samchain/econo-pairs-v1 huggingface dataset:
The other voting members of the Committee – Adair Turner, Hector Sants, Michael Cohrs, Don Kohn, Alastair Clark, and my Bank colleagues Paul Tucker, Charlie Bean, Paul Fisher, and Andrew Haldane – make a formidable group with great experience. So what will we be doing? In devising new macro-prudential policy instruments, there is inevitably a degree of learning by doing. The FPC will be both doing and learning. In the wake of such a severe crisis, it is unlikely that excessive credit growth will be the major problem over the next few years. Indeed, the present problem is the reverse – lending is weak. We shall next week make recommendations in areas where in our judgement risks to the resilience of the system are increasing. In future, when legislation has been enacted, a key part of the FPC’s role will be to issue recommendations and directions to the new regulatory bodies, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority. The PRA will be part of the Bank, led by our new Deputy Governor, Hector Sants, and his Deputy, Andrew Bailey. Its objectives and style will differ from those of the FSA. The primary objective of the PRA will be to secure the stability of the UK financial system through its supervision of individual firms. It will not be to protect individual institutions from failure.

But the rise in world energy and other commodity prices, and the need to reduce both the external and budget deficits, are squeezing real living standards, pushing up on consumer price inflation and slowing domestic consumption. The big picture is that the UK economy is going through a major rebalancing of demand and output, from private and public consumption to net exports and business investment, which will take several years to complete. A necessary precondition for that rebalancing was a fall in the real exchange rate. Markets anticipated that need. The nominal effective sterling exchange rate fell by around 25% between the start of the crisis in 2007 and the beginning of 2009, since when it has been broadly stable. The Monetary Policy Committee (MPC) decided to look through the first-round effects of this depreciation on the price level. We could have made a different judgement. We could have raised Bank Rate significantly so that inflation today would be closer to the target. But that would not have prevented the squeeze on living standards arising from higher oil and commodity prices and the measures necessary to reduce our twin deficits. And it would have meant a weaker recovery, or even further falls in  BIS central bankers’ speeches  1  output, despite our having experienced the worst downturn in output and spending since the Great Depression.
Although the provision of foreign currency liquidity through reserves was clearly important during the crisis, most studies seem to support the conclusion that dollar swap lines made the pivotal difference, especially when they were uncapped vis-à-vis some key central banks. To a significant degree, this was the domestic LOLR process replicated at the international level. Does this mean that we have the solution? At the conceptual level, yes, but at the practical level, maybe not. At present, such swap lines are not a permanent and reliable feature of the international monetary system, and there are important unresolved governance issues, such as who should decide which countries get a swap line and which do not. Let us now move back to the EU/EEA level, where we have the contradiction between the European Passport, on the one hand, and national supervision, a national safety net of deposit insurance and LOLR, and national crisis management and resolution regimes, on the other. The crisis revealed that this framework is deeply flawed. First, it ignores the FX liquidity risk that I discussed earlier. Banks from small countries with independent currencies are more exposed to this risk than, for instance, banks within the euro area. Second, country size and bank size relative to countries are important factors in the viability of bailout options. The Icelandic banks are a good example of this. Keeping in mind what I have said about the fault lines in cross-border banking, let us go back to the collapse of the Icelandic banks.

In that case, national authorities would licence and supervise domestic banks, which would face significant restrictions on the type and scope of their cross-border activities. Their deposits would be insured by the domestic deposit insurance system, and the national central bank would be their LOLR. Banks wanting a European passport would be licensed and supervised by an EU authority; they would be part of an EU-wide deposit insurance system, and in most cases, their LOLR would be the ECB. Second, at the national level the key issue is that, as long as global risks and EU flaws are not dealt with, individual countries are forced to take action to protect themselves: action that might contribute further to the retreat of cross-border banking. Such action might take the form of restricting international activities of home banks and placing much stricter prudential limits on foreign currency maturity mismatches. For example, when Iceland lifts its current capital controls on outflows, it will probably impose restrictions on the size and composition of the foreign currency balance sheets of home-headquartered banks. Some might see such restrictions as capital controls in another form, but I see them as prudential rules. 4  BIS central bankers’ speeches  Finally, deposit insurance and the LOLR are logically related and should be in the same currency. Part of the rationale behind them is to prevent and stop runs.
5 Today, I would like to discuss how we can balance today's challenges against tomorrow’s gains. In my opinion, we must adopt measures that can be seen as costly today to solve problems that could improve the housing market in the long term. And managing the problems on the housing market will require other/more measures than those falling within the framework of macroprudential policy. For the Riksbank, it is important to monitor the housing market: it is well documented by empirical studies that a rapid increase in debt increases the probability of financial crises and falling prices on the housing market. The economy can also become more sensitive to various shocks if households (and companies) are highly  4 See, for example, Bäckman, C, C Lutz (2018) and Cunliffe, J (2019). 5 See Finocchario et al. (2016). 2 [13]  indebted. The studies also show that, if the banking system has large exposures to the housing market, financial stability can be threatened. 6 In the Riksbank’s task of promoting financial stability 7, it is therefore important to ensure that the banks and their borrowers have resilience to shocks that could threaten financial stability. In addition, if financial stability should start to falter, there exists a risk that it would become more difficult to conduct monetary policy.

