samchain/econo-pairs-v1 huggingface dataset:
But some important developments besides the technology shock held prices in check. First, import prices were held down by a strong dollar and weakness in some of our trading partners. In addition, from late 1997 through early 1999, oil prices were falling. Even though there’s uncertainty about which of the two shocks has been dominating, we do know with more certainty that interest rates would have had to rise sooner or later in either case. If we were dealing mainly with excess demand, of course, the reason for tightening is obvious. But even if we were dealing mainly with a technology shock, the Fed still would have had to raise the federal funds rate eventually. I would point to three reasons for eventually raising the policy rate in response to a technology shock. The first reason has to do with the effect of higher productivity growth on equilibrium real interest rates. Since higher productivity growth raises the rate of return on investment, it also raises the level of equilibrium real interest rates. Thus, just to maintain the stance of policy, interest rates would have to rise. In simple models, there is a one-to-one relationship between the increase in trend productivity growth and the increase in the equilibrium real interest rate. Of course, things are not usually this simple. For example, in the US economy today, two developments have tended to mitigate the  1  Glenn D Rudebusch and Lars E O Svensson. 2000. “Eurosystem Monetary Targeting: Lessons from US Data”.

In addition, a technology shock also may give a boost to stock prices by raising expectations about future corporate profits. As a result, a wealth effect also may stimulate spending before the economy’s capacity to produce has expanded. To sum up, we know that the funds rate had to increase to contain inflationary pressures, regardless of whether the economy was being dominated by demand effects or supply effects. But the uncertainty arises when we have to decide how much to tighten and when to start. This uncertainty boils down to the question of where FOMC actions should be along the spectrum of approaches ranging from strongly pre-emptive based mainly on forecasts of future developments - to more cautious - based mainly on emerging data. Ideally, policy should tend more toward the pre-emptive end of the spectrum because of the long lags between policy actions and their effects on inflation. If a central bank reacts early and correctly to an inflationary threat, it can alter inflation expectations and cut off the rise in inflation before it gets started. It looks like that’s what happened in the US in 1994. At that time, we were dealing with forecasts of higher inflation that were based not only on increasingly tight labor markets but also on low short-term real interest rates. So the Fed responded by raising interest rates substantially. In that case, inflation didn’t take off, and the economy moved smoothly into the favorable environment we’ve enjoyed in recent years.
Further benefits should accrue to business from the eventual linkage of the domestic payment system to the EU’s TARGET system. By linking together the national systems of Member States with the payment mechanism of the ECB, TARGET allows payments in euro to be effected much faster, potentially improving liquidity conditions in the financial sectors of participating countries while lowering the processing costs of cross-border payments in euro. The challenges posed by the single currency Thus far we have reviewed the opportunities inherent in membership of the euro area. As might be expected, however, membership will also present new challenges. For example, while it places the  2  BIS Review 61/2004  economy in a better position to compete internationally, it exposes businesses to additional competitive pressures. For a start, customers will be better able to compare local prices with comparable prices abroad and will increasingly question price differentials. Some operators will, of course, benefit from lower procurement costs, but others might find it difficult to survive. It is, therefore, advisable for pricing strategies to be reassessed well in advance of the date of the actual euro changeover, especially where price is an important variable in marketing strategies. In the same manner that the euro will facilitate price comparisons, other monetary variables such as cost per unit, average wage, annual sales volumes, administrative expenses and profits will also become easier to compare across countries.

