samchain/econo-pairs-v1 huggingface dataset:
Simon M Potter: Discussion of “Evaluating Monetary Policy Operational Frameworks” by Ulrich Bindseil Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the Federal Reserve Bank of Kansas City Economic Symposium “Designing resilient monetary policy frameworks for the future”, Jackson Hole, Wyoming, 26 August 2016. *  *  *  Accompanying charts can be found at the end of the speech or on the Federal Reserve Bank of New York’s website. My thoughts on implementation issues have been enriched by numerous conversations with colleagues, particularly around the current longer-run efforts in the Federal Reserve to examine implementation. Recent dialogue with Antoine Martin was particularly helpful in producing this discussion. Introduction: what do we still need to know to evaluate operational frameworks? Thank you for giving me the opportunity to discuss Ulrich Bindseil’s excellent paper, which builds on his considerable body of work in this field and provides an insightful discussion of monetary policy implementation. What makes Ulrich’s contributions notable is the unique combination of academic rigor and practical insights he brings to the topic. By distilling the key elements of his previous research into an accessible form, this article is a useful read for anyone who wants to gain a deeper understanding of the economics of monetary policy implementation, including practitioners of central bank market operations, central bank researchers, and academics.

As supervisors we do not think in terms of countries, but of banks’ business and risk profiles. Each bank operates differently and therefore has to face different problems; it would be unwise not to see them individually. BIS central bankers’ speeches  3
I am confident that the G20 Roadmap is the right approach to this coordination problem. We will, under the French leadership of the 2011 G20, pay due attention to the smooth implementation of this process. 4  BIS Review 93/2010

Exogenous changes  0.5  in firms’ pricing power are one example – so-called cost-push shocks. Shocks to the exchange rate, the  0 Source: Bank calculations. economy’s supply capacity, or commodity prices also  10  See Blanchard, O., and J. Galí (2007). "Real Wage Rigidities and the New Keynesian Model". Journal of Money, Credit, and Banking, 39(1), pp. 35-65. 11 See Broadbent, B (2013), “Conditional guidance as a response to supply uncertainty”, speech at the London Business School. 6  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches  6  Chart 2: … whereas after the financial crisis, the economy experienced a challenging monetary policy trade-off  have this flavour. 12  Because monetary policy’s  influence on inflation is predominantly an indirect one, via demand, in such circumstances inflation can only  Financial crisis and after  6  Inflation (%)  be controlled by delivering an opposing movement in aggregate spending. If something pushes up on  5  inflation directly, monetary policy can only bring inflation back down by causing a reduction in  4  spending via higher interest rates. The speed with 3  which this adjustment is delivered is determined by the monetary policy maker guided by their remit.
Very recently we informally polled ten leading financial institutions in London. Their forecasts for the dollar/euro exchange rate by the end of this year ranged from $ down to 90c. This is a considerably wider spread than the trading range already experienced and suggests a huge measure of uncertainty, to a horizon of only ten months. Of course, one might argue that this represents uncertainty over the dollar as much as the euro. Yes indeed, and I apologise for analysing things very much from a dollar base. Over time, all currencies have experienced considerable volatility - the dollar, the yen, the euro and its ancestors, sterling and so on. Yet in all of these, investors have been able to enjoy significant positive real rates of return over the long term. That may not be good enough for everyone: some seek short-term gains; others may be worried by mark-to-market volatility in the short term even if they are there for the long haul. But long-term investors will give considerable weight to the overall economic and monetary management of the economy. As I mentioned earlier, there are a number of aspects of the management of the Euroland economy about which perceptions from Asia may be somewhat sceptical. As for monetary policy, I would suggest that it is perhaps natural for outsiders to be rather hesitant in their assessments, in view of the new infrastructure for monetary policy, but as the ECB beds down one would expect confidence to grow.

