samchain/econo-pairs-v1 huggingface dataset:
To summarise, HLIs themselves cannot be seen as direct risk to financial stability, at least not at their present stage of development. However, there are two potential transmission channels through which shocks on HLIs could spread to large international banks. If these shocks are large and banks are not robust enough, then the stability of the financial system could be at risk. However, available data and experience with failures of larger HLIs in the past suggest that the disruptive capacity of HLIs is rather limited. 4. Should HLIs be regulated? As we discussed earlier, the HLI industry itself does not appear to be a threat to financial stability. However, the failure of one or more large HLIs could – primarily via credit exposures – weaken a systemically important bank which, in turn, could weaken the financial system. This potential chain reaction, however, does not in itself prove the need for regulation. This challenge can be met by other initiatives. First of all, there is market discipline. Market discipline can compensate for a lack of regulation. I assume market discipline to be more effective in the case of HLIs than in the case of banks for three reasons: (a) Investors in HLIs are generally well informed and relatively “sophisticated”, (b) the number of investors is small and (c) HLIs do not constitute an industry regarded as worth being rescued in terms of the public interest. However, we should make sure that market discipline works.

1  The Fed’s policy objectives, as stated in Section 2A of the Federal Reserve Act, are that “the Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.” See www.federalreserve.gov/aboutthefed/section2a.htm. 2  See “The Fed’s Evenhanded Policy”, by Randall W. Forsyth, Barron’s, Aug. 23, 2014. 3  For the latest reading of the Dallas Fed’s alternative measure of trimmed mean PCE inflation, see www.dallasfed.org/research/pce/index.cfm. 6  BIS central bankers’ speeches  And this, indeed, is happening. U.S. companies have used this bond market and borrowing rate hiatus from normalcy to pile up cheap, nearly cost-free balances. This cheap and abundant monetary fuel, with the proper incentives from the fiscal and regulatory authorities, can be deployed to the benefit of company stakeholders (shareholders and employees) to enrich and grow the economy. In this sense, we are unique in the world. Mr. Ambassador, American businesses are rich and muscular. And those muscles are being flexed. For example, just two days ago, the Institute for Supply Management (ISM) released its Purchasing Managers Index. The data surprised most all forecasters to the upside. Activity was broad based: 17 of 18 industries surveyed reported growth in August, and new orders reached a 10-year high.
CPI inflation was -0.9 per cent in July, which was three tenths of a percentage point lower than our forecast, but underlying inflation measured as the CPIF amounted to 1.8 per cent, which was entirely in line with our forecast. 9 Inflation measured in terms of the EU harmonised index, the HICP, was also 1.8 per cent in July and when measured as the HICP excluding energy it was 2.8 per cent. Inflation was thus much higher in Sweden than in the EU. One reason for this is probably that the krona has weakened since last autumn. We are assuming that the weakening is mainly due to the financial crisis and that the krona will strengthen again. Since the July monetary policy meeting, however, the krona has strengthened more than we had anticipated (see Figure 18). Another reason is probably that unit labour costs have risen rapidly for three years in a row, mainly as a result of falling productivity, but also because of higher wage increases than before (see Figure 19). According to Prospera’s most recent survey in June, inflation expectations five years ahead were 2.2 per cent and were well-anchored around the inflation target. However, inflation expectations two years ahead are slightly below the inflation target (see Figure 20). The current account and public finances are strengths Sweden’s current account and public finances can be said to be its strengths. These look relatively good in comparison with other countries.

