samchain/econo-pairs-v1 huggingface dataset:
As you all know, the Joint Staff Report concluded that further work is necessary in light of the evolving structure of the Treasury market, and it also highlighted a series of additional steps that the official sector will take to evaluate its approach to this market. I remain very supportive of these efforts. In fact, this conference is among the first of those next steps, and presents a perfect opportunity to have a rich debate on the market’s evolving structure and the actions that may be appropriate in response. Thank you once again for coming here today. I look forward to our engagement and discussion. 4  The TMPG has since expanded its mandate to include the agency debt and agency mortgage-backed securities (MBS) markets. 5  A more recent and equally successful practice has also been instituted for the MBS market. 2  BIS central bankers’ speeches

BIS central bankers’ speeches  1  Our evidence suggests short-termism is both statistically and economically significant in capital markets. It appears also to be rising. In the UK and US, cash-flows 5 years ahead are discounted at rates more appropriate 8 or more years hence; 10 year ahead cash-flows are valued as if 16 or more years ahead; and cash-flows more than 30 years ahead are scarcely valued at all. The long is short. Investment choice, like other life choices, is being re-tuned to a shorter wave-length. Public policy intervention might be needed to correct this capital market myopia. 2. The short-termism debate  The short-termism debate is not new. Excess discounting of future outcomes was a familiar theme among Classical economists. For Jevons, “the untutored savage, like the child, is wholly occupied with the pleasures and troubles of the moment; the morrow is dimly felt; the limit of his horizon is but a few days off”.5 For Marshall, people acted like “children who pick the plums out of their pudding to eat them at once”.6 For Pigou, it demonstrated a “defective telescopic faculty” such that “we see future pleasures on a diminished scale”.7 And nowhere were these problems more acute than in financial markets. Keynes, himself part-time speculator, was well-aware of the perils of short-termism in investment choice, both moral and financial: “It is from time to time the duty of a serious investor to accept the depreciation of his holdings with equanimity without reproaching himself.
With a view to strengthening economic growth in the long term, one objective of economic policies in the immediate future must therefore be to provide the education system with mechanisms enabling affected students to obtain the qualifications necessary, despite the lack of face-to-face education. As regards the employed who have lost their jobs, it is essential that the income-support measures be complemented by active policies that prevent a loss of working skills and foster the acquisition of new ones. In this respect, it is important to note that the effectiveness of active labour market policies has traditionally been an unresolved issue in Spain. International experience shows that one way of reinforcing the effectiveness of public employment services is to equip them with the skills to provide individual guidance. For those who keep their jobs after this crisis, various initiatives geared towards improving their productivity can also be conceived. First, it is desirable to apply formulas to counter the potential cuts to training expenditure that firms may make in the short term to address their liquidity needs, given the adverse impact that such cutbacks would have on aggregate productivity further down the road.

Accordingly, just as a resolute shortterm fiscal response will help lessen future damage to our economy, we should accept that a greater budgetary impulse at present should be part of a clear strategy to redress public finances. This is particularly necessary in countries, such as Spain, that face this crisis from a vulnerable public finances starting position, owing to high public debt and structural deficit levels. This strategy should rest on a medium-term budgetary consolidation programme which, through a spending and tax structure and capacity review, will help restore health to public finances. It should also be underpinned by a structural reform programme that raises the economy’s growth capacity and, therefore, broadens the tax bases needed to fund the desired level of expenditure. This fiscal consolidation and structural reform strategy should be implemented once this episode and its economic effects are behind us. But its design and communication should not be delayed. In the short run, there is no place for a premature withdrawal of the emergency fiscal measures, since that would increase the risk of more lasting damage to economic growth. However, the necessary counterpart to this fiscal activism is the early announcement of a strategy to reduce fiscal imbalances, with a view to its subsequent implementation, which should perforce be gradual. An early definition of this strategy would significantly benefit the credibility of our economic policy and help boost the expansionary effects of the current fiscal measures.
We should have an optimistic view of the future and at the same time make sure our stance is realistic and consistent. Time is ripe for Albania to start producing more goods and services than before. Despite the admirable progress in this context, the gap is still wide. Agriculture and industry remain two important branches of the economy operating far from their potential. Additionally, other sectors that have revitalized during the transition years require more orientation and tuning. These measures will enable better diversification of the Albanian economy, augmenting its stability with the passing of time. Other challenges I believe relate to the country’s external position, implying the reduction of current account deficit and the provision of alternative resources of foreign currency inflows. Therefore, I think that the role of the state needs to be more pronounced, not only in terms of completing the legal and regulatory basis but also of concluding a number of important structural reforms, in particular those related to the land, ownership titles, pensions, to the support of the small and medium-size business, to the further improvement of business environment and the ongoing upgrade of national infrastructure. The further strengthening of safety nets, in the context of a stable fiscal and financial position, is an obligation whose accomplishment would reduce both the real and perceived risk of the Albanian economy, hence creating incentives for the growth of domestic and foreign investments.

