samchain/econo-pairs-v1 huggingface dataset:
Firms used a number of methods to assess investment opportunities but most used, explicitly or implicitly, a target rate of return or ‘hurdle rate’ to decide if the investment was worth making. These hurdle rates varied among firms. The largest group, some 40% of firms in the survey used hurdle rates of return between 10% and 15%. And the average across the whole survey was 12% – very much in line with actual rates of return achieved and with the aggregate ONS estimate. Moreover, the survey suggests that firms' hurdle rates are quite sticky. A fifth of firms surveyed had not reviewed their rates in the last five years. As we do not have previous survey data of this sort, we cannot say whether firms' hurdle rates have historically tracked the ONS measure. But earlier research, anecdotal evidence and the stickiness of hurdle rates certainly suggest that this may well have been the case. It is not surprising that the ONS estimate of return on capital, actual rates of return recorded by firms in the survey and their hurdle rates for new investment are all in the same area. There is probably a feedback  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  mechanism at work here; if firms on average do not invest unless they expect to receive 12% that will be consistent with an actual average return around 12%.

It was of course in those days as much a private as a public Bank and these branches soon became important sources of credit in the regional economy. The Birmingham branch was successful – in more ways than one. One of the Bank staff dispatched hurriedly to establish the new branch was an 18 year old clerk called Charles Geach. In line with the nepotism prevailing at the time, he had joined the Bank through the influence of his uncle. But he was clearly talented and energetic – so much so that when in 1836 a group of midlands businessmen decided to establish the Midland bank (or the Birmingham & Midland Bank to give it its full name) they chose the 28 year old Bank of England clerk to be its manager. th  In the dynamic and growing British economy of the first half of the 19 century, and in the heartland of precision manufacturing, the Midland Bank was hugely successful; shortly after the turn of the century it was the largest bank in the country. Geach’s rise was also meteoric; he was mayor of Birmingham before he was 40 and left the bank to enter parliament at 43 – by which time he was also one of the leading entrepreneurs in the country. This illustrious career however was cut short by illness and he died a few years later, as a result, according to his obituary, of the noxious air in the Palace of Westminster.
Second principle: The criteria governing the management of foreign exchange reserves are primarily the security of investments and their liquidity. Return is also a factor. Secure and liquid assets are key, because the SNB must always be able to implement its monetary policy, and hence must have rapid access to its foreign exchange reserves, should the need arise. The need for secure assets means that a large proportion of our investments are in government bonds; the need for liquidity means that we invest in the world’s most liquid assets and currencies. Finally, the third principle is this: The SNB takes care to ensure that its investments do not disrupt the markets. We are aware that the huge amounts we have under management could impact significantly on market prices. To prevent this kind of problem, we control the volumes we place on the markets, so as to avoid having any perceptible market impact. Thus, with such a large volume to invest, there is a fairly long period of transition before the desired allocation is achieved. We are sometimes obliged to hold liquidity on our accounts at other central banks for a while, until it can be invested in line with our investment strategy. A number of players are involved in implementing the investment strategy. I am not planning to go into too much detail about the investment process today. Briefly, the Governing Board decides on the main investment principles, as well as the strategy.

This expansion reflects the policy adopted by the SNB to combat the rapid and excessive appreciation of the Swiss franc. A number of measures were taken in 2009 and 2010 to counter this appreciation, and these have left their mark on the SNB’s balance sheet. The most important of the recent measures was the introduction of a minimum exchange rate of CHF 1.20 against the euro on 6 September 2011. This exceptional measure was designed to mitigate the risk of deflation  BIS central bankers’ speeches  1  that threatens the Swiss economy. We are convinced that this policy is effective, and we shall continue to pursue it with the utmost determination. Note also that even the role of foreign exchange reserves has changed since the onset of the financial crisis. Until 2008, the aim of foreign exchange reserves was to ensure that the SNB was able to implement its monetary policy unhindered and at all times. At that time, foreign exchange market intervention was virtually non-existent, and discussion focused more on whether to hold foreign exchange reserves or not. Today, given the level of foreign exchange reserves, this question is less pertinent. Instead, the SNB has had to adjust its policy on foreign exchange reserve management, in order to take account of the large amounts involved since 2008. For this purpose, it has amended its investment instructions, and I would like to briefly describe these to you now.
Some former members of the MPC have certainly argued more recently 5 that it would have been preferable to have “leant against the wind” of credit growth by having had higher interest rates during the mid-2000s. But on the whole, I continue to think that there are a number of problems with this proposal. Firstly, it is unclear how much higher UK interest rates would have needed to be to have kept the expansion of credit and debt to an acceptable level (not least as there is considerable uncertainty about what that level might be). It seems likely that interest rates might have needed to be substantially higher, in real terms, to have had any noticeable effect. In this case, CPI inflation could well have seen an extended period below target. (The CPI was in any case below target for the first 18 months after the change to CPI from RPIX as the key inflation measure.) There would in these circumstances have been a risk of a damaging loss of credibility in the inflation targeting regime – although it would clearly have had to be weighed against the (as yet uncertain) costs of the subsequent crisis. Secondly, and more significantly, it is not clear that this policy would have tackled effectively the major problem of banks’ misjudgement of risks and expansion of financial sector balance sheets.

