samchain/econo-pairs-v1 huggingface dataset:
An elevated level of reserve balances in the system, in and of itself, need not impede our ability to effectively control the level of short-term interest rates.8 Indeed, there are other central banks, for example Norway, that show that with the right tools and operating framework, it’s possible to maintain rate control despite a large amount of central bank reserves in the system. It appears likely that reserves in the U.S. banking system will be at unprecedented levels when interest rates are eventually raised. As of November 27, reserve balances in the system stood at nearly $ trillion, and the level continues to rise as the Fed’s asset purchases continue. In a recent study using median policy expectations from the Desk’s June 2013 Survey of Primary Dealers as a baseline scenario, staff economists at the Federal Reserve Board estimated that the Fed’s securities portfolio will peak at a level of $ trillion in mid-2014, with the corresponding level of reserve balances topping out at $ trillion at that time.9 The Desk’s most recent survey, from October, would put these numbers even higher, owing to dealers’ expectations for a larger and longer-lasting purchase program than they previously anticipated.10 This changing financial landscape therefore warrants a fresh evaluation of the operating tools we have to achieve the most effective and efficient implementation of monetary policy while operating with or exiting from a very large balance sheet.

The economy will start to recover in 2022 H2, and it will be appropriate to shift towards neutral monetary policy in order to maintain price growth rates in the future. According to the Global Inflation scenario, the acceleration of global inflation will become steadier by 2022. Elevated inflationary pressure and a further rise in inflation expectations will force advanced economies’ central banks to start monetary policy normalisation earlier. In particular, the US Fed might begin to raise its policy rate as early as 2022 Q2. Monetary policy normalisation in advanced economies will cause a decline in external demand and, consequently, a slightly lower growth pace of the Russian economy in 2023–2024, as compared to the baseline scenario. Furthermore, inflation will speed up in 2022, spurred by a rise in Russian companies’ costs and higher inflation expectations. Nonetheless, in 2023– 2024, inflation will edge down closer to 4% due to contracting external demand and a tighter monetary policy than assumed in the baseline scenario. The third alternative considered in the Guidelines this year is the Financial Crisis scenario. Its difference from the Global Inflation scenario is in how financial markets might respond to monetary policy normalisation in the USA. The rebound in the world economy and low rates caused spikes in debt burden, primarily public debt. This process still continues, although at a more moderate pace. It remains to be seen yet whether particular countries are capable of handling this debt burden.
If you’re not familiar with the Principles, I’m pleased to bring them to your attention today. BIS Review 27/2000  6  The Core Principles document brings together concisely all of the fundamental elements needed to carry out effective bank supervision - a remarkable achievement in its own right. Equally important, in my view, the document also balances the desire to set high standards for supervisory practices with the pragmatic recognition that not all countries are in the same stage of financial market development. As such, the Core Principles document is of particular importance for developing market economies, as it establishes a clear set of standards against which each country’s current approaches and progress can be measured. It should be emphasized that, in attempting to craft a document that would have the legitimacy, quality and flexibility to meet the needs of bank supervisors around the world, the Committee made a conscious effort to consult broadly throughout the various stages of the project, and particularly with supervisors from emerging market nations. Some might argue that such extensive consultation slows down the process and dilutes the final product. I strongly disagree. Only through this inclusive approach could we design comprehensive principles with broad applicability and support. Last October, the Basel Committee, in cooperation with the IMF and the World Bank, produced a follow-up document called the Core Principles Methodology. This report was initiated in response to requests from a number of countries for additional guidance on how to interpret and implement the Core Principles.