CLS Bank, which has its headquarters in New York, serves as a platform to eliminate the so-called Herstatt risk, i.e. the settlement risk inherent in foreign exchange deals. Previously, the two legs of a foreign exchange transaction were settled at different times. If US dollars were bought against Swiss francs, the franc amount was to be paid during European trading time. The corresponding amount in US dollars, however, was credited only a few hours later – during US trading time. In the few intervening hours, a credit risk existed. If a bank had been closed down during this time period, its counterparties might possibly have lost huge amounts of US dollar receivables. CLS Bank now makes it possible to settle foreign exchange transactions in the major currencies based on the «payment versus payment» principle, thereby eliminating the settlement risk for these transactions. Currently, 42 financial institutions are directly linked to the system (Settlement Members) and settle their foreign exchange payments via CLS in seven different currencies. One of these settlement currencies is the Swiss franc. Three Swiss banks – UBS, CS and Zürcher Kantonalbank – participate in CLS. Apart from these three Swiss banks, two other financial institutions – HSBC and Bank of America – effect foreign exchange transactions in Swiss francs via CLS. Every day, these five institutions together enter around 1,400 payments in the amount of almost Sfr 20 billion into CLS. Settlement takes place via a direct link between the Swiss Interbank Clearing System (SIC) and CLS Bank.
The Fund’s own history includes a period that illustrates the importance of not changing strategy during a downswing. After the dotcom bubble burst in 2000, the value of the Fund’s equity holdings fell sharply for a period. At the same time, the Fund’s fixed-income investments partly offset the losses on the equity side. Norges Bank is the operational manager of the Government Pension Fund – Global. Since the Fund’s establishment, we have built up an organisation that is capable of implementing the strategy laid down by the Ministry of Finance. Pursuant to the mandate assigned to Norges Bank, we seek to generate value added in excess of the return that follows from the strategic allocation. The Fund has achieved an average annual real return of 4.25 per cent since 1997. The contribution to the return from active management has averaged 0.39 per cent annually in the same period. Active management has thus made a contribution of about 9 per cent of the Fund’s total return. This result has been achieved without changes in the Fund’s return variability or risk exposure. Norges Bank’s investment management has thus improved the risk to return trade-off. In the long run, even a small percentage increase in the average annual rate of return will have a substantial impact on the Fund’s size. A stated goal of operational management is that a large number of investment decisions are to be taken independently of each other both at a given point in time and over time.

And that they represent only a fifth or less of the credit markets in the U.S. And yet as I speak, depository institutions, including foreign banks doing business in the United States, have $ trillion in excess reserves on the books of the 12 Federal Reserve Banks. So one would be hard pressed to say that ending our asset purchases, which the depository institutions from which we buy them deposit back with us as excess reserves, would deny the economy needed liquidity. “Normalizing” policy The focus of our discussions now is when and how to “normalize” monetary policy. Given that we work directly with only 20 percent or less of the highly developed U.S. credit intermediation system, this becomes a complicated matter. It raises questions, for example, about whether we should focus on the federal funds rate, which has been our traditional fulcrum, or some other measure, such as the rate we pay on excess reserves or that we pay on overnight reverse repos or some mix thereof. You can expect to hear more about this as  BIS central bankers’ speeches  3  time passes. Today, I am going to focus on another aspect of “normalization,” and that is: Once we have wound down QE3, when are we likely to raise the short-term rate that anchors the yield curve? In the parlance of the trade, market operators and bankers alike are seeking “forward guidance” about our intentions.
But we have also experienced that the income settlements may be a source of economic disturbances. The income settlements in the mid-1970s and 1986 had the strongest negative impact. The settlements in 1998 and 2000 also fuelled high cost inflation. Retrospective evaluation of monetary policy Today's inflation rate is partly the result of the interest rate that was set one to two years ago. Therefore, today’s consumer price index figures provide a basis for assessing the results of the monetary policy conducted some years ago. Monthly figures for the consumer price index are influenced by random or temporary factors that have little impact on developments in inflation over time. Electricity prices are affected by precipitation levels. Changes in indirect taxes have an immediate impact on the consumer price index. The direct effects of these factors on inflation will be non-existent after a year. Hence, they will not have any significance for the interest rate, which is normally set with a view to maintaining inflation at 2½ per cent two years ahead. However, it is still interesting to adjust monthly inflation figures for temporary effects to determine whether developments are broadly in line with our projections. Norges Bank analyses and presents figures for consumer price inflation where the effects of some temporary factors are excluded. In April, the year-on-year rise in the consumer price index was 3.8 per cent. Figures were affected by sharp increases in both electricity and petrol prices and by higher indirect taxes.

