samchain/econo-pairs-v1 huggingface dataset:
And the Fed regulates and supervises financial institutions so that, each and together, they safely match savers and borrowers in the real economy. I sometimes think that theories or expectations of central banking depart from reality. This may be unavoidable. The best theories are simple. The reality of central banking is complicated. The Fed is a complex entity governed by numerous statutes that have changed many times in the last 100 years—and are still changing. The Federal Reserve is not just a concept. It is a creation of Congress. Its job is what Congress tells it to do—to adhere as closely as possible to the will of Congress. Of course, Congress's instructions sometimes leave room for interpretation and discretion. For example, Section 13(3) of the Federal Reserve Act allows the Board of Governors to provide credit during "unusual and exigent circumstances." What are those? And how do we know when circumstances cease to be unusual and exigent? Theories can help resolve these ambiguities and guide the judgment of policymakers. Other times, Congress is clear, but its instructions do not fit neatly into theories of central banking. In designing its Section 13(3) facilities, the Board of Governors coordinated its policy decisions with the Department of the Treasury. This was required by law.

In the Dodd-Frank Wall Street Reform and Consumer Protection Act, Congress required the Board of Governors to consult with the Secretary of the Treasury on regulations to implement its emergency powers.20 It also required that the Board of Governors obtain the approval of the Secretary of the Treasury before extending emergency credit.21 To some extent, the Dodd-Frank Act codified reality. The Board of Governors and the Department of the Treasury worked closely throughout the Financial Crisis of 2008. But Congress formalized a degree of cooperation that can make it hard to draw a theoretical line between monetary and fiscal authority—or between an independent agency and a political department. I should add that this working relationship between our country's monetary and fiscal authorities deepened following the Coronavirus Aid, Recovery and Economic Stimulus Act—known as the "CARES Act." That statute appropriated roughly $ trillion in economic relief. Congress sent about a quarter of that money to the Treasury for investments in Federal Reserve programs and facilities. I look forward, in the fullness of time, to more theoretical discussions about the proper role of a central bank in administering emergency economic relief. Some of this dialogue has already begun.22 Questions that catch my interest include: What should be the guiding principles and constraints on the design and establishment of 13(3) facilities?
William C Dudley: A bit better, but very far from best – US economic outlook and the challenges facing the Federal Reserve Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Fordham Corporate Law Center Lecture, New York, 5 October 2009. *  *  *  Thank you for having me here to speak today. It is a real pleasure to have this opportunity to discuss the economic outlook and the challenges that face the Federal Reserve in terms of monetary policy going forward. As always, my remarks reflect my own views and opinions and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. My assessment of where things stand today is mixed. On the positive side, the financial markets are performing better and the economy is now recovering. In fact, the improvement in financial conditions has caused usage of the Fed’s special liquidity facilities to fall considerably. Consistent with their design, these facilities have become relatively less attractive as market conditions have improved. Also, the Federal Reserve has begun to taper its rate of asset purchases. The Treasury purchase program will end this month and the agency MBS purchase program by the end of the first quarter of 2010. On the negative side, the unemployment rate is much too high and it seems likely that the recovery will be less robust than desired.

6  The latest macroeconomic projections point to robust growth in the coming quarters once the vaccination programme has gathered pace and restrictions on movement have been progressively lifted. However, significant uncertainties remain as to the course of the pandemic itself, private consumption, tourism flows, the economic impact of the NGEU funds and the damage to the productive system caused by the pandemic. Against this background, there is still the risk of credit quality impairment being more pronounced in the future than has been observed to date, especially in the sectors hardest hit by the pandemic, and particularly once the support measures are gradually withdrawn. In fact, some signs of credit quality impairment were already observed in 2020. Specifically, Stage 2 loans6 increased substantially in 2020 (24.3%), and their growth has quickened in 2021 to date (37.5% in March). Meanwhile, although forborne loans continued to fall year-on-year, these declines have been far more moderate since the onset of the pandemic (-2.3% in March 2021, compared with -19.6% in March 2020). Lastly, NPLs increased in the consumer portfolio in 2020, growing by 23% (but slowing to 15.9% in March 2021). Deeper analysis of the growth of NPLs and Stage 2 loans in the business lending segment reveals that the sharpest increases occurred in sectors severely affected by the pandemic.
However, the reforms were not only intended to bolster resilience and alerts in the face of shocks and sources of risk, but also to promote the development of effective resolution mechanisms. This sought to address the problem known as “too big to fail”, a problem that became obvious during the crisis, when the authorities of various countries were forced to use public funds to rescue banks, owing to the serious consequences that their insolvency might have had on the rest of the financial system and on the economy as a whole. With regard to resolution, a number of principles have been developed in order to guarantee the orderly management of banks in severe difficulties. These include the development of a bail-in tool to permit an orderly resolution process that minimises the impact on financial stability, ensures the continuity of critical bank functions and minimises the need for public funds. 4/14  Apart from the reforms I have mentioned, the G20 promoted stricter regulation and closer monitoring of the activity of non-bank financial intermediaries. The aim was to improve the monitoring of developments in this sector, and to assess which regulatory instruments should be used, taking into account the risks these intermediaries pose to financial stability. These risks may, in certain circumstances, have similar consequences to those traditionally assumed banks. The measures I have mentioned have generally led to a healthier, more resilient and diversified financial system, without adverse effects on the provision of credit to the economy.

