samchain/econo-pairs-v1 huggingface dataset:
But attempts to target a particular level for the exchange rate or the slope of the change in the rate in response to different conditions will, as the capital account becomes more open, inevitably, come with substantial risks to monetary and financial stability. Managing the transition to a more open capital account and a more flexible exchange rate regime is not a simple task. These transitions need to be handled with care and attention to the development of a strong institutional framework for monetary policy and the financial system. The more successful transitions came in contexts where the monetary authorities were independent of political constraint, where balance sheet problems and currency mismatches in the government and the financial system were not acute, where the prevailing legal framework provided reasonable protections for property rights and the enforcement of contract, and where there was effective supervision of the banking system. Where these conditions were weaker, the transitions from fixed exchange rate regimes were more traumatic. These conditions seem exacting, and the understandable need for caution often is invoked in defense of protracted and very gradual transitions. A certain degree of caution is wise: there is a great deal of risk in a poorly managed and premature shift toward flexibility. But there is risk in gradualism too. Delay magnifies the costs of living with the distortions caused by a managed rate.

In any case, the problem with the exchange rate choice was not the decision to let the rate adjust, but the decision to resist it and the role that played in magnifying the bubble, and thereby the subsequent damage from the fall. Given where we are today, and what we know about the relative merits of flexible and fixed exchange rate regimes, what is the likely evolution of the current monetary system going forward? A few concluding observations. First, I think it is unlikely that we will see a substantial move toward monetary integration involving the major emerging market economies, in Asia or in the Western Hemisphere. As the economist Peter  2  BIS Review 44/2007  Kenen writes in his latest book, it is difficult today to envisage a substantial reduction in national currencies though the emergence of large regional monetary unions where they do not already exist. Within Europe, we may yet see a further enlargement of the euro area. There may be other circumstances in which individual economies can derive benefit from a currency board system or from dollarization or euroization. Countries trying to emerge from a period of high inflation may in the future, as they have in the past, adopt a fixed exchange rate as a nominal external anchor for a disinflation strategy. These seem likely to be exceptions, however, to a general move toward more flexible exchange rate regimes.
This seems to be feeding, with about a two years delay from the start of reforms, into a gradual recovery in employment. But these achievements are not yet showing any signs of feeding into productivity growth. Total factor productivity has actually fallen by 0.8% in the euro area since 2008, whereas in the US it has grown by almost 7% in the same period. Higher competitiveness may well contribute to raising productivity, but we know that cheap labour alone will not produce innovative firms. Thus, I see a need today to rebalance our focus: to focus less on achieving internal devaluation, and more on raising productivity. And this entails a broader set of reforms than countries have adopted thus far. Creating a productivity-enhancing environment For advanced countries in today’s globalised economy, productivity is increasingly linked to investment in knowledge-based capital and moving closer to the technological frontier, especially in high value-added sectors such as the digital economy. While this is ultimately about the effort and ideas of individuals, not governments, public policy plays a crucial role in creating the right environment.

These effects can be achieved at the zero lower bound8 and in conditions of a debt overhang9. The key issue is therefore which set of forces dominates. And what matters here is not whether structural reforms are implemented, but how. This is where two further lessons of the crisis come in, which relate to our experience in Europe during the crisis: both the pace and the composition of reforms matter crucially for achieving positive effects in the shortterm. Why the pace of reforms matters Before the crisis there was an active debate about the appropriate pace of reform implementation, which had its origins in the liberalisation of Central and Eastern European economies in the 1990s. Some argued that reform was best conducted through a “big bang” approach, while others argued for more gradual reform implementation.10 More recently, studies of reform implementation had suggested that outcomes might be better if reforms were sequenced, with product market reforms preceding labour market reforms, so that lower mark-ups can support the purchasing power of households.11 There was also a political economy argument in favour of gradualism: as governments have a fixed amount of political capital, they would be most effective if they allocated their scarce resources to one set of reforms at a time. These arguments were however not always applicable to the euro area as, again, they lacked our specific context.
The role of central banks after the crisis From a central bank’s perspective three lessons can be drawn that appear to be crucial for its future role in crisis prevention and resolution. First, in a financially integrated market like the euro area, contagion risks are large with financial instability rapidly spreading to other market segments. Second, the sudden materialisation of financial instabilities can lead to strong recessionary forces that carry downside risks for medium-term price stability. This has taught policy makers that “cleaning” rather than “leaning” against financial imbalances can simply become a very costly strategy. And third, a stable macroeconomic environment with stable prices – though being a necessary condition – is not a sufficient one for the preservation of financial stability. Neither the implemented “ex-ante” policy measures by national authorities nor those by central banks were enough to deal with the build-up of risks and imbalances that led to the current crisis. So, what does this imply for the future role of central banks as stability guardians and their role as crisis managers? The future role of central banks: financial stability and supervision The importance of financial stability for central banks has been acknowledged in the European Treaty. Article 127/5 reads: “The ESCB shall contribute to the smooth conduct of policies pursued by the competent authorities relating to the prudential supervision of credit institutions and the stability of the financial system”.

