samchain/econo-pairs-v1 huggingface dataset:
But we need to be careful not to expect too much from this new set of policy instruments, especially at the outset as the newly formed Financial Policy Committee learns about the use and effectiveness of its policy tools. Just as monetary policy does not attempt to eradicate the business cycle, so macroprudential policy is unlikely to be able to eradicate fully credit cycles. The creation of the Financial Policy Committee with the responsibility for conducting macroprudential policy represents a major advance in responding to the missing instrument problem. Ensuring the stability of our banking system will contribute greatly to our future prosperity. But macroprudential policy is not – nor is it intended to be – the solution to all problems associated with financial markets and the international monetary system. Unless or until effective instruments can be found to manage these other issues, vulnerabilities will remain, to which monetary policy will need to stay vigilant. Monetary policy So what does all this imply for monetary policy? The job of the Monetary Policy Committee is to hit the 2% inflation target. Judged against that objective, we might not appear to have done a very good job recently. CPI Inflation stood at 3.2% in October. Over the past 4 years, inflation has been above target for 39 of the 48 months and has averaged almost 3%. And inflation is likely to remain above target throughout 2011, elevated by the increase in VAT to 20% at the beginning of next year.

I would like to thank you very much for your attention. I will now hand over to my colleague, Dewet Moser, who will provide more detailed information about the latest developments on the money and foreign exchange markets.
We of course aim to be a more sensible and reasonable prudentist, but the question of ease of exit for our patients has nonetheless become more pressing through time. A well-functioning and competitive market is one in which firms can enter and exit easily. Our competition objective leads us to pay particular attention to this, significantly more I would say than prudential regulators without such an objective. I have frequently bored this audience with the very long list of things we have done to encourage entry, particularly into retail and SME banking markets given the competition issues in them. I will resist the urge to do this again but confine myself to making the simple point that in the 8 or so years since its creation the PRA has authorised 61 new banks, of which 28 are really de novo UK banks, because I think these figures speak for themselves. We have, however, said and done less on ease of exit. By “exit” here we mean the point at which a firm becomes unviable and can no longer sustainably meet obligations to customers using its own resources. While this often ultimately ends in winding-up proceedings, outside of fast failures there is much that can be done beforehand to “ease” their passing1. A reliably safe exit process is a vital corollary of ease of entry, as it allows us to be more accommodating to new entrants.

Hence the Committee has come to the view that, by and large, it is better to wait until the publication of the minutes when a fuller view of issues and views can be provided. That is not to say that press statements will not appear in future, but to stress that their purpose is limited to explaining a decision that might be unexpected, irrespective of whether that is a change or no change in rates. On the whole, the minutes have been successful in creating a wider understanding of the issues discussed by the MPC, and have a devoted, if small, following. The Inflation Report, which pre-dates the MPC, has a broader objective in setting out a comprehensive view of the current state of the economy, and describing the outlook for inflation in terms of a forecast over a two-year horizon. The Committee puts great weight on explaining the forecast in terms of probabilities. Hence it has adopted the famous coloured fan charts for its forecasts for both growth and inflation. But there remains some confusion about the role of the forecast. With the advent of the MPC, the tensions between explaining nine individual views and presenting a coherent account of the Committee’s view of the economy have complicated the production of the forecast. The Inflation Report now contains an explicit description of differences of view among the Committee in respect of both the central projection and the risks to the forecast, as well as the “best collective judgment”, or majority view, of the outlook.
But monetary policy cannot solve deeper structural problems or lift growth potential of the economy. That needs to come from real progresses that increase productivity and relax supply-side constraints. Sure, demand stimulating can buy time by cushioning the economy from short-term economic shocks. But this may possibly delay necessary adjustments of the economy to longer-term challenges. For example, keeping interest rate too low for too long and keeping exchange rate undervalued, beside encouraging risk taking and storing up financial instability problems for the future, may also temper incentives for businesses to improve efficiencies, and may slow the reallocation of capital and labor to more productive uses. In the context of Thailand, one of the most important structural issues facing the Thai economy at the moment is that of the labor shortage. Through our business contact and recent surveys, the labor shortage has scored one of the top concerns by both domestic and foreign businesses operating in Thailand. Underlying causes of labor shortage include the demographic change and education and skill mismatch. Clearly, there is little monetary policy can do to solve this supply bottleneck. It can help foster macroeconomic stability conducive to business investment, but most of the efforts to address supply-side impediments still need to come from a broader and more balanced set of economic policies including fiscal, industrial, technology, and labor market policies.

