samchain/econo-pairs-v1 huggingface dataset:
11  The Way Forward  The mutually reinforcing relationship between the regulatory framework and market good practice should help the FMSB, and other market standard-setters, maintain their ambition and momentum even once memories of post-crisis misconduct fade. It could sharpen collective incentives to address, more conclusively, outstanding ambiguities that act as obstacles to real markets. And it should help mitigate emerging vulnerabilities. The Bank of England encourages the FMSB to consider where additional guidance and worked examples could buttress its existing standards, to guard against the risk that certain principles mean different things to different parties. The City’s special responsibility, given its pre-eminent position in global markets, is why it has brought so many ideas and such energy to advance reforms to address the misconduct risk that has plagued global markets. 10  See page 16, Financial Reporting Council (FRC), “Corporate Culture and the Role of Boards: Report of observations”, July 2016. In light of its responsibilities for conduct and market integrity, the FCA is consulting on an approach under which it would formalise that in supervising to, and enforcing, SMR rules for unregulated markets and activities, it would consider whether firms and individuals are meeting “proper standards of market conduct” with reference to “recognised” industry codes.

The bad news is that it has become increasingly clear that we cannot rely on Libor in the long term. Libor is meant to measure banks’ short-term unsecured funding costs. But the reality is that bank funding markets have changed, and banks no longer take enough wholesale term deposits to form the basis for a robust transaction-based benchmark. As we have pointed out in the past, the result is that Libor is overly reliant on expert judgement rather than actual transactions. That situation is neither desirable nor sustainable. There is also a risk that panel banks might withdraw from Libor and precipitate its collapse, which raises obvious financial stability concerns. So there is a clear need for the authorities and market participants, across every sector, to come together, and transition to alternative benchmarks. 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  Under the auspices of the FSB, authorities in the UK, US, Japan and Switzerland have worked with market participants to identify alternative benchmarks. In the UK, the market-led Working Group on Sterling Risk Free Rates recently confirmed SONIA as its preferred alternative to Sterling Libor. 12  Market participants in every sector and market that uses Libor now need to come together to identify and resolve issues, change business practices, and adopt alternative benchmarks. To support the next phase of this work, the Bank and FCA are today announcing that from January, the Sterling Risk Free Rate Working Group will have a new mandate and wider representation from across the market.
But, as Friedman and Schwartz note, this interpretation was misguided – the excess reserves were attempts by banks to maintain a larger buffer stock against liquidity shortages, and low interest rates reflected heightened demands for low-risk assets that the Fed should have further accommodated. I bring up the 1970s and 1930s Fed policymaking examples because they are relevant for the critiques of monetary policy that we are hearing today. It’s safe to say that the aggressive moves the Federal Reserve has made to provide monetary accommodation have not been universally applauded. Critics point to the large expansion of bank reserves and low levels of interest rates throughout the Treasury yield curve and surmise that the Fed is sowing the seeds of future inflation, as in the 1970s. They believe we should be taking back accommodation – some say now, some say soon – as the recovery gains some more steam or inflation creeps up a few more tenths. I don’t see it that way. Rather than fighting the inflation ghosts of the 1970s, I am more worried about repeating the mistakes of the 1930s. As in the 1930s, today we see a lack of demand for loans and a resistance of lenders to take on risk – factors that mean the high level of bank reserves is not finding its way into broader money measures.

