samchain/econo-pairs-v1 huggingface dataset:
Eva Srejber: Monetary policy and inflation expectations in Sweden Speech by Ms Eva Srejber, Second Deputy Governor of Sveriges Riksbank, to Föreningssparbanken in Karlstad, 25 February 2002. *  *  *  I should like to begin by thanking you for the invitation to come here. Today I intend to talk about what guides the Executive Board when we make decisions on monetary policy and what role predictability in the central bank’s actions plays for maintaining price stability. Then I shall take a brief look back at the economic situation immediately following the tragic events of 11 September and summarise the economic situation today. Finally, I should like to explain my views on monetary policy and why I entered a reservation against the decision to leave the repo rate unchanged at the last Executive Board monetary policy meeting. Monetary policy strategy I shall begin with a reminder of what guides us when we make decisions on monetary policy; i.e. how monetary policy strategy has been formulated. The Riksbank has been assigned by law the task of maintaining price stability. We also have the task of promoting a safe and efficient payment system. The banks play a central role in both of these tasks. The monetary policy objective has been defined by the Riksbank as a target for CPI inflation of 2 per cent with a tolerated deviation interval of +/- 1 percentage point. The steering interest rate is the instrument at the Riksbank’s disposal for maintaining price stability.

The Inflation Reports contain different measures of how households and companies expect the rate of price increase to develop. Pricing on the financial markets can also provide some information here. A further type of inflation expectation is reflected in the various forecasters’ assessments of developments. The Riksbank bases its estimations on a total assessment of these different measures of inflation expectations. Stable and low inflation expectations affect both companies’ pricing behaviour and wage formation, as well as having a beneficial effect, as far as monetary policy is concerned, on how consumers react to price changes. Companies’ pricing behaviour is based partly on the development of marginal costs, the competitive situation, demand and inflation expectations. If a company has confidence in the Riksbank’s monetary policy, its prices will not be affected as much by temporary changes in, for instance, supply, demand or the exchange rate. In this situation, the company can assume that inflation will return to the longterm trend once the effects of the disturbance subside. A credible inflation target can thus contribute to maintaining the monetary policy target at lower cost in terms of fluctuations in demand and interest rates. One means of inspiring confidence is to show a high degree of openness and clarity with regard to how monetary policy is conducted. The fact that the Riksbank describes the considerations regarding economic prospects that form the basis for the interest rate decisions makes it easier for external analysts to understand and predict monetary policy.
But many ups and downs and a lot of work remain before we can declare this crisis officially over. And it is in the light of this that we must formulate our monetary policy. The financial crisis has affected the conditions for our actions – how we need to work to manage our two main tasks. As long as the conditions require it, we will also take whatever measures necessary to safeguard financial stability. When necessary we will also act with greater flexibility, speed and force than usual regarding our monetary policy. The latter also affected our most recent interest rate decision and I will now go on to talk about this in more detail. The most recent interest rate decision As I have already mentioned, economic activity has weakened unusually quickly. In addition, there is considerable uncertainty regarding economic developments. To dampen the fall in production and employment, and to manage the inflation target of 2 per cent, our assessment was that it was necessary to adjust the interest rate forecast downwards and to quickly cut the interest rate at the same time. We therefore decided just over two weeks ago to cut the repo rate from 2 per cent to 1 per cent. We are also assuming that the interest rate will remain at around the same level over the coming year, with some probability of a further cut being necessary. But the prospects are brighter further ahead.