On the one hand, Malta’s successful experience with a peg in terms of price  4  BIS Review 61/2004  stability, coupled with the importance of exchange rate fixity for a small open economy that is heavily dependent on foreign trade and investment, suggest that it would be desirable if the features of the present exchange rate regime - predictability and stability - were preserved while Malta participates in ERM II. On the other hand, the appropriate width of the bands in ERM II is inversely related to the degree of convergence achieved with the euro area, but positively related to the size of the fiscal deficit. Whether the continuation of the features of the current regime will remain possible or not, with all the advantages that it brings to the business community, thus depends on the extent of progress with structural reforms and fiscal consolidation. It is, therefore, vital that the reform agenda remains on track. It is in the common interest to ensure that the economy converges faster towards the high levels of efficiency and living standards of the euro area. The business community clearly has an interest in contributing to the achievement of this objective, both by modernizing its structures and operational practices so as to be better placed to seize the opportunities and also by participating constructively in national fora such as the MCESD. BIS Review 61/2004  5
17  Barton, D (2017) p.10 Warsh, K (2009) 19 As Tim Geithner, NY Fed Chair and later Secretary of the Treasury said “In an emergency you [the leader] need to lean against the forces of panic, restore confidence and reduce uncertainty.” Geithner, T (2014) 20 Alternatively, Tim Geithner summarised the issue as follows: “Herein lies the paradox. In a brutal financial crisis like ours, actions that seem reasonable – letting banks fail, forcing their creditors to absorb losses, balancing government budgets, avoiding moral hazard – only make the crisis worse. And the actions necessary to ease the crisis seem inexplicable and unfair”. Geithner, T (2014) 21 Bernanke, B (2015) p.261 - 262 18  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  As a leader you also need to be humble about success and honest about failure. Humility and honesty are essential to authenticity, which to paraphrase Groucho Marx, is very hard to fake. Being authentic means doing what you say, and people knowing who you are – including what you believe in, what drives you, as well as your strengths and, importantly, your weaknesses. Authenticity is intimately connected with trust. People may not agree with all of your decisions, but they deserve to know why you made them. And your decisions will be easier to follow if people know what you stand for. 22  When a leader admits their weaknesses, they recognise that they are on a path of continuous learning and self-improvement.

At the Bank, we not only recruit widely but also encourage colleagues to collaborate across the organisation and spend time in different areas to develop the varied skills required of a modern central banker. 4  In large organisations, developing future leaders requires discipline. For example, Vittorio Colao, the CEO of Vodafone, reviews the company’s top 200 executives annually to assess performance, set development actions and manage those who are having difficulties. The Executive Committee at Vodafone then discusses the progress of a different subset of their leaders at each Executive Meeting, making the process transparent and rigorous. The Bank of England has adopted a similar approach. Developing the right people also requires a culture of inclusion that values diverse ideas, encourages open debate, and empowers people at all levels to take initiative. In a moment, I will come onto the steps the Bank of England is taking in these regards. Finally, for leaders, having the right people also means being able to draw on trusted outside perspectives such as an external advisory board or informal contacts with other leaders. I’m fortunate that in my role I can regularly share experiences with a wide range of leaders in diverse fields. Of these, the most important sounding boards are my fellow central bankers. In this circle of trust, we can have regular, frank discussions of issues we either don’t understand or that are particularly sensitive. The second critical thing that leaders do is to set the priorities for their organisation.
Regulators also need to strengthen their cooperation to minimize possible cross-border spillover risks. On this note, I am glad to report that tomorrow CBRC and the Bank of Thailand will enter into a MoU on Banking Supervision. The third area of cooperation is to enhance financial inclusivity in our region. The financial sector must be aware of its social responsibility and take active roles in promoting financial access and inclusive growth. People at large need to have access to basic financial products at minimal prices, together with adequate financial literacy and financial planning skills. In summary, financial connectivity can be and needs to be enhanced in Asia. AFCA, with its diverse membership, is in a unique position to deepen financial cooperation and promote connectivity among its members. AFCA can play significant roles to strengthen the Asian financial sector and Asian economies by improving productivity, building stronger immunity, and promoting more financial inclusivity. In closing, I would like to congratulate once again the Chinese leadership, CBRC, and AFCA. I wish AFCA very fruitful years ahead. Thank you. 3

