samchain/econo-pairs-v1 huggingface dataset:
Leveraging on technology, financial education applications can be developed, tested and translated for adoption in different countries. International collaboration can not only be for training programmes, but also on the access to the network of international experts through online platforms and communication channels. I would also like to take this opportunity to invite all the delegates of this Symposium to our Financial LATeracy exhibition that is being held in this building. This is an exhibition of more than 150 distinctive caricatures by a renowned Malaysian cartoonist that depict the promotion of good habits for money management. The drawings are compiled from the annual pocket money books for students which were published by Bank Negara Malaysia. More than 15 million copies of these pocket money books have been distributed annually to students since 1999 to more than 10,000 schools throughout the country to encourage good money management habits. The drawings also illustrate the many aspects of the culture and environment in Malaysia. I hope you will enjoy the exhibition and also draw inspiration from it. Let me now conclude my remarks. The commitment to financial education is an important imperative. As the theme of this Symposium reminds us, it is to improve the financial wellbeing of our communities. It is the very reason why we are on this journey. It is so that members of our society will benefit from the effective utilisation of the financial system and avoid despair and desperation that is brought by poor financial decisions.

For instance, Charles Engel from the University of Wisconsin compared price differences for the same goods in cities on both sides of the Canadian and US border with price differences between different cities in the US. Although US and Canadian cities have largely the same language and culture, as well as free trade, the different currencies cause prices to vary as much on each side of the border as between cities at opposite ends of the US. Finally, of course, there is the increasingly important role of the euro as a dominant international currency. The most immediate gain from this is an increase in seignorage income to the extent that the euro is more widely held outside the euro area than the sum of the currencies that preceded it. Taken as a whole, the euro area is the world’s largest exporter and importer, accounting for about one-fifth of international trade. Despite this the US dollar is still the most common counterparty in foreign exchange trading and the widespread use of the dollar as a ‘vehicle currency’ in itself reinforces its status. Given that the euro is still a young currency it is likely to grow in importance and may in time have the potential to catch up with the dollar’s share in the foreign exchange markets.
A woman rose from the audience and, with finger pointed, uttered the memorable line: “That’s your bloody GDP, not ours!” There was no right of reply. Issues of inequality have loomed large in many public debates, not just Brexit, over the past decade or so. Recent books on the rising tide of inequality by Thomas Piketty, Tony Atkinson, Joe Stiglitz and Branko 2  Milanovic have, somewhat surprisingly, become best-sellers. So too have books by Martin Ford and Eric Brynjolfsson and Andrew McAfee discussing how the rise of the robots may further worsen these 3  inequality problems. 1 2 3  See, for example, Carney (2016) and World Bank Group (2016). Piketty (2014), Atkinson (2015), Stiglitz (2013), Milanovic (2016). Ford (2016), Brynjolfsson and McAfee (2016). 2  All speeches are available online at www.bankofengland.co.uk/speeches  2  At around the same time, monetary policy in a number of countries became more expansionary than at any time in recent history. Interest rates in a number of advanced economies fell to their lowest-ever levels during the financial crisis. In some countries, additional stimulus was provided through asset purchases – so-called Quantitative Easing or QE. Those asset purchases are currently running at around a cumulative 15% of annual global GDP.