First, I would underscore the importance of good corporate governance, the basic elements of which include: •  independent and competent outside directors;  •  capable and experienced management;  •  a coherent corporate strategy and business plan; and  •  clear lines of responsibility and accountability. Together, these elements contribute to an overall operating process conducive to long-term health and prosperity. A tightly run ship with a disciplined crew led by an experienced and competent cadre of officers is far better able to survive a long journey that will inevitably confront sudden storms. Closely related to good corporate governance and critical to any banking institution’s well-being is a rigorous internal control apparatus. Of course, effective internal control systems have always been centrally important to sound banking. This point becomes clear if we consider for a moment their basic purposes: •  to provide reasonable assurance that the bank’s and its customers’ assets are safeguarded, that its information is timely and reliable, and that errors and irregularities are discovered and corrected promptly;  •  to promote the bank’s operational efficiency; and  •  to ensure compliance with managerial policies, laws, regulations and sound fiduciary principles. With these purposes in mind, it is clear that the success of any banking organization depends on the effectiveness of its internal control apparatus. And never has this been more true than today.
The preliminary model was further refined in a Validation Seminar attended by visionary and prominent leaders with proven track record of business performance excellence from both the private and public sectors. The Model forms the foundation to guide the philosophy and drive the design and delivery of ICLIF’s leadership development programmes. I wish to take this opportunity to express our appreciation to the industry luminaries who have given so much of their time in participating in the validation seminar for the ICLIF Leadership Competency Model. Let me share with you some of the interesting findings of the consultants in assessing our leaders based on the competencies identified in the Model. Among the positive findings of the exercise was the observation by the consultants that many of the leaders interviewed exhibited strong competencies in the area of focus, drive, execution, negotiations (and deal making) and entrepreneurial drive. These are all competencies resulting from high achievement needs and high achievement values. There is also a high sense of national pride and desire to enable Malaysia to meet the challenges of 2020. Participants also displayed a strong sense of performance drive for excellence. There are areas of competencies that, however, require further development. The review detected some degree of performance complacency by some respondents, as reflected by a lack of drive to achieve and the lack of desire to benchmark against the global best. Participants seemed quite satisfied with what they had personally achieved.

Zeti Akhtar Aziz: Global leadership development Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Official Launch of ICLIF Alumni Association and ICLIF Leadership Competency Model, Kuala Lumpur, 30 November 2004. *  *  *  ICLIF Alumni Members, Distinguished Guests, Ladies and Gentlemen, It is my great pleasure and honour to welcome you to the official launch of the Alumni Association of the International Centre For Leadership In Finance (or ICLIF) and the ICLIF Leadership Competency Model (ILCM). ICLIF Alumni Association It was just over a year ago that we witnessed the Official Launch of ICLIF on 28 October 2003. Within this period, ICLIF has already made considerable progress in meeting its objective to provide a more focused and coordinated approach towards the development of world-class leaders in the financial services sector in Malaysia and in the region. To-date, ICLIF has successfully concluded two sessions of its flagship Global Leadership Development Programme or GLDP, in addition to a Directors’ Forum and a seminar on Scenario Planning. Besides providing participants with an opportunity to learn from the “top thinkers” from worldrenowned institutions and industry practitioners and experts, one of the key strengths of ICLIF’s programmes lies with the unique opportunity for the participants to establish strong social and professional networking and build lasting fraternity bonds. The launch of the ICLIF Alumni Association has been designed to play this role.
Water supply is abundant, accounting for 45 percent of the total water resources of the Southern African region, thus providing investment opportunities for the supply of water for irrigation, home and industrial use. Investment in agriculture is important because the majority of our people in rural areas depend on agriculture for their livelihood and income. Thus, investment in agriculture will help reduce poverty, especially if it is directed at bringing into the fore small scale farmers in the production of cash crops, such as, tobacco, sugar and cotton. BIS Review 72/2006  3  In addition to increased production among small scale farmers, it will be of paramount importance to put in place strategies that will increase productivity among small scale farmers. Mining Mr. Chairman, the ongoing activities in mining suggest that the sector is poised to be, once again, one of the major contributors to the future growth of our country. It is expected that copper output in particular will soon reach and probably even exceed the mid-1970s levels. Increased output is expected from the existing mines and those under establishment such as Lumwana in North-Western Province and Konkola Deep on the Copperbelt. Exploration for other mining ventures has continued with high prospects for nickel mining in Southern Province. Although in the early stages increased employment will be created, the ability to absorb more labour in future will reduce as some mines employ more efficient and less labour intensive techniques in the production processes.