The UK, through the Independent Commission on Banking proposals, and the US, through Dodd Frank, are key examples of this. The EU have also proposed a structural reform measure of this nature. I do not want to go into the detail of the reforms, which can take very different approaches. The reforms are, in the general, complementary to the resolution agenda. By seeking to ensure that critical economic functions are insulated from riskier parts of the group, they make it easier for the resolution authority to protect continuity in those services through a resolution scenario. All entities within the group, of course, still need to be resolvable. When working out the details of implementation, we need to make sure they too line up with the grain of the resolution strategy adopted for the firm. For cross-border banks, that will require work to ensure that the application of different structural reform measures in different jurisdictions add up to form a coherent package for the group as a whole. Conclusion As I have noted, the crisis was not only hugely costly, but also complex and long lasting. It revealed wide spread weaknesses, and weaknesses of very different types, in the financial sector and in regulation and supervision. So the reform programme is complex and wide ranging. There are many elements I have not mentioned today. The overall message, however, is that the landscape must and will change very materially. The change is happening.
As a consequence, the need to reform the existing Accord is widely recognised and supervisors are working very hard to shape the new Accord in close consultation with the private sector. The Basel II Accord is aimed at bringing the capital requirements closer to the true economic risks in banks’ portfolios and at offering a wide range of options and approaches to respond to the increased complexity of financial instruments. Basel II is achieving all of this basically by relying more on banks’ internal models in the supervisory process. An important by-product is, therefore, that there is a lot of pressure on banks to improve their risk management systems. Improvements are already visible. It seems clear to me that more supervisory efforts, similar to those in the banking sector, may also be needed in the other sectors of financial institutions, for example in insurance. The ECB has drawn attention since the early stages of the Basel II process and the implementation of the framework in the EU to macro-prudential implications and to the possibility of increased procyclicality of certain provisions. When bank capital is largely based on risk and risk increases in a recession, macroeconomic consequences might arise through a procyclical reduced ability of banks to lend. These concerns have been appropriately addressed in the revised proposals submitted for consultation by the Basel Committee and the European Commission. Pro-cyclicality concerns are substantially mitigated and a good balance can be found between risk-sensitivity and macroeconomic stability.

Less controversial seems to be the observation that downward spirals in prices can be magnified by the institutions involved in the selling wave of the crash, thereby generating contagion across markets  2  BIS Review 53/2003  and countries. In particular, the Russian and LTCM crises demonstrate the important role of market liquidity as a potential channel of crisis contagion, as market price falls due to liquidity withdrawals could cause losses for many market participants. To summarise the lessons learnt from past experiences, it seems that volatility is in itself not necessarily a threat to financial stability. Other elements are necessary before serious concerns arise over financial stability. One of the key elements is the risk faced by banks and other financial institutions, because this could be the channel through which the functioning of the financial system as a whole could be jeopardised. This view is supported by the recent episodes of market volatility in late 2002 and early 2003, when the sequence of substantial market readjustment was generally managed in an orderly manner by financial institutions across the globe. B.2  Progressing financial innovation  Let me turn to the second theme - the implications of progressing financial innovation. In fact, the reason why the latest episode of stock market adjustments did not cause systemic problems could be attributed to the contribution of financial innovation to the more even distribution of risks. However, some concerns have emerged regarding the securitisation and credit risk transfer markets, for instance.
This will help banks to identify fraud related accounts earlier – sleeper accounts before they are activated for example, and in doing so reduce the potential harm to victims. And thirdly, we are today 4/5  BIS central bankers' speeches  issuing guidance based on some of the good practices developed by our FMLIT banks, particularly with regard to how they integrate external information, data and alerts into their AML/CFT systems, and the use of data analytics tools more widely and other Regtech applications to produce better, more targeted outcomes. There has never been a clearer understanding of the overall objective across the public and private sectors to – improve the quality of data and intelligence going into the AML/CFT eco-system to drive better results – and the role of information sharing in achieving that. Conclusion 32. The priorities that I just highlighted – to be more adaptable in our implementation efforts, leveraging Regtech adoption, and the need to push further on information sharing – are intended to be a starting point to stimulate discussions over the coming two days. 33. And just as we at the HKMA, as a regulator, strive to make our regime increasingly focused on outcomes and effectiveness, I want to encourage all of you, whatever your sector or role in AML/CFT, to work with us in transforming our collective approach.

