samchain/econo-pairs-v1 huggingface dataset:
Richard W Fisher: ¡Ándale Pues! Having made the tough choices, Mexico stands to benefit from reforms and navigate Fed’s tapering with relative ease Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Association of Mexican banks, Mexico City, 5 March 2014. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, Luis [Robles], for that kind introduction. It is my great pleasure to be here tonight as the guest of the Association of Mexican Banks and reunited with my colleagues from Banco de México. I recently returned from Europe, where I met with leaders from the European Central Bank and the National Bank of Switzerland. I am very grateful to Governor Agustín Carstens for his hospitality. The Federal Reserve Bank of Dallas has enjoyed a long history of cooperation and consultation with the Banco de México. I like to call Banxico our sister bank. Agustín himself spent some time at the Dallas Fed when he was a young man, and we take pride in playing this small part in his accomplished career. For many years, the Dallas Fed’s El Paso Branch has held joint board meetings and informational exchanges with the Banco de México regional board of directors in Ciudad Juárez. Now our branches in Houston and San Antonio are holding similar joint meetings with their Banco de México counterparts.

And Governor Carstens’ predecessor, Guillermo Ortiz, is an advisory board member of the Dallas Fed’s Globalization and Monetary Policy Institute. The Federal Reserve Bank of Dallas and the Banco de México enjoy a unique and mutually beneficial relationship. As Guillermo and Agustín well know, there is also a personal dimension to the Dallas Fed’s relationship with the Banco de México. I grew up in Mexico City in the 1950s, attending elementary school not far from here. Spanish was my first language in school. To this day, I have many friends in El Norte who say I speak better Spanish than I do English, although that may be due to my Texas accent. Either way, I always proudly tell them, “¡No hablo español; hablo puro mexicano!” This evening, I will do my level best to speak to you in español mexicano rather than in inglés texano. Unprecedented U.S. monetary policy As you surely know, and as I am happy to report, the Federal Open Market Committee (the “FOMC”), charged with crafting U.S. monetary policy, is winding down its extraordinary “quantitative easing” phase. The Great Recession demanded extraordinary policy, and the FOMC responded. Led by Chairman Bernanke, the FOMC met the financial crisis head-on in September 2007 and by the end of 2008 had lowered the federal funds rate to zero from 5.25 percent. Once the full force of the financial crisis hit, after the failure of Lehman Brothers, the federal funds tool proved insufficient.
Corporate credit markets are stretched. Finance is cheap because bond investors seem to be less concerned about the safety of their investments. So in this speech, I want to consider the degree to which these markets have become stretched, and how well conditioned the wider economy is for that stretching. Will it cause a strain? 1. When do stretched asset prices (not) strain the wider economy? Before we turn to the world today, I’d like to frame the issue. I start from the point that asset prices are not - horror of horrors - always a reflection of the rest of the economy. 3  They can be stretched above levels supported by ‘fundamentals’ as investors squeeze the compensation they get for the risks they take. When they later adjust, some investors have a bad day and others a good one, but the ups and downs of asset markets don’t have to be a problem for the wider economy. For stretched asset prices to strain the economy, I think one or more of the following channels needs to be active. All share the common theme of the wider economic body not being fit enough to cope. 3  See Claessens and Kose (2017) for a review. 3  All speeches are available online at www.bankofengland.co.uk/speeches  3  i)  The level of debt in the corporate sector comes to rely on stretched asset prices.

