samchain/econo-pairs-v1 huggingface dataset:
The theme for this year's conference, "Reinventing retirement strategies in the new world of risks" is most appropriate and relevant to Asia . As we are aware, the ageing population is also an issue in this part of the world. Statistics have indicated that worldwide, a greater number of people are reaching old age and living longer than before. For Asian countries, the World Bank reported that by 2040, the number of the elderly will surpass the number of children and by 2050, it is estimated that there will be nearly 1 billion elderly in Asia . The increasing number of ageing population, relative to a declining workforce in Asia , would significantly increase the dependency ratio in the Asian region from approximately 10% currently to 25% in 2050. Some Asian countries' dependency ratio is expected to reach even as high as 70% in 2050. Malaysia too is not spared from this worldwide phenomenon. The proportion of Malaysians age above 60 is expected to be more than doubled from 7% of the total population in 2000 to 16% in 2020. With improved standards of living, life expectancy is expected to further increase to 79 years for females and 75 for males. By 2040, therefore, one fifth of Malaysians are expected to be in the more than 60-years age bracket.

In addition to these relatively direct effects, the price level will also be influenced by changes in prices for imported and domestically produced intermediate goods. •  The expectations channel to inflation Both price and wage inflation is affected by changes in expected inflation. One reason is that firms often set prices for several periods. The same applies to wage formation. Expected price changes will figure prominently in the calculation of expected future real wages. We have seen that an increase in the nominal rate of interest reduces inflation through various channels with varying lags. As a result, inflation expectations can also be expected to be redused. The expectation channel will therefore amplify the effect of monetary policy. The time it takes for a change in the interest rate to have an impact on inflation and demand will vary. It must also be stressed that in the course of the period in which a change in the interest rate affects output and inflation - and often before monetary policy takes effect - the economy will be influenced by a number of direct and indirect disturbances. Thus, the central bank’s control over inflation and production is far from perfect. 2b. What is a reasonable objective for monetary policy? The goal of economic policy tends to be a desire for maximum welfare for the country’s inhabitants. This goal is often expressed as a number of separate goals, such as (sustainable) economic growth, efficient utilisation of resources, equitable income distribution, price stability, viable regions, etc.
If we are to prevent another crisis, action is required on both of the fundamental causes. First, we need to resolve the problems caused by massive capital flows from poor to rich countries. Yet the imbalances are growing again. This problem can be tackled only by international cooperation – most obviously through the G20 – and I hope that the trade union movement will continue to engage with that process. Second, our financial system needs radical reform. Slowly but surely, we must move towards a banking system that does not put both the economy and your members’ livelihoods at risk. In the long run, banks will have to hold much more capital and be much less highly leveraged. Part of the answer is improving the way we regulate banks, and devising policy tools to control the risks taken by the financial system as a whole. The aim should not be to prevent all bank failures. Just as with every other company in the economy, banks that get it wrong must be allowed to fail, without risk to ordinary depositors or taxpayers. In 2008, banks were bailed out not to protect them but to protect the rest of the economy from the banks. That may not seem fair – and it isn’t – when other companies, such as Jaguar, had to stand on their own feet or go to the wall. So banks too must face market discipline. But we need to do more than reform our banking system.