Forecasts as communication Section 2 of the Monetary Policy Regulation states: "Norges Bank shall regularly publish the assessments that form the basis for the implementation of monetary policy." The projections and analyses in the Inflation Report, together with continuous assessment of the outlook for price and cost inflation and conditions in money and foreign exchange markets, provide a basis for interest rate decisions. The Inflation Report contains analyses and projections for a number of macroeconomic variables. This has been the practice since the first report was published in December 1994. Most other central banks restrict themselves to forecasting price inflation and the output trend. Some also provide estimates of the main components of demand and of the labour market. Different practices reflect different histories and cultures. Some central banks place emphasis on the uncertainty of economic estimates, pointing out that this may make them more misleading than instructive. Institutional framework conditions also influence the forecasts at a detailed level. In countries where a decision-making body presents forecasts, each member may have his/her own individual forecast for both developments in the real economy and inflation. At the same time, the body must present a single estimate for price inflation - and developments in the real economy - based on the members’ best collective evaluation. Such is the case with the Bank of England. If the members have very different views regarding economic developments, projections for economic variables will lose much of their informational content.
In an integrated global economy, severe negative consequences can be felt far away from the center of the financial crisis – as they were in Asia in late 2008 and early 2009. This underscores our common interest in promoting financial stability on a global basis. Truly effective reform would generate sizable and widespread benefits. However, there are significant challenges to achieving this. One challenge arises from the fact that we have a global economy with many large, globally active financial firms, but our regulatory regimes are implemented at the national level. Another is that any attempt to improve regulatory standards will inevitably meet with resistance from parties that have a vested interest in the status quo. Today I will comment on the actions underway in the United States and internationally to make the financial system more resilient and robust. I will focus on the logic behind the reform efforts, progress to date, and areas where there still is considerable work to do. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee, the Federal Reserve System, or my international supervisory colleagues with whom I work closely with on a regular basis. The financial crisis exposed significant vulnerabilities in the financial system. Without revisiting all the causes and consequences of the credit boom and bust that led to a boom and bust in the U.S. housing market, the bottom line is that our regulatory system failed in two important dimensions.

The move toward a tougher capital and liquidity regime undoubtedly receives the greatest attention in terms of the measures being implemented to make large banks safer. However, there also are a number of other important changes being made to supervisory practices in the United States and elsewhere. One noteworthy example is the more widespread use of horizontal stress tests to ensure that banks have adequate capital. This is a very important development, because it makes the evaluation of capital more forward-looking. The issue is not just how much regulatory capital a bank has currently but how that bank’s capital level is likely to evolve over time in adverse economic circumstances. In the United States, another important change is that we are refocusing our supervisory practices to identify structural weaknesses and to push firm managements to remedy their shortcomings relative to “best practice” standards. Horizontal reviews across the large banks are being undertaken to identify firm-specific deficiencies. At the Federal Reserve, we are placing greater emphasis on understanding banking organizations’ business models and strategies – in other words, better understanding the specific markets and activities from which the banking organizations make money over time and the nature of the risks they take in this process. Strong risk management practices within organizations are particularly important, as risk managers must be empowered to stand up to those in the front office and prevent activities and practices that create risks or incentives that are incompatible with bank safety and soundness.
Accordingly, 8,417 persons have been served by a bank branch in the Western Province, while the banking density in the Western Province has been 11.89. 50% of people are within one mile from a bank and with ATM facilities within a radius of 2-3 miles. In contrast, according to latest available data, the Northern and Eastern provinces accounted for a share of 2.9% and 4.7% of the GDP during 2006. These two provinces had 61 and 80 branches, respectively, serving 19,000 and 18,662 persons per branch. The banking density in the two districts was at a low level of 5.26 and 5.36, respectively. Given the conflict in these two areas, the limited branch network, outreach and lower banking density are understandable. It is now time to enhance financial inclusion in the recently liberated Eastern Province. What action is needed and how quickly it can be implemented are challenging tasks, but financial inclusion, in general, and for women, in particular, is an area that should be given priority.