But we do have the consolation of knowing that there is a good chance that those who have perpetrated or adopted those misperceptions may have lost a lot of money as a result - if they were brave enough to put their money where their mouth was. Perceptions of the euro I shall turn now to the euro. I would be deceiving you if I said that the euro, as seen from Hong Kong, enjoyed a particularly positive image at present. Arguably one could expect no better for a currency which has lost around 18% of its external value in little over a year, regardless of whether this was judged to be the result of the strength of the US dollar rather than any intrinsic weakness of the euro itself. It is worth noting, however, that the euro was launched at a time when the Euroland currencies were particularly firm against the dollar - having climbed, in the case of the Deutsche mark, by almost 50% since its low point in 1985. Against this background, and the widening of interest differentials in favour of the dollar in recent months, the direction of the euro’s movement is, with hindsight, hardly surprising. BIS Review 23/2000  2  The depreciation of the euro is of course a fact, and it is perhaps the only concrete basis for the scepticism that one hears being expressed about the euro.
I think it would be good if we introduced a structure for macroprudential policy that does not differ too much from those being introduced in other EU countries, as the financial markets are strongly integrated and a similar structure for macroprudential policy within the EU would  13  Here I am giving my personal views on the Financial Crisis Committee’s proposal. The Riksbank will present a consultation response later in the spring containing more detailed views and comments. BIS central bankers’ speeches  7  facilitate international cooperation. The need for international cooperation is based on the fact that measures introduced, or not introduced, on one country can often have consequences for the financial stability of other countries. As I mentioned earlier, it is extremely important to create a clear mandate and efficient tools for macroprudential policy in Sweden. I would like to have seen the Financial Crisis Committee present a proposal that provided a more active structure, and which was closer to the ESRB’s recommendation.14 For instance, it will probably often be unclear who should react to a risk that has arisen, and it will therefore also be difficult to hold an authority accountable for what it has done or failed to do. However, I am glad that the Financial Crisis Committee has now presented its proposal, as it provides an important contribution to the discussion on how macroprudential policy should be developed and organised in Sweden.

5  For a more detailed description of macroprudential policy, see for instance C. Nordh-Berntsson and J. Molin (2012), “A Swedish framework for macroprudential policy”, Economic Review, no. 1, Sveriges Riksbank, and my colleague Karolina Ekholm’s speech “Macroprudential policy and clear communication contribute to financial stability,” published on 30 March 2012. BIS central bankers’ speeches  3  focus for macroprudential policy is the risks in the financial system as a whole (see Figure 9). The supervision of individual institutions is, of course, also important to the stability of the financial system, not least as financial institutions are regarded as “systemically important”. But to capture the build-up of risks that could threaten the stability of the financial system – what are known as systemic risks – it is not enough to keep an eye on individual institutions. One needs to supplement this with a systemic, or macro, perspective. Macroprudential policy also requires appropriate tools. Let me discuss some of the macroprudential tools that could be useful to specifically manage the risks linked to house prices and household debt.6 Countercyclical capital buffers are one of the most discussed tools, and are a part of the Basel III international regulatory framework.7 The idea is to vary the capital requirements made of the banks; when there is strong credit growth, the requirements will be increased, while they will be reduced during financial stress, when there is otherwise a risk of a credit crunch.
The financial unrest will probably also contribute to Swedish households maintain a certain level of precautionary saving. The fact that it costs more for banks to finance themselves may also contribute to households and companies sooner or later facing dearer loans. But there is considerable uncertainty over how extensive the effects of the financial unrest and the US housing market will finally be. We therefore analyse an alternative scenario with weaker international growth in our Monetary Policy Report. Prospects for inflation and interest rates We are expecting inflation to rise fairly sharply next year (slide 12). This is partly connected to energy prices rising more rapidly. But inflation is rising even adjusted for energy prices. And the reasons are primarily that utilisation of the economy’s resources and cost pressures have increased. Moreover, there are signs that food prices will increase rapidly over the coming year. Inflation measured in terms of CPI will amount to around 3 per cent in 2008, according to our forecast. The measures of underlying inflation, CPIX, which I recently mentioned, will in our opinion rise from the current level to around the target next year. The differences between the measures are largely due to households’ mortgage expenditure increasing and to higher indirect costs. When the economic cycle enters a calmer phase, the CPIX will fall back to levels around 2 per cent, while the CPI will remain slightly higher. This is our assessment, given that we raise the repo rate in the way I described earlier.