3 – A year of inclusion We can look forward to two real advances in inclusion in 2019: a fifth consecutive year of declining household over-indebtedness, by almost 40% over this period, and the implementation of a cap on bank charges at EUR 25 per month for more than three million vulnerable customers. Within this population, the specific offer – capping charges at EUR 20 per month and EUR 200 per year – now benefits 464,000 customers, or an increase of 32% compared with end-2017. I would like to take this opportunity to thank the banking community, which has worked hard to meet its commitments. Now, these commitments must be enhanced, and sustained. Enhanced in 2020: banks must detect fragile customers even more efficiently; they must correct the few remaining shortcomings; and they must raise awareness of their specific offers. These commitments must be sustained over time, and will be monitored by the ACPR, and by the Observatory for Banking Inclusion, which I chair, with an active role for the associations. Climate change will also be the priority in 2020. And you can count on the determination of the Banque de France and ACPR – with its new Climate and Sustainable Finance Committee – to support the greening of the financial sector. We will conduct the first climatic stress tests in the coming months. The aim of this exercise is twofold: to better identify the resilience of banks and insurers to climate risks, and to speed up the methodological work in order to have quality assessments.
This restricts the future freedom of action in economic policy and means that there is a risk of fiscal policy in practice having a destabilising effect. This is particularly the case in that, with high revenue and spending ratios, the Swedish budget is sensitive to cyclical factors. Seen from this angle the Government’s target of a 2 per cent budget surplus over the economic cycle appears reasonable, though there is no academic foundation for a quantified level of ambition. There may be grounds for strategic tax cuts to improve the long-term growth potential. But in the light of the experience with government finance in recent decades a warning should be issued against tax cuts without parallel cuts in spending. Weak employment The labour market trends in recent years have been bleak. Although annual economic growth since 1993 has averaged 2.7 per cent, employment has not risen. This indicates that a considerable proportion of unemployment is structural in the sense that the level is liable to remain high even if activity continues to improve. The difficulty in generating new jobs is not confined to Sweden; it is a problem we have in common with much of Europe. But there are countries in Europe that have succeeded in turning the employment curve upwards since the mid 1980s. I am thinking in particular of the Netherlands, where employment, after a long period of stagnation, has been increased by 20 to 25 per cent since the mid 1980s.

Today, the euro is providing market stability, which is also beneficial to third currencies like the Swiss franc. In monetary affairs, size does not really matter, but the rules of the game are more challenging for small countries than for large economies. Small countries have no choice but to respect market realities. They have to accept exchange rate flexibility even if, in the short run, some exchange rate development might interfere with the interests of their export sector. If they were to complement inflation targets with specific exchange rate objectives, they would create market confusion and destabilise expectations. The implementation of a clear and coherent monetary strategy is of the essence. In my view, smallness in combination with monetary independence and flexible exchange rates is a strength rather than a weakness. For us, being able to set our own monetary policy has meant that we could react to country-specific shocks. Had we joined the euro area, we would not have had this flexibility. Furthermore, monetary independence is attractive for small open economies, because policymakers can concentrate on national data when setting interest rates. In a monetary union, data from different countries have to be combined. Also, the decision process in the union is more complicated, since there are diverging interests to be reconciled. As a consequence, monetary policy is more inertial than in a small open economy with a currency of its own.
As the manager of the Exchange Fund, the HKMA has ensured that ESG principles are now an integral part of our investment criteria, investment process and asset allocation decisions. 42. And, once again, Hong Kong’s status as China’s offshore financial centre gives us an edge in sustainable finance. No financial centre is better positioned than Hong Kong to channel global investment into China’s ambitious plans to achieve carbon neutrality by 2060. Opportunity – Technology 43. When it comes to technology, Hong Kong is already at the forefront of the global fintech scene. The HKMA’s Smart Banking initiatives have helped drive the digital transformation of banking services, bringing competition and promoting financial inclusion that directly benefit 4/5  BIS central bankers' speeches  customers. This is just the start of a long journey. The adoption of AI and data analytics in banking operations, the use of Regulatory Technology – or Regtech – in compliance and the need for enhanced cybersecurity are high on our agenda. 44. Looking ahead, apart from the technology itself, it’s clear that data will be central to the future of banking innovation. That’s why we’re building next-generation financial infrastructure. Last November, we announced plans for a pilot to build a Commercial Data Interchange. The project will enable corporates to share with banks their digital footprint kept by their business partners on a common platform.

