samchain/econo-pairs-v1 huggingface dataset:
It is clear, however, that the ambitions of most countries still fall short of the requirements in the Stability and Growth Pact. This is certainly attributable in part to the economic slowdown, with Italy as the clearest example. But it is also notable that the ambitions for budget consolidation are now lower than before the move to Stage Three. The relatively good growth during 1998 ought to have left room for budget consolidation in many countries but it was not used and in certain countries the structural deficit has actually increased. The Ecofin Council has in fact criticised a number of countries, including Germany, France, Austria and the Netherlands, for the low level of ambitions in their stability programmes. In Sweden, the budget position looks comparatively healthy. Our fiscal policy is likewise less restrictive than before but the structural deficit has been turned into a surplus that is now growing and the ambition is still to achieve a budget surplus of 2 per cent of GDP on average over the business cycle. At the same time it should be underscored that some variation in the objective across countries seems reasonable. The degree of fiscal readiness — and thus the requisite size of the surplus — depends on a number of factors. One is the cyclical sensitivity of government finances and another is the level of government debt. It is then reasonable that a country like Sweden has a larger public sector financial surplus than a country where the automatic stabilisers and government debt are smaller.

Even if the development of inflation in one country may conceivably disturb the path for the union, that country cannot be required to tighten its fiscal policy as long as it complies with the Stability and Growth Pact. 5  BIS Review 76/1999  Secondly, at present there is thus no mechanism whereby a fiscal adjustment could be spread over the participating countries. This is also a problem because the implementation of the Pact indicates that there is a risk of this contributing to a procyclical budget policy. To date, the Pact’s surveillance process has focused on countries with a budget deficit close to the limit. There is nothing remarkable about that: this is where the problems are most apparent and the risk of failure — with problems for the credibility of the Pact as a whole — is most acute. But there is also the risk of the Pact having a procyclical effect. Countries that are close to the maximum deficit on account of weak activity are obliged to follow a restrictive line, while those with good activity and a surplus do not need to tighten their policies in this way. This problem has arisen because the Pact was actually constructed so that it only functions properly when all the member states have established the necessary margins. That is still not the case. For the euro area as a whole it would presumably be best in the present situation if the countries with high activity were to tighten their policies even more.
We call our system PayNow; Thailand calls theirs PromptPay. MAS and the Bank of Thailand have agreed to work together to link PayNow and PromptPay. The aim is to enable someone in Singapore to send money to someone in Thailand, and vice versa, using just their mobile phone numbers – instantly, securely, and at any time of the day. Talent and Research To sustain our FinTech efforts, we need a strong pipeline of talent and research capabilities. We are pleased to announce that MAS and the Massachusetts Institute of Technology (MIT) have agreed to enter an R&D collaboration in FinTech. This will enable our local FinTech talents to work alongside world-class researchers at the MIT Media Lab to come up with technology solutions to real-world use cases. They will run pilots using distributed ledger technology, cryptography, quantum computing and big data, artificial intelligence, and machine learning. One area where we want to make a concerted effort is data analytics and artificial intelligence. MAS is launching a $ million Artificial Intelligence & Data Analytics Grant. This is part of the $ million Financial Sector Technology & Innovation Scheme. The new grant will support the adoption and integration of AI and data analytics in financial institutions. 3/9  BIS central bankers' speeches  Just as important, it will be used to help professionals in the financial sector to up-skill and adapt to the use of these new technologies. Conducive Regulation One of the most critical pieces that we must get right is regulation.

