samchain/econo-pairs-v1 huggingface dataset:
Norman T L Chan: Hong Kong’s positioning in the post-QE era Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at the Hong Kong Economic Summit 2016, Hong Kong, 7 December 2015. *  *  *  Accompanying charts can be found at the end of the speech. Distinguished Guests, 1. When central banks, such as the US Fed, cut short-term policy interest rates to near zero and created money on a massive scale to purchase bonds and other financial assets, we called it quantitative easing (QE). 2. It has been more than six years since the launch of QE in 2009. After spending a total of $ trillion to purchase bonds, the Fed wrapped up its asset purchase programme in October 2014. In 10 days’ time, the Fed will decide whether to lift interest rates. If it does, it will signal the beginning of the normalisation of US interest rates. “QE” Ineffectual? 3. At the end of 2009, I initiated a guessing game with several chief economists from major commercial and investment banks. The question I asked was when they expected the Fed to exit from QE. Most bet on the second quarter of 2010 or earlier. The most dovish of them said Q3 2010. As we all know now, these guesses were wildly off the mark. To be fair, I don’t think anyone expected the US recovery to be so slow and sluggish. 4.

BIS central bankers’ speeches  7  assessments of the level of resource utilisation can lead to different views of how monetary policy ought to be conducted. It is therefore essential that more analyses are conducted to better understand what it is that determines the development of output and potential GDP in conjunction with financial crises and deep recessions. One important factor behind the development of potential GDP seems to be total factor productivity (TFP). This is particularly troublesome as TFP itself is often counted as an unexplained residual. One possible way forward could be to combine the production function approach with economic short-term statistics to analyse how TFP behaves in normal cyclical fluctuations and in deep recessions. The almost unique opportunities for Sweden to conduct analyses based on micro data for individuals and companies should be a major asset in this regard. 8  BIS central bankers’ speeches  Figures and tables 1. Actual and trend GDP Logarithmed levels 6.5  6.5 GDP  6.0  6.0  Trend  5.5  5.5  5.0  5.0  4.5  4.5 50  55  60  65  70  75  80  85  90  95  00  05  10  Note. HP trend derived solely from annual data 1950–2010. Sources: Statistics Sweden and the Riksbank  2.
The Eurosystem cyber strategy for financial market infrastructures Following the increase in both the frequency and severity of cyberattacks over the last few years, legislators, regulators and standard setters have issued legislation and guidance on cyber security at national and international level and at cross-sectoral as well as sector-specific level. Let me briefly mention three initiatives. First, in 2016, the EC adopted the Directive on security of network and information systems (the NIS Directive). Its aim is to bring the cybersecurity capabilities of operators of essential services to the same level of development in all the EU Member States and to ensure an efficient exchange of information and good cooperation on the topic throughout the EU. Second, at international level, the G7 countries have drawn up a set of fundamental elements of cybersecurity for the financial sector, as well as three further recommendations on the effectiveness of cybersecurity assessments, third-party risks, and coordination with other critical sectors. Third, with a key focus on financial stability, the CPMI-IOSCO published a principles-based “Guidance on cyber resilience for financial market infrastructures” in June 2016. Supplementing the “Principles for Financial Market Infrastructures”, it provides additional detail related to the preparations and measures that financial market infrastructures should undertake to enhance their cyber resilience. In recognition of the escalating cyber threats, the legislative and regulatory guidance and the required paradigm shift, the Eurosystem’s overseers have launched a strategy for cyber resilience in relation to financial market infrastructures.

This strategy – which will be explained in more detail at agenda item 3 – is built on three pillars. The first pillar refers to the cyber resilience of individual financial market infrastructures. The second pillar refers to the resilience of the financial sector as a whole. The third pillar highlights the importance of establishing a forum which brings together market actors, competent authorities and the cybersecurity service providers. This brings me to the third and final objective of today’s meeting. Creation of a high-level cyber resilience forum Tackling cyber risk is not for regulators or market actors in isolation. Rather it is a collaborative endeavour that must be undertaken together. Hence, I invite you to seriously consider the creation of a high-level cyber resilience forum for pan-European financial market infrastructures, critical service providers and competent authorities. I am convinced that there is cross-fertilisation and collective learning to be gained from such collaboration and I am looking forward to a fruitful meeting today. 2/2  BIS central bankers' speeches
The Bank’s contribution must necessarily be a longrun contribution. The Bank does not itself produce goods and services, but it should, by creating the right monetary conditions enable the country…” to do so. What Exter repeatedly maintained was the Central Bank was only a necessary condition for future prosperity. That necessary condition was to be created by maintaining price stability so that the economic agents could make economic decisions based on long-run economic prospects. Since the Central bank does not produce goods and services, it cannot directly get involved in economic activities. It is, therefore, the task of the government and the private sector to take appropriate measures to create wealth in the society. The only weapon of the Central Bank is to print money and such money, by changing the price levels, acts only as an illusion. Hence, Exter thought it necessary to warn those who had been advocating the Keynesian type of ideology to raise government expenditure through printed money. In the Exter Report, he argued that higher income created through money creation would simply stimulate consumption of imported goods and precipitate serious balance of payments difficulties. A similar view has been expressed by Dr Goh Keng Swee, economic architect of Singapore, when he clarified why Singapore chose a currency board system in preference to a central bank. He says that none of his Cabinet colleagues “believed that Keynesian economic policies could serve as Singapore’s guide to economic well-being”.