Thomas Jordan: Monetary policy and government debt – different perspectives Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the 13th Zermatter Symposium, Zermatt, 28 August 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The effects of fiscal and monetary policy overlap. Fiscal policy can have a cyclical effect, while monetary policy can also generate income for the government. However, theory and practise have shown that, first and foremost, monetary policy must be used to ensure price stability and – to a limited extent – to dampen economic fluctuations. The principal aim of fiscal policy, however, must be to ensure that the national budget is financed as efficiently as possible. When government debt levels are high and budget deficits get out of hand, they pose a significant threat to a monetary policy that is geared to stability. Misusing monetary policy as an instrument of fiscal policy inevitably leads to a loss of purchasing power. Many episodes of high inflation have come about, ultimately, as the result of funding requirements on the part of the state. Nowadays, the independence of many central banks shields them – to a large extent – from the fiscal greed of politicians. Nevertheless, time and time again, when government finances have fallen into disarray, central banks have been seen to come under political pressure. From a monetary viewpoint, however, government debt is not entirely unwelcome.
One will also require that a certain percentage of the banks’ assets are liquid, in the sense that they can be converted into cash relatively easily. This reduces the banks’ vulnerability to sudden outflows of funds deposited or maturities of loans that cannot be rolled. Put simply, they require that the bank holds a liquidity buffer. The size of the buffer is calculated to ensure that the bank can manage a 30-day period with very large withdrawals of deposits and substantial loan maturities. These two regulations – on liquidity buffers and more stable sources of funding – entail less risk that the banks will be taken by surprise as they were during the financial crisis. But above all the regulations will lessen the contagion effects on the markets. Stable liquidity management reduces the risk of turbulence in individual markets or banks quickly spreading and creating financial problems for other banks. BIS Review 159/2010  5  Stricter risk management The third part of the Basel Committee’s reform package concerns what is perhaps the most important mainstay of the banks – the way they manage their risks. If risk management is inadequate, having plenty of capital or apparently good liquidity management will not help. Risk management mainly concerns credit risks and market risks. Credit risk means that a borrower is unable to repay his or her loan.

