samchain/econo-pairs-v1 huggingface dataset:
Mr George talks about monetary policy in the United Kingdom: The Economic Prospect Text of the Chancellor’s Lecture delivered by the Governor of the Bank of England, Mr E A J George, at Hertfordshire University on 18/02/99. As you would expect of a central banker I will talk about monetary policy – under the title of “The Economic Prospect”. I will begin by explaining what it is that we are trying to do through monetary policy; then I’ll describe how we’ve been doing, where we are now, and where we might be headed. What we are trying to do So let me begin with what it is that we are trying to do. In one sense that’s very easy to explain these days. The previous Conservative Government had already in 1992 defined the objective of monetary policy in terms of a target rate for retail price inflation. The new Labour Government, immediately on assuming office, similarly defined the objective in terms of an inflation target, but went an important step further. As soon as Gordon Brown became Chancellor of the Exchequer, in May 1997, he announced that he would no longer exercise his powers to set short-term interest rates, which is the heart of monetary policy, but instead he would set the inflation target, and delegate the achievement of that target to a new Monetary Policy Committee to be established in the Bank of England.

The exchange rate has, in fact, tended gradually to soften since last spring when the decision to go ahead with the euro was finally confirmed; but increasingly since the autumn the internationally-exposed sectors of the economy have been dealt a further massive blow as a result of global economic turbulence. This started, in fact, with the financial disturbances in Asia in the latter half of 1997, but even as late as the beginning of last summer it seemed as if it might have only limited impact on the overall world economy. The IMF, for example, was then still projecting 3-3¾% world growth in 1998 and 1999 respectively, which was certainly a setback compared with their forecast of over 4% just six months before, but it was hardly catastrophic. Since last summer it has become increasingly clear that things are likely to be significantly worse than that. The financial collapse in Russia, deepening recession in Japan, the long battle – then sudden defeat – in Brazil to hold its exchange rate, and fluctuating fears of possible knock-on effects on the major countries’ financial markets, all contributed to an increased sense of financial fragility, which has not been easy to contain, though I am now hopeful that we will be able to stop the financial rot.
Mr George offers an overview of the UK economy Speech by the Governor of the Bank of England, Mr E A J George, at a dinner hosted by Birmingham City 2000 in Birmingham, England, on 18 May 1999. Thank you, Mr Chairman. I am delighted to have been invited to speak at this Birmingham City 2000 Dinner on the evening before the first ever meeting of the Court of Directors of the Bank of England at one of our Regional Agencies. We have decided to hold Court meetings periodically outside London for two reasons. First, we want to emphasise that we are the central bank for the whole of the United Kingdom and that we are very sensitive to that responsibility. Secondly, we want to draw attention to the existence of our twelve existing regional agencies (and, as we announced on Monday, we will shortly be opening a further agency in Northern Ireland) and to the important role which they play in informing the monetary policy process in particular of real-world conditions on the ground in industry and commerce in every part of the United Kingdom. Our Agent here in the West Midlands, John Beverly, is well known to many of you. He will be moving on, to the South West, in the autumn to be replaced by another John! John Bartlett who is at present a Deputy Chief Cashier.

