samchain/econo-pairs-v1 huggingface dataset:
This naturally served to temper the degree of exuberant risk-taking. Partners or managers in a bank were in for the long haul, with their investments and family wealth tied into the firm until retirement. So it was not just their next year’s bonus that was at risk. This evident “alignment of interest” between the bank owners or managers and the bank’s customers and creditors clearly helped promote trust. 8. That said, although some US investment banks only moved from the partnership to public ownership model in the past 25 years, it is the case that other commercial banks have been structured as public joint stock banks with limited liability since the 19th century. So if limited liability has existed for two hundred years, in at least commercial banking, with the attendant potential “agency” risks (i.e. shareholders with limited skin in the game and managers with relatively little capital invested), what else has been at work to create the problems which so vividly surfaced in the Global Financial Crisis? What has changed: bank management 9. First, bank employees’ time horizons have shifted. By this I mean that in the past employees, for a variety of reasons, tended to be much more “stable” in the sense of their ties to a given employer. An employee might join a bank, work their way steadily up through its ranks and then, on retirement after 30 or 40 years of service, receive a pension from the bank.

This is Statutory Instrument 32 now revised and re-named SI 55 on the Monitoring of Balance of Payments. Ladies and Gentlemen, as the name of the SI suggests, the aim is to “monitor” and not to “control”. There has been much public debate on this subject matter which seems to suggest a public misunderstanding of the intentions of the SI. Some quarters have gone so far as to link the issuance of SI 55 to the earlier issued SI33 as amended through SI78 (Currency Regulations) and concluded that Government is introducing exchange controls. BIS central bankers’ speeches  1  Managing Director, Distinguished invited Guests, Ladies and Gentlemen, allow me to clarify that SI33 was issued with the primary intention of reinforcing the use of Kwacha, which legal tender, for all domestic transactions. This is in line with practice in most countries around the world. The SI has is no way intended to stifle business. The initial Monitoring of Balance of Payments regulations were initially issued under SI 32. When the Government issued SI 32, Bank of Zambia embarked on an exercise to seek the views of the financial system players, the business community and the public at large. Arising from these stakeholder engagements, it became clear that some of the provisions of SI 32 would impede the smooth flow of business. It was also evident that the timeframe within which stakeholders were supposed to prepare for the implementation of the SI was not adequate.
Jiří Rusnok: The future of monetary policy - what can we see as the dust has settled? Opening remarks by Mr Jiří Rusnok, Governor of the Czech National Bank, at the High-Level Economic Conference, Prague, 16 June 2019. * * * Ladies and gentlemen, dear guests, I wish you a good morning. It is my pleasure to welcome you all to this high-level conference on “The Future of Monetary Policy: What Can We See as the Dust Has Settled?” hosted by the Czech National Bank. This conference is organised as part of this year’s celebrations of the 100th anniversary of the introduction of our national currency – named the koruna – in 1919. Before I give the floor to the distinguished speakers, let me first make a few remarks that will set the stage for the upcoming event. During the past 100 years, our currency and the overall economic situation of our country has enjoyed times of economic prosperity, but also some more difficult periods. This alternation between good and bad times applies elsewhere. Before the outbreak of the Global Financial Crisis (GFC) in 2008, it seemed that monetary policy had triumphed. Inflation in advanced countries and elsewhere had decreased to low and stable levels. The goal of price stability had been achieved. Central banks were using standard tools with well understood transmission mechanisms. The outbreak of the Great Recession suddenly changed this perspective. The GFC brought significant economic slack and deflationary tendencies to many countries. In response, central banks started using unconventional tools.

