samchain/econo-pairs-v1 huggingface dataset:
Yet Hong Kong now finds itself with a consumer price level that is 12% below the peak of four years ago, and with a GDP deflator some 15% below its peak and 22% lower relative to that of the US than it was four years ago. What is the explanation, and can one live with this? There is general consensus, supported by both recent IMF analysis and research conducted within the HKMA, that Hong Kong's deflation is predominantly cyclical. I shall return to Hong Kong in a minute, but let me first dwell for a moment on the global slowdown in inflation. Over the past four years the rate of consumer price inflation has averaged 2.5% in the USA, only 1.7% in Euroland, minus 0.3% in Japan, and minus 0.3% in Mainland China. In six other economies of east and south-east Asia taken together, the inflation rate fell to 2.7% on average in these four years as 1 against 4.4% in the preceding four. This widespread slowdown in inflation, and in some cases the emergence of deflation, is not just a cyclical phenomenon. There are, I believe, some more fundamental institutional and structural factors which have been contributing. Underlying forces a. Successful central banks  First of these is the commitment of monetary authorities to combatting inflation and their evident success in doing so (or even over-achievement in some instances). With so many of them represented here today, I do not need to elaborate further. b.

ASEAN’s growth story has been supported by greater traction in recent years in regional financial integration which will expand sources of financing and investments for economic activities, deepen the region’s financial markets, and enhance the competitiveness of ASEAN businesses through efficiency gains (for example through lower costs of payments and settlements). Growth and development across the region however does not guarantee equal opportunities for all to lift their social and economic circumstances. Nor can it therefore be assumed that income and wealth divides will narrow. History bears this out, as despite advances in financial globalisation over several decades, income inequality has actually worsened in many parts of the world – including both developing and developed countries. For ASEAN, a key priority has therefore been to ensure that greater economic and financial integration progresses in lockstep with greater financial inclusion. For many policymakers in this room, the challenges are pressing with 265 million or 44% of adults in ASEAN who are still unbanked. This represents nearly half of the adult population in the region who do not have access to safe and reliable basic banking services, with broader implications for health, economic and social outcomes. ASEAN Finance Ministers and Central Bank Governors (AFMGM) have unanimously agreed that financial inclusion should be a policy priority for ASEAN. The Working Committee on Financial Inclusion, or WC-FINC established in April 2016 to carry this mandate forward, has in turn, laid out clear goals to support and accelerate regional initiatives to elevate the level of financial inclusion in ASEAN.
The pertinent question to ask, therefore, is whether or not prudential regulation amplifies this natural behaviour by financial market participants. Before analysing the elements of procyclicality that Basel II and international accounting standards may contain, it should be stressed that this set of rules includes numerous positive  4  BIS Review 62/2008  elements. Basel II will entail, and is in fact entailing, notable progress in the management of the risks credit institutions face. Had Basel II been in force some years back, many of the dysfunctions currently lying behind the turbulence would not have taken place. Moreover, international accounting standards, and in particular the financial reporting standards adopted in 2005 by the European Union, contribute to the common goal of a single financial market, since it appears reasonable that companies operating in a single area should be subject to the same accounting rules. Returning to procyclicality, I must remind you that this was a very significant debate during the period Basel II was being prepared. Insofar as capital requirements are more sensitive to risk, it is reasonable to believe that procyclicality is greater, requiring less capital when things go well and more capital when they go badly. The Basel Committee on Banking Supervision was mindful of this and that is why the new regulatory framework for capital includes elements that mitigate it, both under Pillar 1 and under Pillar 2.