Caleb M Fundanga: Recent economic developments in Zambia Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, on the occasion of the monthly meeting with chief executive officers of commercial banks, Bank of Zambia, Lusaka, 2 April 2004. * 1. *  *  Recent economic developments  Introduction This brief reviews monetary, economic and financial sector developments during February 2004. Monetary developments •  During February 2004 monetary policy was focused on reducing monthly overall inflation rate to 1.6%. Net strong revenue inflows complemented with primary auctions of Government securities helped to maintain an appropriate level of liquidity. Inflation •  Monthly overall inflation slowed down by 1.5 percentage points to 1.1% in February 2004 from 2.6% in January. This was 0.5 percentage points lower than the projection of 1.6% for February 2004. The decrease in the monthly overall inflation rate was attributed to the slow down in food and non-food inflation rates to 0.9% and 1.4% in the month under review from 2.3% and 2.9% in January 2004, respectively. •  The slow down in food inflation was attributed to continued ample supply of food items in the market while the drop in non-food inflation was largely due to price declines in rental and fuel prices as well as in prices of transport and communications, recreational and educational services. •  The annual overall inflation rate fell to 16.8% in February 2004 from 17.4% in January 2004. This was 0.2 percentage points below the end-February 2004 inflation projection of 17.0%.
In addition, as part of their strategic reorientation, both big banks announced measures which will further enhance their resilience. For instance, both institutions are planning to further expand their loss-absorbing capital, to reduce their risks and, in particular, trim their balance sheets as well as to pursue a policy of dividend restraint. The National Bank welcomes the increase in the big banks’ resilience achieved thus far, as well as the announced measures to further improve their capital situation. The consistent  BIS central bankers’ speeches  1  implementation of these measures is important for two reasons: First, leverage has remained high despite the improvement in the capital situation. Second, the risks in the environment – and thus the associated potential losses for the big banks in the event of a further escalation of the European debt crisis – remain considerable. Situation at domestically focused banks I would now like to turn to the situation at domestically focused banks. The risks associated with the environment in which these banks operate increased during the past six months. Indeed, the isolated signs of a slowdown of growth in the mortgage and real estate markets observed in the second quarter did not materialise in the third quarter. In particular, prices in the different segments of the residential real estate market continued to rise at a sustained pace. At the same time, growth in the mortgage loan volume was still considerably higher than GDP growth. Imbalances have therefore grown.

Ravi Menon: Smart regulation and sustainable insurance growth Speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Insurance Institute of London, London, 12 May 2015. *  *  *  Mr Stephen Riley, President of the Insurance Institute of London Mr John Nelson, Chairman, Lloyd’s of London Ladies and gentlemen, good afternoon. I wish to thank John for inviting me to speak to you today. It is a privilege to address members of this esteemed Institute, and a pleasure to do so in a heritage building of such architectural and historic interest. I have been to this building before. And my first thought as Lloyd’s Building came into view, along with its plumbing, stairways and lift shafts, was transparency. So it is apt that in the same spirit of transparency, I should make a couple of disclosures: •  one, I am not an actuary or an accountant, and  •  two, I am not responsible for Solvency II. But John has kindly assured me that the musings of a central banker and regulator from the Far East counts towards fulfilling your continuing professional development requirements. So for my speech today, I will offer an overview of MAS’ roles as central bank and integrated supervisor, our approach to regulating and developing the financial sector, and prospects for the insurance industry in Asia.
Neither could the securities be sold without further ado in order to realise the existing collateral. Under these circumstances, the market risk was transformed into credit risk. In the case of LTCM, the banks had made a proper credit assessment and scrutiny of their counterparties. The end result, as we know, was that the banks were obliged to take over the fund and contribute additional capital. Secondly, we were reminded that Value-at-Risk and similar assessments must be used prudently. Looking back, it can be said that too much faith was put in estimates that had been made while the sun 3  BIS Review 9/2000  was shining and which proved less watertight when it suddenly started to rain. The parameters on which risk calculations are based - standard deviations and correlations, for example - are usually estimated on the market’s historical performance together with some simple assumption - for instance a normal distribution - about the underlying pattern of probabilities. Shocks of the kind that occurred in the autumn of 1998 pulverise the conditions behind such calculations and make Value-at-Risk less meaningful as an indicator of the risks that actually apply. As with any innovative activity, there is an element of trial and error here that we must aim to tackle by developing new methods at the same time as we try to learn from mistakes.