- In this regard, we must closely monitor long-term nominal interest rates and act accordingly in order to maintain favourable financing conditions, in accordance with our communication in December. - These long-term interest rates developments must also be analysed alongside developments in the rest of the yield curve. In this respect, in tandem with the aforementioned developments, we have observed a steepening of the risk-free yield curve, which may reflect market expectations of an earlier start to the process of reducing the accommodative stance of our monetary policy. Given that medium-term inflation expectations, as I have already said, remain far below levels consistent with our aim, and high uncertainty persist on the evolution of the economy, these developments underline the importance of avoiding premature increases in nominal interest rates that may jeopardise the convergence of inflation towards our mediumterm aim. - We must also continue to focus on heading off cross-country financial fragmentation, which hinders the smooth transmission of monetary policy and the achievement of our inflation aim. In addition to analysing changes in interest rates on sovereign debt, this means that, among other things, we need to pay special attention to developments in bank lending conditions, given the particular importance of the bank-based channel in the euro area for the financing of households, firms and the self-employed. In this regard, 9  sovereign risk premia have so far remained very subdued.
In this regard, we welcome the announcement of the People’s Bank of China in August regarding the introduction of a pilot scheme allowing eligible entities in Hong Kong to make use of their RMB funds to invest in the Mainland's interbank bond market. The launch of this scheme has opened up a channel for offshore RMB funds to invest on the Mainland. Market responses to this scheme have been very positive. 30. As I mentioned at the beginning, Mainland China is now the second largest economy and the single largest source of new economic activities in the world. The increasing use of RMB in the international stage – although that will be a gradual process – will have profound implications on the global financial landscape in the years to come. 4  BIS Review 153/2010  Concluding remarks 31. So, the trends are very clear. Now is a critical time for market players, including banks, financial institutions and asset management companies, to prepare themselves well for the unprecedented opportunities presented by these two important trends in China. 32. Before I conclude, I would like to say a few words about the Linked Exchange Rate System in Hong Kong. As the offshore RMB business continues to develop in Hong Kong, there are views that the RMB may undermine the status of the Hong Kong dollar. Some have even said that it would be natural to consider pegging the Hong Kong dollar to the RMB instead of the US dollar. We do not agree with these views. 33.

At the time, we pointed out that almost 70 per cent of the Swedish national income is comprised of wages. The entry of the euro into Sweden is therefore largely determined by Swedish households. Why would they choose the euro over the krona? There is little incentive to do so, as long as their wages are used for goods, services, mortgage interest payments and other items denominated in kronor. The rest of the national income is the operating surplus generated in companies and that is used to increase the owners' wealth or paid out in dividends. A large number of these companies used have Swedish owners, who cannot be assumed to have any motive for changing over to the euro in the reporting of their balance sheets. Given this, it is reasonable to ask why we had a debate on the repression of the krona at all. I myself believe that it stemmed from the over-enthusiasm of some EMU supporters. They were quite simply convinced that Swedes would not be able to resist the attraction of the euro. As an EMU supporter, I can of course see the advantages of the euro, but to believe in a general, spontaneous transition would be going too far. This meant that the idea of a 'euroisation' was also a bad argument in the debate prior to the start of the EMU. If the Swedes are to be won over to the idea of the EMU, we should be emphasising the facts.
It should be added, however, that agreements are still pending in many cases and the degree of wage drift in various industries also has to be considered. Still, the probability of the report’s alternative scenario with higher inflation should have decreased. Rent costs account for 11 per cent of the CPI and are the largest main item. For 1998 and 1999, final agreements are in place for about 65 and 25 per cent, respectively, of the stock of rented dwellings. They give average increases of just over 2 per cent for 1998 and almost 3 per cent for 1999. The 1998 figure is somewhat lower than expected. There are signs, moreover, that rents for 1998 may be re-negotiated, which has some downward implications for the assessment of inflation this year. No reason at present to alter the repo rate All in all, then, in the period of relevance for monetary policy, global economic development will probably be somewhat weaker than estimated earlier. For this reason the outlook for inflation is somewhat more favourable. To some extent, stronger competition from imports has a similar effect. Somewhat lower inflation in 1998 may also result from a lower increase in rents. For the construction of monetary policy it is equally important at present to consider the altered spectrum of risks. The probability of an outcome for wages that is appreciably above the main scenario has diminished. At the same time, the effects of the Asian crisis are highly uncertain. Much depends on how the crisis is managed.

