samchain/econo-pairs-v1 huggingface dataset:
In the 11 FYs since the last recapitalisation, MAS returned a total of $ billion to the Government, more than two times the amount of the latest increase in capital. In sum, the $ billion net loss is not cause for concern though the investment performance bears close watching. The loss does not impair MAS' ability to carry out its functions. More importantly, it does not change how we will conduct monetary policy. The loss does not result in a draw on MAS' past reserves. The OFR position remains healthy even after MAS transferred $ billion of excess OFR to the Government. But the investment performance is likely to remain weak amid a challenging macroeconomic and financial market environment. A return to profitability and ability to contribute again to the Government's Consolidated Fund will take some time. HOW IS MAS HARNESSING THE BENEFITS AND ADDRESSING THE RISKS OF WEALTH INFLOWS? I will now move on to the topic of wealth flows into Singapore. This issue has attracted much media and public interest. MAS has focused on harnessing the benefits of these wealth inflows while addressing their risks. But before explaining how we do this, let  9/16  BIS - Central bankers' speeches  me try to set the wealth inflows in context. First, as a trusted, vibrant, and well-regulated international financial centre, Singapore has attracted large inflows of wealth to be managed here. Assets under management (AUM) have grown an annual average of 15% during 2017 to 2021.

Both global trade and financial integration aided the growing US domestic consumption as well as the twin deficits of the current and fiscal accounts. Trade integration facilitated exports especially from Asia to meet the US demand. On the other hand, increasing financial integration allowed emerging economies with fast rising export revenues to invest the money in the US market where there is a wide variety of financial assets and instruments. At the same time, financial institutions in most  BIS Review 147/2008  1  advanced economies and a number of emerging economies have invested in opaque financial products, which originated in the US and spread globally through financial integration. Therefore, with economic integration at the global level, the large global savinginvestment mismatches between the US, who is a net spender, and emerging market Asia and others, who are net savers, were allowed to persist for a continued period. In addition, with global financial integration, what was originally expected to be a US problem once imbalances unwind, has turned into a global crisis. Ladies and Gentlemen, One common and frequently asked question is whether further integration at both the global and regional levels, especially financial integration, should be deterred as it has created channels that allow a financial crisis in one country to spread to various parts of the world. I believe that, like all economic matters, integration offers benefits and comes with costs.
Thus, reducing excessive spending and managing to bring inflation down to the 3% target is a priority if we want our economy to be able to adequately withstand the effects of a major disruption of the world economy. Adequately mitigating the adverse effects of an external shock also needs a deep local capital market. Therefore, it is essential that we recover the buffers that permitted us in the past to mitigate shocks coming from abroad. Macroeconomic stability is one of them. A deep capital market is another, but was weakened in recent years by the withdrawal of pension funds. We must ensure that this buffer is not further debilitated. Dear senators, The Chilean economy is living complex times. Inflation has been high for a long period, excess spending has not been corrected, and uncertainty has grown in the external scenario. Bringing down inflation is an indispensable condition for the economy to see sustainable improvement and be able to cope in the best possible way with the impact of shocks hitting us from abroad. Total inflation will gradually diminish in the coming quarters so, according to our projections, it can return to single-digit numbers sometime in the second quarter. This does not mean, however, that the problem of inflation has been resolved, nor does it mean that convergence is guaranteed. Our goal is that inflation meets the 3 percent target in two years. Higher inflation is costly to everybody.

David Rule: Managing risk in a soft market Speech by Mr David Rule, Executive Director of Insurance Supervision of the Bank of England, at the General Insurance Research Organisation conference, Dublin, 21 September 2016. *  *  *  Good morning. This is my first speech as the Bank’s Executive Director for Insurance Supervision. Since I took on this role in July, I have been trying to meet with as many chief executives and chairmen of UK insurers as possible. I have been struck by the variety of business models and strategies but one theme has dominated discussions of the risks facing insurers: the current low rate environment. For life insurers, this can create direct solvency pressures to the extent that they are not fully matched against the increasing value of their future liabilities as discount rates fall. That can also be an issue for some general insurers with long tail liabilities. More generally, low investment returns mean earnings on the “float” can no longer cushion a poor underwriting performance. The margin for error in the running of general insurance firms has reduced – firms have to underwrite profitably. On the positive side, this emphasises the importance of underwriting discipline. The soft market But of course the current soft market makes profitable underwriting more difficult to achieve. I am going to focus my remarks today on the wholesale London markets.
We left most of these problems behind us when we began making forecasts based on market expectations, as reflected in the so-called implied forward rates. This was because market expectations in most cases provide a much more realistic forecast for the future development of the repo rate. The changeover from a constant repo rate to the markets’ expected interest rate path was also a natural step on the route to publishing our own forecast for the repo rate. We then began talking more systematically about future interest rate developments by commenting on the plausibility of the interest rate path given by market expectations. In my opinion this was when we took the major step towards increased clarity with regard to our view of future interest rate developments. The method of basing forecasts on market expectations is not without its problems, either. One problem concerns how expectations are measured. Other problems are related to communication regarding the interest rate path. Let me explain what I mean here. Changes in the policy rate have a direct effect on the shortest interest rates in the economy. Monetary policy can therefore also affect financial market expectations of future short-term interest rates. It is these expectations that the implied forward rates are meant to capture. The implied forward rates can be interpreted as the financial markets’ ”average” forecast for the future repo rate.