That’s why about two-thirds of the Mainland’s two-way capital flows consistently go through Hong Kong. 25. Some argue that this advantage is temporary. As China’s domestic capital markets open up, the argument goes, surely international capital can bypass Hong Kong and go directly to Shanghai and Shenzhen? 26. It is true that the Mainland authorities are pursuing further liberalisation of the onshore capital markets. This was evident in a series of reforms to the Qualified Foreign Institutional Investor regimes last year. Access to the China Interbank Bond Market has also been enhanced, making it easier for investors anywhere to directly access this 16 trillion US dollar market. 27. And yet Hong Kong’s own portal to Mainland bonds is more popular than ever. Orders going through our Bond Connect link to China’s Interbank Bond Market account for more than half of its turnover by foreign investors. More than 2,400 institutional investors are registered on the platform. And Bond Connect has continued to grow right through the social unrest and pandemic: volumes rose by 82 per cent in 2020. 28. Hong Kong’s two Stock Connect links – with Shanghai and Shenzhen – are also very popular with international investors. Average daily turnover on Stock Connect more than doubled last year. ‘Northbound’ traffic from here to the Mainland rose by 119 per cent. This reflects continued global demand for Chinese securities as their weighting in benchmark indices increases. 29. And investors choose Stock Connect for the same reason they choose Bond Connect.
Tharman Shanmugaratnam: The evolving role of insurance in Singapore Speech by Mr Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore, at the Launch of Prudential's New Office, Singapore, 7 November 2017. * * * Mr Mike Wells, Group CEO, Prudential PLC Mr Kai Nargolwala, Chairman, Prudential Corporation Asia Mr Nic Nicandrou, CEO, Prudential Corporation Asia Mr Wilf Blackburn, CEO, Prudential Assurance Company Singapore Ladies and Gentlemen 1. Thank you for inviting me to join you. Let me begin by congratulating Prudential on the opening of its new office at Marina One. 2. It is another milestone in Prudential’s long journey with Singapore, having started out as an agent for fire insurance in Singapore in 1924, and opening its first full branch in 1931. Its first life policy, issued to a Percy Robert Campbell, was a 15-year policy which would mature for the sum of $ Today, Prudential serves over 900,000 customers here, and the average maturity value of a Prudential life insurance policy in Singapore is just over $ 3. Prudential has indeed grown with Singapore. Its total sum assured in Singapore has grown to $ billion in 2016, and it currently employs over a thousand staff and works with more than 4500 financial consultants. Opportunity in Asia’s Demographic and Digital Transitions 4. Prudential, as with its counterparts in the life insurance industry, is increasingly focused on deepening its footprint in Asia. The opportunities are immense, and the basic reasons for this are well recognised. 5. Asia is experiencing momentous demographic change.

It will be home to 60% of those aged over 65 worldwide by 2030, with countries in East Asia leading the way. This will place great demands on healthcare and retirement solutions, beyond the universal or mandatory schemes that governments put in place in many countries. 6. In the other parts of Asia where populations are still youthful – such as India and parts of ASEAN – insurance penetration remains low and has huge potential to grow. 7. Equally important, Asia is rapidly digitising. 330 million people bought insurance products online in China in 2016. In Singapore, a few of the bigger life insurers have offered online life insurance purchase for some products and two fully online life insurers have emerged over the past two years. Enabling Customers through Digital Solutions Insurers can and must take advantage of the digital wave. In particular, there is significant scope for health insurance to venture beyond paying for medical claims post-affliction, to preventive care and to encourage a healthy lifestyle and habits. 8. Health insurers are already beginning to track users’ health and habits through fitness 1/3  BIS central bankers' speeches  devices and apps, and are pricing in premium discounts for healthier habits. The top five life insurers in Singapore, including Prudential, have unveiled programmes to support healthier living and habits by their clients. Healthcare itself can be delivered and administered more effectively, and insurers should encourage this. Tele-health is increasingly being used, saving patients time and convenience.
Presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR) Press conference, Friday 28 May 2021  Speech by François Villeroy de Galhau, Governor of the Banque de France Chairman of the ACPR  Ladies and Gentlemen, It gives me great pleasure to be with you again for the presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), in the company of the new Vice-Chairman, Jean-Paul Faugère, Dominique Laboureix, Secretary General of the ACPR, and Alain Ménéménis, President of the Sanctions Committee. I would first like to pay tribute to the staff at the ACPR – more than 1,050 men and women whose professionalism is exemplary and recognised – who have worked especially hard, both on-site and remotely, to monitor closely the effects of the economic crisis on financial stability. Exactly a year ago, when we were just at the start of the Covid crisis, I pointed out to you, in this exact same setting, how vigilant we were being and how confident I was, both in the competence of our supervisor and in the resilience of the financial system. Looking back, we haven’t done too badly at all: at this stage, the financial risks are, on the whole, under control, thanks to resilient financial institutions with solid fundamentals (I).

