samchain/econo-pairs-v1 huggingface dataset:
The RMB Clearing Agreement lays down the framework for RMB business in Hong Kong. I will not bore you with the details but just to highlight two important changes made in the Agreement. First, the restrictions on the types of institutions that can open RMB bank accounts were lifted. This effectively means that securities firms, asset management companies and insurance companies are now free to open RMB bank accounts. Second, the restrictions on RMB interbank transfers between personal accounts and corporate accounts were also removed. With these relaxations, the key hurdles that had previously limited the development of offshore RMB wealth management business have been eliminated. Market players have been responding to these relaxations quickly with the launch of a wide range of RMB investment products. These include RMB-denominated insurance policies and investment funds. Investor interest in these products has been phenomenal. In developing our offshore RMB business, let me stress that Hong Kong does not have a monopolistic power and we are also facing competition from other financial centers. BIS central bankers’ speeches  3  However, Hong Kong does enjoy the first mover advantage over the others in a number of ways. Over the years, the HKMA has built up a very good working relationship with the Mainland authorities. We have accumulated a wealth of operational and regulatory experience in RMB business. We have also developed the most advanced financial infrastructure for RMB transactions with cross-border links with the Mainland.

Zeti Akhtar Aziz: Asia in the world – sustaining the region’s transformative momentum Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Wharton Global Alumni Forum: “Asia in the world – sustaining the region’s transformative momentum”, Jakarta, 22 June 2012. *  *  *  The global economy is experiencing a period of profound change. Asia is very much at the centre of this global change. Asia’s changing role in the global economy has not only been in terms of its growing size, but also in terms of its influence in global economic and financial developments. The issue before us is whether Asia will continue its transformative momentum over the medium to longer term, to become an increasingly important source of global growth and stability. It is my very great honour and pleasure to be here in Jakarta to speak at this Wharton Global Alumni Forum. Exactly a decade ago, I was actually invited to speak on the same subject on the state and future of Asia at the Wharton School in Philadelphia. Then, having just emerged from the Asian financial crisis, the region was again being challenged by a series of economic and financial shocks, in particular, the bursting of the dot com bubble in the United States in the year 2000. Observers had questioned the sustainability of the region’s medium and longer term growth prospects.
As long as output is independent of monetary policy in the long term, the authorities cannot choose an output target for monetary policy. Attempts to boost production above the natural level in the long term will only result in a rise in inflation. However, the inflation target can be chosen by the authorities. ii)  The short-term objectives of monetary policy  Under certain conditions, monetary policy may nevertheless contribute to smoothing cyclical fluctuations, i.e. swings in output and demand. Some of the channels through which monetary policy influences inflation go by way of the demand side of the economy. Monetary policy can be used aggressively to bring inflation under control quickly, but with considerable fluctuations in the real economy as a consequence; or it may be used more gradually with less of an impact on the real economy, but with inflation being allowed to deviate from the target over a slightly longer period. In the short term, there will thus be a trade-off between output and employment developments and the variation in inflation around the inflation target. In the theoretical literature this trade-off is often described as a loss function in which both output and inflation variability are included. The idea is that the central bank shall minimise a weighted average of the two. The loss function can be depicted in stylised form in a chart with output variability (deviation from “natural” or potential output) and inflation variability along the axes.

Jarle Bergo: Monetary policy, cyclical fluctuations and competitiveness Address by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), to the Norwegian Association of Economists, 5 September 2002. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 7 August and on previous speeches. * 1. *  *  Introduction  Thank you for giving me this opportunity to discuss the relationships between monetary policy, cyclical developments and competitiveness. There has been some debate about monetary policy this summer. Part of this debate has focused on the role monetary policy can and should have in smoothing fluctuations in the real economy and safeguarding competitiveness in the Norwegian business sector. Some have maintained that we place too much weight on reaching the inflation target. Statements like this should be discussed in the light of what monetary policy can be used for and of the broad effects on the economy of various monetary policy objectives. Only when we have clarified our options, can we discuss whether the emphasis on the inflation target is “too great”, “too little” or “just right”. I hope to be able to offer some clarification today. I think it will also become clear that Norges Bank in its implementation of monetary policy consciously seeks to avoid unnecessary disturbances in the real economy.
The probability of interest rates having 3 percentage points of headroom over this horizon is around 40%. Put differently, based on these estimates there is a considerably greater chance of interest rates needing to be cut to their floor to meet recessionary needs than of them gliding back to levels that could safely cushion a recession. Even after interest rates have lifted off from their floor, it is more likely than not they may return there over a ten-year horizon. For the foreseeable future, the effective lower bound will exert a strong magnetic pull. Another way of illustrating the same point is through the lens of real interest rates. In the 1990s, they were around 4%. With a 2% inflation target, that meant nominal interest rates would be expected to average around 6% over the cycle. That would give more than enough room to cut interest rates to cushion recession in a typical loosening cycle. Today, global real rates are around zero. With 2% for inflation, that gives a nominal interest rate of only around 2% over the cycle. That would give insufficient room above the effective lower bound to accommodate a typical loosening cycle. Provided real rates remain low, the lower bound constraint is likely to form part of the new normal. Of course, part of the reason the yield curve is low in the first place is because markets are weighing recession risk, perhaps using historical probabilities.