Governments worldwide are already taking steps to address this concern – but more collective effort is needed to make any significant progress – in closing the gap between the rich and the poor. The third challenge is the retreat in globalisation. Increasingly inward-looking political sentiment poses serious threat to trade liberalisation – which has formed the global economy’s growth engine since the 1980s. Two decades ago, trade liberalisation enabled developing countries such as China and India to achieve exceptional growth, and in the process, unshackling millions from deep poverty. The calls for trade protectionism that are rife in the advanced economies today is therefore a major concern. If left unaddressed, the upsurge in protectionism and insular policies may lead to a reverse in globalisation, which would be detrimental to living standards. I have painted a rather bleak picture that depicts the fragile state of today’s world. Various forces at play have led us to where we are now – finance being one of them. While finance has lifted the lives of many, some argue that it has derailed from its intended objectives, leading to many economic, environmental and social problems that we face today. They argue that the global economy is very much driven by global financial capital, with most of it managed by financial entities that are attuned to financial risk and return considerations. Beyond these considerations, the non-financial impacts of an investment or ‘externalities’, such as rain forest destruction; water and air pollution are rarely considered and often simply ignored.
Good long-term anchoring is thus a prerequisite for fiscal policy to be used for economic stabilisation or to address structural problems in the economy. The fact that anchoring creates such room actually seems to have been a bit overshadowed in recent decades. As I have just noted, the fiscal framework launched after the crisis of the 1990s was motivated not only by lower public debt creating confidence that public finances are under control, but also by creating greater opportunities to use fiscal policy for other purposes. I will come back to that. ...and the inflation target is the anchor for monetary policy The mechanisms for monetary policy are similar. What anchors monetary policy in the long term is confidence that the central bank can keep inflation low and stable. For most central banks, this means inflation of 2 per cent. These now also include the European Central Bank (ECB), which, in July this year, moved to a symmetrical target of 2 per cent, instead of the previous wording, where inflation should be below, but close to, 2 per cent. In the same way that confidence in public finances provides flexibility for fiscal policy, monetary policy will have room for manoeuvre to counteract economic 3  Examples of automatic stabilisers are income taxes and unemployment benefits that level out households' disposable incomes over the economic cycle. 3 [17]  downturns if there is confidence in the central bank’s ability to keep inflation low and stable.

The same is also true for market making activities that play a vital role in ensuring financial market liquidity and thus in convincing investors to finance the real economy. BIS central bankers’ speeches  1  This will therefore mean a new organisation for banks and greater powers for the ACP, including notably banking crisis resolution powers. The ACP will then become the ACPR. In exceptional circumstances, the ACP could call on support from the failing entity’s shareholders and subordinated bondholders. It could then, if necessary, request intervention by the Deposit Insurance and Resolution Fund, which is currently only required to intervene in the framework of its depositor compensation arrangements, even though it has already voluntarily participated in restructuring operations. In this respect, in line with the Paris financial centre’s wishes, the draft law provides that the possibility of calling on support from the Fund will be capped at a ceiling set by decree in order to ensure that the Fund’s intervention does not result in contagion. 1.2  A few words on the banking union  Distinct progress was made in 2012 in the area of European banking supervision. The euro area crisis required particularly ambitious measures to be adopted and these steps have now been taken. Thanks to the determination of European leaders, at the end of 2012, an agreement was reached on two draft regulations establishing the Single Supervisory Mechanism under the auspices of the ECB.
Observing the data, one can notice very strong growth of domestic demand before the crisis, on average of around 6%, while as of 2009 until 2013 domestic demand was contracting. In the last couple of years it was brought on a solid grounds, but yet the average growth is more modest at around 3.5%. 10  Chart 7 Domestic demand and fiscal balance  14.0  12.9  10.0 8.0  4.8  0.0  7.3  7.2  6.1  3.5  3.3  4.0 2.0  0.0  10.9  12.0  6.0  Current account and fiscal balance, as % of GDP (average for the selected countries)  Real GDP and its components growth rates, in % (average for the selected countries)  -1.9  -2.4  4.2  -5.0  -4.4  -2.0  -5.0  0.2  -2.0 GDP  -10.0  Domestic Demand 2000- 2008  -8.0  -0.6  -1.8  -4.0  2009- 2013  Exports  2000- 2008  Imports  2014- 2018  Fiscal balance  Source: Eurostat and NBRNM calculations. 2009- 2013  2014- 2018  Current account balance  Source: IMF and NBRNM calculations. Financial flows to and from advanced economies have been much weaker since the global financial crisis. In particular, portfolio debt flows have weakened, reflecting a combination of factors: large government debt asset purchases by central banks, increased fragmentation in euro area debt markets, and much-reduced accumulation of reserves by emerging market and developing economies.