It is clear that monetary union does entail a higher degree of joint decision-making. But economic integration and political integration can develop in parallel. Where necessary, sovereignty in selected economic policy fields can and should be pooled and democratic legitimation deepened. How far should this go? We do not need a centralisation of all economic policies. Instead, we can answer this question pragmatically: by calmly asking ourselves which are the minimum requirements to complete economic and monetary union. And in doing so, we will find that all the necessary measures are firmly within our reach. For fiscal policies, we need true oversight over national budgets. The consequences of misguided fiscal policies in a monetary union are too severe to remain self-policed. For  BIS central bankers’ speeches  1  broader economic policies, we need to guarantee competitiveness. Countries must be able to generate sustainable growth and high employment without excessive imbalances. The euro area is not a nation-state where persistent cross-regional subsidies have sufficient popular support. Therefore, we cannot afford a situation where some regions run permanently large deficits vis-à-vis others. For financial policies, there need to be powers at the centre to limit excessive risk-taking by banks and regulatory capture by supervisors. This is the best way to protect euro area taxpayers. There also needs to be a framework for bank resolution that safeguards public finances, as we see in other federations.
DLT may provide a more efficient alternative to credit bureaus that compile consumer credit information from banks. The insurance industry in Singapore is looking at how DLT can help prevent duplicate insurance claims. 2/5  BIS central bankers' speeches  Probably, one of the potentially more powerful applications in financial services is in customer verification, the so-called “know-your-customer” or KYC process. Banks spend an inordinate amount of time and money on KYC, and yet struggle to effectively detect and deter money laundering, tax evasion, and other forms of illicit finance. DLT brings about opportunities for a shared industry-wide KYC utility that can verify customers and transactions in a more efficient and robust manner. This is not just conjecture. It is beginning to happen. In Singapore, OCBC Bank, HSBC and MUFG announced last week that they have completed a KYC blockchain project to reduce the duplicity of KYC processes, providing convenience for customers and efficiency across the banks. The “killer app” for DLT is really in cross-border transactions. When multiple entities across different jurisdictions are involved, there is no natural trusted central party. DLT allows the possibility of various parties working directly with one another to make crossborder transactions cheaper, faster, and safer. Cross-border trade is a good example. In Singapore, we are exploring two specific applications – trade finance and trade documentation. In trade finance, DBS Bank and Standard Chartered Bank are exploring the use of DLT to prevent the problem of duplicate invoicing while preserving client confidentiality.

In the absence of direct trust among parties, the alternative is to rely on trusted central parties. In payments and settlement, there is a central operator that records and updates the balances of the clearing participants But trusted central parties are not always available. And even if they are, what if they fail? Single points of failure make attractive attack targets. And what if trust is broken? What if the central party colludes? The key breakthrough of blockchain technology is its ability to establish trust in a decentralised system. Blockchain technology allow diverse parties to collaborate without trusted central parties. All parties to a set of transactions are able to maintain a coherent and consistent view of the state of the world. 1/5  BIS central bankers' speeches  When I am confident that what you see is what I see, we can collaborate more seamlessly without a third party to maintain a “golden source of truth”. How does a blockchain make sure that what you see is what I see without third party verification? First, data are recorded and shared in a way that ensures a consistent view across multiple parties. Copies of the data are spread around all the nodes of the blockchain network. Rather than trusting any single party, the trust is placed in the collective view of all parties. Anybody can check whether something is wrong. Second, data are heavily encrypted or signed with digital signatures that makes the blockchain secure against tampering.
Floating exchange rates allow a country to pursue its own, independent monetary policy; however, the disadvantage of such an approach is that it can result in major (nominal and  2  BIS central bankers’ speeches  real) exchange rate fluctuations. A country’s currency may thus be substantially under or overvalued – sometimes for considerable periods of time. The problems associated with both fixed and floating exchange rates mean that, time and again, central banks have been on the lookout for compromises. Since the end of the Bretton Woods system, the SNB has twice introduced a temporary exchange rate floor in order to cap Swiss franc appreciation: first in October 1978 against the German mark, and latterly in September 2011 as a minimum exchange rate against the euro. The minimum exchange rate as a monetary policy instrument When a central bank announces a minimum exchange rate, it commits to enforcing a floor, if necessary by means of foreign currency purchases. Such a policy is designed to cap a currency’s appreciation. The minimum exchange rate is not conceived as an instrument for fine-tuning the exchange rate. Rather, it is intended to give guidance to the markets in a period of extreme uncertainty and to reduce excessive appreciation. However, a minimum exchange rate is not a long-term instrument. This is especially true in a country like Switzerland which has lower long-term average inflation rates than most countries and a currency that has appreciated consistently over the decades – both in real and nominal terms.