So disturbances in credit and payment systems can be costly for society and the costs are not primarily the direct consequences that measures of support will have for government finances. The essential consideration instead is the costs that a collapse of credit and payment systems may entail indirectly in the form of decreased production and higher unemployment. When payments and the supply of credit do not function efficiently, the rest of the economy also suffers. That is the main reason why governments are more concerned about the bank sector than they are about other service industries. To appreciate what happens when credit and payment systems are disrupted, one can just take a look at what happened as a result of the financial crises that occurred around the world in the last two decades. There are, unfortunately, numerous examples that can serve as illustrations. The International Monetary Fund has estimated that since 1980, serious problems in the bank sector have arisen in three out of four of its 180 or so members. This has been case in the industrialised world, where one example is Sweden in the early-1990s, as well as in emerging markets. Bank capital bases relatively small There is a variety of factors that could be cited as possible causes of these disturbances. They include shortcomings in economic policy, inadequate supervision and, in many instances, poor risk management by the players themselves. But the roots of the problem go deeper than this. The basic issue is the financial system’s vulnerability to unforeseen events.
2  BIS Review 50/2002  The market’s response The market participants have already reacted by themselves. We have seen much self-evaluation in recent months. I am encouraged by how seriously these issues are being taken. The market is enforcing its own discipline. Corporate boards are re-examining their roles and taking a closer look at what is being done in their companies. Investors are demanding greater reconciliation between pro forma financial statements and generally accepted accounting principles. But this is not enough. The apparent breakdown of the checks and balances that served us reasonably well in the past has prompted debate about the need for tougher financial market rules. Potentially new rules need to be written. And when unscrupulous market participants or practices are revealed, authorities must come down on them with full force. To do otherwise is to do markets a disservice. Only strict reprobation will restore and maintain confidence that the rules are being enforced. Regulatory and supervisory bodies around the globe have begun to deal with the high-profile bankruptcies. In the United States, the Financial Accounting Standards Board is looking at proposals to determine when so-called special purpose entities should be consolidated on company balance sheets. The Securities and Exchange Commission has proposed new rules for more detailed and timely corporate disclosure. Major firms, in response to those demands, are changing their corporate reporting methods. There is the clear recognition of the need to eliminate potential conflicts of interest - where auditors are able to offer additional services.

The implication of these possible explanations is, if these exchange rate and commodity price effects ease as expected, or credit conditions become less tight, inflation will fall as the influence of the underlying demand and supply imbalance becomes the dominant influence. But an alternative and less reassuring explanation might be that the pricing climate has changed (following a lengthy period in which firms appeared to set prices in conditions of intense competition), suggesting that firms’ prices might respond less for a given degree of slack in the economy. The key conclusion I would draw from this is, that although from time to time criticised for too much reliance on one model, the MPC has in fact shown itself open to considering a range of interpretations over time, and is fully aware that different circumstances may point to different challenges. At present, neither the extent of excess capacity nor the impact of capacity pressures on inflation are easy to assess. The track record of the judgements we made in more stable times may well not be a good guide to the future. It therefore makes sense to look at a range of estimates both of the gap and of its effect in order to give some guidance to the range of likely economic outcomes. Implicitly, such a range is contained within the fan charts of GDP and of CPI inflation published quarterly in the Inflation Report.
Indeed, there have been serious discussions to try and reestablish exchange rate stability by again fixing their exchange rates, possibly through the adoption of the currency board regime. 1 Re-exports totalled $ billion in 1997, accounting for 85% of total exports of Hong Kong. BIS Review 19/1998  -2Economic Fundamentals 5. But obviously it takes a lot to establish credibility in a fixed exchange rate, or indeed any fixed exchange rate system. However, I believe that we have a highly credible fixed exchange rate system in Hong Kong. Our track record of exchange rate stability is an impressive one. This is against the background of sharp gyrations in the exchange rates of major currencies. The dollar/yen rate, for example, increased sharply in the mid-eighties to 263 in February 1985 before falling equally sharply over a short period to around 120 by the end of 1987, meanwhile triggering the worldwide stock market crash in that year. The sharp gyrations continued in more recent times, with the dollar/yen rate again falling to around 80 in April 1995 before increasing to 134 in January 1998. There was also the ERM crisis of 1992, which at the time brought sharp focus to the viability of fixed exchange rates; and there was the financial crisis in Mexico, which affected many emerging markets at the beginning of 1995. Then there is currently the worst financial turmoil in the history of Asia.