Further, in the last few years Spanish institutions have shown notable skill in managing operating costs, becoming some of the most efficient players in the world. In the current circumstances, progress along these lines is even more necessary. Third, and very importantly, some of the international markets on which Spanish institutions have raised financing in recent years have narrowed substantially. In this respect, the lack of discrimination seen in the last few months is surprising, as the markets have similarly penalised products whose features, in terms of level of complexity and risk, are substantially different. This is the case, for example, of Spanish securitisations which, on account of their simplicity, the high quality of the securitised collateral and the low level of bad debts recorded, bear no relation to the more complex structured products used by banks in other countries. A particularly striking case is mortgage covered bonds, whose credit quality is very high and easily measurable. This quality resides in their legal characteristics, since they are backed by the whole of the issuer's mortgage portfolio and their minimum level of overcollateralisation is 25%. However, financial market participants have not taken these arguments into consideration. In fact, banks have to keep explaining to the market the differences in their issues. An effective way of doing so is to start issuing medium-term securities again. And, as mentioned above, congratulations are in order because this is the path successfully taken by some banks in recent months.
They provide an opportunity to take stock of the world economy. This year the key word will be “imbalances”. The very word does not bode well for our attempt to balance the economic see-saw at home. So I want to pose three questions. First, what are these imbalances? Second, why have they arisen? Third, do they make it more difficult to balance the UK’s economic see-saw? My first question, then, concerns the nature of the imbalances. Over the past year, there has been a marked recovery of the world economy as the effects on confidence and capital flows of the financial crises in emerging markets were quickly reversed. In the words of the IMF, the global downturn following the crises of 1997 and 1998 “now appears to have been relatively mild and brief”. Growth in most emerging markets has been impressive. But in the three largest economies of the industrialised world - the US, the euro area and Japan - economic growth has been lopsided. In the US, the extraordinary strength of consumption and investment has resulted in annual growth of final domestic demand of over 5% a year since 1996. Output grew impressively, but less fast, so the current account deficit has expanded and it is now not far short of 5% of GDP, a record level. Equally remarkable is the absence of sustained growth in Japan, where output is still no higher now than it was in 1996. A lack of consumer confidence resulted in falling domestic demand and a rising current account surplus.

The forward effective krone exchange rate two years ahead is close to the average level of the effective exchange rate during the 1990s. Nordic countries – institutional differences EU membership  Monetary policy regime  Sweden  Yes  Inflation target of 2 per cent (+/- 1 percentage points)  Denmark  Yes  ERM II  Finland  Yes  Member of EMU  Iceland Norway  No (EEA agreement) No (EEA agreement)  Inflation target of 2½ per cent Inflation target of 2½ per cent  SG 240802  2  BIS Review 47/2002  Sector composition of NOREX exchanges. June 2002 100 % 90 % 80 % 70 % 60 % 50 % 40 % 30 % 20 % 10 % 0% Stockholm Industrials and materials Financial services  Copenhagen IT/Telecom Energy  Oslo Consumer goods and services Other  SG 240802  Government net cash flow from the petroleum sector and total capital in the Government Petroleum Fund. Per cent of GDP 120  120  90  Total capital (end of year)  90  Net cash flow  60  60  30  30  0  0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09  Source: Ministry of Finance. RNB 02 SG 240802  BIS Review 47/2002  3  GDP Mainland-Norway and employment.
Looking over the policy-relevant, medium-term horizon, annual HICP inflation is expected to be in line with price stability. This assessment is supported by available indicators of inflation expectations for the medium term. Risks to price stability over the medium term are broadly balanced. Unexpected further declines in commodity prices or a stronger than expected slowdown in the economy could put downward pressure on inflation, while upside risks to price stability could materialise particularly if the recent fall in commodity prices were to reverse or if domestic price pressures turn out to be stronger than assumed. It is therefore crucial that price and wagesetters fully live up to their responsibilities. Turning to the monetary analysis, the latest evidence confirms a moderating rate of monetary expansion in the euro area. Monetary trends therefore support the view that inflationary pressures and risks are diminishing. In analysing monetary developments it should be recognised that the intensification of the financial market turmoil since mid-September has the potential to affect the evolution of monetary aggregates significantly. Recent money and credit data indicate that this has already had a substantial impact on the behaviour of market participants. Both the broad aggregate M3 and, in particular, the components of M3 that are most closely related to the ongoing financial tensions – such as holdings of money market funds – have shown high month-to-month volatility of late.

