samchain/econo-pairs-v1 huggingface dataset:
Øystein Olsen: The conduct of monetary policy Introductory statement by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 19 May 2020. * * * Accompanying slides of the speech. Please note that the text below may differ from the actual presentation. When I appeared at the hearing before this Committee this time last year, the Norwegian economy was growing at a solid pace and the policy rate was on the rise. The policy rate was raised three times in 2019, from 0.75 percent to 1.50 percent. There was no longer any need for low interest rates to support economic activity. After several years of solid economic growth and falling unemployment, capacity utilisation was assessed to be somewhat above a normal level in 2019. Inflation was close to the 2 percent target. GDP growth slowed through autumn, and towards the end of 2019 the Norwegian economy was assessed to be close to the peak of the business cycle. There were prospects that the policy rate would remain close to 1.50 percent ahead, inflation would continue to be close to the inflation target and unemployment would remain low. We envisaged that growth would slow in the years ahead, partly as a result of weaker prospects for petroleum investment.

It is timely, therefore, for you to consider what type of leader you want to be, what type of firm you want to lead, and what type of industry you want to work in and influence. I have some views on all three, which we will get to in a moment. I am encouraged that members of the industry have convened here today to engage on these issues. I think it is important that the industry tackle this together. You can learn from one another. And, given the scandals of recent years, you really do have to sink or swim together. Before the recent spate of conduct problems, there were times when one might be secretly happy when a competitor stumbled through some sort of misconduct. All the better if such a stumble generated negative publicity and headlines. Today, the situation is vastly different. When each new scandal emerges, the industry is painted with the same broad brush. This underscores the importance of taking both individual and collective responsibility for reform. You have a personal stake in improving bank culture. Your firms have a stake too. And so does the industry. There are three messages I am going to focus on today: First, stay in banking and be good role models of the behaviors and conduct that we all want to see. It’s important. The banking industry needs your talents. And, if done the right way, it will result in a fulfilling career.
As fundamental parts of infrastructure development, we adopt international best practices on the security and prudential standards to ensure confidence as the country moves from a cashbased economy towards a digital economy. The third area of financial sector development policy is the Capital Account Liberalization Master Plan, Phase II. The plan aims to deepen Thailand’s financial markets by allowing greater flexibility and diversification in products and services offered to residents and non-residents, and to support the growth and development of the Thai economy. So far, a number of regulations on foreign-exchange management have been relaxed for greater flexibility and lower transaction costs. This year, the Bank of Thailand plans to further relax foreign-exchange regulations by allowing qualified investors to invest in securities abroad directly within a certain limit without the need to go through local intermediaries. We also plan to allow securities companies to buy and sell foreign currencies with their clients within the scope of their brokerage business. Lastly, foreign corporations located in neighboring countries are to be permitted to borrow direct loans in Thai baht from domestic financial institutions to invest in Greater Mekong Subregion (GMS). We have also started to see the results of the increased flexibility, which helps MultiNational Companies to establish Treasury Centers (TC) and International Headquarters (IHQ) in Thailand. As of now, there are 13 companies holding Treasury Center licenses, of which 4 have been granted in the past 3 months, with one more awaiting approval from the Ministry of Finance.