A slide in both copper and cobalt export earnings owing to lower prices accounted for this outturn. Nonetheless, it should be noted that commodity prices on the international markets recently have been edging upwards. If this trend is sustained, Zambia’s external position may improve accordingly. Foreign capital inflow Your Excellencies, the global financial crisis has led to the decline in the foreign portfolio investment inflows as investors reduced their exposure to emerging market instruments. The risk aversion towards emerging markets has led to a reduction in foreign portfolio inflows and  2  BIS Review 86/2009  holdings in Zambia’s Government securities. This has resulted in a net outflow of foreign portfolio investment since funds that mature are not being rolled over and funds coming in have be en scaled down. For example, the foreign investor’s total holding of Government securities has reduced from K1,054.7 billion in the third quarter of 2008 to K446.2 billion by the second quarter of 2009. Similarly, the flow of foreign investments at the Lusaka Stock Exchange has switched from a net inflow of $ million during the period January to May 2008 to a net outflow of $ million in the same period this year. Exchange rate volatility and domestic inflation The global financial meltdown has caused a contagion effect to our foreign exchange market and has led to volatility in the exchange rate of the Kwacha against major currencies.
Caleb M Fundanga: Enhancing access to finance in Zambia Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of the Access Bank Zambia Limited Acacia and Longacres branches and the Visa Debit Card, Lusaka, 16 February 2010. *  *  *  Your Excellency the High Commissioner of the Republic of Nigeria in Zambia, Ms Marcus Folake Bello; The Chairman of the Board Access Bank Zambia Ltd, Mr Caleb Mulenga; The Group Deputy Managing Director, Access Bank Plc, Mr Herbert Wigwe; The Managing Director, Access Bank Zambia Ltd, Mrs Mukwandi Chibesakunda; Members of the Board of Directors for Access Bank Zambia Ltd, present; Management and Staff of Access Bank Zambia Ltd; Colleagues from Bank of Zambia; Distinguished Invited Guests; Members of the Press; Ladies and Gentlemen. It is my privilege and honour to officiate at this important launch of the Longacres and Acacia branches of Access Bank Zambia Limited. As the Central Bank and regulator of the banking sector, we are always pleased to be associated with the achievements of the institutions that we regulate, particularly where these developments lead to increased access to banking services as well as convenience for the Zambian public. Ladies and Gentlemen, it is a well known fact that bank branch expansion programmes play an important role in increasing access to the banking services.