It is important to stress this: tiering and the particularly attractive pricing – now up to - 1 % – of our TLTROs more than make up, in 2021, for the annual charge  generated by negative interest rates. The path to profitability is now through the continuing modernisation of financial institutions themselves, but also through the emergence of a genuine “single banking market”. We need to take advantage of the size effect and encourage the formation of pan-European banking groups: we must never give up on the goal of a genuine Banking Union, despite protectionist resistance from “host” countries. This integration also requires efficient methods of crisis management. Europe needs to strengthen its resolution framework, to ensure the effective exit of non-viable banks in Europe, without burdening solid banking systems with additional financing – which would mean adjusting the financing of the SRF (Single Resolution Fund). The impact of low interest rates is different, however, for insurers. The integration of PSRs into own funds has already allowed them to offer sufficiently attractive revaluation rates in a low interest rate environment. It should also give insurers valuable time to rethink their offering and shift it towards longer term, more equity-based products that make better use of savings to strengthen our economy. Innovation will be at the heart of the transformation that financial institutions need to make over the next decade. Europe is clearly losing momentum here, just as the crisis is accelerating the adoption of digital technologies, with Bigtechs poised potentially to redefine financial intermediation.
A central bank can appropriately be assigned the task of promoting sustainable economic growth, while maintaining long-term price stability and ensuring the health of the financial system. This way of articulating policy goals has the advantage of meeting the public’s need to understand the basis for monetary policy decisions, and may help, therefore, to enhance the democratic accountability of monetary policy. Once monetary policy is firmly committed to price stability, how can a central bank best reach that goal? Clearly, at an operational level, no single formula or implementation strategy can be expected to succeed in all countries and under all circumstances; possible approaches can take many different forms. The choices depend on a country’s history, economic conditions, traditions and institutions. But all successful approaches share two important features: first, they focus on a long-term time horizon and, second, they provide a clear and public standard for the assessment of policy. What is most significant is not the specific way a central bank chooses to seek price stability, but rather the underlying commitment to that goal. While monetary policy aimed at long-run price stability is critical to fostering sustainable economic growth, central banks’ role in promoting growth and, more generally, a healthy economy goes beyond the conduct of monetary policy. Through involvement in financial regulation and supervision, as well as in the oversight of payments system operations, central banks play a key role in preserving and enhancing the safety and soundness of the banking and financial system.

During the last ten years, for example, U.S. nonfinancial corporations borrowed a net amount of $ billion in the form of bonds, three times the net amount they borrowed from banks. Over this same period, these companies as a group spent $ billion more to retire stock – through buybacks and mergers – than they raised in new offerings. Accompanying these increased levels of debt market activity has been a continuous process of financial innovation. This innovation has served to unbundle different kinds of risk and, thereby, to enlarge the menu of risks that investors may choose to bear. For example, interest-rate swaps, futures and options help reconfigure various interest-rate risks. Total return swaps and creditspread options are tools for reallocating the payment risks primarily of emerging market debt. Credit-default swaps and credit-linked notes are ways to redistribute default risks. In practice, this unbundling of risk means that a broad range of financial institutions today performs the credit intermediation process, eroding the historical comparative advantage of banks in bearing credit risk. At various times, some institutions will be underwriting issues, while others will be making bridge loans, providing credit enhancements, writing derivative contracts and taking up riskier components of securities. Within the United States, the fixed-income market is today a market of some $ trillion, roughly the same size as the total equity market. Trading activity in fixed-income instruments is concentrated in Treasury securities.
Mobile phone payments account for nearly three out of four payments between private individuals. It’s a short step to other new technologies. Facial recognition and fingerprint technologies are being incorporated into payment solutions. In the United States, Amazon has opened a shop where customers hardly notice paying while on their way out. Sensors ensure that the items are paid for. For Kristoffer paying for goods was even simpler. His electronic assistant saw to both ordering and paying. This may become commonplace in a few years. Traditionally, Norwegian banks have shown a strong adaptation capacity and have been drivers and early adopters of new payment technologies. Many of the solutions we use today have been developed by Norwegian banks – often in collaboration with each other. Banks’ role in the payment system is being challenged. Small specialist operators and global tech giants have their eye on payment services. Some of these may integrate proprietary payment solutions for purchasing goods and services online. New regulations in the pipeline will facilitate increased competition. Banks will have to give other operators direct access to the account system so that customers can freely choose among payment providers. In a few years, it may be possible to transfer funds automatically between accounts and digital platforms based on a person’s transaction data.6 In response to greater competition, banks should further develop existing services and offer new solutions. There is still room to speed up payments. Payment costs are substantial for businesses.