In theory, the market should respond to a breakdown in monetary or fiscal discipline by demanding higher risk premium for the sovereign debt issued by those countries that are not behaving in a prudent manner. However, market discipline also seems to have broken down in many instances. For example, right after Greece joined the Euro Zone, the market was somehow attracted by the so called convergence play and for 8 years from 2001–2008 it ignored the fundamentals of Greece and its Single A rating and traded Greek sovereign debts as a Triple A credit, with a spread of as low as 8 basis points above German Bunds in February 2005. Looking back, the rationale for this kind of convergence play defies common sense and any analysis of fundamentals. However, the breakdown of the market discipline had played a key role in encouraging and facilitating continued erosion of fiscal discipline of the national authorities by conveying the wrong signals about the market tolerance, and appetite for their sovereign debts. As an illustration, the sharp fall of interest cost (10-year government bond yield) from over 10% in the mid 1990s to a low of 3% in the mid-2000s had also helped lower the cost of Greek Government borrowings and created the illusion of the affordability and sustainability of the rising pile of government debts. There are many reasons why market forces are failing to impose discipline when national authorities or firms fail to behave prudently.
Correlation was not expected to be high between investments in, for example, Japanese inflation-indexed government bonds, bonds issued by international organisations such as the European Investment Bank, European covered bonds and US mortgage-backed bonds. These experiences and the abrupt turnaround in market liquidity suggest that active management of the fixed income portfolio should be limited and measured on the basis of a number of criteria, as laid down by Norges Bank’s Executive Board. The Fund currently has extensive holdings of bonds that are difficult to trade in today’s market. Realised losses related to these investments have, as mentioned above, been limited. The flipside of large book losses is that this portfolio has a high return, reflecting not only the increase in credit risk but also high liquidity premiums and fears and uncertainty in the market. The return, measured as the difference in the effective interest rate between the actual portfolio and the benchmark portfolio, is now close to two percentage points. History has seen a number of deep financial crises, and market conditions will return to normal in time. The final results of the management of the Fund’s fixed income portfolio since the beginning of the financial crisis cannot be deduced from the quarterly results while the crisis is at its  BIS Review 53/2009  3  most intensive. Values are not lost as long as borrowers fulfil their obligations. The Fund is prepared to retain ownership of a large volume of bond holdings until they mature in a few years.

This virtually eliminates the possibility of one person holding a double role as both general manager and as chair of the Executive Board. The executive director’s investment mandate sets rules for the Fund’s choice of investments and risk limits for NBIM’s investment management. The financial crisis revealed that the risk measures used previously, and which were based on what was regarded as best international practice, were inadequate. The Executive Board has therefore also set supplementary risk limits, for example for the size of the percentage deviation between the actual portfolio and the benchmark portfolio, the degree of leveraging and liquidity requirements for the Fund’s investments. The mandate is also intended to ensure that active  BIS Review 53/2009  1  risk positions are taken in a balanced manner and to avoid active strategies with a considerably skewed outcome set. NBIM’s monthly and quarterly reports to the Executive Board are to reflect the guidelines in the investment mandate. The results for 2008 were influenced by the global financial crisis. The total return on the Fund was a negative 23 per cent, the weakest in the Fund’s history. There was a negative return of 41 per cent on the equity portfolio, while the return on the fixed income portfolio was close to zero. The real rate of return after costs has been one per cent since 1998. International stock exchanges lost more of their value in 2008 than in any other single year in recent history. Absolute results, especially with regard to equities, were highly abnormal.
European Central Bank: Press conference - introductory statement Introductory statement by Mr Willem F Duisenberg, President of the European Central Bank and Mr Lucas Papademos, Vice-President of the European Central Bank, at the press conference held in Frankfurt, 7 November 2002. *  *  *  Ladies and gentlemen, the Vice-President and I will report on the outcome of today's meeting of the Governing Council of the ECB. We have reviewed monetary, financial and economic developments and updated our assessment in the light of the information available. In view of the high uncertainty on future growth, and its implication for medium-term inflationary developments, the Governing Council has discussed extensively the arguments for and against a cut in the key ECB interest rates. The view has prevailed to keep interest rates unchanged. However, the Governing Council will monitor closely the downside risks to economic growth in the euro area. As regards the analysis under the first pillar of our monetary policy strategy, the three-month average of the annual growth rates of M3 was 7.1% in the period from July to September 2002, unchanged from the previous three-month average. The continuing strong expansion of M3 should be interpreted with caution, since it has been boosted considerably by high uncertainty in financial markets over recent months. At the same time, the low level of short-term interest rates continues to stimulate demand for the most liquid assets, which are included in the narrow aggregate M1.