The Community of Practice enables us to tap into a reservoir of knowledge and expert resources to explore new opportunities and ideas, and strengthen existing collaborations to take the financial education agenda forward. As FEN continues to grow, we hope to further expand the Community to provide thought leadership and strategic insights that will benefit all FEN members and partners in our joint efforts to raise the level of financial literacy in Malaysia. On this note, let me thank everyone again for taking the time to share your perspectives today. I very much look forward to the discussions ahead. Thank you. 3/3  BIS central bankers' speeches
In addition to the use of CCPs, triparty repo 9 has become more important. Triparty repo accounted for 11% of all repo transactions in 2012 (up from 9% in 2010). I will come back to CCPs and triparty repo later on, but would first like to say some words on collateral and haircuts. Collateral of course is intended to hedge default risk, while haircuts are usually seen as being intended to hedge the risk on that collateral. In times of market stress however, large and sudden margin increases can create self-reinforcing, pro-cyclical spirals of increasing weakness, exacerbate market swings and oblige market dealers to provide collateral to  7  See ECB Money Market Survey: http://www.ecb.int/pub/pdf/other/euromoneymarketstudy201212en.pdf? 4261e943bbcfec98572319740bda877b  8  A CCP is an entity that interposes itself between the buyer and the seller of a repo, thereby reducing counterparty risk for both seller and buyer as long as the CCP itself is well diversified and well governed. 9  Under triparty repo, a central securities depository (CSD), an international CSD or a custodian bank, for example, acts as a facilitator between the buyer and the seller of a repo. The triparty agent handles the related collateral management, including valuation and substitution as well as re-use of the collateral with a central bank where possible. BIS central bankers’ speeches  3  support secured transactions just when it is most costly to do so. Two examples come to mind.

First, as independent clearing agents, CCPs are well positioned to offer effective protection against counterparty risk through the application of consistent margin requirements to a wide range of counterparties and through  10  See T.V. Dang, G. Gorton, and B. Holmström, “Financial Crises and the Optimality of Debt for Liquidity Provision,” working paper, November 2009. 11  Speech by Benoît Cœuré, at the joint ECB-MNB conference on “Cost and efficiency of retail payments: Evidence, policy actions and role of central banks”, Budapest, 15 November 2012. https://www.ecb.int/press/key/date/2012/html/sp121115_2.en.html. 4  BIS central bankers’ speeches  multilateral netting and risk sharing. Second, CCPs also provide enhanced transparency for the markets they serve, which in turn facilitates appropriate risk management and may also help to reduce excessive leverage. Third, as a result of multilateral netting, CCPs may also free up collateral. 12 Overall, provided that it is well-managed and in line with applicable regulatory and oversight requirements, a CCP can be expected to guarantee trade execution under a wide range of market conditions, including extreme or exceptional scenarios. This supports trading also at times of distress when uncertainty and risk aversion may disrupt activity and exacerbate volatility in markets. Given the benefits of central clearing for market resilience and financial stability more broadly, the ECB welcomes the overall increase in the share of transactions that are cleared through CCPs. It also supports the execution of repo transactions via CCPs.
5 / 11  BIS central bankers' speeches  By introducing proportional regulation, we envision that it will stabilise small banks and enhance the solvency of their business models. I would like to highlight that while proportional regulation limits the risks that small banks can take on, but they will be subject to simpler regulation. This will ensure a fairer competitive environment. The second innovation we also announced a year ago here at the congress is the transition to a new bank resolution mechanism and the creation of a fund for banking sector consolidation. We are now ready, both from a legal point of view and in terms of management, to apply the new bank resolution mechanism. We hope that, as the market progressively clears and there is improved early detection of problems, there will be more cases where it is more beneficial to try to recover banks’ solvency than simply revoke their license. Moreover, the new bank resolution mechanism itself could promote the development of competition in the banking sector: consolidation will allow relatively large banks to return to the market. We are currently observing the lowest competition rate among the largest banks. Thus, we have made progress in two of the three major objectives we announced at last year’s congress. The third objective we spoke about last year was establishing qualitative supervision over financial groups – we have prepared a draft bill that is being discussed in the government. We hope this innovation will be introduced next year.