This data access will provide new ingredients for innovative banks to create new products or processes which will allow thousands of small and medium-sized enterprises to access bank credit in an easier and cheaper way than before. 45. We’re also looking to apply new technologies to addressing long-standing pain points in banking. Take international remittances for example. The process is currently slow and costly. Along with the Bank of Thailand, the HKMA initiated a central bank digital currency project for cross-border payments that has now been joined by the central banks of the United Arab Emirates and China. This ‘m-CBDC Bridge’ project is exploring the potential of using blockchain technology to facilitate real-time cross-border payments, which could reduce costs and enhance transparency for users. CBDCs have a range of promising applications and, together with our partner central banks, we want to be at the forefront of this development. Enhancing the Platform 46. We understand that a supportive regulatory environment matters a great deal to the providers and users of financial services. That’s why the HKMA and other financial regulators are working closely with the Government to keep enhancing the attractiveness of the Hong Kong platform. We keep our market infrastructure, legal framework, regulatory regime and tax system under constant review to make sure that they are business-friendly, forward-looking and competitive. 47. In recent years, we’ve been undertaking reforms that provide modern legal structures catering to the evolving needs of the asset management industry.
M R Pridiyathorn Devakula: Efficiency enhancements and risk management Remarks by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the Asian Bankers’ Seminar, Bangkok, 16 March 2006. *  *  *  Distinguished Guests, Fellow bankers, Ladies and Gentlemen, Today’s seminar covers wide-ranging topics of interests to the banking community ranging from efficiency enhancements to risk management needed to achieve sustainable business growth. While these issues are topical and useful to bankers, I believe that one cannot simply reduce risks by relying on risk management process alone. An effective risk management system has to be supported by proper governance of the bank’s Management and its Board of Directors. One of the painful lessons of the 1997 crisis was that improper governance practices at the Board level were amongst the root causes of the downfall of too many financial institutions. Back then, it was not unusual for banks to lend to related parties with close connections to their owners, directors, and management without the proper credit analysis. Board members of banks often neglected their responsibilities to blow the whistle against these imprudent activities. Many Board members also did not have adequate and timely access to the necessary information to detect such misdeeds so that appropriate actions could be taken to prevent the resultant damages. The concept of “governance” as understood in Western society and now introduced into our business organizations, including financial institutions, has served as a good starting point to rectify some of the root causes of the crisis.

The Western governance concept including the appointment of an independent director in the Board of Directors, the introduction of an Audit Committee, and other new initiatives to improve the governance structure, have helped to address some of the problems of the past —but only to a limited extent. Unfortunately, there have been some actual practices in the Western corporate world which are contrary to the intended ideals of good governance. The notorious examples of Enron and WorldCom are all too well-known, notwithstanding the fact that both corporations had Boards of Directors established in accordance with the Western concept of good governance. Yet both eventually faced severe financial difficulties. As I see it, there are two critical aspects of the Western practices which may potentially lead to serious financial difficulties for the firm. The first is that the Chairman and the CEO is one and the same person. The second is the practice of allowing company stock options to be part of the compensation for company Directors. Allow me to elaborate. A CEO is by designation the Chief of Management, responsible for achieving the best possible performance of the company. This means maximizing profits, increasing growth and market share, expanding business lines, and doing all that it takes to maximize the company’s share value. On the other hand, the Board of Directors has to oversee the operations of Management, ensuring that they operate well within the bounds of acceptable risks in order to ensure business continuity.
The relative size of these two deviations is governed by the strength with which higher output translates into higher inflation; and the preferences of the policymaker, or: 𝜆 𝜋𝑡 − 𝜋 ∗ = − (𝑦𝑡 − 𝑦𝑡∗ ) 𝜅 where 𝜅 is the effect of the output gap on inflation. From this, it is clear that the higher is lambda, the greater the weight placed on output stabilisation and the more a given shock is allowed to flow through to inflation. As lambda shrinks to zero, the policymaker becomes an inflation nutter, with all of the adjustment to a shock forced through the output gap in order to keep inflation very close to the target. 13  A “micro-founded” loss function resembling this can be derived in New Keynesian models, in which lambda is a function of the underlying deep parameters in the economy (such as those governing the degree of price stickiness). These are typically based on the representative agent assumption. A newer literature drops representative agent assumption. In this case, the “micro-founded loss function” contains additional terms capturing some aspects of heterogeneity between households. For example, in a model with borrowers and savers, a term in the loss function containing the “consumption gap” arises – measuring the gap between the consumptions of the two types of household. The reason terms like this appear is that dropping the representative agent assumption tends also to introduce additional frictions, like borrowing constraints.

