samchain/econo-pairs-v1 huggingface dataset:
In the near term, CPI inflation is very likely to rise to materially above our 2% target. The question is whether that unavoidable temporary rise will remain just that, temporary; or whether it will feed into medium-term expectations of inflation, and so get reflected in wages and prices going forward and, thus, in domestically-generated inflation. Given this unusual combination of significant downside and upside risks to the medium-term inflation outlook, the broad policy strategy is to offset some but not all of the adverse shock to demand from tighter credit conditions. And to do so by changing Bank Rate gradually and with transparency about that broad strategy. To be clear, this approach probably means allowing a degree of slack to develop in the economy, in the interests of avoiding taking risks with inflation on the upside. Only by underpinning the credibility of the nominal anchor provided by the MPC’s commitment to the inflation target will we maintain scope to cushion the real economy from the effects of the stresses in the international financial system. If we implement this strategy successfully, we will be able to provide more durable support for demand and activity. If, by contrast, we were to adopt a course that let the inflation genie out of the bottle, we would find ourselves needing to tighten policy, exacerbating the slowdown in activity. That broad strategy is not a recipe for inaction.

But in a world in which capital flows freely, local attempts to control the pace of credit creation, particularly within the financial system, may not work. All of that will need to be thought through. But first we need to concentrate on the immediate challenges. Summary In a speech four months ago, I stressed that “we must try to avoid a vicious circle in which tighter liquidity conditions, lower asset values, impaired capital resources, reduced credit supply, and slower aggregate demand feed back on each other”. I identified monetary policy, liquidity policy, and regulatory capital policy as being amongst the instruments the authorities would need to use. That remains the case, as the stress in the global financial system has  4  BIS Review 38/2008  continued and, in the US at least, evidence of a feedback loop is apparent. Each of those instruments is constrained in some degree. That underlines the need for close co-operation between the authorities and the industry, and internationally. BIS Review 38/2008  5
First, it is of particular importance that the mechanisms in the model can be interpreted and communicated so that the model is perceived as a sound tool, both in the internal process and in the Bank’s external communication. In the policy analysis, we also need a framework where the various disturbances can be interpreted and described. The importance of analysing risks also means that we must be able to change the various model mechanisms in a straightforward way. Moreover, the model must reflect the lessons that led to a paradigm shift in economic policy. Expectations must therefore play an explicit role in the model. The model must reflect that inflation is a monetary phenomenon in the long term and that monetary policy provides the economy with a nominal anchor. Norges Bank’s macro models have played a key role in forecasting work over many years. The models satisfy many of the requirements for a sound model, but the introduction of inflation targeting revealed new needs that these models were not designed to meet. Developments in economics and computational technology have also provided new possibilities for constructing and solving macroeconomic models. Norges Bank has therefore started work on developing a new macro model. An important purpose of constructing a new model is to expand our tool kit so that we are better equipped to conduct policy analyses. I would therefore like to devote some attention to this model here, also because it may help explain our thinking as to the functioning of the economy.

The short-term economic policy objective to reinforce aggregate demand by monetary and fiscal policy measures belongs to the first category. The ECB has lowered interest rates and considerably increased money market operations, i.e., the total volume of shortterm loans to banks. In addition, EU countries have agreed to support the economy in 2009 and 2010 by raising fiscal expenditure in the total amount of 1.8% of GDP. However, this is constrained by rapidly expanding deficits and external debts. Therefore it is important that EU Member States make already plans for reducing fiscal deficit in the next years. The European Commission stresses that in the current complicated economic environment the Stability and Growth Pact is still relevant. The longer-term objective in the EU is to achieve fiscal balance or surplus. Second of all, it is extremely important to restore confidence in the financial sector. The minimum rate of guaranteed deposits in the EU was raised to 50,000 euro already in 2008. Thereafter Member States have agreed upon common principles to support the banking system. At the end of 2008 Member States put the main focus on the banks' liabilities side to ensure banks would be able to finance their operations also in a more adverse market situation. To this end many countries have offered collaterals to loans taken by banks, i.e., the state guarantees the repayment of loans taken by banks. In several countries the government has made contributions to banks' capital and acquired holdings in commercial banks.
Supervisory Cooperation  To support responsible openness to international wholesale banking, be it as branches or subsidiaries, and to meet our objectives on safety and soundness and financial stability, we need confidence that: a. the Home State Supervisory regime delivers outcomes which are sufficiently equivalent to the UK regime; b. there is effective supervisory cooperation; and c.  3 4  there is assurance over the home state resolution framework. https://www.bankofengland.co.uk/speech/2020/sam-woods-city-banquet https://www.bankofengland.co.uk/financial-stability-report/2020/december-2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  The first and last points concern in large part the legislative framework, rules and powers of intervention that home states and authorities have. The better the outcomes they deliver, so the more reliance we can place on risks arising from overseas operations being manageable. The second point is about how those powers are applied, the practices, and openness of overseas authorities that wield them. It is on this point that I want to focus as a supervisor. Cooperation with Home State Supervisors  For both branches and subsidiaries, the PRA places reliance on cooperating closely with the Home State Supervisor, for branches this is particularly the case for prudential requirements, because a branch is not a separate legal entity. But for both there needs to be effective regulatory and supervisory cooperation if openness is to be ‘responsible’. We have a long history of working very effectively with a range of supervisory authorities, including the US, EU, Switzerland, Japan, and many others.