Moreover, the conclusions of the report on economic developments and monetary and financial situation are similar to the analyses and conclusions of the Bank of Albania at the end of 2016. In concrete terms, the Albanian economy has accelerated the growth pace driven mainly by the accommodative monetary policy of the Bank of Albania and its effective pass-through to the economy. These factors, coupled with the further recovery of domestic demand will play a significant role in the further growth of economic activity during 2017. The Report points to the important fact that the banking system is liquid, well capitalised and capable to withstand shocks that may come from the external sector. It identifies non-performing loans as the main risk not only to the system’s soundness but also to the monetary policy passthrough in credit growth for the private sector. The report assesses positively the coordinated plan of actions by the Bank of Albania in cooperation with the Government of Albania and international institutions, to address comprehensively and definitively the issues of nonperforming loans. The action plan of the Bank of Albania is a broad and complex process, which consists in legal and institutional regulations and decisions. I am happy to see that the EBRD has reached the conclusion that this legal, regulatory and institutional process will contribute to reducing the nonperforming loans, in the long term.
12  For some of the earliest evidence, see Lintner, J (1956), “Distribution of incomes of corporations among dividends, retained earnings and taxes”, American Economic Review, 97–113. 13  Bank of England Financial Stability Report (op.cit.). 6  BIS Review 10/2010  recently become one of the first firms to do so in 2010. Surveys of households suggest some of the windfall of lower interest costs is being used to repay debt. Opportunistic repayment or refinancing is the financial stability equivalent of repairing the roof while the sun is shining and it is important it continues. The second lesson comes from past debt crises, in particular among developing countries. If a borrower has a large debt overhang, there is a case for restructuring the claim from debt into equity – a debt-for-equity swap. 14 In some cases, such swaps are no more than recognition that an impaired debt is, in substance, an equity claim. But more than that, debtfor-equity swaps can potentially benefit both lender and borrowers by airlifting a debtor to the safer side of the debt Laffer curve. 15 A number of global banks have begun putting such a strategy into practice. Around a hundred debt exchanges were carried out by global banks during 2009, typically converting debt instruments into equity or retiring debt below face value, so reducing leverage in the financial sector. That these swaps were voluntary and market-based is evidence of their benefit to both lender and borrower. Debt-for-equity swaps could be used to tackle the debt overhang in other sectors.

Since there are good reasons for not relying on discretionary fiscal measures for stabilisation purposes, there might be a need for alternative instruments such as the so-called “semi-automatic stabilisers”. These are fiscal instruments that involve tax reductions or increases in transfers and that automatically come into play as the economy goes into recession. Finally, population ageing might also erode the effectiveness of fiscal multipliers since differences in the marginal propensity to consume over the life cycle make consumption by the old less responsive to fiscal transfers. As for macroprudential policies, they can also be used as an additional macroeconomic stabilisation mechanism. Indeed, the introduction of macroprudential instruments to complement the stabilising capacity of monetary and fiscal policies is probably one of the most significant advances in the wake of the international financial crisis. For the countries belonging to a monetary union, the introduction of these tools is particularly important. This is because it is one of the few instruments available at the domestic level to ensure the stability of the domestic financial system. In particular, some instruments, such as the countercyclical capital buffer, can be used to build up capital buffers at financial institutions in good times that can be deployed when conditions worsen. The use of macroeconomic stabilisation mechanisms, such as the CCyB1, is particularly significant in a setting, such as the present one, in which monetary policy scope is more limited.
The ASEAN region, having one of the highest savings rates in the world, therefore has the immense potential to meet some part of the region’s massive requirements for financing, particularly for large investment projects and infrastructure development. Financial integration will facilitate channelling part of such surplus funds towards productive investment opportunities in the region. It will also allow for more efficient risk diversification of assets to include foreign assets from within the region. This will not only reduce vulnerability to external developments but will contribute to achieving more stable conditions in the regional financial markets. ASEAN’s Approach towards Greater Integration Turning to the approach we have taken for ASEAN integration. Like most regional blocs, the integration process for ASEAN seeks to promote greater regional connectivity which will in turn expand and reinforce the region’s growth potential. For ASEAN, this integration process has, however, followed its own distinct path. While ASEAN has drawn lessons from the European experience of monetary and financial integration, the approach taken by ASEAN is distinctly different in order to be consistent with the circumstances of the region. Unlike the European Union, in which the formation of a monetary union with a single currency represents a major element in realising its economic integration, the ASEAN region had come to a decision in early 2000s, based on a study by the ASEAN Central Banks that a common currency would not be pursued.