On the other hand, the experience with models based fully on rational expectations sometimes shows that certain aspects or policy implications are at odds with what is considered reasonable. One example is the forward guidance puzzle, i.e. the unrealistically large responses of inflation, long-term rates and output to the announcement of the future path of interest rates. Therefore, we as macroeconomists want to reconsider the assumption of superrational agents and replace it with something more realistic. The second session on Friday will be devoted to two papers that may challenge our ideas about the economy and the way we think in terms of our usual models. It is always extremely useful to listen to new concepts and visions and to rethink our current approaches. Discussing thoughtprovoking and stimulating papers is the only way to avoid rigidity in ideas and opinions. Rigidity that will – sooner or later – lead to wrong attitudes and decisions. I believe that good policymaking will always benefit from cutting-edge research. I would therefore like to thank the participants of the high-level policy panel, the presenters and commentators in the individual sessions, and all other participants for coming to our event. Ladies and gentlemen, thank you for your attention. I wish you all an interesting conference, fruitful discussions and an enjoyable stay in Prague. 2/2  BIS central bankers' speeches
The growth in international capital flows is the result of greater financial liberalization and sophistication in markets around the world, the rise of institutional investors such as mutual and pension funds, and growing financial innovation and intermediation, especially in derivative products. We all know that capital movements help growth through a more global efficient allocation of resources and bring new knowledge and technology to emerging economies. 4. On the other hand, international capital flows can be very volatile in nature, with the tendency of reversing direction when there is the slightest hint of risk, whether it is in the conduct of macroeconomic policies or concerns over the fragility of the financial sector. Capital flows now drive the balance of payments more than trade flows. Portfolio shifts operate on the basis of market expectations of risk, return and liquidity. A high level of arbitraging, such as the borrowing of funds from one market to invest in another market, leads to contagion effects. Losses in one market therefore result in sales in another. This is a risk that should be addressed not only by those who are now under the process of capital liberalization, but also by the whole international community. Global markets mean global contagion. This is no longer a uniquely Asian problem. 5. Let us now consider the recent Asian market turbulence in the global context. Until recently, Asia enjoyed the benefits of the high global liquidity, and recorded admirable levels of capital inflows, as driven by the high global liquidity in G-3 economies.

As Chairman Greenspan said recently, "in retrospect, it is clear that more investment monies flowed into these economies than could be profitably employed at modest risk". 8. The strong Asian growth would have continued but for the fact that global competition in external trade has emerged with newly industrialized and export-oriented economies with cheap labour, such as China, India, Latin American and Eastern Europe. The failure of central planning has brought at least three billion new workers and consumers into the global market. These new markets began to benefit from the growing trade liberalization and inflows of foreign investments, thus putting greater pressure on the markets of the earlier “tigers” of East Asia, leading to a widening of their current account deficits as they continued their investments in infrastructure and real estate. Issues in Asia 9. If we look more closely at the situation in Asia, the economic fundamentals remain intact. Asia has been the fastest-growing region in the world, recording growth rates of around 5%-9%. Asian economies have low inflation rates and exchange rates were stable until recently. Current account for the region as a whole is broadly in balance, while the fiscal account, excluding Japan, is in surplus. Asia has exceptionally high savings rates of above 30% of GDP. Official savings, in terms of foreign currency reserves, were even higher. In Asia, 70% of the inflows contributed to reserve accumulation. As a result, Asian central banks are now holding about 40% of the world’s foreign exchange reserves.
Some of the disadvantages of unilateral adoption could be reduced by negotiating a bilateral agreement with the anchor country providing for central bank liquidity facilities for the domestic banking system, a share in seigniorage revenues, renewal of banknotes and coin, and participation in monetary policy formulation. Such an arrangement would somewhat resemble euro area membership. But it could be difficult to obtain such a commitment from another country, and there is no precedent for it. At all events, it is likely that such an agreement would be conditional upon giving the anchor country and its central bank a say in the domestic financial system regulatory framework and allowing it to participate in domestic financial supervision, as the historical origins of financial supervision are in central bank liquidity facilities and lending of last resort. In that case, a bilateral agreement of this type would entail relinquishing considerable sovereign powers, even more than in the case of euro area membership. 8  BIS central bankers’ speeches  1.6  Flexible exchange rate and improved framework for demand management and the financial system  As has already been discussed, Iceland’s experience of independent monetary policy and a flexible exchange rate has been mixed, to say the least. Monetary policy has not been effective enough, and more often than not the exchange rate of the króna has been a source of shocks rather than a shock absorber.