BIS Review 64/2002  1  Beyond the very short term, we consider that both the euro exchange rate, which has strengthened since early this year, and the overall economic environment are still contributing towards reducing inflationary pressure. Moreover, there should also be a further unwinding of the indirect effects of previous increases in oil prices and other factors that have added to the stickiness of the annual rate of HICP inflation excluding unprocessed food and energy prices. However, for inflation rates to fall below 2% in the course of 2003 and to remain in line with price stability thereafter, as indicated by recent forecasts, it is crucial that oil prices do not increase sharply again and that the upward trend in labour cost indicators observed in recent years does not continue. With regard to the latter, there seems to be notable inertia, despite the subdued economic expansion; therefore, vigilance is warranted. Regarding fiscal policies in the euro area, may I expressly refer you to the Governing Council's statement of Thursday, 24 October on the Stability and Growth Pact. There is a strong consensus within the Governing Council that the principle of budgetary discipline enshrined in the Treaty and the Stability and Growth Pact are indispensable for Economic and Monetary Union and that the Stability and Growth Pact has been successful in promoting sound public finances and fiscal convergence, as well as in supporting the return to price stability. Moreover, the Pact is in the interest of the Member States.
Jon Cunliffe: Remarks at the Alastair Ross Goobey Memorial Lecture Speech by Sir Jon Cunliffe, Deputy Governor for Financial Stability of the Bank of England, at the Alastair Ross Goobey Memorial Lecture, London, 26 April 2016. *  *  *  I was very pleased to be asked to give this memorial lecture today. I worked with Alastair when I was at the Treasury. Long before the “age of the asset manager” he was a colossal figure who had a major impact, not just on his own industry, but on the corporate world as a whole. Ideas and practices that we now think of as standard corporate governance would, I suspect, never have been adopted without his advocacy and without his willingness to press the interests of those millions of people whose assets he managed. And he knew about booms and busts. His dissection, in his book Bricks and Mortals, of the anatomy of the UK property boom and bust of the late 80s and early 90s is a lesson to those who are today concerned with financial stability in the UK. Alastair died in early 2008, after Northern Rock but before the global financial crisis really got underway. The ending of Bricks and Mortals is prophetic.

I have to tell you that is not true, it was always envisaged that both banks would achieve their capital enhancements by  2  BIS central bankers’ speeches  restructuring their balance sheets without reducing their lending to the UK economy. Moreover, both of those institutions have come a long way from their original business plans, and are consequently much safer thanks to FSA and now PRA pressure. These banks have agreed to do what we have asked and we will hold them to that. This is a regulator’s promise. As we near the end of a timely but not rushed process, we will be communicating in the next few weeks the headline results of this work. Finally, there is also comment that nobody has yet raised new equity capital, or announced an intention to do so. True, but that is not the only way to increase capital relative to assets. What has not gone unnoticed is the reasonably steady stream of disposals by UK banks, both of businesses and assets. At the end of last week, for instance, the last elements of one of the more infamous assets of the crisis, the so-called HBOS Alt-A US mortgage assets were sold. We are happy to see these disposals happen. I mentioned earlier the steps taken last summer at the time of the introduction of the FLS. The evidence on credit creation in the UK economy is however mixed. Funding costs for banks have fallen, which I think is a necessary pre-condition of stronger lending.
The trigger policy I noted above and level-targeting policies may result in inflation running at rates that would make us uncomfortable during normal times. But we should not be afraid of such temporarily higher inflation results today. As I noted earlier, Ken Rogoff (1985) has written that in normal times, we may want conservative central bankers as institutional offsets to what would otherwise be inflationary biases in the monetary policy process. But these are not usual times – we are in the aftermath of a financial crisis with stubborn debt overhangs that are weighing on activity. And as Rogoff himself wrote in a recent piece in the Financial Times, higher inflation could aid the deleveraging process.11 To quote him: “Any inflation above 2 percent may seem anathema to those who still remember the anti-inflation wars of the 1970s and 1980s, but a once-in-75-year crisis calls for outside-the-box measures.” Conclusion Last year about this time economic conditions deteriorated to the point that we undertook discussions on how to provide further monetary accommodation – and we ended up with our second round of large scale asset purchases. Now, one year later, we again find ourselves with a weakened economic outlook and again trying to decide what further accommodation to provide. I’m sure everyone will agree that we seriously don’t want to be in this position again at this time next year. I believe that means we need to take strong action now. Thanks. 11  8  Rogoff, Kenneth S. 2011.