In the long term, according to Paul Krugman, the concept of the competitiveness of an economy merges with that of its productivity: the increase in the standard of living in the United States, Japan or Europe, which, in keeping with Professor Laura d’Andrea Tyson’s  BIS Review 80/2005  1  definition, is the ultimate indicator of a country’s competitiveness, has in fact, excluding all external factors, tracked developments in national productivity over several decades. In addition, the flexibility that enables an economy to specialise in promising sectors determines both developments in its productivity and its competitive position: several recent studies show that labour or product market rigidities may thwart the emergence of an ICT-producing sector and limit the use of these technologies in the other sectors, which holds back productivity growth and the development of exports of products that are in high demand. Second change: the advent of new players in international trade of goods and services and international division of labour. Of course, this is not an unprecedented development – it has occurred several times since the Second World War, with Japan and also with the newly industrialised Asian countries. It has nevertheless taken on a new dimension due to the newcomers’ size and competitive edge, the liberalisation of capital flows and the decrease in transport and communication costs.
Our three-year programme of upgrades includes: Enhancing efficiency and risk management, including the launch of a new collateralised lending service in April this year; Upgrading the system for greater flexibility, by launching a new CMU platform in 2025; Strengthening the cross-border links through the CMU, including enhancing automated access to Mainland Central Securities Depositories in the third quarter of this year to facilitate Bond Connect operations; and Riding on the opportunity of the Mainland’s plan to connect the interbank and exchange-traded bond markets to explore the system enhancements to provide Northbound Bond Connect investors with a single access point to the entire onshore bond market. Enhancing the CMU’s service capabilities will enable investors from the Mainland and abroad to settle debt securities more efficiently, lowering cross-border settlement costs. It will also allow us to seize market opportunities and attract Mainland and international issuers to issue bonds in Hong Kong, thereby expanding the depth and diversity of the local dim sum bond market. Other opportunities – Green 13. Apart from these technical matters, another area that is impossible to ignore when discussing financial opportunities and developments is green and sustainable finance. Asia has the largest need for climate finance among all geographical regions. According to a report by the Global Financial Markets Association and Boston Consulting Group in December 2020, it is estimated that the region will require USD66 trillion of climate investment in the coming three decades1.