Partnerships will thrive and add value when they are supported with effective decision-making structures and organisational frameworks to ensure the smooth translation of ideas from conception to implementation. These factors create partnerships with real impact as they are able to fully BIS central bankers’ speeches  3  and sustainably utilise their specialist skills, knowledge and technological capacity in ensuring successful outcomes. Conclusion In conclusion, the road to a promising and sustainable future for ASEAN is not one that can be traversed in isolation, especially in a world that is becoming increasingly borderless. As we see our economies prosper, our society will also mature with our improved growth potential. However, we must bear in mind that having good ‘genes’ does not guarantee successful results until we come together to activate and realise our latent potential. Therefore policymakers, business community and civil society must collaborate effectively for this better future, together. On this note, I wish you an enriching, dynamic and productive Forum. 4  BIS central bankers’ speeches
BIS central bankers’ speeches  5  Figure 2 Unemployment and model estimates of equilibrium unemployment10 Per cent of labour force 14  14  Unemployment SVAR  12  12  UC gap UC trend cycle  10  10  8  8  6  6  4  4  2  2  0  0 80  82  84  86  88  90  92  94  96  98  00  02  04  06  08  10  Note: The diagram only shows the so-called point estimate for the SVAR and UC trend cycle models. The uncertainty/error margin associated with these two calculation methods is thus not shown. Source: The Riksbank  So, even though the calculations shown in the figure are based on historical data, the level of equilibrium unemployment cannot afterwards be determined with any degree of certainty. This is because equilibrium unemployment is not observable. Given this uncertainty, it could be asked whether equilibrium unemployment is a stable enough measure to use in the assessment of actual resource utilisation. The fact that estimates of equilibrium unemployment vary heavily over time and depending on the calculation model used provides a good illustration of the risk in having blind faith in the exactness of the estimated unemployment gap. This uncertainty means that deciding which view to take of long-term unemployment is always, ultimately, a matter of judgement.

Source: ONS, IMF World Economic Outlook  BIS central bankers’ speeches  1  In the UK, the rate of growth which we have seen over the early stages of recovery has not been spectacular, but that is not unusual in the early period of a return to growth after a major economic downturn. It is also not surprising that there have been variations in growth across different sectors of the economy and that confidence still remains fragile in the business community and among consumers. It is normally only 2–3 years into the recovery phase of the economic cycle that perceptions of improving economic conditions begin to catch up with the reality of a return to growth. This strong correspondence between economic growth in the UK and elsewhere in the EU shown in Chart 1 should not be a great surprise. It reflects the close economic links which have grown up over the centuries and which have been reinforced by the development of the European Union and the Single European Market. But this close link between economic growth in the UK and elsewhere in Europe is an example of a much more general phenomenon. We now live in a highly integrated global economy. And economies which are very open to trade and investment – like the United Kingdom, and indeed Jersey – are strongly influenced by international economic trends. During my time on the MPC, the growth and inflation performance of the UK, and hence our monetary policy judgements, have been heavily driven by global developments.
Some people – perhaps even some of you – may be sensing a different reality: financial crisis, economic crisis, unemployment – these are the keywords currently dominating the discussions on monetary union. How much does the reality have to do with the actual idea of the euro? Is the euro still a symbol of what holds Europe together? Or has it become a symbol of what divides Europe? The growing appeal of anti-euro and anti-Europe parties is a sign that we need to make the incalculable benefits of a single currency easier to understand for the people of the euro area. And we should encourage people to look at the full reality and not just one facet. The euro is a fundamental part of the single market. More than 300 million people in 19 countries make payments using the euro. It’s the world’s second most important currency. Over 20% of global currency reserves are held in euro. And despite all the euroscepticism, recent surveys 1 show that 70% of people in the euro area want the single currency. Obviously, in my view too, a united Europe with a single currency is the right idea; as Theo Waigel, former German Minister of Finance, once said, the euro is “ingenious”. And, for me, it’s about more than the economic advantages brought by a united Europe and a single currency. It’s also about a political reality. Not all the countries of Europe can live in “splendid isolation” – Europe’s voice in world affairs would fall silent.

Yet even after successful structural reforms, in a monetary union with 19 Member States there can always be economic shocks which affect some countries more than others. Flexible labour markets and a responsible fiscal policy help to cushion such shocks – not only in a monetary union. In such a union however they play an even greater role, because the countries concerned can no longer react by way of the exchange rate or national monetary policy. But if the shock is excessive or the economic structures too rigid and the national budget under pressure, the Member State in question may be quickly overwhelmed. This is exactly what we have seen during the recent crisis. The costs of the crisis were borne in large part by the citizens in the crisis countries, but also shifted in part to the European level through mutual guarantees. Basically, the countries concerned resorted to a sort of implicit insurance that was not originally foreseen. This experience gives rise to two key questions: •  First, how can Member States better absorb external shocks – even without an independent exchange rate and without a national monetary policy? •  Second, how can risks be shared at European level without a transfer of risk occurring which distorts the incentives for the individual Member States? A monetary union needs strong members... As for the first question, the euro area countries need economic structures which meet the requirements of a single currency. The crisis has made this abundantly clear.
Of course, this does not prevent differing opinions being held, both within the Riksbank and by external analysts, as to how the repo rate should be managed in order to maintain price stability. Monetary policy is based on how the inflation rate is expected to develop in the near future, primarily 1-2 years ahead. There are two reasons for this. The first is that monetary policy measures make their full impact on inflation during this time horizon. Thus, the Riksbank has little possibility to counteract shocks that affect inflation in the short term, but it can conduct a well-balanced monetary policy to ensure that inflation is maintained around an average rate of 2 per cent a couple of years ahead. The second argument in favour of forward-looking monetary policy is that this provides scope for taking into account developments in the real economy. If the repo rate were to be changed continually to try to bring inflation back to the target level as quickly as possible every time a shock occurred, it could lead to considerable, and undesirable, fluctuations in interest rates, production and employment. During the years that monetary policy has employed an inflation targeting strategy, we have developed a clear analytical framework for our work. The Riksbank has developed a simple rule to make monetary policy more easily comprehensible and to create stability when making monetary policy decisions.