We are concerned – as you are – with the health of every sector of the economy, we fully appreciate the interdependence of the different sectors, and we well understand the part that greater real exchange rate stability can play in promoting more balanced economic growth. But the harsh reality is that we could only seek to achieve a particular exchange rate in order to protect the internationally exposed sectors at the risk of destabilising the economy as a whole, and there would – as we have recently seen – be no assurance even so that we would be successful in achieving and maintaining a particular exchange rate. We do, as I say, take full account of the impact of world demand and of the exchange rate on the likely path of inflation, and, to the extent that these influences are exerting a disinflationary effect, interest rates are lower than would otherwise be the case. That was the reality behind the statement made after our last MPC meeting that if the  BIS Review 56/1999  4  exchange rate does not decline from its present high level, as we assume that it will, at least in line with interest rate differentials, then, depending on other developments in the economy, there might need to be further easing of interest rates to keep inflation on track. I stand by that today. But let me be quite clear. This does not mean that we have any particular target for the exchange rate.
Advantage should be taken of these initiatives to adopt specific and ambitious measures that entail deep-seated changes in the functioning of our labour market. We stand at a pivotal juncture for our future, a point at which it is vital to radically change certain things so that Spain may continue to converge on the core European countries. Some of these reforms may require sacrifices, and it would therefore be best to have as broad a consensus as possible. The effective adoption of these reforms is crucial for the economy in general, but particularly so for the financial system. And if anything has been highlighted by the current global crisis, it is the close relationship between economic growth and the strength of the banking system. Two years on from the onset of the turmoil in summer 2007, most Spanish credit institutions continue to show considerable soundness. Unlike in many other countries, this has meant that practically no public aid has had to be used to bail out banks, which has prevented adding a further burden to the problems stemming from the recession. But the relationship between the economy and the financial system also works in the opposite direction and, evidently, if the necessary measures for reactivating employment growth within a reasonable time frame are not adopted, bad debts will continue to mount and there will be more financial institutions facing difficulty in providing the financing needed for economic recovery. That our banking system has proven reasonably resilient during the international financial crisis is due to various factors.

The Official Credit Institute’s programmes, aimed at smoothing small and medium-sized companies’ access to credit, have attempted to correct this market failing. Further work along these lines should be pursued, improving where possible the workings of these programmes and increasing their volume if necessary. Yet I must urge credit institutions to be responsible, as I have on previous occasions. Evidently, at a time such as the present, they must be particularly careful and, naturally, not  2  BIS Review 27/2010  extend credit to companies that are not solvent; but nor must they forget that should they fail to lend but a single euro to companies that are solvent, they will only be making things difficult for themselves. Another example of progress in financial reform backed by broad Parliamentary consensus has been the approval of legislation whose aim is to restructure the financial system at the least cost to taxpayers and in the shortest time possible, observing the constitutional distribution of powers, so that all institutions in the system are in a position to provide credit to households and firms when the recovery arrives.
Muhammad bin Ibrahim: Of directors and supply of talent Remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Launch of FIDE Forum Directors Register “Of Directors and Supply of Talent”, Kuala Lumpur, 1 April 2016. *  *  *  Today marks an important step forward for board talent management among financial institutions in Malaysia. The Directors Register will be launched this morning to address the financial sector’s need for a reliable supply of qualified individuals to meet the growing demand for high-calibre directors. Financial institutions play a critical role in the economy, intermediating funds to support the real economy. Because of the criticality of the role, financial institutions must be led by directors who possess the necessary skills, experience and integrity to spearhead financial institutions in a competent and effective manner. Identifying, developing and retaining directors of high calibre are no easy task. We need to design a solution to achieve it. The Directors Register is therefore a timely initiative as this acts as a solution to expand the pool of potential directors for boards of financial institutions. Demand imperatives Being a director of a financial institution is highly demanding. The last financial crisis has shown the failure of board oversight in managing the affairs of financial institutions. Unbridled risks-taking, misaligned, incentives structures and failures in overall governance were just a few of the shortcomings that almost brought the global financial system to a standstill.

We must push for building a forward-looking approach of the impacts of climate risks through the development of comprehensive climate stress tests. Third, green finance should mature and upgrade its professional standards. Financing needs for energy transition are huge; in Europe alone, it is estimated that an additional EUR 177 billion per year will be necessary over the period 2021-2030 to reach the EU’s energy and climate objectives for 2030. i The European Green Bond Standard proposed by the TEG should ultimately help to further develop the green bond market and channel more investments towards green projects. Let me add that France has strengthened its role as leader in green finance. Last week, Paris Financial Centre players have committed themselves to adopt a carbon exit strategy by mid-2020. ** To conclude, let me quote John F. Kennedy: “the New Frontier of which I speak is not a set of promises – it is a set of challenges. […] I believe the times demand new invention, innovation, imagination, decision. I am asking each of you to be pioneers on that New Frontier.ii” Today, almost 60 years later, we face other challenges. But let us keep the same energy. Let us not think that the battles have already been lost. Let us break limits and invent new practices taking into account both digitalisation and climate change. Thank you for your attention.
But in another sense one can say that this is not the case, if the Riksbank – as an independent central bank – says that the purchases are made for monetary policy purposes. Monetary financing does not entail the purchases themselves. Under certain circumstances, purchases of government bonds can be monetary financing, but under other circumstances they are not. This is what makes it difficult to define the concept. It is important to understand that the Riksbank's government bond purchases do not mean that the state's costs of issuing bonds disappear. If the Riksbank purchases some of the government bond stock, then part of the state’s debt will be financed by private agents and another part by the Riksbank with central bank reserves. The state costs of the private part of the debt is the yield on the government bonds. The cost for the part the Riksbank has purchased is different however, and not as obvious. The state’s interest payments on the government bonds purchases by the Riksbank fall to the Riksbank. But the Riksbank is a public authority whose income and expenditure is a part of the state's total budget constraint. The interest the state pays to the Riksbank in other words falls to the state itself, the net cost to the state is therefore zero. However, the Riksbank pays interest – that is, the policy rate – on the central bank reserves that have financed the government bond purchases.