The fact that an apparently national problem has global effects to the extent that we have seen is due in this case very much to the fact that the loans have been "repackaged" into fairly technically complicated securities and sold on to investors around the world. And the unrest that has arisen has largely been concerned with the fact that it is difficult to see who is bearing the credit risks, and to what extent. These events have had several effects. There has been a more general reassessment of risk in the financial markets. The general uncertainty has led to an increase in demand for liquid and safe assets such as government securities. The interest rate on government securities has fallen, while the unwillingness to take on risk has contributed to rising interest rates on  6  BIS Review 132/2007  loans and investments between banks; interbank rates (slide 11). But all in all, it nevertheless appears as though the financial turbulence has so far not had as large repercussions on the financial markets as, for instance, the Asia crisis in 1997 and the IT crash in 2000. What effects can we expect on the Swedish economy? Perhaps the most important effect will arise in that growth in the United States will slow down when housing investments there fall and households consume less. The lower demand in the United States to some extent slows down international economic activity and there will be a slightly slower increase in Swedish exports.
Of course, whether further consolidation actually takes place, and if so when, is for the players and the market to decide. But further opening up of the banking sector is inevitable. We have been negotiating FTAs with Australia and the US, and are very close to reaching agreement with both. Our FTA partners expect to be given greater access to our financial sector. The local banks must brace themselves for further liberalisation, by upgrading themselves and keeping pace with international best practices. Capital markets In the capital markets, the Stock Exchange of Singapore and SIMEX have demutualised and merged to form the Singapore Exchange (SGX). SGX is now listed and has expanded its product offerings to include single stock and bond futures, and exchange-traded funds. In the stockbroking industry, with the liberalisation of fees and opening up of access, commissions have shrunk. The brokerages have been consolidating, upgrading their capabilities and widening their service and product offerings. Now, your broker will not only buy and sell shares for you, but may also help you to invest in unit trusts or cash management accounts, or give you financial advice. But the restructuring is taking place in a very difficult bear market, and the process is not yet complete. From the point of view of growing the industry, the results of the liberalisation have been disappointing. There has been no post-liberalisation “Big Bang” in the local capital markets. This is partly the result of poor market conditions globally, and partly the way equities markets have developed.

Singapore has been included in the JP Morgan and Lehman Brothers global bond indices. Our challenge now is to sustain the growth in the local debt market. We need to work with market participants to broaden the debt markets’ investor base and improve swap market liquidity. But our most difficult problem is that our starting premise has yet to materialise. We had envisaged that as the region recovered, corporates and governments would again need funding, and this time their debt funding would be in the form of tradable paper rather than bank loans. This has not happened … yet. Wealth management Wealth management has been our most successful growth area. Since 1998, Singapore’s total assets under management have doubled, no mean feat in this climate. Singapore has overtaken Hong Kong in terms of discretionary assets under management. More players, ranging from large institutional fund managers to boutiques, have set up shop in Singapore. The local fund management community is now more diverse and covers a wider universe of investment styles, geographic foci and asset classes. Singapore as a financial centre In aggregate, we have made promising headway in a few fields, but Singapore still has not set itself apart decisively from other Asian financial centres like Hong Kong and Sydney. Southeast Asia’s predicament has a lot to do with this. In the long term, we have to rely on the region recovering its stability and vitality. But meanwhile we must do our best to differentiate ourselves.
On the one hand, it is tautological to say that crises are unpredictable, or else  2  It is out of the scope of this presentation to discuss the role of monetary policy in causing the crisis. As I have argued elsewhere (De Gregorio, 2010), the cause of the crisis was mainly financial fragility, while lax monetary policy played only a secondary role. Many countries, such as Chile or Canada, for example, had very expansionary policy before the crisis, and did not suffer a financial collapse. BIS Review 84/2010  3  they would never occur. History is plagued with crises. Moreover, crises have become more frequent in recent decades as compared with the Bretton-Woods period, although their severity and duration have not changed significantly (Bordo et al., 2001). Crises must be avoided, but the only way to make sure they do not happen is to eliminate financial innovation and development altogether, which we know is not a good prescription. Therefore, crises will still occur, and the role of policies is not to be the cause of them, but to increase resilience of financial systems and minimize their cost. 3 Of course, all these elements were absent in the global financial crisis and for this reason we need to devote more thinking to reforms. Although crises will continue to happen, we must not conclude that since crises are unavoidable, there is nothing we can do about them.