Meanwhile, aggregate current account deficits of advanced economies rose slightly, underpinned by renewed fiscal easing in the United States. 3 Chart extracted from the IMF External Sector Report, 2019. 4  Chart 3 Current account and fiscal balances in Euro Area and USA USA  Euro Area  Current account and fiscal balance, as % of GDP  Current account and fiscal balance, as % of GDP 4.0  0.0  2.0  -2.0 -4.0  0.0  -6.0  -2.0  -8.0 -10.0  -6.0  -12.0  -8.0  -14.0  2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019  2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019  -4.0  Fiscal balance  Fiscal balance  Current account balance  Current account balance  Source: IMF, WEO October 2019, database  The dynamics of the balances is not always indicative on how appropriate the external position is. The deviation of the current account from its fundamentals and desirable policies provides for additional substantial information on the correction needed. According to the IMF (2019), 35–45 percent of overall current account surpluses and deficits were deemed excessive in 2018.
Lower returns in the new normal 8. First, lower returns in the new normal. There has been increasing acceptance that the era of low yields is not just a cyclical phenomenon, but is in fact the New Normal. In advanced economies, policymakers are faced with conflicting challenges as they seek to maximise economic growth on the one hand; while having to pursue fiscal consolidation and financial sector reform on the other. Meanwhile, emerging economies will grapple with tighter financial conditions and by implication, slowing growth when unconventional monetary policies are unwound. The outlook is highly uncertain as the normal cyclical recovery template cannot be applied to structural deleveraging episodes such as the one we are currently in. Although bond yields are expected to rise from their current low levels, it is likely that insurers will have to settle for much lower returns from fixed income investing in the years ahead than that achieved in the pre-crisis period. Over the next 20 years, the slowing demographic outlook for the world will also exert pressure on economic growth and lower the expected returns for most asset classes. Shortage of long duration assets 9. Next, a shortage of long duration assets. Asia has often been singled out as the bright spot in the global insurance industry, as rising incomes and lower than average  2  Allianz Global Investors estimates. 3  OECD Global Insurance Statistics. 2  BIS central bankers’ speeches  insurance penetration in many markets offer rosy opportunities for growth.

In the alternatives space alone, the average allocation by insurance companies, as a percentage of their assets under management, has in fact already increased from 10% to 15% between 2011 and 20135. 4  “Asian Insurers: Adapting Investment Strategies to a Changing World”, BlackRock in conjunction with the Economist Intelligence Unit, Sep 2013. 5  Preqin’s 2013 Global Alternatives Report. BIS central bankers’ speeches  3  15. A recent Goldman Sachs Insurance Asset Management survey reports that nearly half of Asian insurers are looking to raise their allocation to higher yielding assets. Like expected returns, risks – market, credit, liquidity, and legal to name a few – from investing in these newer asset classes will also be higher. There is no free lunch. Insurers’ risk profiles will be distributed across a wider and more complex spectrum of asset classes. This will call for more sophisticated and robust management of individual investment risks, as well as the correlation between the range of investment risks within a more diversified and complex portfolio. 16. The risk management deficiencies highlighted by the global financial crisis and recent tail events, have raised the bar in all areas of risk management. As a result, risk management has now been elevated from a mere control function under the responsibility of the Chief Risk Officer, to a strategic role that comes under the direct oversight of the insurer’s Board and senior management. 17.
In the years before the coronavirus crisis, there were also some discussions, especially with regard to the Federal Reserve, which also raised its policy rate substantially in the years before the crisis.9 The Federal Reserve is the only major central bank that, following the financial crisis, has practical experience of QT to any great extent. The relationship between the policy rate and the asset holdings: “Reinvestment-rate increase-QT” In Figure 5 the policy rate is also illustrated. In the international discussion there has emerged a consensus that it is appropriate to start raising the policy rate at some point during the reinvestment phase, that is, before the holding starts to decrease. The monetary policy tightening will thus begin with interest rate increases, followed by a reduction in the asset holdings. A summary of the strategy is “reinvestment-rate increase-QT”. If you think this sounds abstract, I can give you a practical example of how we ourselves reasoned a few years ago, before describing how we are thinking now. "A traditional exit" Let's go back in time a little once again. During 2014-2015, inflation was so low that there was a risk that confidence in the inflation target would be undermined. At the same time, the ECB reoriented its monetary policy in a more expansionary direction, which risked strengthening the krona exchange rate at a time when inflation was already too low. 8 For a description of tapering in an American context, see Brookings (2021). 9 See Federal Reserve Bank of St Louis (2019).