As I just mentioned, the impulse we will be getting from abroad in the next two years will be milder than the one of the last two. And as we have said in a number of Reports, we believe that the external risk balance is biased downward. However, we must also be clear that this external scenario finds the Chilean economy on the right foot. Our growth rates have substantially outperformed those of previous years, investment is the most dynamic component of expenditure and our country has been absorbing a significant increase in the workforce without a corresponding increase in unemployment, while wages continue to grow. Today’s lower level of inflation and its implications for the two-year convergence, not only allows adjusting the pace of monetary policy normalization, but also provides room to monitor and analyze the evolution of external conditions without the pressure of an imminent adjustment to the policy rate. Plus, there the traditional cushioning effect of the exchange rate float and a deep local capital market. Summing up, monetary policy is now in an expansionary position, with the policy rate that has remained low for quite a while. Although in our baseline scenario we believe that it will still be necessary to raise it in the next two years, we have also been clear about the convenience of taking a break in the coming months.
The reason for locating insurance and banking in the PRA is in my view that we have learned during the crisis that our job as prudential supervisors is to ensure that the public and users of financial services, including the corporate sector, can be assured of continuous access to the critical services on which they depend. Many financial services may be regarded as critical by their users, but some are distinctive because it is hard for consumers to replace their provider with a substitute without accepting unacceptable cost and loss. Insurers provide critical services to the public in terms of risk transfer and very long-lived savings contracts. This last point draws out that insurance is not a single homogenous industry – general and life insurance are very different activities – and we recognise that in our supervision. It would be unacceptable to the public to have access to risk transfer through, say home or car insurance, or professional indemnity insurance, to name but a few, withdrawn in a disruptive and unannounced way. In the same way, savings contracts that are long-lived and provided by life insurers, and are often an individual’s primary pension provision, are critical financial services that are difficult to replace without unacceptable cost. For me, there is therefore a common feature of banking and insurance in terms of continuity of access to critical financial services. This is not, however, the end of the story on the issue of why the PRA will regulate banks and insurers.

In contrast, a life insurer that enters run-off continues to collect regular premiums on its existing in-force life insurance policies. Moreover, it needs to continue to pay its obligations (e.g. annuities-in-payment) on the exact day contracted whereas a non-life insurer in run-off has some greater flexibility to pay claims to match its cash flow. Finally, a life insurer in run-off needs to honour contractual policy surrender rights. These features of life insurers draw out the difference in economic interest between near-term and far-term policyholders, and one who has a right of surrender and one who does not. Moreover as life insurers are making long-term promises to policyholders, they often seek to match those commitments dynamically, using short-term derivatives, and therefore rely on continued access to those derivatives and the willingness of counterparties to take such exposures to a firm in run-off. These derivative positions will not be more idiosyncratic like traditional insurance, but will be determined by the overall direction of financial market prices, giving scope for more system-wide problems. I described earlier the issues I see with more traditional With-Profit contracts. The issues I highlighted were not so much to do with definite features of the contract between the insurer and the policyholder but with the uncertainty around the contract itself arising from the substantial discretion afforded to the insurers’ management to determine final policy charges and returns.
First, this regulatory reform effort has, to my mind, moved the financial system onto a materially securer footing. That was essential, of course, given the serious risk of global banks sliding into a financial black hole back in 2008. There is no single metric that captures this improvement in banks’ resilience. One is that the equity capital of the global banking system has more than doubled to $ trillion since 2007. Another is that the five largest UK banks’ liquid assets are around £ billion higher than they were pre-crisis, a rise of more than 50%. A third is that the proportion of financial markets participants citing bank failure as the biggest risk to the UK financial system has fallen by an order of magnitude from its peak. 32 Second, are these new and higher prudential standards sufficient to prevent a repeat performance? Truth be told, we cannot know for sure. What is certain is that an academic debate still rages on this question. A couple of months ago, the Bank hosted a conference among academics and policymakers to assess progress on prudential standards. Many of the academics doubted whether sufficient progress had been made to protect against future crises. 33 The prudential bar, while higher, had still they felt been set too low. Whatever the right answer, I very much welcome this academic challenge. This challenge was sadly missing ahead of the crisis when prudential regulation was a niche academic issue.

