samchain/econo-pairs-v1 huggingface dataset:
Moreover, it would lend support to Government’s efforts for the achievement of the Millennium Development Goals. In this connection, plans are well underway to implement two key strategies within our financial inclusion mandate. They are mobile banking and financial literacy. The Bank believes that the introduction of mobile banking in the domestic economy will be hugely beneficial. It will allow better financial access to our low-income community in the rural and remote areas as well as to improve and speed up our payments system. Furthermore, it has great potential to address some issues specific to the economy of Samoa like the current relatively high costs of remittances. 6. Conclusion  In conclusion, I just want to say that when I first received the invitation from your President to be the guest speaker tonight, I asked myself the question, why me? 4  BIS Review 49/2010  Is it because of my position as the Governor of the Central Bank for all these years? I think maybe not, judging from the bored looks on many faces after listening to that last part of my address on the economy. Central bankers are generally regarded as very boring anyway. Is the reason for my invitation due to my age, I asked? Most probably not, as there are others who are older and wiser than me. The answer was clear to me yesterday when I came across a definition of an “economist”, which is the term used for people in my profession!

As well, the ability of many accountants to hide a substantial volume of very large transactions “off the balance sheet”, contributed to the demise of many of these large financial institutions. I mention this to highlight the critical roles that Accountants can play in maintaining financial stability in national economies and thereby the global economy as a whole. The stable economic environment that Samoa has enjoyed over the past many years is also partly due to the responsible way that the members of the Samoa Institute of Accountants have carried out their duties. And, I commend and thank you all for that. Let me now say something about our economy, interest rates and a bit about the Central Bank’s expanded mandate. 2. Economic update for the first seven months of 2009/10 and outlook for the remaining five months  Mainly, as a result of the Global Financial Crisis, the Samoan economy declined by close to 5 percent in the last financial year which ended in June, 2009. So, as we tried to get our economy out of recession, through the introduction of expansionary fiscal and monetary policies, the country was struck by the devastating tsunami in September. In the event, Government and private sector resources were diverted for the rehabilitation and reconstruction of tsunami affected infrastructure and other sectors, and thus putting on hold (albeit temporarily) a number of developments identified in the 2009/2010 budget.
Sections 4 to 6 consider some experiments to assess whether less could be more in financial systems. Section 7 draws out some public policy implications. (2)  When less is more  Mainstream economics and finance is dominated by models of decision-making under risk. Modern macroeconomics has its analytical roots in the general equilibrium framework of Kenneth Arrow and Gerard Debreu (Arrow and Debreu (1954)). In the Arrow-Debreu  BIS central bankers’ speeches  1  framework, the probability distribution of future states of the world is known by agents. Risk can be securitised and thereby priced and hedged. Modern finance has its origins in the portfolio allocation framework of Harry Markowitz and Robert Merton (Markowitz (1952), Merton (1969)). This Merton-Markowitz framework assumes a known probability distribution for future market risk. This enables portfolio risk to be calculated and thereby priced and hedged. Together, the Arrow-Debreu and Merton-Markowitz frameworks form the bedrock of modern macroeconomics and finance. They help explain patterns of behaviour from consumption and investment to asset pricing and portfolio allocation. This has been a well-trodden path for the past 50 years. The path less followed has been to study optimal choice under uncertainty – the inability to form priors on the distribution of future outcomes – rather than risk (Knight (1921)). Neither the Arrow-Debreu nor Merton-Markowitz frameworks admit such uncertainty. Instead, modern macro and finance has been built on often stringent assumptions about humans’ state of knowledge and cognitive capacity.