Just in the last few years, global MNCs have set up more than 30 FinTech innovation labs or research centres in Singapore. The FinTech start-up space has become a lot more vibrant. More than 400 FinTech enterprises have set up base in Singapore. We have start-ups experimenting with new ways to pay, save, invest, buy insurance, and plan for retirement. No innovation ecosystem is complete without physical spaces to facilitate experimentation and collaboration. Last year, we saw the launch of LATTICE80, Singapore’s first FinTech innovation village, occupying two whole floors of 80 Robinson Road. Well, the entire building at 80 Robinson Road will now become a FinTech innovation hub. It will be named 80RR – that’s 100,000 square feet dedicated to housing FinTechs, right in the heart of the financial district! Open Architecture A Smart Nation needs an “open API economy.” APIs are the “connectors” that allow systems to talk to one another, enabling service providers to harness information from multiple sources and produce holistic solutions for customers. MAS has been encouraging financial institutions to develop and share their APIs openly, so that they can work with other service providers to give customers a richer and more seamless experience. We started the ball rolling last year. With the Finance-as-a-Service API Playbook, banks have a common guide to identify and develop APIs. And with the Financial Industry API Register, FinTech start-ups have a one-stop shop to explore the open APIs that have been made available.
The suggestion made in some quarters that the MPC has slavishly followed the inflation target in recent years – that it has been fixated with inflation at the expense of growth and employment – is simply at odds with the facts. Based on the MPC’s central projection for inflation published last month, over the decade to the end of 2015, CPI inflation will average close to 3%. It will have been above its 2% target for 90% of that time, and above 3% for 40% of the time. Yes: some of this might be the result of poor forecasting. But much more important was the recognition that a lower profile for inflation was possible only by tightening monetary policy at the cost of an even deeper recession and an even larger rise in unemployment. Monetary policy has been on the frontline in supporting our economy through the financial crisis and it continues to be so. Indeed, it is striking that while some criticise the MPC for focussing too narrowly on inflation, others argue that we’ve worried too much about the real economy and taken our eye off the inflationary ball. “Is the MPC’s job to hit the inflation target or not”, they ask? Has the inflation target become a sham? The remit given to the Monetary Policy Committee makes clear that our job is to hit the 2% inflation target.

But it also acknowledges that inflation will on occasions deviate from its target as a result of shocks and disturbances, and that “...attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output”.1 Although the language is arcane, the meaning is clear: monetary policy should try to prevent damaging booms and busts in output and employment. This secondary objective matters and has been central to the recent conduct of monetary policy. To repeat: we could have delivered lower inflation over recent years, but only at the  1  The relevant clause of the remit states “The framework is based on the recognition that the actual inflation rate will on occasions depart from its target as a result of shocks and disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output.” See http://www.hmtreasury.gov.uk/d/open_letter_from_chx_to_boe_22032011.pdf  2  BIS central bankers’ speeches  expense of providing less support to growth and employment in the midst of the most significant economic downturn of our generation. That monetary policy should be concerned with growth as well as inflation is nothing new. Indeed, way back in 1997 – the year that the MPC was first established – Mervyn King, then just the lowly Chief Economist of the Bank of England, referred to the value of the “constrained discretion” built into the inflation targeting regime.2 The “discretion” relates to the speed with which inflation is returned to target.
This conflict has not been talked about much, if at all, even in central banking forums; but it is, I am quite sure, one important contributing factor to the making of financial crises. Financial intermediaries are often, and rightly so, rewarded handsomely for their innovative efforts, which, it is claimed, bring a higher rate of return for those with surplus money and a lower cost for those in need of money; in other words, a narrowing of the intermediation spread, or greater financial efficiency. But there is an internal contradiction in this phenomenon. Greater profits for financial institutions and larger bonuses for those employed in them mean, to me at least,  BIS Review 106/2009  1  a widening, rather than a narrowing, of the intermediation spread; in other words, lower financial efficiency. Yet we do observe greater profits and larger bonuses in the financial system along side (probably apparent) improvements in financial efficiency. For example, the innovative effort variously described as "securitisation", "originate-and-distribute", and "credit risk transfer" did raise the rate of investment return and lower the cost of credit. The explanation for this, if I may venture a guess, is in the time dimension. The observed narrowing of the intermediation spread comes at the expense of, or presages, a future, possibly sharp widening that often occurs in the context of a financial crisis.