BIS central bankers’ speeches  5  Chart 1  © Globe Cartoon  Chart 2 Switzerland’s foreign trade, 2000−2015  Source: Swiss Customs Administration  6  BIS central bankers’ speeches  Chart 3 Interest and exchange rates, 2008−2011  Chart 4 Monetary base from 2008 to the present day  BIS central bankers’ speeches  7  Chart 5 Interest and exchange rates from 2012 to the present day  8  BIS central bankers’ speeches
By the end of this year, Bank Negara Malaysia will have completed a compendium of regulatory standards to provide clarity on the Shariah and operational requirements for 14 Islamic finance contracts. This endeavour began in 2013, and incorporates the interpretation of the SAC. The task for the regulators is to come up with similar 3/4  BIS central bankers' speeches  standards in the future – especially as the market ventures into novel and more innovative approaches. This will provide an invaluable resources in helping Islamic financial institutions and their lawyers in structuring Islamic finance products as well as identifying the necessary legal documentation. Individual excellence At the individual level, the promotion of legal certainty will require a strong base of legal and Islamic finance professionals. As the domestic industry and global market for Islamic finance grows, so must our talent pool. Lawyers involved in product structuring, for example, can provide value-added advice to their clients on the parameters of Shariah requirements and legal rules, which helps in the design and developing the documentation of the products. Litigation experts with sound understanding of Shariah requirements can reason better in courts. Certification programs and targeted seminars such as today’s will be important in equipping legal practitioners with a solid understanding of both applied Shariah knowledge and the necessary legal expertise. In conclusion, the world of modern finance is in need of anchoring principles to ensure that intermediation serves rather than enslaves the real economy.

This can be traced back to the enactment of the Islamic Banking Act in 1983 and the Takaful Act in 1984 which facilitated the birth of the first full-fledged Islamic banking institution and takaful operator. Prior to this, Islamic finance was very niche. Its relevance was mostly limited to the provision of custodian services such as the pilgrimage fund as managed by Tabung Haji. There was no appeal to the wider market, then. Since the early 1980s, we have witnessed a significant transformation of Islamic finance in Malaysia. Over the years, this sector began to offer a wider range of solutions to cater for the evolving needs of the national economy and the local communities. Islamic finance now makes up a significant and growing share of the domestic market. The share of Islamic banking assets more than doubled from 12.9% in 2007 to 28% in 2016. Takaful penetration has now reached 14.6% of the population. Globally, Malaysia has established itself as a leading hub for Islamic finance. In the global sukuk market, we hold a share of more than 50% of the global outstanding sukuk. To cater for the growing size and sophistication, the legal foundation for Islamic finance has undergone several enhancements over the years. The Shariah Advisory Councils – or the SACs – of the Securities Commission and Bank Negara Malaysia were established roughly twenty years ago to promote greater Shariah certainty. They since have played an increasingly important role in the ascertainment of Shariah for matters of Islamic finance.
I argued then that it made no sense to use these descriptions because each member of the Committee had the same objective. Members of the MPC cannot entertain closet views about their desired inflation rate because they will be held personally accountable for their judgments about the level of interest rates necessary to meet the inflation target. No matter. A good argument will never beat a good headline. Hawks and doves it was, though there were also references to ostriches, foxes and hedgehogs, and headless chickens. No doubt there were even less flattering comparisons made in private. Still, unlike England football managers, we have not – yet – been compared with root vegetables. And we have made progress. As Chart 4 shows, press references to “hawks and doves” reached a peak in mid-1998 and have declined markedly since. As I predicted in a speech in May last year, “as circumstances change, it is easy to imagine that the ‘hawks’ shall be ‘doves’ and the ‘doves’ shall be ‘hawks’”. But we were also criticised for not being open enough about differences of view. The early minutes were thought to be too bland and to conceal expressions of individual points of view. Much of that criticism was indeed fair. And we have tried to respond by making the minutes a more accurate expression of the range of points of view that are expressed at the meeting.

As part of my revision, I studied the inflation rates since the Second World War for several different measures of inflation. They were all at or very close to 3% a year. No-one in Cambridge at that time – and certainly not the students that were to become part of the inflation generation – heeded the late Richard Kahn’s warning that creeping inflation was about to accelerate. The rest, as they say, is monetary history. I would like those of you revising for your final exams this month to be able to look back in thirty years time and recall that the year in which you graduated was when we finally laid to rest the idea that the UK was an inflation-prone economy. Inflation was the norm for most of my adult life. It should not be in yours. BIS Review 63/1999  8  Why then, you may ask, do we need to build a constituency for low inflation? There are two reasons. First, it is important that support for low inflation not wane as the experience of high and unstable inflation of the past recedes. It would be a counsel of despair to believe that the inflationary excesses of the recent past would have to be repeated in order to retain support for low inflation. Yet, in a recent survey of households in Germany, Robert Shiller2 found that support for stability was much higher among those who had experienced hyperinflation.