samchain/econo-pairs-v1 huggingface dataset:
This position was subsequently formalised in the new Bank of England Act which came into effect in June of last year. That Act now defines the Bank’s objective as “the maintenance of price stability, and, subject to that, to support the Government’s economic policy, including its objectives for growth and employment”. Under the Act the Chancellor tells the Bank what precisely we are to understand by “price stability” and he has done this by setting a target of 2½% for a particular measure of retail price inflation (RPIX – which is the RPI excluding mortgage interest payments); and although the Act provides for the Chancellor to set the target each year, the expectation is that it is in practice set for the medium to longer term. That is the political decision. The task of achieving that target – the technical implementation of monetary policy – is then delegated, transparently and accountably, to the MPC. The Government no longer has the power – as it had under the 1946 Bank of England Act – to issue directions to the Bank in the field of monetary policy, except, in the terms of the new Act, “in extreme economic circumstances”. So the objective of monetary policy these days, in this immediate sense, could hardly be clearer; and that objective is accepted across a broad part of the political spectrum. But it is important to understand that this objective – of permanent effective price stability – is not simply an end in itself.

So it is the outlook for inflation, rather than its current rate, which explains the MPC’s decision to resume asset purchases. Asset purchases work by increasing the amount of money in the economy. When the Bank buys assets, the people who sell the assets to us receive money which can then be used to buy other assets. In turn, the sellers become buyers of other assets, and so on indefinitely as the money is transferred from one account to another. The prices of assets that investors choose to buy go up, raising wealth and pushing down on yields. Those yields are the opposite side of the coin to the borrowing costs of companies. In these ways, the Bank’s purchases of assets increase demand in the economy. Some of you have asked why the MPC has focused largely on purchases of gilts, rather than securities issued by companies. The answer is three-fold. First, gilts are the only asset available in sufficient quantity such that the Bank can rapidly inject large amounts of money into the economy – £ billion in the present case. Second, we have bought, and continue to buy, corporate securities, but this was designed to ensure that the corporate bond market functioned normally with the Bank acting as a temporary market-maker in a dysfunctional but previously liquid market. We were able to achieve that objective without the expenditure of large sums of money – unnecessary given the size of the market.
Expansionary monetary policy affecting asset prices in this way is actually a part of the transmission mechanism for monetary policy, that is, the way that monetary policy spreads through the economy. But the effect on asset prices is not the objective of the policy. The objective is that the expansionary policy – through the effects on interest rates, asset prices, exchange rate, access to credit, expectations and so on – will in a couple of years contribute to increasing activity in the economy and bringing up employment and inflation. It is important not to lose this perspective in discussions of the distributional effects of monetary policy, as it broadens the spectrum of effects to more than just those coming through asset prices. Moreover, it points to the difficulties in determining the size of the distributional effects of monetary policy. One such difficulty is assessing what should actually be considered an effect of monetary policy and what is rather an effect of the conditions for monetary policy having changed. In a system like the national economy, it is not an easy task to distinguish between cause and effect. The Riksbank does not operate in a vacuum; it adapts its monetary policy to changing circumstances. 3 Moreover, if monetary policy were not adapted to new circumstances, this would also have distributional effects.

Given that the recent financial turmoil has highlighted the importance of strong liquidity risk management, an important recent development to assist in the liquidity management of Islamic financial institutions is the establishment of the International Islamic Liquidity Management Corporation (IILM). The IILM has begun its operations in Kuala Lumpur from early February this year, following its official launch in October 2010. The IILM is tasked to issue short-term multi-currency liquidity instruments that would facilitate the cross-border liquidity management between financial centres, and by doing so, would enhance financial inter-linkages. The first issuance of liquidity instruments is expected to take place later during the year and is very much anticipated as it would contribute to more efficient management of financial flows across borders, thereby leading towards more efficient internationalisation of Islamic finance. The Islamic finance industry is at a stage of growth in terms of products and services, which requires innovation to remain as the driving force behind the progress of the industry. In the pursuit of innovation, it is paramount that the Islamic banking and takaful industry achieve full Shariah compliance in the development and application of their products and services. A robust Shariah governance framework is therefore an important foundation for the Islamic financial institutions to ensure that its objectives and operations are in accordance with Shariah principles. In Malaysia, there have been recent enhancements to the Shariah governance that aim to further strengthen the existing Shariah governance process, decision making, accountability and independence of Shariah advisories.
As always, my remarks today reflect my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. We live in a globalized economy in which the flows of products, capital, and ideas across borders have led to significant economic gains for literally hundreds of millions of people around the world. Thus, there is a strong public interest in ensuring that this global economic integration is supported by a coherent set of coordinated national macroeconomic policies and a harmonized international regulatory regime. This applies to the policy actions we undertake to reduce economic imbalances as well as to the regulations we develop to address the vulnerabilities in our financial system that were exposed by the crisis. The better we are able to develop cooperative global solutions to these types of issues, the more successful we will be in creating a sounder and more sustainable global economy and financial system. It is clear that there were important imbalances in both economic and financial activity in the years preceding the financial crisis. For example, in the U.S., too much of economic activity was based on an unsustainable housing boom. The turmoil in financial markets that was unleashed when the boom collapsed subsequently forced the U.S. and other countries to undergo significant adjustments. These adjustments were often sudden. They transmitted large shocks across the global economy. These shocks, in turn, necessitated other adjustments in trade, investment, and in financial markets elsewhere.