It is when an institution knows without doubt that its people will stay the course in these situations that it can truly claim to have achieved the ideal culture. 3/4  BIS - Central bankers' speeches  Before I end, I would like to congratulate AIBIM on the launch of Integrity Year 2023 and it is my sincere hope that all participants, whether in this room today or from your respective institutions, will benefit from a deeply beneficial and fulfilling programme planned for the rest of the year. Thank you and Assalamu'alaikum. 4/4  BIS - Central bankers' speeches
[3] Albertazzi, U., F. Barbiero, D. Marques-Ibanez, A. Popov, C. Rodriguez D’Acri and T. Vlassopoulos, “Monetary policy and bank stability: The analytical toolbox reviewed”, Working Paper Series, ECB, forthcoming. [4] Lang, J. H. and Forletta, M. (2019), “Bank capital-at-risk: measuring the impact of cyclical systemic risk on future bank losses”, Macroprudential Bulletin, No 9, ECB. [5] Budnik, K. et al. (2019) “Macroprudential stress test of the euro area banking system”, Occasional Paper Series, No 226, ECB, July. [6] Kok, C., Müller, C. and Pancaro, C. (2019), “The disciplining effect of supervisory scrutiny on banks’ risk-taking: evidence from the EU‑wide stress test”, Macroprudential Bulletin No. 9, ECB. [7] Behn, M., Daminato, C. and Salleo, C. (2019), “A dynamic model of bank behaviour under multiple regulatory constraints”, Working Paper Series, No 2233, ECB, January. [8] For a recent application of the 3D model see, for instance, Hoerova et al. (2018), “Benefits and costs of liquidity regulation”, Working Paper Series, No 2169, ECB, July. See also Mendicino, C., Nikolov, K., Suarez, J. and Supera, D. (2018), " Optimal Dynamic Capital Requirements," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 50(6), p.p. 1271-1297 and Clerc L., Derviz, A., Mendicino, C., Moyen, S., Nikolov, K., Stracca, L., Suarez, J. and Vardoulakis, A.P. (2015), "Capital Regulation in a Macroeconomic Model with Three Layers of Default," International Journal of Central Banking, vol. 11(3), pp 9-63.

Caleb M Fundanga: Financing for gender equality Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of the Financial Institutions exhibition in commemoration of International Women’s Day, Lusaka, 5 March 2008. * • • • • • • • •  *  *  The Honourable Minister for Gender and Women in Development The Country Coordinator of the United Nations System The Permanent Secretary, Gender in Development Division The Director, Environmental Council of Zambia Chief Executives of Financial Service Providers Heads of Non Governmental Organisations Invited Guests Ladies and Gentlemen  I am honoured this morning to address you at the launch of this important Financial Sector Exhibition by financial service providers, in commemoration of the International Women’s Day for 2008, under the theme “Financing for Gender Equality”. The purpose of this exhibition is for financial service providers to showcase how they are contributing to financing for gender equality. It also provides an opportunity for the various institutions to market financial products that can be accessed by women. A further objective is the sensitization of the financial service providers and indeed the public at large to the need for gender mainstreaming in access to finance. International Women’s Day began with the declaration of International Year for Women in 1975. Since then, many countries world-wide celebrate International Women’s Day to recognize the achievements of women without regard to national, ethnic, cultural, economic or political divisions.
During its short life-time the MPC has made changes in its procedures and remains open to the possibility of further improvements. But unnecessary tinkering would be a distraction from its main purpose. One does not have to go as far as Lord Falkland, who said in 1641 that “If it is not necessary to change something, then it is necessary not to change it”, to believe that, at least for the time being, major changes to the MPC are unnecessary. And if imitation is the sincerest form of flattery, then the Government can draw comfort from Michael Howard’s speech in March of this year when he argued that “Nor, given the importance of stability and continuity, do I think it right to propose any major changes in either the remit or the composition of the Monetary Policy Committee”. The fact that there is a broad, cross-party consensus on the objectives and broad framework of monetary policy is one reason to think that the stability we have experienced in the first five years of the MPC will continue in the future. 5. Conclusions  The idea behind the MPC was to take day-to-day politics out of monetary policy. It is now widely accepted that this was desirable. Macroeconomic policy in Britain had been much too exciting for comfort for most of the post-war period. In the 1970s, inflation averaged over 13% a year, and reached a peak of 27% in August 1975.

The rapid progress of information technology in recent years has brought new risk measurement models to aid in the measurement of market risk. The most widely accepted of these is the ”Value-at-Risk” model, called ”VaR” for short. VaR is the maximum loss that can occur in the value of a portfolio having a certain investment horizon under a certain probability. Since it is a simple and clear-cut concept, the VaR model is widely used for measuring market risk. It permits comparison of the market risk of different investment instruments, so that portfolio performance can be evaluated in terms of the risk undertaken. Especially for measuring  market risk to determine capital adequacy, this model has become a necessity in many countries and financial institutions. Another method widely used for measuring market risk is ”Scenario Analysis”. Scenario Analysis is a technique used to see how the value of a portfolio would be affected by various probable changes in market conditions. A last widely used method for measuring risk is the ”Stress Test” method. The Stress Test is used to estimate how the value of a portfolio would be affected by large, unexpected fluctuations in the markets, such as have been observed during the global crisis which is still with us. Though similar to Scenario Analysis, the Stress Test mainly aims to predict the maximum value that would be lost by a portfolio under certain extraordinary market conditions. The success of this method depends on successfully predicting market conditions.