Across all of the episodes of market distress in the emerging world over the past two decades, an essential element of heading off or minimizing damage from a crisis has been policymakers showing that they "get the message" about the need for reform, and are prepared to take appropriate measures. §  In this regard, the comparative advantage of the international public sector is in guiding economic and financial policy, and fostering the conditions that will facilitate the restoration or maintenance of voluntary credit and investment flows. IMF support should provide an unambiguous signal of the international community’s confidence in the capacity of crisis-affected countries to take the measures necessary to restore economic health. §  This role is particularly important in unfolding crisis situations, because borrowing country authorities too often are slow to recognize the full dimensions of the policy challenges confronting them, and the private sector is ill-equipped to deal with this. A case-by-case approach by definition is supremely tactical, but it also needs to be strategic in orientation if it is to be successful in the longer run. I would like to highlight several ways in which the case-by-case approach needs to be strategic. G  First off, strategy needs to be informed by a long-run view about the case at hand. The emphasis should not be merely on "working out" the problems at hand, but on "working through" them.
You would recall that in my first message to you on assuming the office of the Governor of the Central Bank on the 01st July 2004, I stated that I was deeply conscious of the great honour attached to my appointment to this august post. Now, I address you with 6 months’ experience at the helm of this unique institution which is responsible for safeguarding the price stability and the country’s banking and payments system. During the last decade, the staff of the Central Bank faced several traumatic events and challenging situations. The Central Bank bomb blast, which took away the lives of 41 employees and caused injuries to nearly 1000 employees, was the most traumatic event. However, I understand that even those seriously injured joined the unaffected employees to offer their best efforts to the Bank and as a consequence, the Bank was in a position to resume normal work without an interruption within a short period of time. This reflects the resilience of our staff. Thereafter, the Bank was subject to a modernization and restructuring scheme. A major feature of the restructuring process was the offering of a Voluntary Retirement Scheme (VRS) for certain categories of the Staff at the end of 2001. Around a third of our staff opted for the VRS and left the Bank.

Encik Abdul Rasheed Ghaffour: Shaping the future starts now Speech by Mr Encik Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the launch of the Financial Management for Retirement Module "Shaping the future starts now", Kuala Lumpur, 7 April 2017. * * *  Importance of financial literacy There is a growing concern on the low financial literacy level of Malaysians as measured by financial knowledge, attitudes and behaviours. Based on the Financial Capability and Inclusion Demand Side Survey conducted by Bank Negara Malaysia in 2015, the main observations on the state of financial literacy of Malaysians can be described by: a. First – the majority of Malaysians have inadequate knowledge on financial matters to enable them to make informed financial decisions, particularly among the vulnerable groups; b. Second – a significant majority of Malaysians display short-sighted tendencies and are inclined to ‘live for the moment’ – that is to only focus on instant gratification at the expense of long-term financial planning; c. Third – more than 75% of Malaysians find it difficult to even raise RM1,000 to meet emergency needs; d. Fourth – only a quarter of Malaysians have any form of investment; and e. Fifth – most Malaysians indicated that they will face financial pressure should there be a loss of income. Therefore, building the financial capability and literacy of Malaysians is certainly a priority for the nation.
Structures must be in place to prevent weaknesses in the financial system, such as payment or delivery difficulties on the part of a system participant, spreading in an uncontrolled fashion to other participants. In this context, the focus is, for example, on requirements relating to the payment instruments used, the irrevocability of transactions that have already been settled (finality), and on instruments and procedures to limit credit and liquidity risks. 2  BIS Review 58/2003  Collaboration with other authorities The National Bank is not the only institution which actively endeavours to secure the stability of the financial system. There is also contact with other authorities. One of these points of contact arises from the fact that, for example, the operator of SECOM (SIS Sega Intersettle AG) holds a bank licence and is therefore subject to supervision by the FBC. The FBC will still be the regulatory body responsible for the institution itself, while the National Bank will handle the oversight of the system operated by this institution. A parallel situation exists in the case of x-clear, which is operated by SIS x-clear AG - also regulated, as a bank, by the FBC. The FBC and the National Bank coordinate their activities and avoid overlaps. A further point of contact with other authorities exists in the case of financial market infrastructures that are of systemic importance to Switzerland but are operated abroad and thus cannot be overseen directly by the National Bank.

