samchain/econo-pairs-v1 huggingface dataset:
“The Financial Crisis and the Policy Responses: An Empirical Analysis of What Went Wrong”, National Bureau of Economic Research Working Paper 14631. White, William R. (2006). “Is Price Stability Enough?”, Bank for International Settlements Working Paper 205. White, William R. (2009). “Should Monetary Policy ‘Lean or Clean’?”, Federal Reserve Bank of Dallas Globalisation and Monetary Policy Institute Working Paper 34. Williams, John C. (2009). “Heeding Daedalus: Optimal Inflation and the Zero Lower Bound”, Brookings Papers on Economic Activity, 2, 1–50. Woodford, Michael (2003). Interest and Prices: Foundations of a Theory of Monetary Policy. Princeton University Press: Princeton, NJ. Woodford, Michael (2010). “Financial Intermediation and Macroeconomic Analysis”, Journal of Economic Perspectives, 24(4), 21–44.

Most of the time this should not  8  BIS central bankers’ speeches  happen, as both aggregate demand and credit market shocks will tend to push the two policies in the same direction. Differential movements are more likely to arise in the face of supply disturbances. For instance, a beneficial supply shock will tend to push inflation below target, warranting a looser monetary policy, while it may also encourage a credit boom, warranting tighter macroprudential policies. But in any case, it is not clear that is such a problem. The instruments address different distortions, so one should expect them to move in different directions from time to time. Moreover, it is likely that the regulatory dials will be adjusted much less frequently than policy rates, so co-ordination should not be that significant an issue7. My concluding observations relate to the broader context within which macroprudential policies are conducted. Credit booms are times when everyone feels good and risks seem slight. Taking the credit punch bowl away before the party gets out of hand will be controversial, and banks and borrowers will be quick to claim “this time is different”. That is a good reason for delegation to a separate committee or agency with a longer perspective, much as we do with monetary policy. Even so, the pressures not to take action may be intense. Making macroprudential policies rule-based would be one response.
See chart “Real exchange rate against Norway’s trading partners” at the end of the speech. Substantial oil revenues are now being ploughed into the Norwegian economy. Since the turn of the millennium, annual petroleum revenue spending has increased by a good NOK 100 billion. According to uncertain forecasts in government documents 5, another NOK 40 billion or so will be phased in over the next ten years. The cost level in Norway is a thermometer indicating how much the Norwegian economy can sustain without developing a serious case of Dutch disease. The temperature is now high. 4  Measured in international currency at the exchange rate prevailing on 31 December 2008. 5  See Table 3.6 in Report No. 2 (2009–2010) to the Storting: Revised National Budget 2010. BIS Review 78/2010  3  Measured against Norway’s trading partners, the cost level is now almost 20 per cent higher than the average for the oil age. Norwegian labour has never been as costly as today. Norwegian businesses will often lose contracts given the current high level of spare capacity in other countries. And it has never been more profitable to relocate activities abroad. The economic geography of Norway will change over the next 10–15 years. Norway’s cost level and low growth in Europe will bring pressure to bear on jobs and businesses in manufacturing communities. Job losses will have the most severe effects in areas where manufacturing is the most important industry. Entire manufacturing sectors may be lost.