William C Dudley: What does interconnectedness imply for macroeconomic and financial cooperation? Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Swiss National Bank-International Monetary Fund Conference, Zurich, 8 May 2012. *  *  *  It is a pleasure to have the opportunity to speak here today. As I see it, the complex interconnections that exist between the real and financial sectors of the economy, both within and between countries, have important implications for both macroeconomic and regulatory policy. In particular, cross-border coordination in both realms is warranted. Often, macroeconomic and regulatory policies are too narrow in their focus. At times, policies are designed with the goal of being “best” at the national level. Yet the resulting mix of national policies is distinctly inferior to what a well-coordinated global regime could have produced. Today I will discuss two important challenges that go along with living in an interconnected world. The first is how to define what aspects of macroeconomic policy or regulation require greater international coordination and harmonization. Some issues can be handled effectively at a national level, but the crisis has demonstrated clearly that many can not. The second challenge is how to make international coordination workable so that progress can be made in a timely manner while still preserving sufficient autonomy for countries to fashion policies to suit their particular idiosyncratic structures.
That meant the output gap was no longer shrinking at any pace, if at all. Meantime, price pressures had remained weak. External deflationary forces – from energy prices and sterling’s earlier appreciation – have started to wane. But domestic wage growth had not picked up discernibly. Wage inflation had remained in the “2-point-something” zone it had occupied for much of the preceding 5 years. Indeed, this looked increasingly like a new, post-crisis, “going rate”. Given job insecurity, and given slowing employment growth, that new going-rate seemed unlikely quickly to dislodge. This has been an uneven economic recovery, looking across regions, income and age cohorts. Large parts of the UK – many regions, those on lower incomes, the young, renters – have not experienced any meaningful recovery in their incomes or in their wealth. Perhaps it is not so surprising, then, that reflation in spending, prices and wages has been modest over the past few years and interest rates, contrary to financial market expectations, have hence remained on hold. Over the past month, the outcome of the EU referendum has added another important ingredient to this mix. It has increased materially the degree of uncertainty – economic, policy, and political – around the UK’s economic recovery. 15 And while some of this uncertainty may dissipate, a good chunk is likely to linger throughout the Bank’s two to three-year policy horizon. This uncertainty is likely to weigh on domestic spending by both companies and households for the foreseeable future.

Those small countries in particular had to accept the new economic reality of lower demand, higher unemployment and forced fiscal consolidation due to a fall in tax income or borrowing difficulties. The other group consists of bigger or more closed economies that were relying on domestic demand. They were able to smooth the initial impact of the crisis with more extensive government support measures. There was also the expectation that the crisis would be temporary. With the benefit of hindsight we know that we were not facing a temporary bump on the road, but a more fundamental need for adjustment. The initial smoothing of the shock may have been even more costly as it resulted in a higher level of public debt. Secondly, the required policy adjustment involves a dimension which we now consider critical: the speed of reacting and the decisiveness of policy actions. The Baltic countries have learned it firsthand through their experience, which of course is the hard way. There are few economists today that would fundamentally question the need for fiscal consolidation and structural reforms in Europe, as the crisis has clearly turned out not to be temporary. However, we all know it is politically difficult to cut government spending and implement reforms fast. The natural tendency for most politicians is to favour gradual adjustment. “Gradualists” say that in case of fast changes the risk of possible policy mistakes is higher, leading to losses in physical and human capital. Opponents of that view, including myself, certainly acknowledge those risks.
As Charts 1 and 2 illustrate, however, the distribution of betas is fairly wide, with over a third of US firms and almost a fifth of UK firms having a beta in excess of unity. Table 4 Estimated betas Number of firms  Number of observations  Mean  Median  S.D  S&P  401  10,140  0.91  0.86  0.49  FTSE  168  3,765  0.63  0.62  0.45  Index  21  Because a firm’s beta ought also to be a function of its business and financing decisions, we also estimate a restricted version of (10):  22  . We exclude observations where the estimated beta is greater than 5 in absolute value, which in practice is only 7 firms. BIS central bankers’ speeches  7  Chart 1  Chart 2  Distribution of betas – US  Distribution of betas – UK  Sources: Thomson Reuters Datastream and Bank calculations. Notes: Shows estimated betas for the US firms. The chart is drawn for betas lying between –1 and 3 with 400 bins. Sources: Thomson Reuters Datastream and Bank calculations. Notes: As for Chart 1 but for UK firms. The second component of the firm-specific discount factor is company gearing. This was constructed using annual Thomson Reuters Datastream data for book value per share, the number of shares outstanding and debt outstanding.