This stems in particular from their internal transformations, which rely in large part on the development of open-platform IT systems and on greater use of IT outsourcing, especially via the cloud. The public health crisis has significantly amplified this exposure: the widespread use of remote working has been accompanied by a massive roll-out of new collaboration tools and new software. This (sometimes hasty) deployment of third-party software and new methods of labour organisation has amplified the overall vulnerability of the sector. The need for vigilance is being even further heightened by the fact that cyberattacks are evolving constantly and becoming increasingly sophisticated. On a technical level, this phenomenon can in part be explained by the diffusion of “turnkey” hacking tools and a general increase in computer skills. On an economic level, the huge financial rewards to be gained from attacks is leading to a surge in the number of potential hackers. This dual trend has taken cyber-risk into a whole new dimension: at the company level, it represents a major operational risk, while at the level of the financial system, it has now become a systemic risk. B) Digital innovation in the financial sector offers new opportunities for efficiency gains, but also carries risks. These innovations, especially the use of DLT, have the potential to enhance the functioning of market infrastructures and payment systems, notably by speeding up transactions, reducing the number of intermediaries and lowering costs.
Thus, the ability to compete is no longer based on access to raw materials of land, capital and labour. It will demand much more. It will depend on how these resources are exploited. The new environment thus calls for greater focus on building capabilities. The new environment also presents increased uncertainty affecting the level of preparedness. In addition, under an increasingly more uncertain environment, the traditional approach can no longer be applied. Making sound strategic decisions under uncertainty requires a different approach. In this case, understanding the range of possibilities and the ability to perform under different circumstances becomes important. Knowledge and speed becomes the essence in this new environment. The speed of access to knowledge therefore needs to be continuously enhanced. Smart partnerships becomes highly relevant in this new economic order. Tremendous benefit can be gained from collaboration and partnerships. Such collaborations in this new economy needs to extend across borders. Distinct efforts need to be made to prepare for this new economic age. The strategies have to be developmental. High fliers that do not develop capabilities will not be equipped for the long-term. Investment, therefore, has to be made for the future. Among the key strategies will be the continuous investment in building the capabilities and capacity, setting the performance standards and promoting strategic alliances. This has to be achieved with a clarity of the goals. This is particularly important in an environment of intense short-term pressures.

Another area in which there is significant participation of women is the services sector which has now become one of the most important sources of growth for the Malaysian economy projected to expand by 7.7% in 2008. Ninety percent of womenowned SMEs in Malaysia are in fact in the services sector. Some of these activities are also developing in the informal sector. As, the formal economy in Malaysia continues to prosper, there is significant scope to integrate the informal sectors of our economy with the formal sector. Deliberate actions to integrate the informal economy into the formal economy will give this segment of society increased opportunities. As part of the efforts to promote greater engagement of women in the modern economy and their increased participation in the formal economy, significant initiatives have been taken to raise the level of financial literacy among  2  BIS Review 37/2008  women. Greater empowerment can be achieved through the resulting greater financial independence. In many countries, the success of various national and international socio-economic reform programs have resulted in women becoming an increasing part of the formal economy. Through the concerted efforts of women's rights movements, economic policy intervention and gradual shifts in cultural norms, women today have more opportunities for education, careers and political representation. This has allowed for increased participation in the economy. Bringing women into the economic mainstream would contribute to the economic potential of the nation.
The unemployment rate has decreased close to its record lows, while the number of vacant jobs has approached its record high. To fill the new jobs, we need either an inflow of labour migrants, or a redistribution of the current labour force among regions, industries, and enterprises. This process is objectively slower than the return of the available labour force to work during the period of the recovery growth. A higher competition for specialists between employers is promoting the conditions for an increase in wages. It is essential that a rise in wages is consistent with the growth of labour productivity in the relevant sectors. Otherwise, it will entail higher costs which enterprises will pass on to consumers, and the rise in nominal wages will be ultimately absorbed by inflation. We keep our GDP forecast unchanged for the next year and further on. An additional tightening of monetary policy aimed at returning inflation to the target is coherent with the positive contribution of external demand and investments from the National Wealth Fund made to aggregate demand. GDP will increase by 4–4.5% this year and by 2–3% further on, which is in line with the sustainable growth path. Monetary conditions have changed only slightly after the September meeting. An increase in market rates following the rise in the key rate currently has only a limited effect on them. This is largely associated with the impact of higher inflation expectations.