Ladies and gentlemen, As the Thai economy gradually recovers and inflationary pressure remains subdued, monetary policy will ensure that monetary conditions are adequately supportive to growth. At the same time, we must not forget to chart a course towards the country’s long-term economic development. As the Thai economy is in need to upgrade growth potentials and increase competitiveness, the Bank of Thailand will contribute to this process of economic transformation by taking a proactive role in the financial sector development policy. Ongoing in this sphere, there are at least three development plans under implementation, namely, the Financial Sector Master Plan, the Payment Systems Roadmap, and the Capital Account Liberalization Master Plan. Although the three plans have different objectives, they complement each other and together form a strong foundation for the country’s financial sector development. I will highlight a few key elements we hope to get out of these plans. The first one is the Financial Sector Master Plan (FSMP) Phase III. Approved by the Cabinet in March this year to set out strategic directions for the next five years (2016 – 2020), FSMP III is aimed to promote a competitive Thai financial sector, to support more diverse needs at fair and undistorted prices, as well as promote regional trades and investments, with proper supervision to ensure macroeconomic and financial stability. In short, this plan’s motto is to promote a “competitive, inclusive, connected, and sustainable” financial system.
8, 2014, the Riksbank, Stockholm. Ball, Laurence M. (2014), The Case for a Long-Run Inflation Target of Four Percent. IMF Working Paper WP/14/92. Blanchard, Olivier, Dell’Ariccia, Giovanni and Mauro, Paolo (2010), Rethinking Macro Policy. IMF Staff Position Note SPN/10/03, International Monetary Fund. Calmfors, Lars (2013), Våga ompröva Riksbankens mål. [Dare to reconsider the Riksbank’s target.] (In Swedish), Column, Dagens Nyheter, 3 April 2013. Cervenka, Andreas (2015), Stefan Ingves gör självmål. [Stefan Ingves scores an own goal.] (In Swedish), Column, Svenska Dagbladet, 3 September. Côté, Agathe (2014), Inflation Targeting in the Post-Crisis Era. Remarks at Calgary CFA Society, Calgary, Alberta, 18 November. Dagens Industri (2015), Inflationsmålets fader sågar Riksbankens agerande. [The father of the inflation target slates the Riksbank’s actions.] (In Swedish), 1 October. Dagens Nyheter (2015), Minusräntan bäddar för ny svensk finanskris. [Negative rate paving way for new Swedish financial crisis.] (In Swedish), 10 September. Engzell-Larsson, Lotta (2015), Gör din plikt Ingves, [Do your duty, Ingves] (In Swedish), Editorial, Dagens Industri, 19 August. Expressen (2015), Blås av den galna inflationsjakten. [Stop the mad inflation hunt] (In Swedish), Editorial, 4 September. Flodén, Martin (2015), Därför är inflationsmålet två procent. [Why the inflation target is two per cent.] (In Swedish), Ekonomisk Debatt no. 6. Fölster, Stefan (2015), Riksbankens lek med elden. [The Riksbank is playing with fire] (In Swedish), Column, Östgöta Correspondenten, 19 March. George, Esther (2015), Weighing the Costs of Waiting. Speech, 9 July. Federal Reserve Bank of Kansas City. Hammond, Gill (2012), State of the Art of Inflation Targeting – 2012.

However, international real interest rates are currently very low, and various factors indicate that they will remain unusually low, at least in the medium term (see Armelius et al, 2014). BIS central bankers’ speeches  interest rate would not be restricted by its lower bound too often. During the financial crisis, however, several central banks lowered their policy rate over a short period to nearly zero, which they judged at that point to be the policy rate’s lower bound. And now, seven years later, the policy rates are still at the same low levels in many countries. Based on these experiences, many analysts think that it would be desirable to have an inflation target higher than 2 per cent. 9 This question is perhaps mainly discussed within the research community, though it has also been highlighted by the IMF and some central banks, among others. In the review of the monetary policy framework which the Bank of Canada conducts every five years, for example, an increase in the target is one of the areas to be examined. 10 Unlike the debate in Sweden, the international discussion therefore focuses on the central banks’ inflation targets needing to be raised rather than lowered. Some inflation is desirable for another reason, namely that wage formation can deteriorate when average inflation is too low. The reason is that in practice it has proved difficult to lower nominal wages.
Turning to fiscal policies, euro area governments need to do their utmost to support fiscal sustainability by correcting excessive deficits in accordance with the agreed timetables and by moving to a structural balanced budget or surplus position over the medium term. Slippages in the implementation of fiscal consolidation plans of vulnerable countries must be corrected swiftly by structural fiscal improvements. With regard to the new provisions of the EU economic governance framework that recently came into force, it is crucial that all the elements be implemented rigorously. Only ambitious policies to prevent and correct macroeconomic and fiscal imbalances will foster public confidence in the soundness of policy actions, and thus strengthen overall economic sentiment. The Governing Council welcomes the European Council’s agreement to move to a stronger economic union, which was announced on 9 December 2011. The new fiscal compact, 2  BIS central bankers’ speeches  comprising a fundamental restatement of the fiscal rules together with the fiscal commitments that euro area governments have made, is an important contribution to ensuring the long-run sustainability of public finances in the euro area countries. The wording of the rules needs to be unambiguous and effective. The further development of the European financial stability tools should make the operation of the European Financial Stability Facility and the European Stability Mechanism more effective. The swift deployment of these tools is now urgently needed.