I am certain that over time these places will be your most profitable centers as places like Lusaka will only yield narrow margins due to stiff competition. Chairperson, Zambia’s economy has shown some resilience in the midst of the global economic crisis. As you are aware, the economy has posted some marked improvements in macroeconomic indicators in 2009 with GDP growth estimated at 6.3%. Both inflation and the yield rates on Government securities have edged downwards while the exchange rate of the Kwacha against major international currencies has also shown some stability in the recent months. It is for this reason that I reiterate my appeal to all financial service providers including Access Bank Zambia Limited, to make some meaningful efforts in addressing the high cost of banking services in the country. It is also my expectation that the banking sector will take advantage of opportunities arising from the conducive macroeconomic environment in the country to create wealth and contribute to the development in our economy. Finally, let me extend my gratitude to the Board of Directors and the Managing Director of Access Bank Zambia Limited for inviting me to officiate at this launch of the two branches and the Visa Debit Card. I also wish to particularly thank the Access Bank, Group Deputy Managing Director, Mr Herbert Wigwe for having travelled all the way from Nigeria, to come and be part of this event today. It now gives me great pleasure and honour to declare the Acacia and Longarces branches officially launched.
Of course, this is not so easy as the public is aware of what has happened, but not of what could have happened. However, on the whole, I think most people have quite a lot of understanding that a central bank with an inflation target of 2 per cent cannot simply sit and wait for an inflation rate of around 10 per cent to fall back, without doing something about it. It was, of course, largely through this type of policy that high inflation could gain hold in the 1970s. That said, it is of course a question of judgement as to exactly how much the interest rate needs to be raised. I will come back to what the return to the inflation target might look like in different scenarios. … than when it is too low I feel that it has been more difficult to convey that it is equally problematic if inflation is persistently too low. During the period of low inflation, the Riksbank has been criticised from some quarters for trying to bring inflation up to the target of 2 per cent and therefore keeping the policy rate low, despite the fact that developments in the economy have otherwise been relatively good. Examples of arguments put forward are that the Riksbank should “apply the target more flexibly” and not “chase tenths of a per cent” of inflation. But this reflects a misunderstanding of what the Riksbank’s motives have been as well as the purpose of the inflation target.

This argument reverses the conventional reasoning: Monetary policy would then no longer affect inflation by influencing demand and inflation expectations, but by affecting interest expenditure – the higher the interest rate and interest costs, the higher the inflation rate. I find this way of reasoning unconvincing. It would mean that central banks would in future have to act in a completely new way, which is not supported in either economic theory or practical experience. It can also be noted that this argument was not put forward during the period when inflation was low – that is, that the Riksbank would then have needed to raise the interest rate in order to raise household interest costs and ultimately inflation. Temporary break from the low-inflation environment rather than lasting change? Before continuing, I would like to stress that, although much has happened in a short space of time, this does not change the conclusion in my speech a year ago – that fiscal policy and monetary policy need to interact in a better way than has been the case in recent decades. My reasoning then was based on the fact that the policy rate had for a long time been at, or very close to, its effective lower bound – a bound below which it is not possible to reduce the rate further or where the negative side-effects of doing so risk being very large.
William C Dudley: The transition to a robust reference rate regime Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Bank of England’s Markets Forum 2018, London, 24 May 2018. * * * Thank you, Mark, and thanks to the Bank of England for the opportunity to talk about the important issue of reference rates. I will focus my remarks today on reference rate reform in the United States—where we have been, where we are, and where we are headed. In short, I will argue that while much has already been accomplished, we still have a lot more to do—and it must happen within a compressed time frame. This is an important point that Andrew Bailey usefully underscored for us last year. Because of the great uncertainty over LIBOR’s future and the risks to financial stability that would likely accompany a disorderly transition to alternative reference rates, we need aggressive action to move to a more durable and resilient benchmark regime. As always, what I have to say reflects my own views and not those of the Federal Open Market Committee (FOMC) or the Federal Reserve System.1  LIBOR Scandal Demonstrated the Imperative for Reform Although the backdrop to current reference rate reform efforts is well known here, some historical context is useful when considering the issues facing us today. That history highlights why alternatives to LIBOR are needed.

In my view, LIBOR is likely to go away—and it should, because it is not supported by a sufficiently robust regime. The LIBOR countdown clock should provide an impetus for action, but it should also make market participants and regulators increasingly nervous as we approach the deadline—especially if longer-term solutions are not in train or in 4/6  BIS central bankers' speeches  place. Time is of the essence, and we must manage it well. The ARRC and others have laid out valuable transition plans, and we need to ensure that they are executed expeditiously and well. Of course, I do not mean to minimize the costs involved. This is a monumental and complicated effort—one that the industry has never undertaken—and it will entail overcoming many obstacles. It requires collective action by a wide variety of market participants, some of whom may not be fully convinced of the need for change. And, there may be others with a direct interest in the preservation of LIBOR—such as its administrator—who may not support moving away from the status quo. There also undoubtedly will be those who seek a free ride on the efforts of others. And, of course, the effort will encounter inertia and wishful thinking. All of this is to be expected in such a large undertaking with significant upfront costs. Nevertheless, delay is not a viable option. This task is borne out of necessity.
But there are risks to this scenario. They are twofold. First, that strong global growth continues to generate upward pressure on the prices of commodities and tradable goods more generally. And, second, that the period of elevated inflation causes medium-term inflation expectations to drift up, leading to higher rates of increase of both wages and prices. Measures of near-term household inflations have moved up in line with the MPC’s own assessment of near-term inflation, but the rise in longer-term measures has been considerably more muted. And measures derived from inflation swaps suggest that the expectations of financial market participants five years ahead have remained stable. But given the unexpected strength of inflation in recent months, this risk has probably increased of late. So we shall be watching these indicators, and their impact on wages and prices, like proverbial hawks. What are the implications of all this for monetary policy? The recovery has so far turned out to be broadly in line with that expected a year ago, but the outlook for growth remains highly uncertain. Though inflation has been running well above target and is likely to continue to do so for a while yet, beyond the end of next year it should fall back to near the Committee’s 2% target. In the light of that outlook, I believe we have made appropriate use of the “constrained discretion” granted to us in the Chancellor’s remit, looking through the temporarily elevated inflation to the medium term in order to avoid unnecessary volatility in output.