Adopting an exchange rate peg and a deviation band in an international collaboration with other countries could prove more propitious, however. Such a policy would be more credible because it would be supported by the actions and credibility of the other countries. The Bretton Woods exchange rate system, which was in place from the end of World War II until 1973, is an example of this. The difference, however, was that most participating countries also had capital controls. ERM-II, on the other hand, is an example of an exchange rate targeting system based on international cooperation and unrestricted movement of capital. It works because of the ECB’s credibility and its obligation to intervene, and because it is defined as a temporary arrangement with a clear exit path towards the euro area. The markets are thus not tempted for an unlimited period by a commitment to a peg that they can speculate against. A currency board has the same advantages as a conventional exchange rate peg in that, in the long run, average inflation should align with that in the anchor area (see Chapter 18). Because a currency board is based on a pledge enshrined in law or even the country’s constitution – a pledge to convert the domestic currency to the anchor currency at a predetermined exchange rate – volatility vis-à-vis the anchor currency disappears. Because the pledge is more stringent than that implied by a conventional unilateral peg, it can also be more credible.
As such, a key lesson from the financial crisis is the need to expand the range of instruments available to policymakers, so they are better equipped to ensure the resilience of the financial system. This missing instrument problem provides the backdrop to the Government’s announcement earlier this year that it intends to create a new policy committee in the Bank – the Financial Policy Committee – which will have responsibility for conducting macroprudential policy. In 2010, quantitative easing was entered into the Oxford Dictionary of English, along with chillax and defriend (don’t ask!). I predict that 2011 may be the year of macroprudential policy. The legislation determining the precise tools and objectives of macroprudential policy is still to be enacted. But as the Governor recently emphasised, the over-riding objective is to ensure the resilience and stability of the banking system. 4 If successful, macroprudential policy will represent a significant advance. As we have seen repeatedly through history and across countries, banking crises come hand-in-hand with deep and costly recessions. Promoting the resilience and smooth functioning of the financial and banking system in bad times as well as good would contribute greatly to our future economic stability. But it would be wrong to conclude from this that macroprudential policy is likely to solve the missing instrument problem entirely. That is for at least three reasons. First, macroprudential policy is not the instrument that will solve the problem of global imbalances.

8 But that does not mean that equity-financed booms and busts cannot have sizeable macroeconomic consequences via other channels, such as misallocating resources, wealth effects and their impact on confidence. In the 5 years  4  King (2010). See also Tucker (2009) and Haldane (2009). 5  Bean (2010). 6  IMF (2010). 7  See Tucker (2009). 8  See Mishkin (2008). BIS Review 161/2010  5  following the dotcom bust, GDP growth in the US averaged almost two percentage points lower than in the preceding 5 years; this despite a very aggressive easing in monetary policy. Third, as Claudio Borio of the Bank for International Settlements and others have stressed, actions necessary to preserve the resilience of the banking system may not be sufficient to prevent credit cycles altogether. 9 A much-studied example of this comes from Spain. Since 2000, Spain has had a system of dynamic provisioning whereby banks had to put aside more capital as they increased lending. This increased the resilience of the Spanish banks, but it did not prevent a large run-up and subsequent crash in house prices in the Spanish property market. If – and it is a big if – macroprudential policy could be used to prevent such credit cycles it could potentially have even greater benefits for our economy.
Against the above-mentioned developments, monetary indicator analysis confirms controlled inflationary pressures originating from the domestic economy. Money supply annual growth was 12.2% in April, staying close to its historic trend. Monetary expansion reflected the accumulation of liquidity in the banking system, revealing the households’ preferential behaviour towards saving. Our assessments point out that monetary expansion is compliant with the private sector’s demand for real money, thus indicating controlled monetary-related inflationary pressures. The contained behaviour of the private sector about spending and investing is reflected also in a low demand for bank lending. Annual growth rates of lending to the private sector ranged 10%–12% in the four first months of the year, on average, only 2 percentage points higher than a year earlier. The business  2  BIS central bankers’ speeches  demand to cover liquidity needs was their main driver for loans, while lending to households increased by low rates. Developments in financial markets speak of low risk premiums and liquidity. Short-term interest rates in the inter-bank market stayed close to the key interest rate and demonstrated contained volatility. In the primary market, government securities yield surged in the last three months, in response to a higher demand of the public sector for funding. Nevertheless, their curb remains lower in comparison with a year earlier, pointing to more favourable financial conditions in the economy. Looking ahead, assessments and projections of the Bank of Albania suggest continuation of positive growth in the upcoming period.