The expansion of the Zambia Sugar Plc operations and the anticipated opening of the Nickel Mine around Munali hills will all make a significant impact in boosting the living standards and job opportunities for the community of this town and the surrounding areas. Besides, Mazabuka is a successful and expanding farming district. I therefore wish to take this opportunity, to extend my congratulations and good wishes, to the Board, Management and Staff of Stanbic Bank for the excellent business foresight in having decided to make Mazabuka the new location of your latest branch. Mr. Chairman, Ladies and Gentlemen, the Bank of Zambia, has on a number of occasions indicated that the cost of banking services is relatively high in Zambia as compared to our neighbouring countries. This contention has been backed by studies conducted by the Bank of Zambia whose results have been communicated to commercial banks. As such, we take this opportunity to implore  BIS Review 99/2006  1  commercial banks to reduce their lending rates and service charges in order to encourage greater economic activity. With these few words, Ladies and Gentlemen, I declare Stanbic Bank Mazabuka Branch officially open. I thank you. 2  BIS Review 99/2006
Following the recent review of data on average earnings, it has been decided to put the relationship between the Bank and the Office for National Statistics on a more formal basis with a Service Level Agreement between the two organisations. Good progress has been made on drafting that Agreement. But the MPC cannot live by official statistics alone, nor even on a diet of business and household surveys. In addition, the Bank has a network of twelve Regional Agents. Their main task is to ask local people how they view the current state of the economy. Each year the Bank’s Agents make, in total, around 7,000 visits to business contacts across the country. The attraction of this information is that it is timely and focussed on the Committee’s needs. Other data are often published with a considerable lag. And there are frequently gaps and puzzles in those data which the Agents can help to resolve. Each month the MPC decides on a “question of the month” which the Agents then put to their contacts. Recent questions have covered trends in employment, the behaviour of earnings, the reaction of exports to the rise in sterling, and the likely effects of the Millennium on investment expenditure. Within a couple of weeks, the responses from a sample of about 150 companies are available to the MPC.

Higher inflation expectations boost demand and increase the extent of the pass-through of higher costs to consumers. As a result, companies have the opportunity to almost completely pass costs to prices and thereby maintain or even increase their profits, which in turn discourages them to take efforts in order to reduce costs and improve labour productivity. Monetary policy should prevent the inflationary spiral from getting out of control. Therefore, it should respond to transitory factors to the extent they transform into steady factors through higher inflation expectations. This is especially relevant when households’ inflation expectations and companies’ price expectations are at their peaks recorded over several years, as they are now. Third, monetary conditions are adjusting to key rate increases faster. Over the period after our July meeting, the yield curve of federal government bonds with maturities of up to three years has risen. Furthermore, yields on long-term government bonds remain almost unchanged since last March, when we started to raise the key rate. I would like to remind you once again that the stability of long-term interest rates is crucial for the stability of bank rates on investment loans and mortgages. Interest rates in the deposit market were growing in July—August. The demand for bank deposits started to edge up. As of the end of July, the outflow of funds from retail time deposits ended for the first time since the beginning of last year. Moreover, it even reversed to a slight inflow in August, according to recent data.
But as innovation and competition lengthen that chain of action and introduce more actors into it, the current regulatory framework does not capture the full ‘end to end’ risks in the chain. As a result, the Financial Policy Committee of the Bank of England has recommended to the Treasury’s Payments Review that the regulation and supervision of systemic payments systems should reflect the financial stability risk, rather than the legal form, of payments activities and ensure end-to-end operational and financial resilience across payment chains. 12 Similar changes are happening in other countries, both advanced and emerging economies. 13 12  See https://www.bankofengland.co.uk/-/media/boe/files/financial-policy-summary-and-record/2019/october-2019.pdf The Committee on Payments and Market Infrastructure reports there are 45 jurisdictions now “live” with fast payment services, and know of 12 jurisdictions planning to introduce fast payment services in the future. 13  8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  And central banks and others are working through the BIS Committee on Payments and Financial Market Infrastructure and the Financial Stability Board to produce, for the G20, proposals to improve the coverage, efficiency and reliability of current systems for cross border payments. Crypto assets and stablecoins  It is important to emphasise that the developments we have seen in electronic payment systems we use over the last 50 years have been innovations in the transfer of commercial bank money – the claims we hold on licenced, deposit taking commercial banks – to make transactions.