In contrast, there are signs that the depreciation in sterling is having the expected effect on the market share of goods exporters. That is also reflected in the robust growth in manufacturing output and in business surveys which report buoyant export orders. So far, there is less sign that the lower level of sterling is leading to the substitution of imports by domestically produced goods and services. But it is likely that the producers of internationally tradable goods and services take time to respond to the improved opportunities associated with a lower real exchange rate, especially if investment in foreign distribution networks or the repatriation of off-shored activities is required. So, other things equal, it seems reasonable to expect the impact of the lower level of sterling on net exports to continue to build through next year. The prospects for net exports obviously depend not only on the response to the past depreciation of sterling, but also on demand in the UK’s main export markets. While global growth has been strong over the past year, much of that has been in emerging economies that presently account for a relatively small proportion of UK exports. Growth has been patchier in the developed economies. In the United States, following a series of soft indicators through the late summer and early autumn, the US Federal Reserve announced additional purchases of US treasuries.
BIS central bankers’ speeches  21  Figure 7: Average number of hours volunteered by age group in 2011  16 to 29  Average number of hours volunteered per year* 87  30 to 49  77  50 to 69  109  Older than 70  113  UK average  97  Age group  Sources: ONS (2013), “Household satellite accounts: valuing voluntary activity in the UK”. Underlying data from the Understanding Society survey. *Conditional on volunteering. Figure 8: Change in volunteering activity over time in the UK  Source: Chart reproduced from ONS, “Household satellite accounts: valuing voluntary activity in the UK”. Original data come from Home Office, DCLG and Cabinet Office surveys. 22  BIS central bankers’ speeches  Figure 9: The “Volunteering Onion”, a summary of the estimated contribution from volunteering activities in the UK  Social value Social impact multipliers of 2-10? Private value Probably more than £ per year* Economic value Around £ per year Labour input 15m volunteers 1.25m FTE  Source: Bank and Pro Bono Economics calculations. Note: The estimate of private value shown is an estimate of the benefits to an individual’s well-being, not including health benefits or improvements to an individual’s skills or employability. BIS central bankers’ speeches  23  Figure 10: Illustrative calculation of the economic contribution to the UK economy beyond formal volunteering £ in 2012).

Given this definition, measuring volunteering activity is likely to be a tricky business. Would you know how many hours you had spent over the past year helping your neighbours? Those London commuters might know – a roundish number? – but the rest of the UK population is unlikely to keep score. Household surveys can help. In the UK, the Community Life Survey and the British Household Panel Survey (BHPS) ask respondents about the nature and scale of their volunteering activities. Although far from perfect, they enable us to build up a good overall picture of the volunteering sector. And what a picture they paint. First, the volunteer army in the UK is huge. Figure 4 illustrates the extent of participation in voluntary activities in 2012, based on the Community Life Survey. Around 44% of respondents had done some form of formal voluntary work over the previous 12 months and 29% volunteer formally at least once a month. This means around 15 million people in the UK volunteer “frequently”. Looking at hours worked, this equates to just over 2 billion hours per year spent formally volunteering. To give you some context, that is just under one hour per week for every person over 16 in the UK. It is 5% of the total hours worked in the UK by paid employees. It is equivalent to 1.25 million full-time equivalents (FTEs), or double the number of paid FTEs in the voluntary sector.