One latest development is the amendment of the Banking (Capital) Rules last year, which brings the current synthetic securitisation rules fully up-to-date with the Basel rules. These products are commonly found in Europe over the last five or six years. Banks in Asia-Pacific are now starting to take note of them as a useful tool for credit risk mitigation and regulatory capital management without having to transfer their portfolio assets. This feature is extremely useful to help overcome typical constraints such as loan assignment and confidentiality restrictions. Such products can offer an additional investment opportunity for institutional investors. 14. When the new capital rules become effective in June this year, the full spectrum of synthetic securitisation structures will be available for use in Hong Kong. For example, the use of special purpose vehicles (SPVs) as providers of guarantees or credit default swaps, which is a common structure for synthetic securitisation products, will be permitted subject to relevant criteria1. It effectively lifts the headroom for growth of the synthetic securitisation 2/4  BIS central bankers' speeches  market here. 15. Earlier on, I briefly touched on the HKMC, which is a wholly owned subsidiary of the HKMA. I should also elaborate a bit more on its role in promotion of securitisation in Hong Kong. 16. One of the key business mandates of the HKMC is to develop securitisation and other financial products that contribute financial stability and facilitate the development of the local financial markets. 17. Throughout the years, it has been a trailblazer in different areas.
Economic theory tells us that the introduction of the euro should have led to real convergence as capital flowed towards so-called “catching-up” economies where the marginal product of capital was higher. Yet, while capital growth was indeed higher in catching-up economies, it did not lead to underlying productivity convergence. In my view this was because two structural and institutional conditions were missing. First, there was an incomplete single market in goods and services, and a general lack of competitive processes in the non-tradable/services sector, which allowed some firms in socalled catching-up economies to extract excessive rents and distort capital allocation. Second, there was an incomplete single market in capital, and lack of common approach to supervision and resolution of banks, which allowed the financial cycle to take hold too strongly in these countries in the upswing, and limited the potential for risk-sharing between jurisdictions in the downswing. This “Minsky” cycle in turn masked the underlying lack of productivity convergence in the pre-crisis period. The reform process in the euro area today is essentially a process of filling these two lacunae: improving the functioning of national economies through structural reforms; and creating a well supervised, integrated financial market through Banking Union. This should provide the conditions for efficient resource allocation and hence sustainable convergence in the future. The illusion of convergence before the crisis In its simplest form, economic convergence can be understood as the process of narrowing income gaps between lower and higher income countries, achieved through faster relative growth in the catching-up economies.