Ardian Fullani: Recent economic and monetary developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the press conference on the Monetary Policy Decision of the Bank of Albania Supervisory Council, Tirana, 29 June 2011. *  *  *  Today, on 29 June 2011, the Supervisory Council of the Bank of Albania reviewed and approved the monthly Monetary Policy Report. Based on an analysis of Albania’s latest economic and financial developments and following discussions on their performance outlook, the Supervisory Council of the Bank of Albania decided to leave the key interest rate unchanged at 5.25%. The Supervisory Council holds that the actual monetary conditions are appropriate for meeting the inflation target and for continuing to stimulate the economic activity. Let me now proceed with an overview of economic developments and main issues discussed at today’s meeting of the Supervisory Council. *** Annual inflation pointed to 4.2% in May, remaining close to preceding months levels. Under higher foreign prices pressure, the prices of “processed foods” and “non-food consumer goods”, including oil, were the main contributors to inflation rates. In the meantime, the seasonal effect of increased domestic supply of fruits and vegetables is reflected in a lower contribution of the “unprocessed food” to inflation. The rise of some administered prices and the effect of higher excise tax rates for some goods continued to provide a constant, but positive, contribution to annual inflation.
There is no scope for any mechanical adjustment of asset prices or bubbles. The central bank's reaction will not be stable but shift with its judgment and, counter to substantial parts of the literature, I do not believe that it is productive to discuss these issues directly in terms of the central bank's reaction function, for instance as modifications of a Taylor rule (Svensson 2003b, 2005). Asset-price movements and asset-price bubbles may directly threaten financial stability and cause the financial-stability constraints on monetary policy to bind. Thus, the central bank may want to respond to asset price developments that increase the risk of financial instability in the future. Again, in many realistic situations, the difficulty in making such judgments will be very great and there will be insufficient information for taking such preemptive action in many cases. Now, is there any reason to modify this view of monetary policy and financial stability given the experience of the financial crisis so far? Let me approach this question by asking what the causes of the financial crisis are, what the role of monetary policy is in causing the crisis and whether a different monetary policy was warranted and could have prevented or reduced the size of the crisis. 4.

One important lesson from the financial crisis is that financial factors may have a very strong and deteriorating effect on the transmission mechanism, making standard interest-rate policy much less effective. This motivates more research on how to incorporate financial factors in the standard models of the transmission mechanism used by central banks, and a rapidly increasing volume of such research is now being produced by academic and central-bank researchers and presented at an increasing number of conferences on financial factors and monetary policy. Important questions include how potential output and neutral real interest rates are affected by financial factors and financial distortions (Curdia and Woodford 2009, Walsh 2009), and what impact financial factors have on the general equilibrium effects of  6  BIS Review 112/2009  alternative policy-rate paths on inflation and resource utilization forecasts. 11 Before such extensions to the modelling framework are operational, policymakers and staff have to improvise and apply unusual amounts of judgment on the effects of the financial crisis on the transmission mechanism. Even with much better analytical foundations concerning the role of financial factors in the transmission mechanism, there will of course, as always, be considerable scope for the application of good judgment in monetary policy.
Replacing missing prices in this way is usually referred to as imputation. The total weight in the CPI for the products where prices are imputed in this way is not particularly large; it amounts to just under 3 per cent of the total weight of the CPI, see Figure 2. The percentage of imputed prices is at present much higher in other parts of Europe. Figure 2 shows the aggregate weight for the product groups where imputation has been necessary in total for the euro area and the larger euro-area countries. The statistics refer to the harmonised index for consumer prices, the HICP.3  2  See the press release and the material presented at an extraordinary meeting in the Consumer Price Index Board on 1 April. 3 The HICP was developed by Eurostat, which is the EU’s statistical body. The measure was designed to facilitate international comparisons of inflation. 3 [6]  Figure 2. Percentage of imputations in the HICP 4 Per cent  Source: Eurostat  What do the many imputations abroad entail for the quality of the statistics? The conclusion in a current working report written by two world-leading researchers in this field is that the principles recommended by international organisations lead to underestimation of the rate of inflation and overestimation of the real increase in consumption.5 However, this is probably no major problem for Sweden, as the percentage of prices imputed is relatively low. The problems could be much greater for other countries, and therefore for international comparisons.

SPEECH DATE:  17 June 2020  SPEAKER:  Deputy Governor Henry Ohlsson  VENUE:  riksbank.se  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Monetary policy during the economic crisis* The economic crisis the world economy is now experiencing is the deepest for many decades. Both demand and supply have declined substantially around the world. Economic policy faces major challenges. Sweden, which is a small open economy, has been severely affected by the reduced economic activity in the world around us. Naturally, we have also been affected by how international economic policy to deal with the crisis has been formulated. I will in this speech highlight three challenges that monetary policy has faced during the spring. These challenges have by no means disappeared, we will continue to deal with them. The first challenge has been that the financial markets function less smoothly during severe economic crises. This has been an important base for the Riksbank's monetary policy during the spring. Monetary policy aims to attain the inflation target. A second challenge at present is that the inflation statistics are difficult to interpret. For instance, there are no prices for many goods and services because there is quite simply no economic activity on these markets. Monetary policy must also be forward looking. Under normal circumstances this means that monetary policy is formulated according to forecasts of future economic developments.