Scheibehenne, B and Broder, A (2007), “Predicting Wimbledon 2005 tennis results by mere player name recognition”, International Journal of Forecasting (3), pp 415–426. Selten, R (2001), “What is bounded rationality?” In G. Gigerenzer & R. Selten (Eds. ), “Bounded rationality: The adaptive toolbox”, pp 13–36, Cambridge, MIT Press. Serwe, S and Frings, C (2006), “Who will win Wimbledon? The recognition heuristic in predicting sports events”, Journal of Behavioral Decision Making, 19, pp 321–332. Simon, H A (1972), “The Sciences of the Artificial”, MIT Press. Simon, H A (1956), “Rational Choice and the Structure of the Environment”, Psychological Review, 63 (2), pp 129–138. Snook, B, Zito, M, Bennell, C and Taylor, P J (2005), “On the Complexity and Accuracy of Geographic Profiling Strategies”, Journal of Quantitative Criminology, Vol. 21, No. 1, March. von Neumann, J and Morgenstern, O (1944), “Theory of games and economic behaviour”, Princeton University Press. Wang, G, Grone, B, Colas, D, Appelbaum, L and Mourrain, P (2011), “Synaptic plasticity in sleep: learning, homeostasis and disease”, Trends in Neurosciences. Weitzman, M (1974), “Prices versus Quantities”, Review of Economic Studies, 41(4), pp 477–91. Wilde, O (1893), “Lady Windermere’s Fan”, J W Luce. 22  BIS central bankers’ speeches  Wübben, M and von Wangenheim, F (2008), “Instant customer base analysis: managerial heuristics often “get it right”“, Journal of Marketing, 72, pp 82–93.
Much will depend on developments in the rest of the world; on whether the slump in the US housing market causes a sharp slowing in the wider US economy: and on how far this acts as a brake on demand – and inflationary pressures – in the rest of the world, especially Asia and the euro area. The projections we published in last week’s Inflation Report were centred around a relatively mild slowdown, by historical standards – on the same scale as we experienced in 2005 – based on the assumption of a gradual and modest easing in interest rates over the next two years. But those projections are subject to a very wide margin of error – in both directions. The MPC’s monthly decisions are always grounded in a careful analysis of all the evidence. Given the uncertainties we face, now is a time to pay extra attention to the emerging data. We can, and should, respond quickly and flexibly to early signs of the changing economic weather. According to most recent official economic statistics, the weather is still set fair. But we know fouler weather is brewing off shore. What is still far from clear is whether we are in for a force 6 strong breeze, or a full force 8 gale. We will need to deploy all our meteorological skills. In the Inflation Report we highlighted a number of early warning indicators on both output and inflation, which will help us judge the strength of the wind.

Should we take heart from the relatively muted impact of previous increases in oil prices? Or does the fact that workers had already absorbed the impact of a doubling in oil prices since 2004, even before the latest surge, make it more not less likely that they will hold out for higher pay? A key point for the MPC is that its own actions will help to determine how far oil prices have a lasting impact on inflation. There are always risks in signalling that policy will be eased, at a  4  BIS Review 136/2007  time of rising energy prices. This is all the more so after a year when inflation has been above target and on some measures remains uncomfortably high. On the other hand, we need to be very alert to the risk that the economy may be slowing too abruptly. At current interest rate levels, monetary policy may be on the restrictive side. And the duration and impact of financial turbulence is very hard to call. There must be a risk that at some stage it will spill over into asset and property markets more generally, and trigger a damaging loss of confidence. Conclusions The MPC faces a tricky period as we try to weigh the risk of an unduly sharp downturn, against the threat to inflation posed by a sharp surge in global energy prices.
However, in some sense the Basel proposals will have failed in their purpose unless the pricing of bank credit better reflects the riskiness of borrowers. By removing perverse incentives for banks, we also wish to establish better incentives for borrowers. Greater risk sensitivity does, however, carry with it a possible danger, and that is the introduction of potential 'procyclicality' into the capital framework. I have touched on this concern more than once in the past, and make no apology for doing so again. To counteract this danger, regulators should not allow banks' internal ratings to reflect the optimistic prospects of borrowers during an economic upswing: rather, ratings need to be genuinely forward-looking, and to factor in borrowers' likely performance during economic stress. Long runs of performance records will be invaluable in establishing how robust borrowers are to different economic circumstances. In this way, economic downturns when they come should not prove too much of a shock to the ratings scales. Of course, I do not wish to sound complacent regarding the avoidance of 'procyclicality'. Capital is after all meant to be a cushion against volatility, also referred to as 'unexpected' loss, but measuring the unexpected is something of an oxymoron. Some of our researchers at the Bank of England recently reviewed the usefulness of various predictive models of banking problems, but unfortunately our conclusion at the moment is that banking crises are each unique in its own way.