I would then like to turn my attention to the subject of gold as part of our currency reserves. But first, let me begin with the key events in monetary policy. Key events in monetary policy in 2012 and 2013 More than 20 months have passed since the SNB introduced the minimum exchange rate against the euro under exceptional circumstances. In summer 2011, the Swiss franc had appreciated to such an extent that we had to take action. It is the SNB’s statutory mandate to ensure price stability, while taking economic developments into account. With money market interest rates already close to zero and conventional monetary policy options exhausted, we would have no longer been able to fulfil this mandate without the introduction of a minimum exchange rate. In taking this step, the SNB averted the threat of adverse developments to price stability and the Swiss economy. The minimum exchange rate provided the foreign exchange market with clear guidance and gave companies a sounder basis for their investment planning. Notwithstanding the minimum exchange rate, conditions for the Swiss economy remained difficult in the past year. Global economic growth weakened, after having already lost momentum the previous year. This slowdown was mostly due to the deterioration in economic activity in emerging economies and to the recession in the euro area. Although the European financial and debt crisis is weighing particularly heavily on the euro area economy, it is also curbing growth in other regions.
Monetary policy needs to take this onboard, even before considering other issues such as risk-management at the zero bound. I have argued today that the central bank needs to have a major role in ensuring that the financial system is sound. Without this, the central bank cannot ensure that monetary policy will be effective in achieving its objectives. This is the important linkage of monetary policy to banking. Now some express concern that involvement in banking regulation and supervision may lead a central bank to bias the setting of monetary policy to try to help troubled banks or other institutions. This fear is misplaced. Problems in the financial sector are taken into account for monetary policy purposes only to the extent that they affect the transmission of policy to the real economy. There is a separate tool kit to address problems at the level of the banks themselves. Others will argue that having the central bank involved in the oversight and regulation of the financial system puts too much power in the hands of one authority. Another concern is that such a consolidation of responsibilities is dangerous for the central bank because it could threaten the central bank’s independence with respect to monetary policy. I think these are legitimate issues. But the bigger risks, in my view, are a monetary policy that fails to accomplish its economic objectives because of financial instability, and difficulties that stem from the inevitably imperfect coordination that takes place between multiple agencies with divided responsibilities during a crisis.

It is also necessary to take steps to restore the banking system to health as soon as possible. This means forcing banks to cut their capital distributions early and to raise new capital in a timely way even if such capital-raising results in the forced dilution of existing shareholders. With respect to bank capital, we saw two unwelcome behaviors during the crisis that central banks and other banking regulators need to lean against. Banks were reluctant to cut their capital distributions because of worries that this would signal weakness. Of course, these capital distributions just made the banks and the banking system weaker. Also, we saw that banks were reluctant to raise capital to guard against particularly bad states of the world because they thought this might unnecessarily dilute their shareholders should such bad states of the world not materialize. Of course, the collective action of banks to not raise this additional capital made the banking system weaker than it would otherwise have been. This in turn made the possibility of the particularly bad states of the world more likely. In such circumstances – which the U.S. faced in 2009 and arguably the Eurozone faces today – it is essential for the authorities to force sufficient capital into the system. The subtlety here is that in a time of stress it is necessary to overcapitalize the banking system relative to the base case scenario in order to ensure financial stability and an ongoing supply of credit to the real economy in a stress scenario.