countries have undergone such an adjustment, and a sudden collapse of the currency such as that occurring in Iceland during the financial crisis is the exception rather than the rule. The benefits deriving from the reserves are therefore significant. The problem, however, is that the benefits are distributed widely, while the Central Bank bears the costs alone. Last year the Bank recorded an operating loss of 35 b.kr. This was due to an exchange rate loss of nearly 90 b.kr. on the reserves, owing to the appreciation of the króna during the year.

Every ijtihad should always be geared towards fostering harmony and not widening the differential gaps. If a gap exists even in the matter of perception, it may raise doubt and reduce the effectiveness of a Shariah decision. In this context, the majority of the Shariah Committee members in the Islamic financial institutions in Malaysia are currently undergoing the Shariah Leadership Education (SLE) programme that commenced early this year. This programme aims to provide exposure to the Shariah members on the fundamentals of finance and to foster greater understanding on their roles and responsibilities in shaping the direction of Islamic finance in Malaysia. The objective is also to ensure that all operational, legal and Shariah aspects are taken into consideration before any Shariah decision is made. Aspect of Ijtihad in a contemporary setting The second point that I would like to share is on the aspect of ijtihad in a contemporary setting. In line with the maturity of the Islamic financial industry, issues relating to Shariah have also becoming increasingly complex and challenging. Fundamentally, the ijtihad formed by the Shariah experts need to be based on the rules and principles of Islamic law. At the same time, the Shariah Committee members need to also examine and understand the contemporary environment that is constantly changing especially in the field of communication technology.