These projects would fail to receive financing. Investment and, ultimately, growth would be lower  4  BIS central bankers’ speeches  than optimal. In fact, the potential capital misallocation problem is greater still. To see that, consider the three projects summarised in Table 1. Table 1 Short-termism and capital planning Project  A  B  C  Cash-flows (CF)  $ pa in years 6–10  $ pa every year  $ pa in years 1–5  Cumulative CF  $  $  $  NPV (rational)  $  $  $  1  2  3  $  $  $  3  2  1  Ranking (rational) NPV (myopia) Ranking (myopia)  In the absence of short-termism, project A is selected. Its payouts are back-loaded but significant; it generates a net excess return of 22%.17 Short-termism hits such long duration projects hardest. The impatient investor chooses project C. This project delivers lower cashflows but these are front-loaded. In NPV terms, the project selected is the worst on offer, whereas the rationally optimal project ranks last. Capital allocation is not just sub-optimally low; it is also skewed towards sub-optimally short-duration projects. (b)  Asset pricing  Consider now a formal model of multi-period equity price determination. Finance theory typically assumes that investors care about both the level and uncertainty of their wealth and are risk averse. In this world, agents require a premium to invest in a company.
25 The supply of credit increases, at the same time as interest rates are  24  For an overview of how complementary monetary policy functions, see De Graeve, F. and Lindé, J., “Effects of unconventional monetary policy: theory and evidence”, Economic Review 2015:1, Sveriges Riksbank or the article “The Riksbank’s complementary monetary policy measures”, Monetary Policy Report, February 2015, Sveriges Riksbank. 25  Some studies of the effects of complementary monetary policy in other countries include, for instance, Weale, M. and Wieladek, T. “What are the macroeconomic effects of asset Purchases”, External MPC Unit Discussion Paper No. 42, 2014, Bank of England, Gertler, M. and Karadi, P. “QE 1 vs. 2 vs. 3. . . : A Framework for Analyzing Large-Scale Asset Purchases as a Monetary Policy Tool”, International Journal of Central Banking,  10  BIS central bankers’ speeches  pushed down and the exchange rate weakens – aggregate demand in the economy increases. When the economy is stimulated, inflation gradually rises, as companies can charge higher prices and the lower unemployment pushes up wages. A weaker exchange rate also leads directly to higher inflation, as prices of imported consumer goods rise faster. Let me give an example of how the increase in the Riksbank’s balance sheet in the form of government bond purchases can spread throughout the economy. When we buy government bonds, those who sell them receive liquid funds in the form of their bank account balance instead of the bonds they previously held.