Euro adoption and Banking Union For a non-euro area country the issue of participating in the Banking Union is intrinsically linked to that of euro adoption. After the crisis broke out, all non-euro area EU countries in Central and Eastern Europe with floating exchange rate regimes, as well as Bulgaria, shifted to a wait-and-see approach as regards euro adoption, even though, in most of them, the Maastricht criteria were already fulfilled or within reach. This state of affairs may appear paradoxical, given that, shortly after these countries’ accession to the European Union, their euro adoption target dates were very ambitious, despite the scant progress at the time in fulfilling the Maastricht criteria – 2008 in Hungary, 2008/2009 in Poland, 2009/2010 in the Czech Republic, 2010 in Bulgaria and 2014 in Romania. None of these deadlines were met. Currently, virtually all new Member States outside the euro zone lack a euro adoption target date, which is indicative of a substantial shift in approaching the euro changeover as a whole rather than their inability or difficulty to comply with the reference values of nominal convergence. How did this change come about? This shift in approach occurred amid euro adoption benefits becoming less obvious, to which added the increasingly evident costs. This is also reflected by the Flash Eurobarometer, which indicates a significant decline in the number of those who believe that adopting the euro is beneficial for their country.
FT: What more should they be doing? CN: They should finish the work they have started and reach the goal of convincing all market players that this is done and the financial system is fully repaired. FT: But do you think doing too little is riskier than doing too much? CN: I would say there are two risks. Doing too little is a risk. Doing too much is a risk. If you trigger these Ricardian effects and actually trigger a reduction in the spending propensity of consumers, then of course, the result would be worse. FT: Would you put the emphasis on putting the regulating framework and only discuss other measures if there is time address other issues, as Axel Weber said yesterday? CN: The regulatory framework was identified at the summit in November by G20 heads as a very important thing to give back confidence to all market players and citizens in the financial system and the economy. The heads [of government and states] set out a road map on  BIS Review 29/2009  1  which we have since been working on in various working groups. This holds true. Of course there are things that can only be implemented over the next cycle because I hope there will be things that are designed to be counter-cyclical and to provide for cushions in good times and help the financial system and therefore the health of the economy in the low part of the cycle.

I recognise the importance of the efforts that Germany has made. FT: Your plans for a central clearing house for derivatives have provoked controversy in London, where this is seen as a continental grab for business to pass though LCH.Clearnet and people are unconvinced that you need to have this lender-of-lastresort, central bank function. CN: For me, the argument is very simple. If you really want to have a safe system you really need these clearing houses to have the possibility of extensive access to central bank liquidity. I think that is the only way to ensure that in times of stress, when you have eventually defaults of counterparties, you can manage the liquidity in a smooth fashion. Having said that, no central bank would accept large-scale access to central bank liquidity without having the oversight. FT: But market participants say that even after the Lehman collapse, they still managed to unlock a lot of these trades without having to resort to central bank liquidity. CN: Well, the fact that it went well doesn’t mean that it will always go well. It may depend also on the type of instruments that you are clearing. We have the feeling that it may be different for, on the one hand, fixed-income instruments and, on the other hand, derivative instruments. But this is a long-standing position, it is not taken especially vis-à-vis London. FT: What sort of model of European capitalism will emerge after this economic crisis? CN: We will probably return to a more organised, ruled, economic system.
The good news is that sustained monetary policy tightening by major central banks has begun to break the momentum of rising inflation. The bad news is that inflation remains elevated. The longer inflation remains elevated, the greater the risk that inflation expectations become unhinged. If inflation expectations rise, monetary policy would have to be tightened even more to restore price stability. It is important that monetary policies remain tight. In Singapore, monetary policy remains tight. The MAS has just announced maintaining its current policy stance following five consecutive rounds of policy tightening. 1/3  BIS - Central bankers' speeches  Maintaining an appreciating path for the nominal effective exchange rate of the Singapore Dollar means that monetary policy will continue to have a dampening effect on inflation. Imported inflation is already negative and core inflation has peaked and is projected to decline over the second half of 2023, towards 2.5% by year-end. But it is too early to declare victory. MAS will remain vigilant to any signs of a resurgence of inflation. Even as we remain vigilant on our current challenges, let us not ignore our longer-term imperatives. I will highlight two such imperatives for China and Singapore: financial market connectivity and co-operation; and green and transition financing. The CCI Financial Summit has been a key platform for financial co-operation between Chongqing and Singapore. Since its inception in 2015, the CCI Financial Summit has connected more than 2000 policymakers and industry leaders from ASEAN and China, to exchange ideas and to explore new areas for cooperation.

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