Ong Chong Tee: Confidence in and resilience of the life insurance industry Speech by Mr Ong Chong Tee, Deputy Managing Director (Financial Supervision) of the Monetary Authority of Singapore, at the Life Insurance Association (LIA) Annual Luncheon 2015, Singapore, 4 March 2015. *  *  *  Dr Khoo Kah Siang, President of the Life Insurance Association, Distinguished guests, Ladies and Gentlemen. 1. Thank you for inviting my colleagues and I to the Association’s 13th Annual Luncheon. 2. Modern life insurance is said to have its beginnings in London more than 300 years ago by a company called Amicable Society for a Perpetual Assurance, with the aim of allowing an amicable distribution of contributions to be made by deceased members to their surviving wives and children. But even during the times of Ancient Rome, it is believed that some forms of life insurance existed to help mitigate the costs of burials of deceased members and to provide for their surviving families. While clearly much has changed in the industry, the central tenet of the industry has remained – to provide financial protection to dependants and in current times, also as a means of savings and wealth management. 3. A life insurance purchase is in essence a legal promise. In exchange for payment of premiums, an insurer will honour claims and make payment as agreed under the insurance policy. Hence given the typically long term nature of the commitments, confidence in and resilience of the life insurance industry must underscore its growth and development.
The importance of the Bank’s role in this has been recognised through the Chancellor’s recent remit and recommendation letters to the Bank’s policy committees, which set out that the transition to a net-zero economy is now a part of the government’s economic strategy that the committees must have regard to.9 So what does this mean a central bank should do in practice? Financial system First, and foremost, it means building resiliency at a micro and macro level. We do this by ensuring the financial system proactively manages and pre-emptively mitigates the financial risks from climate change. That task falls squarely within the mandate of the Prudential Regulation Authority (PRA) and the Financial Policy Committee (FPC). The PRA has set supervisory expectations for banks and insurers to ensure they adopt a strategic approach to climate change and develop capabilities to effectively identify, measure, manage, and where outside appetite, mitigate the financial risks from climate change. This is a necessary component of protecting the safety and soundness of PRA-regulated firms. The FPC, alongside the PRC, will launch next week a Climate change Biennial Exploratory Scenario exercise – the CBES – to assess the resiliency of individual banks, insurers and the wider financial system to different climate scenarios. This type of scenario modelling and analysis is critical to enabling real decisions on climate-related risks by financial firms and policymakers. Assessing resiliency against a range of scenarios enables us to prepare for what might happen in the absence of certainty about what will happen.

If losses have to be shared on a large scale this can put the core of the financial system in peril. Corporate bonds and securitised assets can have similar risks, especially if they are effectively held in the banking system. Debt instruments generally can be destabilising if they cannot easily be restructured when losses occur. Equity provides the most efficient form of risk sharing, suggesting perhaps that this area should be a priority for CMU. The nature of investors also matters in ensuring that an increase in cross border market-based financing in the EU does not increase financial stability risks. In general, sources of market-based financing are more likely to be resilient if the investor base is diverse, not excessively reliant on leverage and “sticky”. It is abundantly clear from all of the above that achieving the necessary step change in market-based financing in the EU means a marathon not a sprint. Although it shares its nomenclature with Banking Union, Capital Markets Union is a very different animal. The former is essentially designed to improve stability of and between the euro members through institutional change and moving major financial stability responsibilities to sit at the euro level alongside monetary stability. It was possible to make these institutional changes relatively quickly, though their implementation will take longer. Capital Markets Union, in contrast, aims to deepen and widen the single market, though it needs to have regard to financial stability. It does not require institutional change.
And firms’ labour costs grew an estimated 1.3% in the last quarter of 2014, close to core inflation. Consumer confidence and retail sales growth are at their highest in over decade. Similarly real income growth is on course to be the strongest for more than a decade. Firms’ investment intensions are robust. Surveys point to solid growth consistent with trend. There is little evidence of a deflationary mindset setting in. 13  That reflects an excess of saving over investment. That in turn reflects a combination of factors including the protracted process of balance sheet repair in both public and private sectors, and more secular factors like demographics (ageing and slower population growth), the higher steady state costs of financial intermediation relative to the pre-crisis period, and, possibly, lower productivity growth, as a consequence of lasting scars from the crisis. See Carney, M (2013), “The spirit of the season” at The Economic Club of New York; and box on page 42 of Bank of England (2014), Inflation Report, August. 14  Protracted pass-through, generated by stickiness in the domestic price of imported goods, challenges the classical view that the exchange rate provides an efficient shock-absorber in the face of foreign shocks. 15  These figures refer to the quarter-on-quarter annualised growth rate of the Average Weekly Earnings series.