This often results in structural defects in the financial systems that are not conducive to the maintenance of monetary and financial stability; for example, regulatory gaps, low transparency and market concentration. These defects also breed unethical behaviour. Indeed, free and open emerging markets are considered by some as markets that can be rather freely manipulated. They also call them ATMs. But I still believe that financial openness outweighs the risks of financial instability, and that the risks I mentioned just need to be, and can be, managed, simply by being sensible in the development of the financial system, reminding ourselves always that the primary purpose of the financial system is financial intermediation that supports the economy. Although it provides employment for quite a number of people, including us, and profits for a lot of capital, the financial system does not and should not have a life of its own. Gradualism is perhaps a prudent attitude, even if this means taking a little more time or appearing for a time to be not as welcoming as the top players in international finance would like. "Because others have it" is definitely a risky attitude to take in financial development. And as developed markets are going back to basics, a no-frills approach to financial development may not be a bad idea. Financial openness does not mean getting all the top brand names to set up shop in your backyard and importing innovative financial instruments and practices. Indeed, some of those innovative financial instruments may be toxic.
On the Committee itself various suggestions have been made: to extend the terms of appointment of members of the MPC, to make those longer terms non-renewable, and to appoint people with more diverse backgrounds. By far the most fundamental of these suggestions is the proposal to appoint representatives of different industries or regions to the Committee, as opposed to monetary policy experts. That would change the nature of the debate and undermine the mutual confidence of members of the Committee in each other if it were felt that some were representing a specific interest group. With experience of the MPC, I think that this argument has come to be accepted. The proposal that the minutes of MPC meetings should include more description of individual views I discussed earlier. The Committee has been opposed to such a change for the reasons I gave. In its early days the Committee was sensitive to the view that the minutes, then published six weeks after the meeting, should be published earlier, and it shortened that lag to 13 days in October 1998. The forecast process has attracted much attention, and was discussed at length in the Kohn Report. Presenting the forecast in terms of a fan chart, in order to highlight the balance of risks to the outlook, has proved successful. But it has proved more difficult to explain the role of a projection conditioned on the assumption of constant official interest rates.

Inevitably, payment networks could become more interconnected and a single and large payment network could emerge. It then becomes essential to be in a position to manage the risks that may emanate from places beyond national boundaries. There has to be then a high level of preparedness against any disruption in the flow of information, funds and securities becomes vital. Ladies and Gentlemen, The policy response How have these developments changed the way Bank Negara Malaysia operates? In Malaysia , efforts are currently being taken on several fronts to meet the challenges arising from these trends. These range from structural enhancements to the macro surveillance systems, to strengthening of the robustness and capacity of financial players, in addition to promoting greater understanding of the intricacies of the interconnectivity, and the nature and speed of contagion risks within the overall system. On the regulatory front, closer regulatory oversight is particularly important in ensuring the strength of the risk management framework of large and complex financial institutions that are active in crossborder transactions. Towards this end, Bank Negara Malaysia is enhancing its prudential framework for the management of operational risks among such financial institutions, with the introduction of  BIS Review 32/2006  1  sound practices. The Bank's prudential framework has also been refined and enhanced to ensure that financial institutions address the risk management implications of new financial products, including credit derivatives, credit default swaps, credit linked notes and collateralised debt obligations.
Partly reflecting the improvement in the terms of trade, the nominal krone exchange rate has remained strong. Wage costs in Norway are now very high compared with other countries, measured in a common currency. The current situation is considerably different from that of the mid-1990s. At that time, performance in the manufacturing sector was strong partly owing to solid competitiveness. Today, the manufacturing sector is faring well in spite of a strong krone and a high cost level. The reason is the unusually buoyant markets for Norwegian goods. At the same time, the strong krone exchange rate has eased the impact of revenue gains. In periods, the effects on the krone may nevertheless be somewhat excessive, partly owing to the low level of inflation in Norway. Low interest rates, increased petroleum investment, strong global growth and the improvement in the terms of trade have contributed to solid growth in the Norwegian economy. Capacity utilisation has probably reached a higher-than-normal level, and the cyclical upturn is continuing. Enterprises are steadily increasing their debt to finance investments. So far, the cyclical expansion has been marked by strong production growth, with ample labour supply and unusually low inflation. 1  2  Adjusted for lower maximum day-care rates. BIS Review 44/2006  For a long time, employment growth measured by number employed was lower than in previous upturns, partly reflecting the fall in sickness absence as of summer 2004. In 2005, the number of person-hours worked increased relatively rapidly and productivity growth picked up.