Implementation of the investment policy  Our investment policy has not fundamentally changed with the new Act. The monetary reserves continue to constitute core assets for monetary policy. They allow the National Bank to exert an influence on the Swiss franc exchange rate in exceptional situations and are available as an internationally accepted means of payment in a crisis situation. This presupposes a minimum degree of liquidity of these assets. Moreover, monetary reserves enhance the credibility of monetary policy and foster confidence in the Swiss franc. The security of these investments and growth of the monetary reserves in step with the development of the Swiss economy is an important consideration in this context. This is why monetary reserves ought to provide an adequate return, while taking into account the monetary policy restrictions. It is the aim of our investment policy to strike an optimal balance between the criteria of liquidity, security, and return. We assess and regularly review the National Bank’s liquidity requirements - i.e. its need for easily realisable and hence easily accessible assets - on the basis of our experience and taking due account of the current situation. Given the Bank’s large portfolio holdings in US dollar and euro government bonds, the liquidity requirements are currently more than met. This creates a certain amount of leeway for investing in instruments that are less liquid but generate a higher return. The investment criterion “security” must be seen in the context of the monetary reserves as a whole.
These are likely to include the cash flow effects of interest rate changes on interest payments and receipts and the effects of asset prices on wealth portfolios. For example, when asked about whether lower interest rates have benefitted them, around a third of the UK public – and more than half of those aged over 50 – suggest not. 17  Within that group, a large majority –  around 80% – focus only on the negative effects of lower rates on their savings income. This is only one of the channels through which monetary policy works, albeit the most immediate and observable. It is far harder for the public to take account of the other channels, many of them neither immediate nor observable, through which a relaxation of monetary policy might benefit them. This includes the effects of looser policy in boosting wages and jobs. Not taking account of these channels can give a distorted lens on the impact of policy on the economy at large, on inequality and on individuals’ personal finances. To gauge fully the distributional impact of monetary policy, then, we need to capture as many as possible of its transmission channels, direct and indirect, immediate and slower-moving. It is only by considering all of these channels in combination that we can then properly evaluate the impact of monetary policy on the income, wealth and welfare of people and the distribution of these effects. It is to those we now turn.

It raises the prospect of LIBOR continuing under a new methodology as “synthetic LIBOR,” at least in some currencies. But the FCA itself has warned that whatever it does will not be an alternative to firms’ transition efforts, and that any synthetic continuation of LIBOR will still not be deemed to be a representative rate.10 The FCA has said that any action it takes will be focused on contracts that cannot feasibly be amended by the parties to mitigate the effects of LIBOR cessation. It will not provide a solution for new contracts. And even at that, it will not necessarily address every LIBOR setting or currency. For those it does reach, users will be giving up control of the economics of their contracts to whatever the new methodology may be. In short, if you rely on these new powers to take care of your LIBOR contracts, you may not get what you want, and you may not like what you get. The message is clear: you must still do everything you can, right now, to anticipate the end of LIBOR and take control of your own risks. https://www.newyorkfed.org/newsevents/speeches/2020/hel200929  2/6  30/09/2020  The LIBOR Countdown Has Not Stopped - FEDERAL RESERVE BANK of NEW YORK  In the European Union, there is draft legislation that is similar in approach to the ARRC’s proposed New York law.
But the effect of this is that all Hong Kong dollar against US dollar transactions will then be conducted with the HKMA, thus on the one hand killing off the foreign exchange market in Hong Kong and on the other hand generating much greater volatility in interest rates as the liquidity in the banking system changes along with each and every one of such transactions done with the HKMA. 43. Second is a variation of the first alternative by introducing a spread around the fixed rate of 7.80 amounting to, say, half a percent or one percent or whatever, by which the HKMA would passively buy or sell US dollars against the clearing balance of the banking system. This alternative is also transparent and allows an exchange rate range within which the foreign exchange market would function freely. But it creates identifiable targets for currency attacks which is undesirable. Every time the exchange rate trades near the upper or lower limits, perhaps even only for seasonal reasons, there may be speculative position taking against those limits. 44. The third alternative, which is the current practice, is to leave the foreign exchange market alone under normal circumstances but for the HKMA to establish its passive presence only when exchange rate instability is detected, for example, when there is a currency attack as in the case of October last year.