11. According to a market knowledge study called the ‘FinScope Demand – Side Survey’ which was conducted in 2005 to review the inclusiveness of the Zambian financial system, two thirds (or 66.3%) of the Zambian adult population do not have access to financial services and only one third (or 33.7%) use banks, other formal and informal financial services and products (such as those offered by microfinance and savings clubs). Furthermore, only 15% of the adult population access commercial bank services. A huge market therefore exists to tap if transaction costs are reduced. 12. Finally, Honourable Guest of Honour, let me congratulate NATSAVE for its participation in addressing the issue of increased access to financial services for the people of Lukulu despite the challenges of physical access and resultant higher transaction costs. I thank you. 2  BIS Review 69/2009
Before the EU/IMF programme was agreed, the total Eurosystem loan support for Ireland (combining monetary policy operations to all eligible banks and emergency liquidity assistance from the Central Bank of Ireland) amounted to about 100% of Irish GDP. Our total loan provision now stands at above EUR 125 billion. There are however statutory limits to what the Eurosystem can do, and a clear dividing line between the tasks of a State and the tasks of a central bank. There can also be no doubt that the current amount of liquidity support extended by the ECB and the Central Bank of Ireland  4  BIS central bankers’ speeches  to Ireland’s banks needs to be substantially reduced over time, and we expect that the Irish authorities and the banks are working hard to achieve this. For Ireland’s economy to recover, its banking system must be sound and fully functioning. A virtuous cycle must blossom. That will be difficult to instil with banks that remain dependent on Eurosystem support. With measures in place to break this dependency, the conditions will be in place for recovery. The foundation for this recovery has already been laid. In late 2010, the ECB played a key role in mitigating the challenges facing the banking system, and in designing programme measures to reverse the situation. I hope you share my view that these measures achieved their initial aims: the stabilisation of the banking system.

Norman T L Chan: A new era of smart banking Opening keynote speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at HKIB (The Hong Kong Institute of Bankers) Annual Banking Conference 2017, Hong Kong, 29 September 2017. * * * Dr Patrick Fung, Ms Carrie Leung, Vice President Pan Guangwei, distinguished guests, ladies and gentlemen, good morning to all of you! The theme of my speech is “A New Era of Smart Banking”, “智慧銀行新紀元 ” in Chinese. In the last few years, we have frequently come across two comments amongst the fintech community. The first comment is that Hong Kong is very backward in fintech, quoting mobile payment developments in Mainland China as the evidence. The second is that fintech will disrupt or displace traditional banking. I must say I don’t agree with these two comments for two main reasons. First, Hong Kong has not been slow in developing and adopting fintech. It is not entirely appropriate to use mobile payment as the only benchmark for measuring the state of development in fintech. There are many other important aspects of developments that define the maturity of fintech developments, such as the use of digital or internet banking and the robustness of cybersecurity. Even in the field of mobile payments, we should appreciate that Hong Kong already has a well-developed electronic payment ecosystem. In 2015, each Hong Kong citizen had on average 2.6 credit cards, compared to 0.3 credit cards per person in Mainland China.
5 [8]  and our assessment is that there is no technical obstacle to settling payments in Swedish krona there. Moreover, it doesn't cost anything to join TIPS over and above the adaptations the Riksbank and the market need to make to their IT and communication systems. Joining the platform involves the central bank wishing to participate entering into an agreement with the ECB and the Eurosystem. If the Riksbank decides to use TIPS, the settlement of instant payments in Swedish krona will thus take place in Italy, where the platform is located. As the Riksbank would then be outsourcing the operation of the system to an external party, the TIPS operations must meet the requirements made by Swedish legislation. In addition to these requirements, the outsourcing process would also raise a number of broader issues regarding national self-determination. It may be worth reminding you that the Swedish payment infrastructure is already dependent on external parties. Let me give some examples: RIX has been procured from a South African company, the settlement of Swedish securities takes place in Euroclear’s technical system in France, Swedish banknotes are printed in the United Kingdom, the communication network used to send payment orders between Swedish financial institutions, which is required for instance when customers make normal cash withdrawals, is owned by an international cooperative society with its headquarters in Belgium (SWIFT) and card transactions in Sweden are cleared through two American corporations.

The institution that is responsible for the settlement of payments between financial institutions gains a considerable influence over the payment system as a whole. If 4 [8]  the settlement of payments had been a branch characterised by substantial competition and low entry barriers, it would not have been problem. But as payment settlement is instead characterised by economies of scale and network effects, Sweden actually has to choose between a public monopoly and some form of private monopoly. Even a privately-owned infrastructure can be supplied in a competitively neutral way without creating monopoly profits, but it must in that case be accompanied by regulations, supervision and oversight which is once again an unnecessary detour if the infrastructure could just as easily be directly supplied by a central bank. I therefore believe that both financial stability and competition on the payment market would benefit from the Riksbank supplying a payment system that is available whenever the participants wish to use it. Platform sharing with other central banks is cost-effective Platforms for settling instant payments must be able to process a large number of payments, be accessible 24/365 and offer first-class continuity solutions. The systems are therefore expensive and complex to develop. We have not calculated in detail how much it would cost for the Riksbank to develop or procure a system for the settlement of instant payments, but simple business economics speak against this type of project. Payment infrastructures entail substantial fixed costs.