Lars Heikensten: The economic situation and monetary policy Speech by Mr Lars Heikensten, Governor of the Sveriges Riksbank, at the Swedish embassy, London, 20 September 2004. *  *  *  Thank you for the invitation to the Swedish embassy and for the opportunity to speak about the economic situation and Swedish monetary policy. It is important for the Riksbank to come to London occasionally to meet the participants in the financial markets that regularly follow the Swedish economy and our work. My intention today is to give a broad picture of my views concerning the inflation outlook in the years ahead. The starting point will be the most recent Inflation Report in May and the assessments in the press releases that the Riksbank has published thereafter. I will also discuss particularly some issues that have recently been touched upon in the monetary policy debate: oil price developments and household indebtedness as well as developments in residential property prices. Following my introduction I look forward to a lively discussion. International developments The Riksbank’s assessment in the latest Inflation Report in May was that international economic activity would continue to strengthen this year and during the coming two years. During the summer we concluded that there was reason to be somewhat more optimistic about economic growth this year. The high oil price was indeed judged to stifle growth somewhat, but not to such an extent that would derail the upswing. Developments have differed somewhat between various regions.
Where, for whatever reason - which may be a result of macro-economic mismanagement by the authorities themselves or a result of mismanagement by banks or other financial institutions - there is a threat to the stability of a sizeable part of the financial system as a whole, it is the national authorities ultimately that have to deal with it. BIS Review 66/2000  2  They can seek to reduce the risks of systemic problems originating in the financial sector in particular in a number of ways. Firstly, there is regulation or supervision of individual financial intermediaries which may, as here in Sri Lanka be undertaken by the central bank itself or by a separate financial supervisory agency as now in the UK. Financial supervision - including banking supervision - is a powerful instrument for preventing systemic financial disturbance, even when - as in the UK - the primary objective is to provide a degree of protection to the investors or depositors in individual financial intermediaries rather than to protect the system as a whole. But it necessarily has its limitations. The job of the supervisor in this context is essentially to set appropriate minimum standards for the authorisation and prudential conduct of financial institutions and to satisfy himself (or herself!) as far as possible that these standards are being observed. It is not the job of the supervisor actually to micro-manage the institution or the particular risks that it takes.

The safety net is not there to protect every individual institution that gets into trouble as a result of its own failings. Even where it is judged that there is a systemic threat - and a public interest in containing it - a judgement that will properly need to be openly justified at the appropriate time - last resort assistance like IMF assistance to its member countries - has to come with conditions. The purpose of last resort assistance is not to protect either the shareholders or the management of an illiquid, even less an insolvent institution, and the appropriate outcome may well be an orderly run-down or sale of the business. That may sound severe - even threatening to commercial bankers. But it is necessary both to ensure that moral hazard does not undermine the safety and soundness of the banking system and to maintain its competitive efficiency. Pulling all this together the “authorities” - governments, financial supervisors and regulators, and central banks - have a vital role in creating and sustaining a safer, sounder, banking system. But in the end it depends critically on you - the professional, commercial, bankers. Yours is a tough job at the best of times. It is especially challenging in today’s environment of rapid financial change as a result in particular of the inter-action between deregulation and increasing competition, globalisation and the revolution in information technology, which are constantly bringing new dimensions to your unenviable task of risk management.
Combined with high productivity growth, this has resulted in high corporate earnings and solid growth in employment. At the same time, wage-earners share of corporate value added has been reduced, from around 75 per cent at the end of the 1980s to 70 per cent at the end of the 1990s, and now  BIS Review 121/2007  1  stands at below 65 per cent. Solid productivity growth and high prices for export goods and deliveries to the petroleum sector have contributed to the reduction in the wage share over the past few years. The ample supply of labour has probably had a dampening effect on wage growth. Increased globalisation may have provided greater opportunities for Norwegian enterprises to relocate production to other countries if labour costs become too high. This probably places some restraint on wage demands among workers in sectors where enterprises have such opportunities. Historically, a high wage share has tended to be accompanied by low unemployment. Developments in recent years have provided the basis for strong growth in employment while the wage share has fallen. Is it possible to sustain the combination of low unemployment and a low wage share? First, it partly depends on whether the positive supply-side conditions are sustained. There is probably symmetry here. Should the terms of trade deteriorate, productivity growth slacken and foreign workers return to their home country, the wage share will increase, profits fall and unemployment increase. There is now a prospect of slower global growth.

2  BIS Review 121/2007  inflation expectations from becoming entrenched below the operational target of 2.5 per cent was one of the main reasons the interest rate was lowered to a very low level in 2003 and 2004, when inflation receded and approached zero. Low interest rates have stimulated demand and output and gradually led to the prospect of higher inflation, which we are addressing by increasing the interest rate. Consumer price inflation is still fairly low, but capacity utilisation is now at such a high level that inflation is projected to move up gradually to 2.5 per cent. Higher interest rates will contribute to a gradual decline in capacity utilisation, thereby preventing inflation from becoming too high. In the long term, monetary policy cannot influence real economic variables such as output and employment; it can only influence nominal variables such as inflation, the nominal interest rate and the nominal exchange rate. When monetary policy serves as an anchor for inflation expectations, it allows the interplay between monetary policy and other components of the economy to function. A good result can be achieved if the social partners take the role of "leader" and the central bank the role of "follower". Wage growth can then be determined in the knowledge of the monetary policy response. Flexible inflation targeting provides a fixed framework for monetary policy and gives a clear indication of how the central bank is to respond in different situations.