In other words, what happens when certain assets that are considered relatively safe, and in some cases are used as safe havens, are not considered as being that safe any more? The crisis has shown the importance of financial markets relying on liquid and safe assets to protect against systemic risk. Traditionally, the government bonds of advanced economies  4  BIS Review 126/2010  have played this role. What scenarios open up if advanced economies’ sovereign debt assets are no longer perceived as risk-free assets? How would this affect the functioning of financial markets? There is no doubt that there would be some direct spillover to all other assets. The riskiness of the global portfolio can be expected to rise more than proportionately. Indeed, if the public sector is itself over-leveraged, who can back up the public sector? 2 It can be expected that higher yields and lower asset prices would exert downward pressure on economic activity through increases in the costs of external finance, negative wealth effects and negative effects on confidence. 3 A world without default-free assets would have further implications for economic activity because these are the prototype of “information-insensitive” instruments, i.e. they serve as “money” and provide the basic functions of money when the opportunity cost of holding money becomes too high. 4 For instance, information-insensitive assets are an important source of collateral in financial markets. The disappearance of “good” collateral would reduce credit supply and thus impair economic activity.
Goh Chok Tong: Staying ahead of the Asian curve Speech by Mr Goh Chok Tong, Senior Minister of the Republic of Singapore and Chairman of the Monetary Authority of Singapore, at Barclays Asia Forum, Singapore, 1 November 2007. *  *  *  I extend a warm welcome to all of you, especially to those who have not come to Singapore in recent years. I would also like to thank Barclays for organising this Asia Forum as well as this weekend’s Singapore Open. I hope the Singapore Open will grow in prestige as you expand your presence in Singapore and Asia. Singapore’s economic growth rates in the past few years have surprised many, including ourselves. We did not expect to be able to consistently achieve growth rates of above 6% per annum as we are a mature economy. Yes, we have remade our economy but the good growth was also due to the buoyant world economy and a surging Asia. Singapore’s future growth will depend not only on our own efforts but also on our ability to anticipate trends in our external environment and stay ahead of the curve. This morning, I would like to share with you how we see developments in Asia and the challenges before us. Political outlook Let me start with the political outlook. I believe that Asia will remain stable and the regional environment conducive to growth. Post-9/11, the world had to adjust to new insecurities posed by terrorism.

In this kind of uncertain economic environment, it is all the more important that we should be trying to maximize the opportunities to develop trade and investment links between neighbouring economies. That is why this Symposium is timely and important. The existing economic links between Fujian, Hong Kong and Taiwan provide a solid platform on which to build for the future. Taiwan and Hong Kong are already major trading partners with Taiwan’s exports to Hong Kong accounting for 23.5% of its total exports in 1997. Visitors from Taiwan also account for a significant proportion of the total number of visitors to the territory and thus make a major contribution to the tourist industry in Hong Kong which, as you will know, currently needs all the help it can get. 4. Trade between Hong Kong and Fujian is also growing rapidly in both directions and both Hong Kong and Taiwan are a major source of overseas investment into the Province. There are over 10,000 Hong Kong enterprises in Fujian. 5. The Hong Kong presence in Fujian includes a number of banks from Hong Kong, including Bank of East Asia. The same bank also maintains a branch in Taiwan which puts it in a good position to take advantage of the triangular trading links between Fujian, Hong Kong and Taiwan. In its role as an international financial centre, Hong Kong is also the host to a number of banks from Taiwan. The Taiwanese presence here consists of 4 licensed banks, 2 restricted licensed banks and 3 representative offices.
I think that pragmatism should prevail as to the form of the private sector involvement in crises resolution. But there is a need for general principles to highlight the roles and responsibilities of the public and private sectors, such as those that have been defined in the framework adopted by the G7 at the Köln Summit in June 1999. Among these principles, I would particularly stress: –  the focus on the medium term sustainability of a country’s financing position;  –  the objective to achieve comparability of treatment between and within a country’s bilateral official and private creditors. 1.5  Choice of the right exchange rate regime  The sustainability of any exchange rate regime depends crucially on its consistency with a country’s domestic macroeconomic and structural policy framework. This being said, the choice of an exchange rate regime should rest on the following principles: –  So-called “corner solutions” are not necessarily the only available options. Free floating rates may help to accommodate volatile capital flows and asymmetric shocks; however, they might not prevent misalignments leading to balance of payments desequilibrium, they might prove disruptive for the real sector of small open economies, which often lack the size for developing the necessary market infrastructure to cope with exchange rate instability. Currency boards can be warranted only under very specific circumstances.