As affirmed by the Governing Council at its last monetary policy meeting on 7 September, we expect the key ECB interest rates to remain at present levels for an extended period of time, and well past the horizon of the net asset purchases. Our asset purchase programme (APP), at the current monthly pace of € billion, is intended to run until the end of December this year, or beyond, if necessary, and in any case until the Governing Council sees a sustained adjustment in the path of inflation consistent with its inflation aim. The net purchases are made alongside reinvestments of the principal payments from maturing securities purchased under the APP. Later this year we will decide on the calibration of our policy instruments beyond the end of 2017, taking into account the expected path of inflation and the financial conditions needed for a sustained return of inflation rates towards our objective. 1/3  BIS central bankers' speeches  The ECB’s monetary policy measures and the favourable effects they are having on borrowing conditions for firms and households, access to financing and credit flows across the euro area are supporting domestic demand and are also facilitating the deleveraging process. In order to reap the full benefits of our monetary policy measures, actions in other economic policy areas remain necessary to strengthen long-term growth and resilience in the euro area. Meanwhile, the condition and resilience of the euro area banking sector has continued to improve.
Over the past decade,1 excluding China, the emerging world has grown at a 4.7 percent annual rate – its fastest rate on record. The EME world is, of course, not monolithic. There are the dynamic large economies, EMEs that are broadly complementary to them, and some countries that are both less complementary and less competitive than their peers. Happily, for the most part, EME success is proving mutually reinforcing, as witnessed by growing intra-EME trade. 1  Based on the International Monetary Fund World Economic Outlook database, covering the period 2001 through 2011 (forecasted). BIS central bankers’ speeches  1  As EME output has grown rapidly, their share of the global economy has increased markedly. EMEs now account for 38 percent of global gross domestic product (GDP), up from 23 percent in 1990. And it is the EMEs, not the developed economies, that have been the engine of global growth in recent years. For example, during the 2000s, EME growth accounted for 59 percent of global growth, up from 33 percent and 25 percent, respectively, in the two preceding decades. By other measures, the EMEs have been even more important. For example, EME growth has been very commodity intensive. Thus, while China is still only two-fifths the size of the United States in GDP terms, it dwarfs the United States in terms of its demand for some key commodities. The growth momentum among the EMEs is the result of years of tough choices and sound decisionmaking across the emerging world.

Of course, as I noted in a speech earlier this year, we will have to monitor inflation expectations closely to ensure that they do not become unanchored. We also need to keep a close eye on the degree to which unit labor cost increases in EMEs and real exchange rate appreciation abroad are passed through into U.S. import prices and consumer inflation. Although the historic evidence is that pass-through has been limited in the United States, we cannot be complacent about this. Meanwhile, we have to recognize that monetary policy works somewhat differently in a world in which a large share of global GDP is part of a de facto dollar block. In particular, we must take into account the feedback loops this creates – how U.S. monetary policy influences financial conditions elsewhere and, how these changes, in turn, influence activity and prices in the United States. At the same time, other nations should recognize that we cannot and do not seek to make monetary policy for the world. Responsibility for ensuring that financial conditions in other nations are appropriate for their own circumstances appropriately lies with their national authorities, and they have a wide range of fiscal, monetary, exchange rate and other policy tools available for this purpose. I do not see any fundamental conflict between U.S. domestic economic objectives and the interests of the global system as a whole. But the existing system of global currency and monetary arrangements does render effective pursuit of these objectives more difficult.
In June 2014 monetary policy in the euro area embarked on a phase of renewed expansion, aimed both at enhancing monetary policy transmission, in a context of continued bank deleveraging, and increasing policy accommodation in view of persistently weak inflation. Having limited room for manoeuvre on the main refinancing rate, the ECB initiated a series of new unconventional measures. These consisted of our targeted longer-term refinancing operations 2/6  BIS central bankers' speeches  (TLTROs), our asset purchase programme for public and private sector securities (APP), and our policy of charging a zero interest rate on main refinancing operations and a negative rate on excess reserves. As the floor of our monetary policy corridor – which by then had become the key instrument steering monetary conditions in the money market – was reduced to negative levels, other short to medium-term market yields dipped below the zero line as well. Given the novelty, scope and size of the measures taken, and given their potential interaction with other public policies, communication of these measures proved to be much more difficult than before the crisis, when we only had to explain how changes in the main policy interest rates affect the economy and ultimately the price level. Likewise, holding the ECB accountable for its monetary policy has also become more difficult. Let me illustrate this difficulty by considering how observers have been using Taylor rules to compare our policy interest rates with rule-based benchmarks.