This is a slightly better outcome than in our July forecast, where we assumed that GDP would fall by 0.3 per cent in the second quarter and that the fall would not come to a halt until the third quarter. However, there was unusually great uncertainty regarding the preliminary national accounts figures on this occasion. In recent months various confidence indicators have also shown an improvement. The National Institute of Economic Research’s Economic Tendency Survey, which summarises companies’ and households’ views of the economic situation, increased by almost seven units in July, to 87.1. However, the level is still below 100 and indicates that the mood among companies and households is still much weaker than normal (see Figure 13). 6 The purchasing managers’ index for July was also more positive than market expectations had implied. It rose by almost four units to 54.3 and was thus above 50 for the second month in a row (see Figure 14). The purchasing managers’ index is usually a slightly quicker indicator of developments than the economic tendency survey and an index above 50 indicates growth. 7 Labour market continues to weaken Our assessment in the most recent Monetary Policy Report was that the labour market would continue to be weak. A deterioration in the labour market usually lags behind in an economic downturn, which was also the case this time.
15  For a survey of the literature on the impact on growth of contractionary fiscal policies, see Briotti (2005). 8  BIS Review 43/2006  only be able to play its intended role if it becomes a stable currency. To achieve this, the Maastricht Treaty has given the European Central Bank (ECB) clear priority for the objective of price stability and has granted its decision-makers independence so as to be able to take the necessary decisions.” I believe that we have fulfilled our mandate. By pursuing price stability in the euro area, we have also made a positive contribution to stability worldwide. The euro is not only a very stable currency, but has also become the world’s second international currency, after the US dollar. Moreover, EMU has affected global capital reallocation, attracting FDI as well as portfolio investment, and has enhanced regional financial integration among euro area Member States. Let me therefore underline my firm belief that the euro is an undoubted financial and monetary success because the people who use it around the world believe in its stability. BIS Review 43/2006  9

And, the central idea came with a coalescing around a view on the institutional  BIS central bankers’ speeches  1  structure of monetary policy, that an independent central bank, with a clear objective and target emanating from the public via Parliament was the best way to achieve and sustain the public good. I have absolutely no doubt that in the UK this change has been an outstanding success. Moreover, the benefits of the public good are not challenged – there is a difference between a healthy debate on what the setting of policy should be at any point in time and an unhealthy undermining of the fundamental public good. We have seen the former, and the record of the last nearly twenty years shows that this important distinction has been robustly maintained, all for the good. It is therefore easy to conclude that another crisis, the financial crisis, has made the same mark. Likewise, it is easy to conclude that a stable financial system is a necessary condition of stable economic growth. So far, so good. But it has been less easy to describe simply what constitutes financial stability. It doesn’t reduce to a single measure, like the rate of inflation. It has many heads. There is nothing wrong with this per se, but it may help to explain why it has taken longer to arrive at a stable institutional structure for achieving it.
For example, one would want to be certain that in no circumstance would management see a benefit from putting the firm into resolution in order to convert its debt holdings into equity. BIS central bankers’ speeches  3  jurisdiction, even in periods of stressful financial market conditions, without taxpayer funds, in a way that minimizes knock-on effect to financial markets and other financial institutions. As I have indicated in earlier speeches, I endorse the Federal Deposit Insurance Corporation’s (FDIC) single point of entry (SPE) resolution framework for the United States. For the SPE approach to be successful, firms subject to this resolution regime will need to have a sufficient amount of long-term debt at the parent company that the FDIC can convert into equity to guarantee that the new bridge company is adequately capitalized. Counterparties at the subsidiary level need to be assured that they have no reason to pull back from the new bridge company. In the international arena this type of requirement is referred to as GLAC, or “gone concern loss absorption capacity.” The Financial Stability Board is working on a proposal for an international GLAC standard, with a target date for consideration this November. Finalizing this standard is an important to-do item. As I discussed earlier, both the amount and the composition of additional resources are important.

This was not at all what most people had predicted - given the earlier  1  BIS Review 92/2000  widespread fears of an overheating US economy and the progressive widening of the US current account deficit - and most conventional analysis has for some considerable time now suggested that, on “the fundamentals”, the euro has become increasingly undervalued. I share that view. Why then has the euro weakness persisted? Frankly I’m not at all sure that anyone really knows the answer to that question. What I think we were all somewhat slow to recognise was the impact of the remarkable acceleration of productivity growth in the US economy - not just faster productivity growth but accelerating productivity growth on the latest data up to the second quarter of this year. This has allowed the US economy to continue to grow faster than before without generating inflationary pressures - though there is clearly a limit to how far that can go. But accelerating productivity growth has also increased prospective returns on investment in the US which has contributed to a huge net inflow of capital - in the form of both direct and portfolio investment - which has much more than financed the US current account deficit. The numbers are truly massive.
A case in point is the decisions we have taken in Frankfurt since the start of the crisis, such as interest rate cuts, the unlimited supply of liquidity, purchases of bonds and covered bonds and three-year refinancing operations, which, while aimed at resolving problems of the euro area as a whole, have proven particularly beneficial for Spain. But there are other less evident instances, such as when Europe obliges us to use competitive procedures to award banks that have been taken over or oversees the granting of public aid. Admittedly, this makes bank restructuring a lengthier and more complex process, but it should be acknowledged that it helps Spain ensure that sell-offs are open to all new investors that may be interested and that the taxpayer’s money is better allocated. The help of the European institutions should likewise be appreciated when, in compliance with the new economic governance framework, they obliged the Spanish authorities to be rigorous in cutting the budget deficit. This has not been to the liking of some but, however we view it, it is rightly one more reason to be confident about Spain’s possibility of emerging from the crisis. The discipline required by Europe, which may prove uncomfortable and even debatable in the short term, has, like monetary discipline, extraordinarily positive effects on our economy in the medium term. It is as though Spaniards had taken out insurance so that our governments, authorities and companies cannot take decisions that harm Spain in the long run.