First, it sets out the evidence base on the benefits and costs of the current shareholder-centric model of companies. Second, it makes some tentative suggestions for reform which might tackle some of these costs. There are possible remedies on the table. Part of the solution to the shareholder shorttermism problem may come from mobilising and catalysing what is at present a dispersed, and too often disinterested, long-term investor base. The falling share of institutional investors in equity ownership, together with the rise of passive investment strategies, has exacerbated the trend towards “ownerless corporations”. This is a particular problem in the UK, given its relative lack of block shareholding. 55 Under the auspices of the Investment Association, an Investor Forum has been set up following the recommendations of John Kay’s review. 56 And, internationally, an initiative by asset managers called “Focussing Capital on the Long Term” is seeking some of the same objectives. 57 Ultimately, however, it is simply too soon to say whether any of these initiatives will mobilise and catalyse long-term investors sufficiently to exercise leverage over company management in ways which support long-term value creation. A second, complementary strand would be to seek to reinforce and broaden the “purpose” of companies, to better reflect their broader societal role – their role in serving stakeholders plural (employees, customers, clients) as well as shareholders. Some companies have been able to do so voluntarily by defining clearly their societal purpose and sticking with it.
Second: Would it be possible for a central bank to assume the role of a professional investment manager? Third: How could this activity be organised within the central bank? Norges Bank’s Executive Board, under the chair of former central bank governor Kjell Storvik, chose to take on this task. The Bank solved the two other challenges by delegating management to a separate unit for investment management – Norges Bank Investment Management or NBIM. A key aim was to establish NBIM as a business unit with clear financial objectives. Eventually, Chinese walls were erected between NBIM and the rest of the Bank. NBIM does not participate in monetary policy deliberations and does not have access to the Bank’s work concerning other matters. 6  National Budget for 2011. BIS Review 145/2010  3  In winter 1997, Norges Bank wrote in a letter to the Ministry of Finance that the investment horizon implies that a substantial share of the Fund – no less than 30 per cent – should be invested in the international equity market. In the Revised National Budget for 1997, the Ministry considered this matter and set the allocation to equities at 40 per cent 7 . In the correspondence between Norges Bank and the Ministry, there is also support for the fiscal rule’s assumption of a real return of 4 per cent with an equity allocation of 40 per cent. In 1998, the Fund started investing in listed equity in 21 countries, all of them featuring a fairly well developed financial market.

Those working on the bill at the Ministry of Finance at that time were probably in doubt as to whether any petroleum revenues would ever be saved, and perhaps they also questioned the utility of such a fund. Initially, the fund structure was merely an exercise in accounting. Government petroleum revenues were deposited in the fund, but the entire amount was transferred back to the central government budget to cover some of the non-oil deficit. However, the Norwegian economy rebounded and transfers to the Fund started in 1996. The Fund has since acted as a buffer between widely fluctuating oil revenues and public expenditure. The decision regarding annual petroleum revenue spending can be made independently of the size of the revenues. Thus, the fluctuations in government petroleum revenues do not have an automatic impact on the Norwegian economy. The Fund also has a stabilising effect on the krone exchange rate because capital outflows increase when Norway’s petroleum revenues rise. The fiscal rule for petroleum revenue spending, which was adopted in 2001, states that the government may spend – as an average over the business cycle – the expected normal real return on the capital in the Fund over the central government budget. This return is estimated at 4 per cent. The rule ensures that the capital in the Fund is not drawn on unless the real return on the Fund is lower than 4 per cent. In this way, future generations will also benefit from the oil wealth.
Opinions in the Union presumably differ from time to time about the practical application of this commitment but the basic requirement is that policy focuses consistently on stability. The Riksdag has left the door open for Sweden’s participation in the monetary union at a later date and stated that in connection with such a move it can be relevant to join the European exchange rate mechanism (ERM). In this perspective, too, it is an advantage if the krona is more or less stable. Monetary policy in the euro area is to have the primary objective of price stability. We do not yet know just how the European Central Bank (ECB) will formulate its target but it is unlikely to differ from the norm that has applied in Germany since the mid 1980s. This means that inflation is not to exceed a medium-term level of 2 per cent. In practice, therefore, the differences in this policy field between the ECB and Sweden will probably not be so great as to have any real consequences for the exchange rate. With policy focused on price stability both in Sweden and in the monetary union, there should be good possibilities of a stable exchange rate between the krona and the euro. This is supported by the path of the krona relative to the German mark in recent years. As measured, for example, by the long-term interest rate differential with Germany, confidence in Swedish economic policy has been high since 1996.

A consistent implementation of this policy, with an inflation target, clarifies the rules of the game for wage formation. High wage increases are liable to boost inflation, which necessitates higher interest rates. The inflationary consequences of the wage increases can be modified if productivity growth is good, as has been the case in recent years. But at least a part of this productivity growth is achieved at the expense of jobs; this is one aspect of the process whereby higher labour costs generate stronger rationalisation and maybe also an increased capital input. In this way, too, and not just because the higher interest rates directly affect demand and employment, a rapid wage rise is liable to endanger jobs. Against this background, the outcome of the latest wage negotiations is better than in earlier years. Agreements for the next three years have been concluded at levels around 3 per cent a year. It has been said that this takes wage drift into account but that is probably not entirely the case. Instead one should no doubt count on wage drift averaging around 1 per cent. The average annual wage outcome in the period 1998–2000 would then be 3.5 to 4 per cent. This does still represent some downward shift in the rate of wage increases, which in turn assists the Riksbank’s task of ensuring low inflation. All else equal, we can allow ourselves a somewhat lower level of interest rates and a somewhat stronger growth of demand.