Of course, since new forms of shadow banking activities are certain to develop in the future, FSB members will continue to monitor for emerging risks, and share data and analysis in order to support any future regulatory response. 9 The data refer to the UK, the US and the Euro Area, as of June 2009 (see Bank of England Financial Stability Report, June 2009). 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  These include reforms to secure the tools and powers authorities need to deal decisively with failing banks. At the same time, major banks are required to make themselves easier to resolve, including by writing ‘living wills’. Most importantly, global standards now require that banks hold sufficient debt in life such that, in the event one fails, its successor can be recapitalised to support the continued operation of its most important activities. The combination of these initiatives and the determination of authorities to complete the job explains why the too-big-to-fail public subsidy for private systemic banks has fallen by 90% in the UK. Put simply, a decade on, market discipline is coming back. The system is also fairer because we are addressing the root causes of misconduct. In the wake of the crisis, a series of scandals ranging from mis-selling to manipulation undermined trust in banking, the financial system and to a degree markets themselves. The economic consequences have been enormous.
Singapore’s regulatory regime already meets or exceeds international norms, and this has enabled us to weather the financial crisis relatively well. Following the crisis, international regulatory standards are being raised. We are well-placed to meet them. Let me start with banking. MAS announced last month we will require Singaporeincorporated banks to meet Basel III capital requirements earlier than the Basel Committee’s schedule, and at a higher standard. Market reaction to this announcement has been positive because Singapore-incorporated banks are well-capitalised and in a strong position to meet MAS’ revised requirements. These requirements will help keep our banking system strong and safeguard our financial stability. Likewise for liquidity. Singapore was one of earliest jurisdictions to require banks to maintain minimum liquidity levels. Over the years, this has evolved to a risk-based liquidity risk supervision framework. Singapore banks are therefore well positioned to meet the new Basel liquidity ratios. Effective regulation is not just about setting high standards. It is also about creating market conditions that enable financial institutions to meet the standards. Take for instance the higher liquidity requirements under Basel III. MAS has taken steps to increase the availability of liquid assets in the market and collaborate with other central banks to expand eligible collateral in the MAS Standing Facility. Let me elaborate. BIS central bankers’ speeches  3  We started issuing one-month MAS Bills in April this year. This has added about $ billion of high quality liquid assets for financial institutions. We have seen good interest in the Bills.

Cloud computing and the use of third party services also have the potential to undermine firewalls. Putting a balance to the needs of various parties would be a challenging task. As information technology grows, so do the capabilities of cyber criminals. These criminals have a wide range of tools to execute cyber attacks, many of which are easily obtainable and relatively inexpensive to procure. For example, cyber criminals can now control networks of compromised computers through “botnets” that enable anonymity. This access can be bought or rented online. In the hands of criminal or organisations that are determined to  BIS central bankers’ speeches  1  disrupt national stability, botnets could be used to steal sensitive data or disrupt access to critical national infrastructure. Industry players, security firms and financial supervisors may easily find themselves in a cat and mouse game, where the ability to attack constantly outpaces the ability to defend. These challenges demand a stronger and forceful response by all parties. Recent global regulatory reforms, such as the Basel III capital adequacy and liquidity rules, have tended to focus on financial risks. There has been much less focus on technology and cyber security risks despite the real systemic threats that they pose. So far, no financial institutions in this region have encountered an attack, severe enough to disrupt its critical services or cause material losses, but we cannot leave this to chance.
It is a great pleasure for me to chair now the panel that will discuss some of key policy issues raised in the two reports presented to you earlier. We have the privilege of having four outstanding panellists with first hand experience in dealing with financial integration and stability at the highest level. Michel Barnier is since early this year European Commissioner for Internal Market and Services and before that he held various ministerial posts in French cabinets, including that of Minister of Foreign Affairs and of European Affairs. Jaime Caruana is since April last year General Manager of the Bank for International Settlements. Previously, he was counsellor to the Managing Director and Director of the Monetary and Capital Market Department of the IMF. Jaime was also Governor of the Bank of Spain, and in that capacity he served on the ECB’s Governing Council. Vikram Pandit is since end 2007 CEO of Citigroup, a truly global financial player which has a history of being present in more than 100 countries worldwide. He took the helm of Citi at a very difficult time, and since then has initiated a turnaround in the business model of the bank. Before that, Vikram had a long successful career in other financial institutions, including Morgan Stanley and Citi itself. Alessandro Profumo has been CEO of Unicredit Group since it was founded in 1997.