The world has in the past experienced lengthy periods of continuously positive annual growth: in the UK, for a remarkable 26 years after the Second World War and for 16 years during the Great Moderation starting in the late 1990s. As Chart 12 shows, however, these are extreme outliers in the distribution of expansions. The probability of an expansion lasting for longer than 10 years is, on past evidence, less than 10%. 5  Assuming these probabilities evolve according to a Bernoulli distribution – that is to say, the probability of a recession triggering shock occurring in one year is independent of the probability of a shock occurring in another year. This probability is calculated by looking at data on the frequency of negative annual growth rates. The cumulative probability is the probability that there will be at least one such shock over a given horizon. 6  Using conditional probabilities – for example, on starting in recession or expansion – does not dramatically alter these cumulative probabilities. BIS central bankers’ speeches  5  If a recession were to strike in the period ahead, a relevant question for monetary policy is how much room for manoeuvre might be necessary to cushion its effects. History can again offer some guide. Table 1 looks at loosening cycles in the UK, US, Germany and Japan in the period since 1970 and in the period since 1994. There has been considerable variation in the scale and duration of loosening cycles over time and across countries.
Of course, we do not believe that increased competition alone can explain developments in the Norwegian economy in the last couple of years. There have been many driving forces behind low inflation and developments in output. Nevertheless, the developments resulting from the model analysis are fairly consistent in qualitative terms with the picture we seem to be observing for the Norwegian economy. Inflation and the interest rate are low. Real wages have risen and consumption growth is high. Mainland investment and in particular housing investment have gradually increased substantially. The number of man-hours worked has also picked up markedly, although employment growth measured by the number of persons has been more subdued. The model can thus support an assumption that increased competition in the Norwegian economy is one of several driving forces behind low inflation. The model may also provide an indication of the appropriate monetary policy response to such disturbances. However, let me again emphasise that this model is still in the development process and that in addition to this model, we are also working on other empirically-based analyses to understand relationships in the Norwegian economy. It is important to have an abundance of tools so that we can combine different models and theories in our economic analyses. Conclusion The lesson from Kydland and Prescott was that economic policy can achieve better results if the authorities can commit themselves to a pre-established set of credible policy rules.

We engage in five rounds of talks each year with business and community leaders concerning economic developments in their industries. All of this information provides a basis for our analysis of the current situation. A large share of the overall resources used for analyses and projections of the Norwegian economy is devoted to this work. 4  BIS Review 4/2005  Based on experience and economic theory, we can assume that certain relationships will hold in the long term. There is fairly broad agreement that monetary policy cannot affect the level of output and employment over time. Therefore, it is reasonable to assume that output and employment over time are determined by supply-side factors. At the same time, inflation is determined over time by monetary policy. Both theory and experience indicate that in the long term, the real interest rate must be positive and consistent with the growth potential of the Norwegian and international economy. Experience shows that the real interest rate has generally ranged somewhere between 2 and 4 per cent. In keeping with experience, we can assume that wage income, consumption and investment as a share of production are fairly stable over time. Hence, we have some fairly robust reference points for the economy in the long term. In the work on medium-term forecasting, short-term developments are linked to our assessments of long-term developments. In this context, a macroeconomic model can function as a bridge. Moreover, a macro model can ensure consistency between important economic variables.
Our financial centre has been built on a wide range of comparative advantages: a financially sound country, a stable political and monetary framework, a long tradition of banking and an internationally oriented economy. All these points are also valid for the United Kingdom. There is a major difference in terms of specialization, however: the City is “the” market place for investment banking and a number of other financial activities in Europe, whereas Switzerland plays a dominant role in asset management. Despite different realities and market positions, Switzerland and the United Kingdom share many common values vis-à-vis their financial centre: –  both countries believe that financial activity requires professionalism, high standards and efficient supervision;  6  BIS Review 13/2002  –  both countries consider money laundering and the financing of criminal activity as major threats for the long term development of their financial system and act decisively against them;  –  both countries favour market competition in general and have a liberal attitude toward tax competition in particular;  –  both countries are reluctant to accept over-regulation and see in the mushrooming of offshore centres a source of risk for the global financial system. I come therefore to the conclusion that there are more converging interests than rivalries between our financial centres. Some diverging views are due to misunderstandings. With its traditions and its experience in asset management, Switzerland attaches great value to financial privacy.