The Migration of credit transfers and direct debits under the SEPA requirements, will not resolve all payment-related issues which will be on the agenda of the Euro Retail Payments Board. Because of that, the Board is expected to  1  2  Hasan, I., Renzis, D. T. & Schmiedel, H. (2013) Retail Payments and the Real Economy. European Central Bank Working Paper No. 1572. BIS central bankers’ speeches  intensify its efforts for further integration in the field of card payments, innovations and security. Seventh, during the course of this conference we will also discuss virtual currencies, taking into account the public interest about the effects that these currencies have on the payments. Although these currencies are not economically significant and therefore, do not pose a risk to the price and financial stability, they do however pose significant risks to the individual users of the currencies. These risks, however, could impair the reputation of central banks given the fact that virtual currency schemes operate as retail payment systems, but are not regulated and monitored. Please allow me to briefly conclude that this conference on payment and security settlement systems has grown into a platform of active cooperation between the central banks, both in our region and beyond, in Europe, and we hope to continue hosting it in the future to assure faster and complete integration in the European Union.
And, it means that the exposures of major banks and investment banks to these GSEs is larger than in the past, measured relative to capital, and large relative to other major counterparties. Together, these changes mean there are a larger number of non-bank financial intermediaries operating outside the supervisory safety and soundness framework established for banking organizations, that are sufficiently large or integral to the financial system that their failure or anticipated failure could have major implications for the functioning of the markets in which they operate and their financial institution counterparties. And third, hedge funds now play a more substantial role in the U.S. financial system. They are a significant source of liquidity in some markets. They play an important role in making our financial markets more efficient. And they are likely in some circumstances to help markets equilibrate more quickly in conditions of stress, as was the case in the summer of 2003, when they helped meet a substantial increase in mortgage-related hedging demand from banks and the GSEs. Assets managed by hedge funds have grown very rapidly, more than doubling since 1998 to current estimates in the range of one trillion dollars. Gross credit exposure and potential future credit exposure to hedge funds as a group are probably larger today relative to the capital of banks and investment banks, although also likely more diversified.

The industry experienced a compound average growth rate of 27 percent in terms of net contributions between 2005–2010, with family takaful driving the growth at 28 percent for the same period, to dominate more than 80 percent of the total takaful market in 2010. The strong growth momentum is expected to continue, underpinned by the rising affluence of Malaysian amidst strong economic fundamentals. Given the large untapped market that still exists with only 54 percent of the population having a life insurance or family takaful policy, the takaful industry is poised to benefit in the years ahead. Today’s launch is thus an important step in our overall strategy to further elevate the growth and development of the takaful industry. ING Public Takaful Ehsan is the 3rd licensee to launch out of the 4 family takaful licences awarded recently, making up to a total of 11 takaful players now operating in Malaysia. The initiative for strengthening competition in takaful industry is premised on our quest to unlock the enormous growth potential that lie ahead. There are 3 dimensions from which strong opportunities for growth can be harnessed in the takaful industry. First, is the opportunity to penetrate the remaining underserved areas in family takaful. One such area is medical and health, which in 2010 constitutes only 9 percent of new family takaful business.
Some survey measures of labour availability are at their lowest level at least since inflation targeting began (Chart 14). Vacancies are at a record high (the official series began in 2001). Both suggest a tighter labour market than you’d normally expect at current levels of unemployment. Chart 13. Unemployment has surprised to the downside in recent months Per cent  Chart 14. Survey measures point to tighter labour market than unemployment alone would suggest 5.2  0  Wage growth (rhs)  10 5.0 4.8 4.6 Data  4.4  August MPR forecast  4.2  Jan  Feb  Mar  Apr  May  Jun  Jul  4.0 Aug Sep  Sources: ONS and Bank calculations. 20  Staff availability (lhs, inverted)  90 80  30  70  40  60  50 60  50  70  40  80 30  90 100  20 99 01 03 05 07 09 11 13 15 17 19 21  Indices: 50 = no change on the previous month. Wage growth series weighs together the ‘Permanent staff salaries’ and ‘Temporary staff pay rates’ indices according to the shares of permanent and temporary employees in the Labour Force Survey. Sources: KPMG/REC UK Report on jobs, ONS and Bank calcs. Over the cycle, there tends to be a reasonably stable – and inverse – relationship between vacancies and unemployment, known as the “Beveridge curve”. In an upswing, vacancies rise and unemployment declines.

If (for example) the NAIRU goes up (temporarily) but the underlying “natural rate” of unemployment that maximises economic welfare, and that is relevant for the MPC’s secondary objective, does not, then inflation might rise for a bit but the welfare-relevant output gap wouldn’t, and could even widen. And I’ve argued that such a deterioration is part of the story here. However, I don’t think it’s the whole story: I think the strength of labour demand (including from the public sector) is also playing a part in reducing slack in the labour market. It’s also possible that the rise in the NAIRU will last longer than we think (and that it amounts to a rise in the longer-run natural rate as well). I touched on the question of potential trade-offs in the labour market in a talk some years ago (“Unemployment and the conduct of monetary policy in the UK”). The canonical academic reference is Blanchard and Gali (2007), ‘Real wage rigidities and the New Keynesian model’, Journal of Money, Credit, and Banking. 11  16  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  16
Joseph Yam: Exchange fund notes Opening remarks by Mr Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, at the signing ceremony for the appointment of retail exchange fund notes distributors, Hong Kong, 3 May 2005. *  *  *  I have often emphasised the need for diversification in the financial intermediation channels to maximise the contribution of the financial system to economic growth and development. Diversification can also promote financial stability through reducing the over-dependence of financial intermediation upon one particular channel. Such diversification is therefore clearly in the public interest, to the extent, I think, of requiring the involvement of the public sector in its promotion, if the free market does not produce the desired results. Indeed, Hong Kong’s non-interventionist Government finally got around to this view back in 1989 and on 14 March 1990 the first weekly issue of 91-day Exchange Fund Bills, amounting to $ million, was launched. Since then the Exchange Fund Bills and Notes Programme has become a central feature of Hong Kong’s debt market. The total amount of Exchange Fund paper now outstanding is $ billion. And it was not just a matter of bringing supply to the market to meet demand. We developed a benchmark yield curve, a market-making system and a sophisticated market infrastructure, including a paperless clearing and custodian system. But more needs to be done.