It is considerably above the range the SNB equates with price stability, namely between 0% and 2% over the medium term. How is the SNB handling this situation? We made our initial response to the emerging inflationary pressure already in the final months of last year. At the time, both inflation and also our inflation forecast were still at a low level. Abroad, however, inflation had already increased markedly. In order to reduce the inflationary pressure from abroad, at our monetary policy assessment in December 2021 we announced that the SNB would allow the Swiss franc to appreciate to a certain extent in nominal terms. The Swiss franc appreciated nominally by around 4% between autumn 2021 and spring 2022, making imports cheaper and so countering the general increase in prices. In June 2022, we then raised the SNB policy rate by half a percentage point to –0.25%. Yesterday, we tightened our monetary policy further and raised the SNB policy rate by 0.75 percentage points to 0.5%. It cannot be ruled out that further increases in the SNB policy rate will be necessary to ensure price stability over the medium term. To provide appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary. Our tighter monetary policy is countering the renewed rise in inflationary pressure and the spread of inflation to goods and services that have so far been less affected.
Empirical methodologies may be used to uncover interrelationships in the economy with a reasonable degree of accuracy. Haavelmo’s contribution can be put to good use when Norges Bank, as the central bank, is to set the interest rate with a view to stabilising inflation. The Bank’s monetary policy assessments and decisions must be based on knowledge it can obtain on interactions within the Norwegian economy and how the interest rate interacts. The theory the Bank applies and the empirical methodology it employs will depend on the purpose of the analysis. A model apparatus that is to be used as an aid in making interest rate decisions requires different attributes and is based on different principles than models that seek to provide optimal nearterm inflation and output forecasts. Chart: Different time horizons – different models Current statistics and anecdotal information can serve as a basis for providing some indication of how the economy has evolved up to the present. But the statistical basis is uncertain. Statistics are published with a lag and are often subject to revision. Data from different sources can provide different pictures of the situation at hand. Statistical models can provide us with good support and help distinguish between news and noise in the data. They can capture time series properties in data and correlations that in many cases will be able to produce good forecasts of developments in the next months ahead. It then makes little difference whether or not the models are based on economic theory.

Captive risks will differ from traditional insurance, and they also vary significantly between different types of captives, depending on ownership and structure, scope of business and nature of risks insured. Managing these risks cannot simply be addressed at an institutional level. Macroprudential 3/4  BIS central bankers' speeches  measures might have relevance in certain circumstances. For example, a pure captive insurer that merely underwrites the risks of its parent may pose low financial and consumer risks, but if the parent is an economically significant entity, with critical financial linkages, a different regulatory response and approach might be warranted. To a large extent, our ability to design suitable regulatory frameworks for captives remains constrained by the paucity of data on captives. This needs to be addressed as a matter of priority. Broader measures need to be taken, both at a national and global level, to collect better data on captives to understand their nature, evolution and impact on macro-financial developments. Increased efforts by governments to tackle profit shifting and tax base erosion (BEPS) have been another factor behind recent regulatory developments. Significant changes have taken place affecting offshore financial centers in the past decade, shaped by heightened expectations for enhanced transparency and exchange of information between tax authorities. These winds of change are likely to pick up speed for captives. And they will change the way captives have operated in the past. Very likely it would pave the way for the transformation of offshore financial centers.
It should come as no surprise to anyone that the conditional nature of the decisions, which has always been a significant feature of ECB monetary policy practice, should take on particular significance in the current setting of particularly high global uncertainty. Hence in the coming months the main channels through which financial shocks could affect the European economy will have to be monitored very closely. In my opinion, three factors require particular attention. First, it is necessary to gauge the true extent of the US slowdown, its possible spread to the world economy and the possible impact on exchange rates. Second, at the European level, the effect of the turbulence on the cost and availability of financing for the private sector will have to be calibrated. Finally, the possible impact on corporate and consumer confidence will have to be monitored carefully. The signs identified in these latter two channels, i.e. credit and economic sentiment, will be particularly informative for euro area economic growth when they affect countries in which consumption growth is still somewhat hesitant. I also believe that, echoing the words of the ECB President after the Governing Council meeting, this is an appropriate time to reiterate the firm commitment of monetary policy to the objective of price stability, which is the best way to promote the sustained growth of output and employment and thus the welfare of European citizens in general and of Spaniards in particular.

[…] In sum, achieving price stability is not only important in itself; it is also central to attaining the other mandated objectives of maximum 12 sustainable employment and moderate long-term interest rates.” The ECB, for its part, aims to maintain price stability in the “medium term”, thus minimising economic fluctuation in the short term. In other words, in line with its mandate as enshrined in the Maastricht Treaty, the ECB is not indifferent to short-term economic growth trends. 2.4  Empirical results  So, on balance, what have been the factors underlying the difference in approach between European and US monetary policy? From the empirical results we see that the overall persistence of inflation is basically alike in the euro area and in the United States, even though inflexibility is far more pronounced in the euro area. Secondly, the evidence suggests that monetary policy impacts on the process whereby inflation expectations in the euro area are shaped. These expectations have remained basically in line with the quantitative definition of price stability provided by the ECB for the best part of the last ten years, and have displayed low variability, as can be seen in Table 1. Recent studies have confirmed the importance of a clear definition of price stability. For instance, the response of long-term interest rates (which should respond better to the 13 anchoring of inflation expectations) to economic news has virtually disappeared.