14  BNM Financial Sector Development Department (FSD) – Based on number of bancassurance/bancatakaful policies with regular premium/contribution to the number of savings account in Malaysia (August 2013). 15  FSD – Annual submission by insurers to the Bank on Bancassurance data. 16  EY- 2014 EY Asia-Pacific Insurance Outlook. BIS central bankers’ speeches  3  banking penetration of 52.2% and 12.7% respectively 17 augurs well for direct insurance models. In fact, in the general insurance and takaful sector, direct channels already have achieved significant market shares of 10% and 14% respectively 18. For the life insurance and family takaful sector, the LIFE Framework envisions greater adoption of direct channels such as internet platform and walk-ins for pure protection products. Safeguarding consumer interests The global ﬁnancial crisis has shown that rapid financial sector innovation without due regard to business conduct can result in large-scale losses to consumers and cause widespread disruption to ﬁnancial institutions and markets. As a result, there has been a renewed focus on consumer protection and market conduct, with new institutional arrangements for conduct regulation being established in some jurisdictions and strengthened enforcement frameworks in others. Of importance in a conduct regulation framework is an emphasis on financial institutions’ having effective oversight arrangements to ensure that business is conducted in a responsible manner. With the Financial Services Act 2013 and Islamic Financial Services Act 2013, which came into force in June 2013, the Bank has a clear mandate to foster fair, responsible and professional business conduct among all financial service providers.
Such financing are also in line with ethical and responsible financing principles, that contribute towards the long-term sustainability of this business. Governments around the world are also playing a critical role in catalysing sustainable development, through policies and regulations that encourage the adoption of green  BIS central bankers’ speeches  1  solutions. South Korea, for example, has adopted a shared vision for green growth and established the Green Growth Institute to implement efforts to deal with climate change and resolve environmental and energy issues. The Philippines introduced new legislation on climate change and established a Climate Change Commission to coordinate, monitor and evaluate the government’s actions to mitigate and adapt to the effects of climate change. In Malaysia, sustainability represents one of the key principles underpinning the New Economic Model and has been identified as a Key Strategic Reform Initiative which has led to the establishment of key agencies such as Malaysian Green Technology Corporation (MGTC) and Sustainable Energy Development Authority (SEDA). In the foreseeable future, green technology will be a driver to promote sustainable growth and development. It is in the financial industry’s interest to be involved and engaged in its rapid development. The Government has put in place, the necessary support, incentives and infrastructure. Therefore the banking industry must reciprocate in kind, by allocating more resources and putting in place the required ecosystem to expand financing into this exciting new era of new financing.

The concrete follow-up measures and timeline for their implementation will be announced on Saturday, 1 PM, as part of the published results. Implementation of the measures will begin on Monday, 15 August 2016. They will be incorporated in the individual bank’s capital management plans, as well as in the supervisory process conducted by the BNB. 3. The results do not necessitate any public support to the banks with state budget funds. The follow-up measures aimed at maintaining or strengthening the capital position of all banks are based entirely on available market solutions and funds from private sources. BIS central bankers’ speeches  1  In closing, I would like to stress out that the asset quality review and the stress test were not an isolated event but an important step in the 18-month reform plan for the institutional development of the Bulgarian National Bank, which I announced upon my election as a Governor in July 2015. Other key aspects of this plan include significant improvement of the BNB’s supervisory process and the development of an institutional framework that is effective in resolving issues in the banking system. The strict execution of the plan to date has strengthened our disciplined approach and contributed to improving financial results in the banking sector. The markedly high half-year results of the banks are a solid platform for implementing the follow-up measures identified as a result of the asset quality review and the stress test.