The Swedish Parliament (2022), "the Riksbank's monetary policy 2015–2020 has been evaluated", published on 31 March, available at The Riksbank's monetary policy 2015–2020 has been evaluated - the Riksdag. 13 [19]  Figures Diagram 1. Inflation in various countries and regions Annual percentage change  Note. Consumer prices refer to the CPIF for Sweden, the CPI for the United States and the United Kingdom and the HICP for the euro area. Sources: Eurostat, Statistics Sweden, UK Office for National Statistics, U.S. Bureau of Labor Statistics and the Riksbank. Diagram 2. Riksbank's asset holdings Nominal amounts, SEK billion  Note. The bars refer to executed and decided purchases. Source: The Riksbank. 14 [19]  Tabell 1. Purchases of securities by ECB, Federal Reserve and the Riksbank Government securities  Commercial paper  Regional and municipal bonds  ECB*  🗸  🗸  Federal Reserve  🗸  🗸  🗸  The Riksbank  🗸  🗸  🗸  Covered bonds  MBS & ABS  🗸  🗸 🗸  🗸  Note. Mortgage Backed Securities (MSB) and Asset Backed Securities (ABS) are similar to covered bonds in that there is an underlying collateral for the bonds in the form of a loan portfolio. The difference lies, among other things, in different regulatory requirements and in which party has the underlying collateral on its balance sheet. *The ECB has also purchased bonds by supranational bodies. Source: Hansson and Birging (2021). Diagram 3.
5 This reduces the return potential of investments and hence also the demand for capital to finance investments. The real rate of interest had to fall in order to balance supply and demand on the capital market. Negative interest – still essential from a monetary policy perspective The decline in long-term interest rates also has implications for monetary policy and thus for short-term rates. What is known as the ‘neutral rate of interest’, i.e. the rate at which monetary policy neither holds back nor stimulates the economy under conditions of price stability, is also lower than it used to be. To achieve the same degree of monetary policy expansion in these circumstances, short-term interest rates must therefore also be lower now. This is one of the reasons why many central banks lowered their policy rates to zero or even into negative territory in the financial and debt crisis. It was because of this that the SNB, too, introduced a negative rate of interest on the sight deposits that banks hold with it. We are aware that the negative interest rate is an unconventional instrument, and one that has side effects. That is why we subject the benefits of this instrument for monetary policy, as well as any resulting costs, to particular scrutiny. We will only maintain the negative interest rate for as long as the benefits outweigh the costs. We undertook the most recent evaluation during our September monetary policy assessment.

Any linking of monetary policy to social policy raises the issue of potential conflicts of interest with the SNB’s actual mandate. That would also be the case if income were committed in this way. To ensure that the SNB can fulfil its mandate, our decisions must be based solely on monetary policy considerations. The current arrangements for determining and distributing profits take due account of the individual stakeholders’ responsibilities: the SNB’s responsibility for monetary policy, and that of the Confederation and cantons for fiscal and social policy. The law stipulates that the SNB’s profits be allocated to the Confederation and cantons, which can dispose of them as they see fit. Transferring the income derived from the negative interest rate to the pension funds would not only result in a questionable mingling of monetary and social policy, it would also reduce the volume of funds available for ordinary distributions to the public sector. Ultimately, it would be a zero-sum game. For the negative interest rate to have the desired monetary policy effect, it must be applied across all sight deposit accounts held at the SNB as far as possible. Making an exception for such an important investor category as the pension funds would severely impair this effect. Moreover, it is likely that other players which also perform economically relevant and socially useful functions – such as charitable foundations – would promptly demand the right to be treated equally.