Like in most other crisis-affected Asian countries, these relationships played a critical role in the evolution of the crisis in Thailand. The problem of weak governance is not limited to the private sector, however. Regarding monetary policy, a post-crisis survey of stakeholders, consisting of domestic and foreign institutions, government agencies, as well as the general public, revealed that the BOT was also perceived to be plagued with several weaknesses: lack of good leaders, lack of experiences, and lack of transparency. Finally, in the macroeconomic framework as a whole, it is probably obvious from the experiences leading up to the crisis that high growth cannot be reached and sustained in the absence of consistent government economic policies. The most striking example here is the combination of the fixed exchange rate and the financial liberalization policy, which inherently led to underestimation of exchange rate risks. In the end, market stability that the fixed exchange rate regime was intended to foster was undermined by market-driven foreign borrowings. The lesson for Thailand as well as for other emerging economies is that the authorities must regularly review their policy stances in the drive to keep up with changing financial environments. A move towards liberalization, for example, should be examined carefully in the light of the public sector’s capability in stabilization and whether there is sufficient infrastructure in place to support the regime shift. Finally, the crisis reminds us the importance of monetary and fiscal policy coordination.
The document I am presenting today is the result of six months of review, updating and consolidation work of many studies carried out at the Central Bank, combined with incoming new empirical evidence that enrich our knowledge of the Chilean economy. It provides an in depth analysis of the medium-term trend growth of Chile in the horizon spanning from the years 2017 to 2050, with a special focus on the GDP growth projection for the next ten years. This document projects the evolution of the productive factors (labor and capital) and total factor productivity (TFP) for sectors other than natural resources, while for the latter, the projection of its expected evolution is updated in the light of diverse sectoral background. It includes both the study of the history of the variables and a cross-country comparison, which allows us to look at the Chilean experience in the context of other 8  countries that experienced our current levels of development before us, showing us what we can expect in the future. It also stresses the major importance of productivity, both in explaining current differences in income levels with the developed world, and in projecting future growth. Therefore, special care is given to analyzing the evolution of TFP, providing new evidence on the importance of generating the proper conditions for an efficient allocation of resources. Primarily, we estimate that a range around 3% to 3.5% is reasonable to place trend GDP growth for the ten years ahead of us.

Bank capital is inherently somewhat procyclical. In an economic downturn, banks will increase provisions and tighten loan standards. In some  BIS Review 83/2001  3  circumstances, this could reduce the supply of credit, intensifying the decline in activity. But the introduction of a regime in which regulatory capital is linked to ratings could amplify that effect to the extent that those ratings themselves deteriorate rapidly in a downturn. There are various ways round these problems of procyclicality, but they will need to be resolved before the new Accord can be finalised. I have talked a lot about the structure of public regulation. But it is also important to remember the powerful role that effective market discipline can play in maintaining financial stability. Both the new Accord, and a number of other, broader international initiatives, put substantial emphasis on improving the disclosure of information by financial firms. Disclosure of an appropriate kind should help the market distinguish clearly between well-managed and adequately capitalised banks on the one hand, and their less sound counterparts on the other. This should act as a spur to the weaker firms to improve their performance. Disclosure should also help to reduce uncertainties, which may mitigate the tendency of financial markets to lurch into periodic self-fulfilling crises. It is certainly arguable that greater, and earlier, disclosure of the exposures of Long-Term Capital Management, for example, could have avoided the problems seen in world financial markets following its collapse in the autumn of 1998.
As we announced at the end of our last monetary policy 2  BIS central bankers’ speeches  meeting in January, the Governing Council will review and possibly reconsider the monetary policy stance in early March. The focus of our deliberations will be twofold. First, we will examine the strength of the pass-through of low imported inflation to domestic wage and price formation and to inflation expectations. This will depend on the size and the persistence of the fall in oil and commodity prices and the incidence of second-round effects on domestic wages and prices. Second, in the light of the recent financial turmoil, we will analyse the state of transmission of our monetary impulses by the financial system and in particular by banks. If either of these two factors entail downward risks to price stability, we will not hesitate to act. In parallel, other policies should help to put the euro area economy on firmer grounds. It is becoming clearer and clearer that fiscal policies should support the economic recovery through public investment and lower taxation. In addition, the ongoing cyclical recovery should be supported by effective structural policies. In particular, actions to improve the business environment, including the provision of an adequate public infrastructure, are vital to increase productive investment, boost job creations and raise productivity. Compliance with the rules of the Stability and Growth Pact remains essential to maintain confidence in the fiscal framework.