Tukiya Kankasa-Mabula: Stakeholder’s workshop on the draft Bank of Zambia Act Opening remarks by Dr Tukiya Kankasa-Mabula, Deputy Governor of the Bank of Zambia, at the Stakeholder’s Workshop on the Draft Bank of Zambia Act, Lusaka, 21 September 2010. *  *  *  Chief Executive Officers and Representatives of Stakeholder Institutions; Distinguished Invited Guests; Directors and Staff of the Bank of Zambia; Members of the Press; Ladies and Gentlemen. On behalf of the Bank of Zambia, and indeed on my own behalf, I welcome you to this workshop which is entitled “the Stakeholder’s Workshop on the Draft Bank of Zambia Act”. As the name rightly suggests, it is a workshop facilitating the meeting of minds of key stakeholders affected by the Bank of Zambia Act. On the one hand we have those administering the Act, the Bank of Zambia representatives and on the other hand those whose operations stand to be affected by the administration of the Act, the Financial Service Providers. We have also cast the net wide to include other key stakeholders such as Government ministries, other regulatory entities and professional bodies representing lawyers, accountants and economists. The Bank of Zambia is charged with the responsibility of formulating and implementing monetary and supervisory policies that achieve and maintain price stability and promote financial system stability in the Republic of Zambia.
As central banks, we need to consider carefully to what extent instant transparency with regard to liquidity operations may end up being counterproductive. Let me add here that this is a very complex issue. I am not arguing that the evolution towards greater transparency in central banking should be reversed. Indeed, perhaps we need greater ex ante transparency such as clearly stated conditions and eligibility criteria associated with central bank liquidity provisions. Undoubtedly, ex post transparency about potential liquidity support measures must also be guaranteed. But in the midst of a crisis, it may well be beneficial and desirable for central banks to have some flexibility with regard to how they communicate regarding potential liquidity operations. 2.2. Implications of volatile risk premia for the conduct of monetary policy  My second tentative lesson directly relates to the conduct of monetary policy. The recent market strains are unusual because confidence or rather the lack of confidence plays such an important role. Clearly, there is a great deal of uncertainty regarding valuations of complex credit instruments. Moreover and arguably more importantly, banks realize that they are facing or could face large contingent liabilities. They are therefore doing everything they can to protect their balance sheets. In essence, banks are hoarding liquidity and are reluctant to lend money in the interbank market beyond the very short term. As a result, a substantial and highly unusual risk premium has emerged in the interbank market.

To support my point, I would like first to explain how we at the Banque de France and the ACPR approach this twofold issue (identify the challenges and adapt when necessary our policy framework) (1). I will then illustrate our approach by addressing the case of financial market infrastructures (2). 1. Identify the challenges and be ready to change our policy framework Technological innovation has the power to create new services for consumers but also to reshape financial market structures. I will not elaborate on a phenomenon that everybody can see developing in the financial sector. The whole value chain is being impacted by Fintechs as well as by Bigtechs, which are introducing almost every day new ways to pay, to provide credit, to get insurance and, of course, to invest within capital markets. By doing so, they are  also modifying the financial ecosystem that we supervise and may contribute to an increase or a shift of risks in the financial system. Data and consumer protection issues raised by new technologies, anti-money laundering challenges posed by new usages, operational risks specific to third party providers and cloud outsourcing, including cyber-risks, competition impacts: the list of issues is quite long! I should also mention the systemic threats that large actors can represent if they use their huge consumer base and leverage on worldwide networks effects without sufficient regard for financial stability consequences. Facing these changes, Central Banks and Supervisors need to adopt the right mindset.
There are two ways in which the path of monetary policy might potentially be affected to a greater degree by increases in market power. When companies have a significant degree of market power, the level of output produced is likely to be below the social optimum, creating an incentive for monetary policy to try to offset that by running the economy hotter (“inflation bias”). And if market power lowered companies’ investment rates, this could reduce the economy’s neutral rate of interest. Neither, however, at present has a strong empirical basis. To the extent these channels do operate, they reinforce the institutional case for independent central banks charged with pursuing well-defined inflation targets. At the same time, actual inflation across advanced economies has of course been relatively low and stable over recent decades. So while the micro-economic evidence – a secular increase in mark-ups – is striking, it is not easily reconciled with the macro-economic evidence on measured inflation, including on the impact of mark-ups on inflation (for example, Smets and Wouters (2007)). Reconciliation of the two strands of evidence – micro and macro – means that some combination of the following would have to be true. First, the micro-economic firm-level evidence may not accurately describe how economy-wide mark-ups have evolved since the 1980s. Second, other macro-economic factors may have more than offset the impact of rising mark-ups on the behaviour of inflation.

To this end, I wish to mention that the Bank of Zambia with other stakeholders is in the process of putting in place a National Switch that will further enhance initiatives such as this one whose launch we are witnessing today. Ladies and Gentlemen, the Bank of Zambia will continue to support any efforts and innovations by the private sector that extend the provision of financial services to the majority of our citizens. I look forward to seeing the product being launched today live up to the expectations of providing a safe, efficient, secure and reliable service to the Zambian people. I hope that all customers will enjoy using the Airtel Money service. With these few remarks, I wish to declare Airtel Money officially launched and wish it all the success. Thank you. 2  BIS central bankers’ speeches