Chart 5: Sterling three-month interbank rates relative to future expected policy rates  Chart 6: Oil prices  Sources: Bloomberg and Bank Calculations  Sources: Bloomberg and Thomson Datastream  8  BIS Review 145/2008  Chart 7: CPI inflation projection based on market interest rate expectations  BIS Review 145/2008  9
I am sure you will quickly get to know him just as well – and I am equally sure that he will represent your various views on the business conditions here in the region to the Monetary Policy Committee just as objectively and forcefully as John Beverly has done. I’d like to thank John publicly this evening for all his work, on both your and our behalf, over the past three years. I thought that in my opening remarks I would talk about the state of the economy as a whole, about the substantial imbalance between the domestic and the internationally – exposed sectors of the economy and the regional impact of that imbalance, and about the difficult dilemma which that poses for monetary policy. I will then happily try to answer your questions. Let me start then with the overall economy. The economy as a whole has grown consistently quarter by quarter now for over seven years – at an average annual rate of 3.2% which is well above its long-term trend rate. Consumer price inflation has averaged some 2.7% over this period. Employment has risen to a record level; and the rate of unemployment has fallen to a near 30 year low. All of that is very encouraging. But since the summer of 1996 our effective exchange rate has appreciated by about 12% and we have been affected by a global economic slowdown resulting largely from the financial crisis that began in Asia two years ago.

But it can certainly help, and is in fact the best contribution that monetary policy can make to the sustained growth of output, high levels of employment, and rising living standards. It helps particularly where there is supply-side flexibility and sectoral diversification. Birmingham, and the West Midlands more generally, have made – and are making – considerable strides in those directions, building on existing strengths certainly but also developing new skills and new activities. Birmingham City 2000 has, I know, played an important role in this forward-looking approach. I congratulate you and encourage you to persist in your endeavours – in conjunction with the West Midlands Regional Development Agency – well into the next millennium, despite your apparently non–Y2K–compliant title. 5  BIS Review 56/1999
The new regulatory framework also made it harder for originators to get capital relief insofar as the conditions that must be met in order to qualify for a significant transfer of risk (a necessary condition to free-up capital) are now much more stringent. This was unfortunate in the sense that the contribution of this class of securities in alleviating systemic effects, which should warrant a more reasonable regulatory treatment, was overlooked; in at least two ways. First, ABS sales are, from an aggregate perspective, a better way for banks to deleverage vis-à-vis credit supply restrictions. In fact, if many banks deleverage simultaneously by restricting credit, this will have an aggregate impact on the total supply of credit, which might end up in a credit crunch. In contrast, deleveraging through securitisation does not mechanically induce a credit supply restriction, even if many banks do it simultaneously. In fact, deleveraging through securitisation could provide banks with enough funding and capital to enable them to increase lending, or, it could help transforming zombie banks into active players in the economic recovery. Second, there is considerable home bias in the loan portfolio of banks whereas diversification of assets and reserves across the euro area, something which is achievable through cross-border purchases of ABS, could act as an absorber of asymmetric shocks. 2  BIS central bankers’ speeches  All this suggests that the next regulatory steps could justifiably give a more favourable treatment to ABS.

Jean-Claude Trichet: Interview in The Wall Street Journal Interview with Mr Jean-Claude Trichet, President of the European Central Bank, in The Wall Street Journal, conducted by Messrs Brian Blackstone and Marcus Walker on 19 January 2011. *  *  *  WSJ: If 2008 and 2009 were years of crisis, and 2010 was a year of stabilization and recovery. How do you see 2011? What should Davos participants be focused on this year? TRICHET: Since the start of the recovery, in the third quarter of 2009, the real economy has surprised up on the upside. This is encouraging. I see 2011 as a year of continuous hard work, to make the financial sector more resilient and to improve the soundness of fiscal policies. The crisis, which started in 2007 and intensified in September 2008 revealed the fragility of the financial sector first and then the relative vulnerability of public finances in the advanced economies. WSJ: What worries you most? Trichet: To consider that because we managed to avoid a depression and are now experiencing the recovery, we could lose momentum in the reforms that are still urgently needed. That is the main danger. WSJ: This year austerity becomes pan-European. But a recent United Nations report said austerity risks a renewed economic downturn. Do you agree? TRICHET: No, we do not. I do not buy the very simple reasoning that would suggest that pursuing sounder fiscal policy would hamper growth.
In addition, a cheque processing fee of 50 sen per cheque leaf will be imposed 11 months later on 1 April 2014. 4  Norway, Sweden, Denmark, Finland. 5  RM636 million (banks) + RM19 million (MyClear) + RM113 million (businesses). RM113 million for businesses was computed based on the ECB study that businesses incur a cost amounting to 0.012% of GDP. BIS central bankers’ speeches  3  The 11-month grace period before the implementation of the cheque processing fee is intended to afford both the public and the businesses ample time to familiarize with, adjust and migrate to using electronic payments such as the IBG for their payment transactions. Improving accessibility, security and convenience of electronic payments Based on a recent survey conducted on businesses, we have identified 4 key hindrances to the adoption of electronic payments, namely: •  Concern of the security of electronic payments  •  Difficulty to perform payment reconciliation  •  Low limit of electronic payment transaction  •  Lack of familiarity with electronic payments  In terms of security measures, banks have continued to invest significantly to ensure the safety of electronic payment transactions. Examples of security enhancements that have been undertaken include the migration to secure chip-based payment cards to address card counterfeiting fraud, the introduction of a second factor authentication to strengthen authorization of online banking transactions and the implementation of SMS alert to mitigate credit card fraud.