Andrew Bailey: Meeting varied people Speech by Mr Andrew Bailey, Governor of the Bank of England, at Diversity in Market Intelligence: Launching our Meeting Varied People Initiative, 21 April 2021. * * * Thank you Andrea for that introduction, and thank you to everyone for joining us today. People often talk about diversity in terms of the makeup of their own workforces – and for a public institution like the Bank, it is vital we reflect the whole society we serve. This includes both identity and cognitive diversity, which are equally important. 1 I often say I don’t want to work in a place that is full of people like me.2 I want the Bank to have an inclusive and open culture where people speak up, ensuring we make better decisions by mitigating the risks of groupthink and myopia. Over recent years, a number of my colleagues at the Bank have also emphasised the importance of diversity and inclusion, both for us as an employer, and as a wider public good for the financial sector. 3 We have made significant progress internally: for example, launched our Out & Proud Action Plan in September 2020, and continue to sponsor the ‘Women in Finance’ Charter. 4 But there is always more to be done, which is why for example we recently initiated a review, led by our Court of Directors, on ethnic diversity and inclusion. I know that many of you are doing similar work within your firms.
Chart 2  The interest rate differential is still wide, however, as can be seen in Chart 2, particularly the long-term differential, which has only narrowed by 1 percentage 5  point (and much less, if adjustments are made for CDS spreads). It would therefore have been imprudent to lower the SRR to zero now, and furthermore, there is limited experience of the impact of adjustments in capital flow management tools of this type. However, this does not change the fact that the objective is to keep the SRR at zero whenever possible. We have said that this tool should be our third line of defence, after conventional economic policy (including intervention in the foreign exchange market) and conventional macroprudential tools. This is not to say that the SRR is some sort of emergency device, as distressed economies hardly need worry about excessive voluntary capital inflows. The capital flow management tool, or CFM, is not a capital control in the sense that it restricts or halts certain capital flows explicitly, as was the case during the tenure of the comphrehensive capital controls on outflows. It changes the incentives for inflows — the shorter the investment horizon, the stronger the impact. But this brings some costs with it, in terms of Iceland’s image and the effectiveness of its markets, and it would be better to do without the SRR if possible. This prioritisation of policy tools is consistent with the position taken by the International Monetary Fund (IMF).