It is one of the most robust interbank clearing systems in the world, and is a very important piece of financial infrastructure contributing greatly to financial stability in Hong Kong. But in running the system, the HKMA cannot avoid lending to the banks at the end of the day to effect what are really residual interbank payments. But in providing such liquidity money is created in the form of a larger overnight balance of the banking system that appears not to be directly matched by an increase in the holding of foreign reserves by the HKMA. BIS Review 19/1998  - 11 40. However, the manner in which this “last resort” liquidity is provided does not involve any real conflict with the discipline of the currency board system. Lending through the LAF is organized largely through a repo arrangement of paper issued by the HKMA22. Such paper, in the form of Exchange Fund Bills and Notes, are liabilities of the HKMA which are fully backed by foreign currency assets. The HKMA runs an Exchange Fund debt programme involving the issue of debt instruments of maturity from three months to ten years. The proceeds of such issues have largely been switched into foreign currency assets. In any case, with a real time payment system, overnight lending in the term of repos through the LAF, though essential, is infrequent and the money is to be repaid the first thing in the following morning.
These trustees have a legally binding obligation to exercise all of their rights as majority owner of AIG in the best interests of the U.S. taxpayer, with the proceeds of any ultimate sale of shares going directly to the Treasury of the United States. Efforts to reduce risk at AIG Financial Products As has been widely noted, the activities at AIG's Financial Products unit (FP) were a principal cause of the losses that drove AIG to the brink of bankruptcy in September 2008. Risks of substantial magnitude – including derivatives positions with a current total notional value exceeding one trillion dollars – still remain in force at FP, meaning that not millions but billions of taxpayer dollars are potentially at stake as the orderly wind-down of FP continues to progress. The winding down of these risk positions at FP is a delicate and complex matter with systemic implications for the U.S. and global economy. Our oversight of this riskreduction process remains a top priority.

Charles L Evans: Monetary policy normalization – if not now, when? Speech by Mr Charles L Evans, President of the Federal Reserve Bank of Chicago, at the BMO Harris and Lakeland College Economic Briefing, Plymouth, Wisconsin, 8 October 2014. *  *  *  Introduction I would like to thank Lakeland College for inviting me to speak this morning. It’s always refreshing to reach directly into the communities in our District to gain valuable personal insights into what is going on in the economy and pick up information that sometimes get missed in dry reports and statistics. Opportunities such as this also give me a chance to talk to you about the state of the economy, the progress we have seen in repairing the damage from the Great Recession, and how Federal Reserve policy fits into the picture. Of course, to gauge progress, we must measure economic performance. It’s natural for us at the Federal Reserve to do so against the objectives that Congress has set out for us – what are known as the Fed’s dual mandate. Namely, the Federal Reserve is charged with fostering financial conditions consistent with full employment and price stability. Needless to say, the past seven years have been very challenging and we have struggled to achieve both our employment and inflation objectives. To accomplish our goals, the Federal Open Market Committee (FOMC) cut its traditional policy tool, the target federal funds rate, essentially to zero – what economists refer to as its zero lower bound, or ZLB.
This new technology has not only created a demand for new or improved payment services, it has also provided payment service providers with new channels through which their services can be supplied. The growing number of mobile payment services is an example of this. A number of challenges for the banks Banks have dominated the retail payments market for a long time and they still have a strong position. They are the “factories” of the retail payments market. They are usually BIS central bankers’ speeches  1  large scale and sell standardized payment services. However, they have to meet a number of challenges. One challenge relates to the fact that banks operate on a vast scale providing payment services that can be used in a broad variety of situations. In an environment that quickly changes and where tailor-made payment solutions are increasingly demanded, it is a tall order to meet such a variety in demand. We should also remember that the core business of banks is financial services including payment intermediation. They are not technology firms even though they are heavy users of technology. Innovation in payment services is usually not a question of inventing a wholly new payment process from account to account. Rather it is taking some service that is already out there and offering a new way of accessing that service. As an example, many mobile payment services and electronic wallets are just new ways of initiating card payments. A recent example is Apple Pay.

This development, whether we like it or not and depending on who we are, is a reality that we have to relate to. In this structural development in the payment market, there will be several challenges for commercial players, as well as for those of us working on the public side. Evolvement is seldom a gradual and smooth process. This gives rise to a number of interesting issues that we have the chance to address here today. It also explains the conference agenda. Three topics for the conference The first topic concerns the current development. How do the different market players view the evolving ecosystem? Are the banks hurt or do they benefit from the entry of non-banks as a result of an increase of payment traffic through their systems and between their accounts? Are all market players a big happy family where everyone cooperates with everyone else or is it razor-sharp competition, a dog-eat-dog market? Who, if anyone, is gaining the upper hand? I’m looking forward to learning more about this type of issue in the first session. The second topic concerns the regulatory environment. The central role of the retail payments market for social welfare ensures that the authorities will want to promote an efficient outcome. How to balance cooperation and competition? How to ensure a level playing field and how to protect consumers? For example, is the current supervision 2  BIS central bankers’ speeches  sufficient or will we have to sharpen it in the future?