Therefore, a more appropriate solution would be for them to be able to transfer the ownership of their assets in exchange for debt repayment with the option to repurchase those assets back at a later date. As such, this scheme will remove debt burdens that would incur otherwise if they still have to hold onto the assets and loans. These examples provide some concrete illustrations of how we, at the Bank of Thailand, have tried to respond flexibly and pragmatically to the changing circumstances of the COVID-19 crisis. Part 3: Future Plans Let me now turn to the third part of my remarks today, which is what is next? One thing that we would like to do is a move from short-term and blanket measures such as a debt moratorium to longer-term and more targeted solutions such as debt restructuring. Moratoria are good responses to something that is short, severe and broad. However, as we have seen in discussing the economic outlook, this crisis is likely to be long. The recovery is likely to be very uneven, thereby requiring a longer-term and more targeted approach. Hence, we would like to encourage a move from a solution of having debt moratoria in response to waves of infections that are causing a lockdown to more lasting solutions such as debt restructuring. On this light, we have recently announced a series of initiatives and regulatory incentives to encourage banks to undertake debt restructuring, which is important as a lasting solution to the problems that we are facing.
This is the best way to ensure sustainable market access supported by a robust growth outlook. Recent empirical estimates based on the distance-to-frontier approach show the gains that could still be achieved. In Portugal, closing the gap from best practices via a fast implementation of product, labour and welfare state reforms would lead to an increase in percapita GDP by 13.5% in 10 years.2 In these projections, not only the pace of implementation matters, but also the degree of ambitiousness. If reforms target only a partial closure of the gap vis-à-vis the best performers then of course the GDP gains will also be reduced. All this points to the need to establish a clear link between notional reforms and actual outcomes via an outcome-based accountability framework, which can increase or make more effective the implementation process. The need for structural reforms in all euro area countries Despite difficulties, the impetus for reform has been strong in the stressed countries, while it has been much weaker in the rest of the euro area. This is the natural outcome of a crisisdriven reform process. However, the crisis has clearly shown that a strategy of postponing reforms is self-defeating, as it contributed to the accumulation of imbalances and vulnerabilities in good times and increased the cost of adjustment in bad times. It is therefore crucial that the reform process is strengthened in all euro area countries, also those not affected by the crisis.

Concerns that systemic sovereign issuers may lose market access fed fears that they may be forced to redeem their liabilities in a currency different from the euro, and thus de facto leave the euro area. “Redenomination fears” became a new source of market anxiety. There was a risk that such unwarranted concerns would become self-fulfilling and the spectre of destructive tail scenarios was looming. In this context, the process of financial integration, which had evolved at a rapid pace since the inception of the euro, was partially reversed, giving way to fragmentation. Interbank financial fragmentation per se was not a new phenomenon in the post-Lehman world. However, during the most severe stages of the sovereign crisis the fractures across the euro area were not idiosyncratic but systemic – that is, they ran along national borders. This reversal of the integration process risked undoing one of the key benefits of the common currency. Fragmentation led to an impairment of the monetary policy transmission mechanism. The monetary impulse that the ECB had swiftly introduced in response to the rising risks to price stability was no longer transmitted uniformly throughout the entire euro area. While the ECB had brought its official policy interest rates to historical lows, a number of countries were not in a position to take advantage of monetary accommodation. Banks in those countries were tightening credit conditions, running against the monetary policy intentions of the central bank, with negative repercussions on access to finance, in particular for small and mediumsized enterprises.