If we look at the development over the past ten years, we can see for instance that market capitalisation in relation to GDP has grown from approximately 20 per cent in 1990 to almost 90 per cent in 2000. This means that according to this measure, the euro countries have passed Japan, while the USA is still ahead of them. It is interesting to note that the EU countries  2  BIS Review 85/2001  outside of the euro area are at approximately the same level as the USA, or at just over 150 per cent. However, the stock markets in the euro countries are growing rapidly. Between 1995 and 2000 the value of the listed companies in the euro area grew by 276 per cent. The corresponding figure in the USA was 206 per cent. Looking at the number of new issues and number of listed companies also gives a picture of a strong development in Europe. All in all, there is a clear picture that companies in the euro zone use risk capital to a lesser degree than those in the USA, but that the differences are rapidly declining. The rapid developments have also put greater pressure on structural changes in the infrastructure of the stock markets. Since the introduction of the euro, we have seen several examples of co-operation and mergers between stock exchanges in Europe. Euronext, the merger between the stock exchanges in Paris, Amsterdam and Brussels, is one example.
It is changing at a scale and speed we had never experienced before, that require us to accelerate our own pace of transformation, to enable us to survive and prosper under this “new normal” operating environment. The world is currently faced with wide-ranging challenges that include among others – excessive indebtedness, at household businesses and at sovereigns. Many are grappling at finding the solutions to overcome the complex issues facing them today. Some of the problems look uncannily similar to what we had faced in the 1990s, but the solutions might be different this time. But whatever that solution might be, we must never discount any probable answers including unorthodox measures. Experience during the Asian Financial Crisis had shown that unconventional measures could very well be the future best practices. But then, yesterday’s solution may no longer be adequate to address today’s challenges. Therefore, we must endeavour to search for new alternatives  BIS central bankers’ speeches  1  and embark on new ventures that could mitigate the contemporary issues and challenges confronting us. And this is where Islamic finance can fit in and play a meaningful role. As an objective, we need to build the foundations for a stronger and more inclusive global economy with sustainable growth and greater shared prosperity by all. This objective is in fact fundamentally in line with the role and relevance of Islamic finance. Islamic finance emphasises on attainment of socio-economic goals espoused on Shariah objectives.

Muhammad bin Ibrahim: Malaysia and Turkey – the new silk route in Islamic finance – strategies for collaboration, cooperation and smart partnership Opening remarks by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at a business seminar on Islamic finance Istanbul: “Malaysia-Turkey Islamic finance cooperation: new solution – preferred partner”, Istanbul, 29 September 2011. *  *  *  I have the honour today to welcome distinguished guests to the Business Seminar organised by Bank Negara Malaysia, held in this beautiful and historic city of Istanbul. The theme “Malaysia and Turkey: The New Silk Route in Islamic Finance – Strategies for Collaboration, Cooperation and Smart Partnership” was chosen as a reflection of our desire to strengthen economic and business ties for the mutual benefits of both countries. The emergence of the “Silk Route”, a term coined by Governor Dr Zeti in 2006 opens up exciting prospects for countries and businesses. The new “Silk Route” not only carries traditional trade of goods and services of old but also manufactured goods, technological innovation and know-how, portfolio flows, private equity investment and mobility of human capital and knowledge. Today, Islamic financial products and services are truly “new” additions to this trade. Let me first express our heartfelt appreciation to His Excellency Tun Dr. Mahathir Mohamad for accepting our invitation to speak at this event, sharing his thoughts on Islamic finance. Tun Dr. Mahathir needs no introduction.
It would also bridge the drag from structural reforms on nominal spending and would be consistent with the longer term direction of travel towards greater integration. It would be bold, and it would be favoured by fortune. 8  BIS central bankers’ speeches  5. Conclusion  Jim Flaherty understood the importance of having a plan, and implementing it diligently and clearly. Not just because, as policymakers, that is our job. But also because in the absence of such a plan, businesses and households would shy away from the risk-taking we need for a sustained global expansion. Europe needs a comprehensive, coherent plan to anchor expectations, build confidence and escape its debt trap. That plan begins but does not end with the monetary policy boldness of the ECB. That plan includes difficult structural reforms, but cannot be wholly reliant on them. That plan requires greater private risk sharing via banking and capital markets unions. But that plan also needs to recognise that private risk sharing will never fully replace public risk sharing so that plan should include what every other successful currency union has at its heart: mechanisms to share fiscal sovereignty. As of this evening, progress on structural reforms in the euro area remains uneven. Cross border risk sharing through the financial system has slid backwards. Europe’s leaders do not currently foresee fiscal union as part of monetary union. 24 Such timidity has costs. I think we all know what Jim Flaherty would have said about that.

BIS central bankers’ speeches  Chart 5:  Chart 6:  Net migration(a) from Ireland overwhelmingly to economies outside the euro area since the crisis  Risk-sharing in EMU substantially lower than in Canadian, US and German federal systems  (a) Cumulative net migration between 2009–14 from Ireland by destination. Source: Central Statistics Office of Ireland. Source: IMF – Toward a fiscal union for the euro area, technical background notes (September 2013). Based on Hepp and von Hagen (2012) for Germany; Asdrubali, Sorensen and Yosha (1998) for the US; Balli, Basher and Rosmy (2011) for Canada; and Afonso and Furceri (2008) for the EMU and EU. Chart 7: Rest of the world now borrowing from the euro area as a whole  Source: Eurostat (ESA 95 definitions).