Since it is forwardlooking the central bank can at least try to foresee future problems or structural changes and meet them through a rate adjustment. The ability to act quickly is essential, as monetary policy acts with some lag and the economic cost of increasing inflation becomes lower if it is checked at an early stage. Another benefit is that the central bank does not become as tied as with a rule, but instead can take account of alternative scenarios and risks. Moreover, these assessments can be regularly updated in the light of new information about economic developments.2  1  This is known as the Taylor rule. The US economics professor John B. Taylor is Under Secretary for International Affairs at the US Department of the Treasury. He has formulated a simple rate-setting rule that has come to be known as the Taylor rule and that has become very popular. This is one of many examples of monetary policy rules. 2  See the speech by Federal Reserve Board Governor Ben S. Bernanke, "The Logic of Monetary Policy" (2004). In his speech Bernanke discusses advantages and disadvantages of following a simple monetary policy rule compared with a forecast-based policy. See also Apel, M., Nessén M., Söderström U.
During this period we were steadily reabsorbing the spare capacity created by the recession, and this was reflected in a gradual improvement in the labour market - in a net increase in employment of 1.7 mn people since the end of 1992, and in a persistent fall in unemployment to - as I say - the lowest rate for nearly 20 years. Meanwhile, underlying consumer price inflation has averaged 2.7% over the past 5 years, the lowest rate since the early 1960s - and it has been exactly on target - at 2½% - in each of the past 3 months. About 2 years ago it began to become evident that demand and output growth, in the economy as a whole, was picking up speed. And as we moved into and through 1997, it became increasingly obvious that unless we acted to tighten monetary policy, in order to moderate the rate of growth, we risked overheating, particularly in the labour market, where reports of shortages not just of skilled but even of unskilled workers, were becoming widespread. The situation was seriously complicated by an increasing imbalance between the domestic and the internationally exposed sectors of the economy. Domestic demand for goods, and particularly for services, was unsustainably strong, and large parts of the economy were doing very well on the back of that - though they didn’t make too much of a song and dance about it.

What we have to do, in actually operating monetary policy is to monitor all the relevant evidence as it emerges for signs that the economy is proving to be either stronger or weaker than we expect, and modify our view of the prospect for inflation - and our monetary policy - in the light of that. And in that context I repeat the assurance, which I gave recently to the TUC in Blackpool, that we will act symmetrically. We will be - have been - just as rigorous in reducing interest rates with the overall evidence pointing to the balance of risks to inflation on the downside, as we have been - and will again be - in raising rates with the evidence pointing to a significant or sustained overshoot of the inflation target. Now there are those - perhaps even one or two of you here this evening - who regard this assurance as cold comfort. It misses the point - they say - because the present approach to monetary policy focuses too narrowly on inflation. What we want - they say - is a monetary policy which puts more emphasis on growth and employment. You hear this complaint not just in this country but increasingly these days in Continental Europe. I must say, President, that it leaves me totally bemused. What it suggests is that growth and price stability are seen as alternatives - you can have a bit more of one if you’re prepared to accept a bit less of the other.
A guiding principle for us is that the body that is given responsibility for macroprudential policy needs a clear mandate with both the right and obligation to take action against risks that arise and appropriate tools that can be used to limit the risks. The discussion of macroprudential policy also comprises the issue of the Riksbank’s balance sheet, and particularly the foreign-exchange reserve. As you know, the inquiry conducted by Harry Flam recently presented its proposals. Here too, the Riksbank is in the process of formulating its stance. The public are entitled to expect that the authorities act to prevent and manage financial crises in the best possible way All of the things I have talked about here are measures that aim to reduce the risk of a financial crisis recurring, or to limit the damage if a financial crisis nevertheless breaks out. The international process that has come to expression in the Basel III Accord is creating better regulations for the banks in all countries. This also benefits us here in Sweden. Over and above this, however, we have to manage the Swedish banking system and its special characteristics. Sweden is a small open economy with its own currency and large banks. We need special regulations. This means that we, like a number of other countries, want to proceed more quickly and impose stricter requirements than those in the Basel III  10  BIS central bankers’ speeches  Accord. However, the measures we have taken so far have already clearly strengthened the Swedish banks.

•  RMB deposits grew more than 20% year-on year. •  Average daily RMB FX turnover grew more than two times in 2014. RMB is now one of top 5 most actively traded currencies in Singapore. •  Aim in coming years is to: o  Grow RMB capital market activities, including through promoting RMB bond issuance;  o  Enhance RMB asset management capabilities, leveraging on RQFII; and  o  Promote cross-border RMB financing, building on RMB pilot for Suzhou Industrial Park and Tianjin Eco-city. Making concerted efforts in two areas that cut across asset classes: skills and technology. 63. First, SkillsFuture. •  We want to be a financial centre that is among leaders globally in workforce skills and expertise, with a strong core of Singaporeans at every level. BIS central bankers’ speeches  9  •  MAS in partnership with industry and educational and training institutes, will undertake initiatives to strengthen support for finance professionals to: o  o o  learn continuously, develop expertise, and make strong contributions throughout their professional careers. 64. Second, Smart Financial Centre. •  We want to be a financial centre where innovation is pervasive and technology is used effectively to: o o  o  o •  10  increase efficiency, create new opportunities, manage risks better, and improve people’s lives. MAS in partnership with industry will drive initiatives to create a vibrant ecosystem for innovation and adoption of new technologies while fostering safety and security. BIS central bankers’ speeches