This refinement may mean a reduction in the frequency of issues open to retail investors compared with the experimental period, but it will enable the allocation of a larger portion of the selected issues for allotment to them. It will also facilitate more focused retail marketing for the relevant issues. The second refinement is the enhancement of price attractiveness for the retail investors. Exchange Fund Notes open to retail investors will be allotted to successful non-competitive bids at the lowest price, i.e. the highest yield, accepted at the competitive-bid tenders, rather than the average accepted price (or average accepted yield). In other words, the retail investors will be assured of getting the best price that institutional bidders are able to get. I am sure retail investors will welcome this. The third refinement is the strengthening of the distribution network. The number of Retail Exchange Fund Notes Distributors will be increased from three to seven. The extensive branch networks of the Distributor Banks and their sophisticated telephone and Internet banking facilities will, I hope, make it much easier for retail investors to gain assess to the primary market for Exchange Fund Notes. The large retail banks have in the past been criticised for not supporting the development of the retail debt market for fear of losing their retail deposits. Just by looking at the names of the magnificent seven you will realise how wrong that criticism has been.
One disadvantage of this index, however, is that some of its components have not yet been finalised. As an aid in the analysis of price trends, the Riksbank’s inflation reports include various indicators of underlying inflation. The tolerance interval of ±1 percentage point serves, among other things, to accommodate the various transitory price movements that normally occur. Experience has shown, however, that in periods when the transitory price effects are extensive, inflation may move outside the interval without this by itself having consequences that should be considered in monetary policy. Thus, the tolerance interval represents the range that is normally expected for fluctuations in CPI inflation. It serves to indicate that the target variable, the CPI, cannot be controlled exactly. Still, I am convinced that people’s awareness and understanding of these factors will gradually grow as time passes. This will happen not least as a result of the efforts of all those knowledgeable analysts and business journalists who follow monetary policy closely and mostly do their utmost to explain these complex details to a broader public. Exchange rate of indirect importance for monetary policy Now I should like to say something about the role of the exchange rate. Our monetary policy strategy is premised on a flexible exchange rate. In other words, the Riksbank does not explicitly target the exchange rate and, given Sweden’s position on ERM, it seems today that the rate will continue to be flexible at least until a new political decision is taken on the issue of EMU.

MONETARY POLICY’S CURRENT CONSTRUCTION A long target horizon permits a gradual monetary adjustment When assessing monetary policy’s construction, we look ahead to assess the path of inflation in the coming twelve to twenty-four months. A relatively long target horizon does have the drawback that earlier assessments may have to be revised. One reason for choosing a long horizon - with the attendant difficulties in making reliable forecasts - is the time lag before effects of monetary policy materialise. By acting in good time, it is possible to adjust interest BIS Review 35/1998  ˝  -7-  policy more gradually and smoothly. In this way, any consequences that altered inflation prospects may have for the monetary stance will usually be gradual and small. With a shorter target horizon, the inflation assessments might be more accurate but the monetary policy responses would have to be more pronounced in order to fulfil the target. There would also be wider fluctuations in output and employment. Real factors like production and employment are accordingly taken into account when making this choice. In view of the difficulties in assessing and forecasting economic tendencies and monetary policy effects exactly, the Riksbank has opted for one to two years as its normal target horizon. Lower CPI figures The forecasting problem can be illustrated with assessments from the National Institute of Economic Research; I use them here simply as an example, not to single out the National Institute from other forecasters.