This also means that the equilibrium exchange rate of the króna has probably fallen in the recent past, which in turn may partially explain the recent depreciation of the króna. The deterioration in external conditions is not good news, of course, but we must place it in the context of the substantial improvement that has taken place in recent years. On the whole, however, this turning point is positive in a number of ways. The growth rate of the past few years was unsustainable, and it tested the capacity limits of the domestic economy. According to the Central Bank forecast published yesterday, the landing will be a soft one. GDP growth will measure 2.6% over the next three years, close to the average level that will allow the economy to grow without importing labour. The positive output gap will narrow gradually and close by the end of the forecast horizon, which is in 2021. There will be virtually full employment for the entire period, and purchasing power will continue to rise. Inflation will rise above the target in 2019 but then remain close to the target for the rest of the forecast horizon, partly because the forecast assumes that interest rates will rise when inflation does. Some observers might say that this is too good to be true. It could turn out that way, of course, but that would be because known or unknown risks not included in the forecast had materialised. There are so many things that could happen in this regard.
The joke in the American camp at the beginning of the 1980s was that macro is just bad micro, meaning that the models had become dominated by the idea that agents make optimal economic decisions over infinite horizons into the future and that markets therefore tend to be selfequilibrating towards a single steady state. Central banks’ standard models – DGSE [Dynamic General Stochastic Equilibrium] models – have been transformed in many ways, but the 1980s view has still not fully disappeared. This has to change. Economic agents clearly have finite horizons, which impact on their consumption decisions. People do not optimise and plan their lives up to their death. Nor does the financial sector play as important a part in models as it should. The possibility of multiple equilibria has also to be introduced; there are fallacies of composition, there are coordination failures. All these elements have to become part and parcel of macroeconomics; macroeconomics is not just the aggregation of individual decisions by optimising agents, we should not just assume everything moves towards a general equilibrium of competitive markets. The absolute minimum that has to happen is to rid macroeconomics of the imperialism of a certain type of microeconomic foundations; a new core model for macroeconomics has to emerge. If agents act in different ways, we also have to address the question of income distribution. And fortunately there are already models, so-called HANK models, Heterogeneous Agents New Keynesian models, that consider this.

The growing complexity of market-based finance and the change in the financial system will make it difficult for central banks to go back completely to the old, comfortable, traditional approach of having very lean balance sheets and just targeting the overnight money market rate. The set of instruments will have to be broadened. Several have been used during the crisis, some of them just for very stressful periods of course, but they are now part of the toolkit. Do you think what you’re saying is shared by other people on the Governing Council? I wouldn’t speculate on that. This view is developing in academia everywhere and has been discussed extensively in [the Kansas City Federal Reserve’s flagship conference in] Jackson Hole in 2016, for instance. So it’s part of the ongoing discussion at the interface between academia and central banking. Do you think the ECB has done enough to justify the impact of its policies on inequality? If we were to do quantitative easing (QE) again, would helicopter money be a better option? Helicopter money has never been a policy option. We are attentive to the question of inequality. I spoke in August last year to the European Economic Association about inequality and monetary policy, and since then further work has been done in the ECB to expand on what I said.
The low net debt of the Treasury, courtesy of a responsible fiscal policy, has allowed for this gradual adjustment without major surprises. However, there are limits and the debt has been increasing. In this context, I am particularly concerned that the accumulation of commitments could end up straining our public finances. In the case of monetary policy, the limit comes from credibility. There is an explicit objective—the inflation target—and a market that monitors on a daily basis to see whether our monetary policy conduct is consistent with achieving that objective. For as long as the market remains confident in the Bank’s capacity and, above all, on its commitment to take inflation to 3% in the two-year horizon, an expansionary monetary policy will be successful. The minute we lose that confidence, we will fail. That is why we are adamant about our concern with inflation expectations, insisting that we will do whatever it takes for it to stand at 3% over the forecast horizon. The good news is that we have succeeded: despite inflation’s high volatility, due mainly to the sharp variations in the exchange rate, expectations two years out have remained at 3%. This encourages us to keep our guard up and not to neglect what has been achieved or try to extract from monetary policy more than it can deliver. The second challenge is that experience suggests that our first line of action to deal with the cycle is monetary policy.

To this end, the Bank of Albania will continue to work diligently for: the prudent regulation and supervision of the banking activity; the financial market and payment system development; the promotion of the financial stability of the country, as well as for bolstering the financial education and inclusion of the public. Although the challenges facing ahead are not few and far in between, I am convinced that the banking industry will continue to remain a trusted partner to Albanian enterprises and households. In conclusion, I would like to stress out that the Bank of Albania supports and encourages the structural reforms. This agenda of reforms has now found a stable anchor in the process of negotiations undertaken in the framework of the European Union membership. The continuous investment on reforms, which boost and encourage the macroeconomic stability of the country, the improvement of the business climate, the increase of efficiency and competitiveness, the improvement of human and institutional capacities, as well as the comprehensive development of infrastructure, is the one and only path toward a faster economic and social progress. 2/2  BIS - Central bankers' speeches