2  BIS central bankers’ speeches  •  We have world-class universities such as INSEAD and University of Chicago based here, who will collaborate with this Campus to design programmes to offer highquality, specialised courses in banking and finance. •  We have research centres such as the Centre for Asset Management Research and Investments and EDHEC conducting specialised research in areas relevant to the financial industry. •  We have training providers such as the Wealth Management Institute and Risk Management Institute organising programmes and conferences to further thought leadership in areas of finance. BNP Paribas’ Asia Pacific Campus is a welcome addition to Singapore’s ecosystem to build human capital in finance for the future. Conclusion This is an exciting time to be in the financial industry, notwithstanding the challenges it has gone through since the crisis. It is also an exciting time to be in Asia. But to seize the opportunities in Asian finance, we need a deep pool of highly skilled and trusted professionals. I thank BNP Paribas for growing with Singapore, and for being a strong partner with MAS in our efforts to develop talent and capabilities. I am confident your strong presence in Singapore will serve you well as you continue to extend your Asian footprint. BIS central bankers’ speeches  3
8  BIS Review 36/2005  Chart 1: The Maradona theory of interest rates in 2002 Feb IR  Per cent 8  May IR Aug IR Nov IR  7 6 5 4 3 2 1  2001  2003  2002  2004  0  Note: the black line represents the Bank of England official interest rate. The coloured lines represent the market’s expectations of future interest rates, as calculated in each of the four Inflation Reports published in 2002. Chart 2: Inflation and Unemployment 1993-2005 RPIX inflation (%) 30 25 20 15 10 5 0 -5 0  2 4 6 Une mployme nt (%)  8  10  12  Source: ONS. Note: The unemployment rate used here is the Claimant Count measure.

Mervyn King: Monetary policy – practice ahead of theory Text of the Mais Lecture 2005 by Mr Mervyn King, Governor of the Bank of England, at the Cass Business School, City University, London, 17 May 2005. The references can be found on the Bank of England’s website. I am indebted to James Proudman, Gertjan Vlieghe, Tony Yates and Richard Harrison who have worked closely with me on this lecture and are effectively co-authors. Alan Mankikar and Tim Taylor provided excellent assistance in preparing the empirical and historical research that support this lecture. *  *  *  Introduction Monetary policy is aimed at maintaining price stability. That may seem self-evident. Thirty years ago it was not. From the end of the second world war until the mid to late 1970s, the majority view of academic economists and policy-makers alike was that monetary policy had rather little to do with inflation, and was largely ineffective as an instrument of demand management.1 The intellectual basis for that view was never clear. And painful experience taught us that price instability led to costly fluctuations in real output and employment. Far from being ineffective, a monetary policy aimed at price stability has proved to be the key to successful management of aggregate demand. Fortunately, the theory and practice of monetary policy in the UK have changed out of all recognition in the past twenty-five years.2 We have moved from the Great Inflation to the Great Stability.
In fact, after the consolidation phase we have witnessed a period in which the number of banks and bank-like institutions in Sweden is increasing. The new ones have mostly been small banks specialising in certain activities and services, for instance linked to major retail store chains and benefiting from the cash flow from the stores’ customers. We call them “niche banks”. Sweden never had a large share of state-owned banks in its financial system. In the crisis one bank had to be nationalised during the resolution phase but that bank was rapidly merged with another bank. Another of the banks which suffered during the crisis was state owned already at the outset but the shares of this bank were gradually sold to private investors as soon as the bank had recovered its financial health. The Swedish government remains a shareholder in the bank but holds only 19 percent of its total equity capital. Today, this bank which is named Nordea, is highly profitable and has formed a large group which has significant market shares in the countries in the Nordic region. As a government official deeply involved in the banking crisis, I took the decision that although some banks had to be rescued by public funds, the management of the banks should be left to professionals, without undue operational interference from the government. The banks should be run in accordance with market conditions just like any other bank.

Supervision should be based on a combination of offsite observations, where the supervisor analyses financial and prudential reports and other information; onsite visits where the supervisor verifies the information it has received and focuses on the governance and control processes in the bank; and personal contacts with banks’ auditors, owners, boards, management and staff in order to gain a good understanding of the bank’s business and of the competencies of the leading personalities. Recently, more stress has been given to this latter issue because the increased complexity of banking makes the importance of good corporate governance and efficient control functions even more evident. Supervisors should avoid trying to micro-manage the banks. When supervisors go too much into the details of the running of the bank, they will be seen to assume – in the eyes of the bank and also of the general public – a responsibility for the bank, which they should not have. The operational independence of supervisors has lately become even more important. The higher degree of interdependence between the institutions and markets combined with their increased complexity and thus vulnerability implies that supervisory decisions and measures must be based on purely prudential grounds without listening to non-relevant arguments. Such operational independence is inscribed in the statutes of the Swedish supervisory authority. However, independence must be tempered by accountability so the supervisors will have to explain their decisions publicly in various ways, such as reports to the Parliament, and they must be prepared to take responsibility for them afterwards.