The total cost is even higher when we take into account the cost incurred by the payer and payee in delivering and depositing cheques. It is estimated that cheque processing cost Malaysia about RM768 million5 per year. This amount is huge and a sheer wastage. Correcting distortion between paper-based and electronic payments Despite the cost incurred in processing cheques, cheques have not been priced directly to reflect its costs except for the stamp duty of 15 sen per cheque. On the contrary, electronic payment services such as the Interbank GIRO (IBG) are priced above cost at about RM2 per transaction. Such price distortion does not incentivize the adoption of the more efficient electronic payments on a mass scale. In advanced countries such as Australia, Norway and Sweden, electronic payment services are priced lower than cheques consistent with their respective cost of production. The correct price signals that reflect the real cost of cheques and electronic payments had facilitated a broad shift from the use of cheques to the use of electronic payments. We need to correct this price distortion between cheques and electronic payment services, Bank Negara Malaysia has announced a new pricing strategy for payment services in March this year where the price of IBG and cheques are aligned closer to their cost of production. With effect from 2 May 2013, the transaction fee for IBG conducted via internet and mobile banking was reduced to 10 sen from RM2 previously.
Because my analysis suggests that recent food and oil price increases have their roots in concerns about wheat harvests in Russia and oil production in Libya and the like, I do not believe that monetary policy is the appropriate tool to respond to these disruptions. While many observers see food and energy prices rising and assume the Fed should tighten policy – raise the cost of money and credit – to head off inflation, I would suggest taking a step back and recognizing that tighter U.S. monetary policy will do nothing to stabilize Libyan oil production, reduce uncertainty about political stability in the rest of the Middle East, or increase the wheat harvest in Russia. BIS central bankers’ speeches  1  In fact, tightening monetary policy solely in response to contractionary supply shocks would likely make the impact of the shocks worse for households and businesses. To see why this is so, it is important to keep in mind how supply shocks affect the economy.1 First, supply shocks can lead to increases in food and energy prices that slow economic growth. For example, because a person’s need to drive may not be very flexible, spending on gas consumes a bigger portion of their budget. So an oil shock tends to force consumers to reduce their spending on other goods and services as they absorb higher oil costs.2 Second, while the prices of goods directly affected by the supply disruption increase, other prices in the marketplace may be unaffected – at least initially.

Consequently, longer-term inflation expectations became unmoored, and nominal wages and prices spiraled upward as workers sought compensation for past price increases and as firms responded to accelerating labor costs with further increases in prices. That wage-price spiral was eventually arrested by the Federal Reserve under Chairman Paul Volcker, but only at the cost of a severe recession in the early 1980s. Since then the Federal Reserve has remained determined to avoid these mistakes and to keep inflation low and stable.” [http://www.federalreserve.gov/newsevents/speech/yellen20110411a.htm]  BIS central bankers’ speeches  5  Figure 15 shows two measures of inflation expectations, plotted alongside oil price movements. The red line shows what professional forecasters expected inflation to average over the next 10 years, at various points in time. Their expectations have declined somewhat over the past 20 years, but what is striking is the relative stability of their inflation expectations. In addition, there was no significant reaction to the oil price shock that we experienced in 2008. The chart also shows a second measure of inflation expectations – the University of Michigan Survey (the green line), which asks respondents about their expectations for inflation over the next 5 to 10 years.6 Again these expectations are not very responsive to movements in oil prices, and have remained quite stable over the past two decades. It is worth noting that countries can be affected quite differently by supply shocks. As Figure 16 shows, the importance of food in the “basket” of goods purchased by consumers can vary greatly by country.