Efforts have now to be pursued as regards the prioritization of these Standards and Codes (the Financial Stability Forum Task Force on Implementation identified 12 of such Codes and Standards out of 65) and the development of incentives to implement them. Is there a better demonstration that we are experiencing globalization than to observe that 65 global workshops including countries in transition and emerging economies have worked out 65 Codes and Standards to be implemented BIS Review 52/2000  2  universally? The commitment of economies to implement Codes and Standards might be reinforced if market participants reflect information on observance of Codes and Standards in differentiated credit ratings. 1.4  Private sector involvement  The main objectives of private sector involvement is to avoid moral hazard and other distortions in the functioning of international financial markets and to facilitate more orderly adjustments in case of crisis. Market participants should be encouraged to assess adequately the risks involved in investment decisions on the basis of a country’s underlying fundamentals, including the soundness of its financial system, rather than on the expectation that official flows will possibly support repayments to them in times of crisis. We have to promote approaches that permit appropriate coordination among creditors, and between creditors and borrowers. Appropriate instruments to reach that goal include collective action clauses, private contingent credit lines, call options on interbank credit lines and the removal of put options from bond contracts.
To receive an LOLR credit, a bank must on the one hand be systemically relevant and, on the other hand, be solvent and able to furnish sufficient collateral. Without collateral, the National Bank cannot grant any credit. This fundamental principle is enshrined in the National Bank Act. By disclosing our terms to the banks in advance, we are eliminating any possible misinterpretation of the liquidity risks and helping to ensure that preparations are in place for a liquidity crisis which can never be ruled out altogether. This is what we refer to as “constructive clarity”. Conclusion To sum up, I would like to reiterate that the situation of the Swiss financial system is stable. However, this gratifying conclusion should not allow us to rest on our laurels. Maintaining a stable financial system in the long term calls for constant efforts to prevent and cope with crises. While this challenge must primarily be met by the private sector, the authorities can, should and must support its efforts. Financial Stability Report 2004 (424 kb)  BIS Review 39/2004  3

If necessary, it will therefore remain active in the foreign exchange market to influence monetary conditions. Thank you very much for your attention. I will now be happy to answer your questions. BIS central bankers’ speeches  1
It is intuitively easy to understand that the amount of money in the economy is a decisive factor for the price of the goods produced in the country. In modern economies, where payments are largely made electronically, the monopoly on issuing banknotes is no longer an equally evident condition for enabling monetary policy to determine price trends. Today, it is instead the right to determine the terms in the systems for large electronic payments between banks and the opportunity to influence how much the banks shall borrow or deposit in the Riksbank that enable us to steer interest rates. For electronic payments to be able to function as money, it is necessary for the central bank to be perceived as guarantor for these means of payment in the same ways as with banknotes. This role can only be fulfilled by a central bank and in this way one can say that the possibility to determine price trends in the economy still lies with the monopoly on issuing money. The Riksbank governs the shortest interest rate in the interbank market, so that it normally remains close to the monetary policy-steered repo rate. The fact that the Riksbank can steer the interbank rate is primarily due to the fact that each individual bank participating in the system handling large interbank payments - known as the RIX system - always has an opportunity to borrow and deposit money in the Riksbank overnight at the lending and deposit rates set by the Riksbank.

Even loans with a longer duration could in principle be financed by short-term borrowing on the interbank market. The lending rate in the interbank market will thus comprise the bank's financing cost for this loan and is therefore an important factor when the bank decides the lending rate it will offer the company. For loans with a longer fixed term, expectations of the development of the repo rate during the duration of the loan will affect the financing cost and thus the lending rate the bank sets for a longer term loan. A bank that has a surplus to invest can in the same way choose between investing it in the interbank market and lending money. The interbank rate will thus influence the lending rate the bank offers households and companies as it comprises an alternative yield. In addition to the interbank rate, however, the banks' lending rates are determined by many other factors. When setting interest rates, the banks must of course compensate themselves for the credit risks connected with the loan and at the same time reserve funds in their own capital to meet any future losses. The fact that banks from time to time make differing assessments of borrowers' credit rating should not in itself affect how much the banks' lending rate changes when the repo rate is raised. The impact from monetary policy should not, therefore, change merely as a result of the banks changing their assessments of the credit risk.