I would like here to outline how the Swiss National Bank can help to ensure more efficient and more reliable financial market infrastructures through its oversight of payment and securities settlement systems. I would, however, like to make one key point right away: state intervention in, or regulation of, financial market infrastructures is justified only if it must be assumed that the private sector will not necessarily perform these functions of its own accord in a manner that is best for the economy. In reality, when designing a system its operators and participants will probably consider the direct costs that they would bear themselves in the event of a system failure or the withdrawal of a participant. However, the remaining costs that are not borne directly by the parties involved in the event of a system crisis tend to be forgotten in management calculations. It cannot be ruled out, then, that operators and participants take less account of the security of a system than would be necessary from the perspective of the broader economy. It is a classic problem of market failure. The sense and purpose of overseeing payment and securities settlement systems is to give due consideration to the externalities that would be neglected by the private sector and to ensure that financial market infrastructures provide the optimum degree of reliability from the point of view of the national economy.
This dynamic is augmented in jurisdictions like Malaysia, where the central bank is responsible for promoting both monetary and financial stability. If we were to go completely cashless, central banks might lose this traditional means of maintaining a strong brand. The policy calibration in Malaysia At present, Malaysians still transact mostly via cash. While Malaysia endeavours to accelerate the migration to e-payments, we see that cash is necessary and will always be in demand. Although e-payments per capita nearly doubled in the past five years, the ratio of cash in circulation to GDP rose by 17%. We are therefore committed to ongoing enhancements in the way we manage cash and its circulation. To this end, we have invested in a new Automated Cash Centre, which most of you will be visiting as part of this Conference. We are also in the process of building a new modern Mint. 3/4  BIS central bankers' speeches  The next page for physical currency As we consider the future of physical currency, it is crucial that we bear in mind the sensitivities of the users of cash. We live in an increasingly aware and empowered generation. For this reason, issues of environmental footprint cannot be an afterthought. Similarly, banknote production must carefully consider the public interest and legitimate ethical concerns across society – including special interest groups. In addition, the industry must be run with manifest integrity. The Banknote Ethics Initiative is a welcome step forward in this regard.

This, in turn, exerted a paralysing effect on a significant fraction of spending decisions, thus playing a key role in triggering the 1930s Depression and the resulting deflationary spiral. 5 What should we conclude from this brief excursus? In launching the economic revolution which unbound China and ultimately propelled it among the world powers, Deng Xiao-Ping famously exhorted his countrymen to “Seek truth from facts”, 6 in stark opposition to the ideological approach which had dominated up until then. Within the present context the facts are clear: on the one hand, price stability is a necessary precondition for financial stability, although it is by no means a sufficient one; on the other hand, a key reason for preserving the stability of the financial system is in order to avoid potentially significant risks to price stability, in one direction or the other. Let me now turn to discussing several issues concerning the joint implementation of, and the interaction between, monetary and macroprudential policies. II. Issues concerning the joint implementation of, and the interaction between, monetary and macroprudential policies  We are currently in uncharted waters. The new mix of macroeconomic policies, with the setting up of macroprudential policies, is being developed as we speak. Some issues are already clear: we have two objectives – price and financial stability – which, based on standard economic analysis, means that we will need two separate instruments to achieve them.
Some say the film is being screened again now; that households are simply addicted to debt and lenders are enabling that addiction. Let’s put things in context. Since the financial crisis, helped by low interest rates, Britain’s households have reduced their debt. Nevertheless, we do still have a high level of household debt by historical and international standards. As a share of incomes, consumer loans are actually smaller than they’ve tended to be in the past twenty years. It is mortgage debt that explains why debt levels are so high (chart 6). Mortgage debt is high, in large part, because housing costs are high. Across the nation, the average house costs 4.5 times income (Chart 7). 8  All speeches are available online at www.bankofengland.co.uk/speeches  8  An imbalance of demand for, and supply of, homes means it’s not just expensive to buy a home, it’s expensive to rent one too. 6  Those who rent in the private sector typically spend a third of their income on rent. How much would a first time buyer be willing to pay for a house financed with a mortgage if the alternative is to spend a third of their income on rent? The payments on a mortgage of 4 times income, paid off over 30 years, at an interest rate of 7% (rather higher than the prevailing Standard Variable Rate of about 4%) would cost the buyer a third of their income.

Many advanced economies continued to retain significant capital account restrictions until early 1980s, later than the internationalisation process of their currencies that began in earlier decades. Such evidence suggests that the transition of the renminbi as an international currency can commence with the gradual and sequential liberalisation of the capital account. China’s position on a ‘managed convertibility’ approach instead of the traditional ‘fully or freely convertible’ can therefore be appreciated given the lessons from the Global Financial Crisis and the risks associated with volatile capital flows even for such a large emerging economy like China. It is important to note that China has made significant progress in this area. This is even acknowledged by the IMF in its recent reports as they note that China has already achieved full or partial convertibility in 35 out of 40 items under the capital account. The rise of the renminbi and its implications While the path for the renminbi to be a fully international currency will remain gradual, the renminbi has already achieved significant milestones. It is now the second most used currency globally for trade finance and the fifth most used currency for global payments. One‐quarter of China’s total trade is now invoiced in renminbi, and this is expected to double within the next five years. By some accounts, more than sixty central banks around the world already hold renminbi in their official reserves.
The purchasing power of the lowestearning half of the population has been flat since the early 1980s, while the richest decile have more than doubled their real income in the same period. Much of this increase stems from higher capital income. If we are to reap the rewards of economic integration and technological advances, structural adjustments are essential. At the same time, we must take measures to prevent too many from falling behind. In this respect, the education system and social safety nets are important. Redistribution through the tax system and transfer payments can also help spread the benefits more evenly. This is not, however, helped by the international competition to offer ever lower corporate tax rates. The outcomes of last year’s two key popular votes are a signal that the winds have shifted, with opposition to globalisation on the upswing. Few stand to benefit from a shift away from free trade. For small, open economies like Norway the loss may be considerable. But the biggest losers will be the more than 700 million people still living in poverty. Climate change – a global challenge The industrial revolution that began in England in the 18th century was a turning point. Ever better utilisation of resources in terms of working hours, machinery and raw materials has continued to raise total world GDP. But a simple indicator like GDP does not capture the full range of welfare 5/9  BIS central bankers' speeches  gains.