According to unofficial statistics, Swiss banks are entrusted with about one third of the totality of the world’s assets managed by banks in other countries than those where their clients are domiciled (so-called offshore wealth management), which places them well ahead of their competitors. Indeed, asset management and private banking are the strongest segments of Swiss banking, not only in terms of market shares, but also measured by revenues. For many observers, the success of our banks in asset management and private banking can only be explained by the existence of Switzerland’s banking secrecy. I think they misunderstand the meaning of this feature. In any case, it would be short-sighted to believe that a financial centre could insure its long-term development on a single factor. A successful strategy requires strong fundamentals: a competent and dedicated workforce, reliable services and products, and efficient infrastructures. I have no doubt that you share this view with me. Necessary characteristics of a successful financial centre How can we explain the long-lasting development of the finance industry in Switzerland? It is not the result of some public strategy or industrial policy. Instead it is the combined outcome of a number of factors which all point in the same direction. a)  An open-minded economy  Firstly, Switzerland, as a traditionally very open economy, was well placed to benefit from trade liberalisation and financial deregulation. We are used to see our economic performance being constantly challenged and directly dependent on our ability to adjust to a changing world environment.
However, if unrealistic expectations of the future push up prices on a more lasting basis it can lead to serious problems. …but if they are pushed up by unrealistic expectations and lending… Expectations of the future, “mood” and attitude to risk are very important factors with regard to the prices of most assets. During the course of history investors have from time to time behaved as though prices on a particular market would keep on rising for ever. Exaggeratedly optimistic expectations of the future may entice investors into a particular market, prices will then rise, which will attract even more investors in the belief that prices will go on rising. Unless the spiral is broken reasonably early, a bubble will arise. If exaggerated optimism and a high risk propensity over a long period of time have pushed up prices, there is also a considerable risk that the fall from the inflated price level will be very hard once the mood changes. And this will probably have a negative effect on the rest of the economy. It is probably necessary to be most on our guard regarding what developments can be considered sustainable when things appear to be going well. By this I mean times with a high level of growth in the economy and in household incomes, good investment opportunities and low loan losses in the banks. It has happened more than once that a normal economic upturn inspires excessively optimistic expectations of economic developments and the price of risk thus becomes unreasonably low.

22  All speeches are available online at www.bankofengland.co.uk/news/speeches  22  Chart 15: FPC housing tools more efficient than monetary policy for addressing the same risks  Risks increasing as the GDP-at-risk tail grows larger  1yr ahead median GDP growth 4.0 forecast (%)  2004  If FPC housing tools had been in place  2004 2007  2014  3.5  3.0 2000  2015  2006  2.5 2005  If monetary policy acted to achieve same reduction in GDP-at-risk  1998  2001  2003  2017 2.0 2016 2010 2002  2013 1.5 2018  2008 2019  2011 1999  1.0  0.5  3yr ahead 5th percentile GDP growth estimate (%, cumulative)  2012  0.0 -6.0  -5.0  -4.0  -3.0  -2.0  -1.0  0.0  1.0  2.0  The FPC’s structural and cyclical bank capital requirements The UK’s bank capital framework optimises the FPC’s objective function by balancing the impact of higher capital on GDP-at-risk with the impact of higher capital requirements on the central GDP forecast. 𝑇  min ℒ𝑡 ≡ 𝐸𝑡 {∑ 𝛽 𝑖 [𝑓(𝐺@𝑅𝒕+𝒊 ) − 𝜙𝑦𝑡+𝑖 ]} 𝜌𝑡  𝑖=0  The capital framework includes structural requirements that are not designed to vary systematically over time, and a cyclical requirement that varies with the financial cycle to match the level of resilience with the level of GDP-at-risk.
In December last year, the People’s Bank of China and the Bank of Thailand concluded the bilateral local currency swap arrangements during the visit of Vice President Xi Jinping to Thailand. The Agreement provides for the exchange of respective local currency upto 70 billion yuan or 320 billion baht, to facilitate bilateral trade and investment. I believe this is a crucial role that the public sector can provide to give assurance to the private sector on the availability of their access to the yuan and the baht for their trade and investment needs. In addition, the Bank of Thailand received approval from the People’s Bank of China and China Securities Regulatory Commission to participate in the interbank bond market and securities market here in China. Our investment would allow our asset allocation and diversification to better reflect the increasingly important role of the yuan in international monetary system. Last but not least, I hope that the inauguration of our Beijing representative office will be more than just another success story. I truly hope that the spirit and friendship behind this long-standing relations and successes, nurtured earnestly over centuries, will continue to serve as solid foundations that will lead to even greater and closer future cooperation between our two nations. Let me end by thanking everyone for being an important part of this success. And, with Your Royal Highness’ permission, may I propose a toast to future success and cooperation as well as to your Royal Highness’s good health and prosperity. Thank you.