Norges Bank is therefore considering whether the central bank should also offer the public central bank digital currency.8 Like cash, central bank digital currency will be a claim on the central bank. It will have to be designed to be a risk-free alternative to private payment solutions and to function in a contingency in the same way as cash does. It can be based on account systems, as we know them today, or it can be a digital variant of banknotes and coins. The latter alternative will entail a clear distinction between central bank digital currency and banks’ deposit money. In the future, central bank digital currency may be necessary for ensuring an efficient and robust payment system. Its most important purpose will be to underpin confidence in the monetary system. MONETARY STABILITY In order to serve as generally accepted means of payment, money must have a stable value guaranteed in a credible manner. There must be trust that money will be worth as much tomorrow as it is today. This is the primary task of monetary policy. In September 2018, Norges Bank raised the policy rate for the first time in seven years (Chart 11), reflecting the favourable developments in the Norwegian economy. The effects of the fall in oil prices in 2014 have faded, and both output and employment show solid growth. Underlying inflation is close to the 2 percent target. If economic developments prove to be in line with expectations, the policy rate will be raised gradually and cautiously ahead. 7 Kloster, A.
But we also need policies for containing systemic stress more generally; and, if possible, for heading off the risk of systemic problems in the first place. Like others, in speeches I have identified three elements in that armoury: monetary policy; central bank liquidity policy; and policies towards bank capitalisation and liquidity. Monetary policy I have for some years openly queried the notion that it is enough to rely on monetary policy “mopping up” after the event. 2  BIS Review 77/2008  The “mopping up” doctrine came out of a view that monetary authorities could not spot bubbles but that policy could cushion the bursting of what turned out to be a bubble. The doctrine effectively assumes that, faced with the possibility of systemic stress, the monetary authority can always reduce its policy rate without taking risks with inflation. The current conjuncture tests that assumption. There is a nasty shock to demand from tightening credit conditions, here and abroad. And that may get worse rather than better in the coming months. So far, the financial system has faced a “trading book” problem; but we cannot rule out a “banking book” problem caused by rising defaults. We face a race involving whether the deleveraging process can be sufficiently advanced for financial conditions to stabilise before macroeconomic slowdown, here and abroad, raises loan defaults and so brings a new dimension to the challenges in the banking sector and so to the supply of credit to the real economy.

That left them exposed to a deterioration in financial conditions, particularly in liquidity, and so to a fall in “market” prices way beyond anything they contemplated, or perhaps still contemplate, for fundamental impairment. This is the mentality of traditional “banking book” risk assessment grafted on to post-Glass Steagall “trading book” valuations and financial accounting. As the regime currently works, mark-to-market is not – or, rather, cannot be – just an accounting convention; it needs to be a culture, or way of life, for those who adopt it. The dynamics of a financial system in which the vast majority employ MTM accounting, irrespective of their declared holding periods, are fundamentally different from one in which just a few “market-makers” do so. Third, therefore, the rules and infrastructure supporting the financial system need to help it withstand stress. Accounting and valuation policies is one such area, now being debated. Another is the trading and clearing platforms themselves. The authorities must do what they can to encourage the industry to focus on whether more wholesale market activity could and should be conducted across central trading and clearing platforms rather than OTC. In the past, intermediaries have tended to be doubtful about this. But it is plausible that the system would have been somewhat more resilient if “vanilla” products had been subjected to the minimum standards, greater pre and post-trade transparency, and centrally set margin requirements that accompany transacting across central infrastructure.