I assume that this is one explanation why, for instance, it took Sweden until 1999 before there was sufficient political support to grant the Riksbank increased formal independence and to confirm by law the price stability objective, despite the fact that these reforms had been proposed when the inflation target was introduced in 1993. However, the concern among politicians over making central banks independent is quite unwarranted. The independence does not, of course, mean that the central bank is free to conduct any monetary policy they wish; it only means that it should be able to use the means at its disposal to meet the objectives set by the political system without outside intervention. This is usually expressed as the central bank being instrument independent but not goal independent. The delegation of powers should be regarded as a means for politicians to ensure that the long-term aim of the monetary policy that they endeavour to achieve – but have difficulty guaranteeing – can become a reality. Furthermore, a natural consequence of the independence is that the central bank shall be accountable for its actions and that monetary policy shall be conducted in a transparent manner 7 . It is interesting to note that, despite fairly substantial initial doubts, people have afterwards been very satisfied with the reforms implemented. Monetary policy therefore appears to have essentially delivered what was hoped for and I am not aware of any country where making the central bank more independent has been regretted. Conclusion Let me round off.
I wish you fruitful discussions and I am looking forward to seeing what answers you might find to address the issues highlighted in the panels of this conference. As the focus of the conference is on economic growth and development in Romania and the wider South-East Europe region, allow me to elaborate on this topic. I will approach the subject from the perspective of a central banker. Let me start by saying that sustainable economic growth of both Romania and the region relies mainly on economic policy consistency. The global economic and financial crisis has proved yet again that there is no valid substitute for consistent economic policies. The correction of economic policy errors is, everywhere and always, painful and, while difficult to comprehend by the public at large, it is absolutely necessary. The case of Romania is highly illustrative in this respect. Large macroeconomic imbalances had been steadily accumulating during the boom years, as a result of sizeable foreign capital inflows and credit expansion, the impact of which was augmented by a pro-cyclical stance of fiscal policy, especially in the last two years before the onset of the crisis. As a result, Romania had large twin deficits at the start of the crisis, specifically a sizeable structural fiscal gap (around –8% of GDP in 2008) and a current account deficit in the double-digit area (between 2006 and 2008). After the crisis hit, Romania had no other choice but to undertake the necessary adjustments in order to eliminate these imbalances in an orderly manner.

Mugur Isărescu: The regional finance and investment for South East Europe Keynote address by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Euromoney Regional Finance and Investment Conference for South East Europe, Bucharest, 12 June 2014. *  *  *  Prime Minister, Ladies and gentlemen, It is an honour for me to be invited to speak in front of such a distinguished audience. I am very glad that, after three years “off”, Euromoney Conferences is re-launching the event in Romania. Time has come for Bucharest to host this important event, held for several years in Dubrovnik. The joy of giving the keynote address at this conference is bigger as I had the opportunity to read the first issues of Euromoney magazine while being a young research fellow at the World Economy Institute in the early ‘70s. For years it was one of my favourite magazines. Back in 1978, I also had the opportunity to visit the editorial offices in London. I could not help but notice that you have chosen a generous theme: “The Regional Finance and Investment for South East Europe” and you have set yourselves to approach themes that I am particularly interested in, like: pro-growth strategies in an age of austerity; what more can policy-makers do? ; how will governments incentivise overseas investors? ; how can the region increase EU fund absorption rates?
In fact, I see fintech as the nexus between finance and entrepreneurship. Finance is essential in helping startups and entrepreneurs get off the ground and scale up. Likewise, entrepreneurs can help to reinvent finance by providing ideas to develop innovative financial solutions. This morning, I would like to share some of my thoughts on fintech and on how the finance industry, especially Islamic finance can gain from technology-driven solutions. I will also elaborate on how multisided platforms are facilitating the interaction between investors and ventures. I will then briefly touch on the efforts that Bank Negara Malaysia is taking in promoting fintech. While Islamic finance has made significant progress domestically and globally, the next growth phase requires the industry to ride the fintech wave. At present, Islamic finance fintech is still in its infancy and growing. Encouragingly, we are seeing increasing number of fintech start-ups, innovation labs and incubators that are based on the values and principles of Islamic finance. However, they are not as visible and omnipresent as their conventional peers. The case is compelling for Islamic finance to take on a more prominent role in the fintech ecosystem. The technology is ripe, with higher penetration of mobile and internet across markets. Consumers are also becoming more and more tech-savvy. Digital-banking consumers stand at an estimated 670 million in Asia alone and are expected to reach 1.7 billion by 2020. In Malaysia, within a population of 31 million, there is high mobile and internet penetration rate at about 141% and 81% respectively.

We still estimate this neutral range to be at 5–6%, provided that inflation is close to the Bank of Russia’s target of 4%. Thank you all for your attention. 3/3  BIS central bankers' speeches