This will support the banking sector’s ability to make long term sustainable business plans into the future. In fact, central bank governors and heads of supervision indicated that they are committed to not significantly increase overall capital requirements across the banking sector. In the euro area, the situation in the banking sector now is very different from what it was in 2012. Perhaps most importantly, euro area banks have significantly strengthened their capital positions over the past few years, notably as a consequence of the Comprehensive Assessment conducted in 2014. For significant institutions, the CET1 ratio has increased from around 9 to 13%, making them more resilient to adverse shocks. In addition, the quality of the banks’ capital has also been substantially improved. With the 2015 Supervisory Review and Evaluation Process (SREP), the ECB has outlined the steady-state Pillar 2 supervisory capital requirements. This means that, all things equal, capital requirements will not be increased further. Hence, the banking sector can now conduct much better capital planning. Moreover, in 2015, the banks under ECB supervision further increased profits relative to 2014. This allows banks to have appropriate distribution policies while still meeting regulatory capital requirements and buffers, and to support lending to the economy. In addition, the ECB’s monetary policy actions continue to support banks’ financing conditions and, more broadly, economic activity. Clearly, some parts of the banking sector in the euro area still face a number of challenges.
In Malaysia, the average remittance cost has been brought below 3% in 2016, while MSB companies offer some of the most competitive rates for the exchange of currencies in this part of the world. This has been achieved over a period that also saw significant reforms undertaken in the Malaysian MSB industry. A period in which regulatory, compliance and professional standards were substantially strengthened across the industry. And a period of structural change that also introduced greater competition in the industry. MSB companies have risen to these challenges with strategies that have embraced an increased use of technology, a focus on productivity, and in some cases, strategic changes in business models to deliver greater value for investment. Going forward, the MSB industry will continue to be shaped by two important influences. The first is a strong political and economic focus on the role of the industry in advancing financial inclusion and development. The second is certainly going to be the changing nature of competition, powered by technology. Achieving the goal of affordable and inclusive remittance services Making remittance services more affordable and inclusive remains an unfinished agenda. In many countries, both developing and developed, informal remittances systems remain prevalent. There are legitimate reasons why such systems exist in some countries, for example countries that do not have fully developed formal financial systems. At the same time, legitimate concerns exist over risks associated with such systems, especially in an environment where money laundering and terrorist financing concerns have heightened.

In the next few minutes I will first clarify my view regarding dollarization in general and, subsequently, I will briefly focus on the special case of small-island economies like Aruba and the Netherlands Antilles. 2. Dollarized countries  Countries that have dollarized their economy can broadly be divided into two categories. The first group consists of countries, which are generally small and have strong political and/or economic ties with the country that issues the currency they use. Various island states in the Caribbean (Virgin Islands) and in the Pacific (Guam, Micronesia) belong to this group, which are in economic size comparable with Aruba, Curaçao and St. Maarten. Other examples include the mini states in Europe like Andorra and Monaco, which use the euro as legal tender. All in all, some thirty countries or territories can be classified in this category. The second group of countries is much smaller. It consists of economies that are dollarized because of a former special political event or economic crisis. Ecuador is a good example of this case. At the end of the 1990’s, this country experienced high inflation and depreciation of its local currency (the sucre) when the government suddenly decided to dollarize the economy, even without consulting the IMF. Mr. Stanley Fischer, at that time Deputy Managing Director of the IMF, later stated that he would have advised against dollarization, as the banking sector in Ecuador was unhealthy and the fiscal position weak.