Chart: Changes in employment So far, however, it is only in the tourist industry where a weaker krone has led to clearly higher activity. Since oil prices started falling in autumn 2014, employment has shown solid growth in the hotel and restaurant industry, but otherwise almost two in three new jobs have come in the public sector and the construction industry. Growth in those sectors has offset the decline in oilrelated industries, where one in five jobs has been lost. The strong growth in jobs in the construction industry reflects the economic policy pursued. Public investment has increased, and low interest rates have fuelled house price inflation and led to a sharp rise in housing construction. In 2016, housing starts came to almost 37 000, the highest number recorded since the early 1980s. In the present situation, it has been sensible to pursue a potent countercyclical policy. Many countries have experienced that a sharp fall in output and employment can have long-lasting adverse effects. It must be recognised, however, that the longer-term challenges facing the Norwegian economy cannot be resolved by spending more oil revenues and keeping the interest rate low. Chart: Norway’s trade and current account balance As a small open economy, much of our welfare is based on trade with other countries, providing us with access to goods and services others are better able to produce. But we also have to offer something in return. High oil and gas prices have over the years generated large current account surpluses.
A published repo-rate path makes it easier to explain the Riksbank’s view of developments and its reasoning to the public and the financial markets when the monetary policy decisions are made. The aim is to improve the Riksbank’s ability to steer expectations regarding the monetary policy that will be conducted in the future. Expectations regarding the repo rate influence the more long-term interest rates which in turn are important to the economic decisions of the households and companies. The Riksbank updates its repo rate paths at the monetary policy meetings, which are held approximately every other month. During this two-month period, new information on the development of the economy may emerge. If the Riksbank is successful in communicating the principles for monetary policy, the market participants should be able to predict rather  11  See T. Jonsson and P. Österholm, “The Properties of Survey-Based Inflation Expectations in Sweden”, Working paper no. 114, 2009, National Institute of Economic Research. 18  BIS Review 32/2010  well how new information will affect the Riksbank’s repo rate path. This should then help to ensure that there will be only small deviations between the market’s expectations on the day before the publication of a repo-rate path and the repo-rate path that the Riksbank actually publishes. The Riksbank’s repo-rate paths in 2007 and 2008 were, by and large, well predicted by the market.

WC-FINC aims to reduce the average financial exclusion level in ASEAN to 30% by 2025, and increase the level of infrastructure readiness in ASEAN to 85% (currently at 70%), based on agreed measures of financial inclusion outcomes and preconditions. Particular emphasis is given to capacity building and peer learning. An especially interesting part of this journey has been ASEAN’s incredible diversity which provides a rich and broad canvass for drawing lessons from every country on specific challenges faced and measures pursued to increase financial inclusion. For some of us, the geographic barriers to financial inclusion are the most urgent, for 1/3  BIS central bankers' speeches  others, cost or knowledge and trust are more significant barriers. In different ways, we all have something to learn from each other’s experience on strategies that worked or did not work so well. This is why we are here today. This Forum on financial inclusion was organised in response to technical assistance requests and learning needs of ASEAN countries based on a survey conducted by WC-FINC last year. There was particular interest in Malaysia’s experience and so we volunteered to host this first Forum, but clearly, we are also eager to learn from others. The Forum focuses on 5 key areas which represent core pillars of a holistic financial inclusion system. The first is the development of a national financial inclusion strategy and monitoring mechanism which are crucial to ensure that strategies are well targeted, coordinated and executed.