Domestic demand is likely to be dampened by the ongoing tensions in euro area sovereign debt markets, as well as the process of balance sheet adjustment in the financial and non-financial sectors. At the same time, we continue to expect euro area economic activity to recover, albeit very gradually, in the course of 2012, supported by developments in global demand, very low short-term interest rates and all the measures taken to support the functioning of the financial sector. In the Governing Council’s assessment, substantial downside risks to the economic outlook for the euro area continue to exist in an environment of high uncertainty. They notably relate to a further intensification of the tensions in euro area debt markets and their potential spillover to the euro area real economy. Downside risks also relate to the global economy, protectionist pressures and the possibility of a disorderly correction of global imbalances. With regard to price developments, euro area annual HICP inflation was 2.8% in December  BIS central bankers’ speeches  1  2011, according to Eurostat’s flash estimate, after 3.0% in the preceding three months. This decline was expected and reflects a downward base effect stemming from energy prices. Inflation rates have been at elevated levels since the end of 2010, mainly driven by higher energy and other commodity prices. Looking ahead, they are likely to stay above 2% for several months to come, before declining to below 2%.
The really important phase, however, was when railways began to affect processes for production and distribution. Previously, production in Sweden had been located in the vicinity of iron ore and forests. The units were numerous and not particularly efficient; transportation was slow. In the county of Värmland, for example, there were sixty different sites for the production of iron in 1870. When the railways had been constructed, it was easier to concentrate production to fewer sites; by around 1900 there were only six sites and they were accordingly considerably more efficient. This is just an example to illustrate how the railways played a major part in Sweden’s industrial upswing in the late 19th century. Productivity and growth rose. For the Internet, this phase of the process probably lies ahead. The new technology has not yet seriously altered either production and distribution processes or consumer behaviour. Progress is still a little hesitant as more and more people use the new technique for surfing and learn the new technology. The potential will also be limited as long as the technique is not entirely user-friendly. IT generates pressure for change When the new information technology really catches on, it will probably lead to a rapid expansion and transformation of capital stocks. The entire economy will then be involved in intensive investment and high productivity growth. Old technology will be replaced by new and each unit of capital equipment will then require a smaller input of labour. Unprofitable units or firms will be closed down, accompanied by new establishments.

Structural changes generate developments that are often referred to at present as a “new economy”. The marked improvement in productivity maintains profits and keeps prices down. During the transformation, a good circle is created but it is difficult to tell how long it will last. It can be described, if you like, as a period of extensive rationalisation and heightened efficiency. The growth trend is raised for an indefinite period, enabling the economy to expand more rapidly without inflation taking off. It should be born in mind that the adaptation to the new information technology does not occur automatically. It is not the case that one day we suddenly find the new technology has begun to be implemented in ways that are leaving their mark on economic developments in general. The late 19th century provides important lessons about the necessary conditions for this good circle. At the beginning of the 1800s Sweden was still a poor country with an unstable form of government, a chaotic monetary system and a general shortage of credit facilities. Ninety years later the Swedish economy had undergone a dramatic transformation. Inflation was low, with an orderly monetary system. The nation was bursting with vitality in every field. An impressive range of products, many of them world leaders, were being developed on the basis of Swedish inventions. Swedish financial experts were engaged in the exploitation of the inventions at an early stage. Employment was provided for more and more people, living standards rose and growth was among the highest in the world.