samchain/econo-pairs-v1 huggingface dataset:
Mr. Patrikis discusses the implications of the Year 2000 computer problem for international banking and finance Statement by the First Vice-President of the Federal Reserve Bank of New York, Mr. Ernest T. Patrikis, before the Committee on Banking and Financial Services of the US House of Representatives on 23/6/98. I am pleased to appear before the Committee today to discuss the implications of the Year 2000 computer problem for international banking and finance. I am appearing in my capacity as Chairman of the Joint Year 2000 Council, which is sponsored jointly by the Basle Committee on Banking Supervision, the G-10 central bank governors’ Committee on Payment and Settlement Systems, the International Association of Insurance Supervisors, and the International Organization of Securities Commissions (collectively referred to as the “Sponsoring Organizations”). The international financial community has much work to do to prepare itself for the challenges posed by the Year 2000 (“Y2K”) problem. While much good work is being done and progress in many areas is evident, more needs doing. The Sponsoring Organizations believe that mutual cooperation and information sharing can play a key role in helping individual market participants carry out these preparations and limit the scope of Y2K-related disruptions. Our major concern, of course, will be the possible impact of the Y2K problem on the functioning of the international financial system as a whole.

Faced with a pressing need to provide additional accommodation, we were forced to turn to innovative, but controversial, unconventional monetary policies. These policies have been extremely helpful. But there is no denying that they were second-best options; the ZLB had made lowering the fed funds rate, which is our first-best interest rate tool, infeasible. Everyone will welcome a return to more normal times and a reliance on the traditional policy framework of adjustments to the federal funds rate. But the decision about when to begin to raise rates shouldn’t be made prematurely. Rather, the decision for policy liftoff has to be made for the right reasons – that is, it should be dictated by economic conditions. I have said many times that I agree with Minneapolis Fed President Narayana Kocherlakota: Policy at all times must be goal-oriented. 16 Our experiences since the crisis began and current economic conditions are highly unusual. The FOMC should not simply set its policy instruments by mechanically aligning them with historical norms if those norms are not relevant harbingers for the attainment of both of our dual mandate goals. Rather, our policy instruments should be set to achieve our ultimate goals as efficaciously as possible given current and prospective economic conditions, all the while with an eye on managing against important risks to the outlook. What does that mean now? I believe that the biggest risk we face today is prematurely engineering restrictive monetary conditions.
But should oil prices concurrently fall, that path may narrow. Moreover, labour costs in Norway have reached high levels. The cost level in the business sector has increased sharply in relation to our trading partners (see Chart 5). With lower activity and earnings from the petroleum sector, oil service companies must seek inroads into other markets, which may be demanding with a high cost level. Substantial oil revenues and spillovers from the oil sector have driven up house prices and household debt. Debt has risen markedly faster than income. The debt burden on both younger and older households has increased, but the burden on younger households is heaviest (see Chart 6). Today’s households of age 30 have an average debt equivalent to three times their disposable income. Ten years ago, the burden on households of the same age was substantially lower. Households have borrowed heavily to buy primary and secondary homes, possibly on the expectation of continued high income growth. The price of an average dwelling has almost doubled over the past ten years, with the sharpest rise in cities located near oil industry areas. High debt levels give rise to vulnerabilities. The risk of default on residential mortgages, with large direct losses for banks, is nonetheless small. We have a solid social safety net, which provides an assurance in the event of income shortfalls. But in the case of a downturn that leads to higher unemployment, the high debt levels will prove uncomfortable for many households.

The same applies to the return on GPFG capital. The three paths illustrate the uncertainty we are facing, but they also illustrate another important point. Spending the return will ultimately lead to a flattening of the GPFG, which will then decline as a percentage of GDP. It has always been clear that this will happen at some point in the  8  BIS central bankers’ speeches  future. What is new is that this may be the case here and now. At today’s oil price, the GPFG may have reached the peak. In that case, petroleum revenue spending as a percentage of GDP must be reduced to avoid using more than the return on the GPFG. Even if the oil price and the rate of return follow a path that allows the GPFG to grow for a period ahead, petroleum revenue spending should be restrained. By keeping spending well below the upper bound, the need for fiscal retrenchment further ahead can be reduced. The fiscal rule has functioned as a long-term guideline for fiscal policy for nearly 15 years. It has served its purpose. The time has now come to show restraint. A sensible risk adjustment is now to refrain from increasing petroleum revenue spending further from today’s level. The era of rising petroleum revenue spending may be behind us. Conclusion The more than forty-year-old white paper on the role of the petroleum industry in Norwegian society was far-sighted and proved to be on the mark.
There has been an enormous increase in lending activity at a time when the nation is engaged in the largest investment it has ever undertaken, its financial system has been revolutionised, and the housing market has seen a virtually unparalleled injection of capital, to name just a few things. Neither can it be denied that competition has abated considerably, the market has become much more concentrated, and duopoly is common. It cannot be debated that effective competition in as many areas as possible is the main premise for the successful transmission of any central bank’s decisions into the economy. Managers of companies in the export sector have complained vociferously about the policy and activities of the Central Bank of Iceland. Their comments and criticisms are understandable, especially those coming from the fishing industry, which has had to stand up to the double blow of unfavourable exchange rates and an unavoidable cut in the cod quota. What has lightened the load for exporters, however, is that many of them, especially those in the aluminium and fishing sectors, can command high export prices at the moment. But while we must understand that exporters are dissatisfied with the current circumstances, it is not a given that their complaints are founded on the right premises. Many people consider the exchange rate of the króna disquietingly high and blame the Central Bank’s interest rate policy for it.

If the Central Bank had stayed its hand now, despite the worsening outlook and the myriad of indicators of continuing deterioration, accusations of indifference, and even cowardice, would have been appropriate in view of the criticism to which the Bank has been subjected recently, some of it from quite unlikely sources. A few decades ago, when Iceland was engaged in disputes over its territorial fishing waters, we shot blanks first before loading the weapons on our tiny Coast Guard cruisers with real ammunition, and even then we thought it sufficient to shoot wide of the mark rather than aiming directly at the alleged offenders. The Cod Wars are bathed in a romantic glow in Icelandic history, but they were no small matter at the time, a daring game of chance by a tiny country contending with much larger neighbours. At one point it was said that Icelanders had won that unequal battle, that we couldn’t have afforded to lose it. The same applies, actually, to the fight against inflation. We can’t afford to lose it. Inflation must not take root in this economy again. We must take decisive action against it, no matter how unpleasant – or even costly – the effort may be in the short run. There is no need to go into detail about the consequences of inflation for the income and financial position of businesses and households; the repercussions are familiar enough.
This remarkable de-coupling of inflation expectations from economic disturbances is the single most encouraging indicator that the new monetary policy framework is doing its bit to ensure continued economic stability. The importance of reliable information In monetary policy as in business, reputations that have taken decades to build can be lost with distressing speed: it only takes one banana skin to turn a confident stroll into a painful tumble. And while monetary policy may be a matter for experts these days, it is very far from being a precise science. Any honest assessment of the economic outlook comes with very large health warnings. That’s why, in its quarterly Inflation Reports the MPC discusses at some length the main economic risks that may knock its central projection off course. These tend focus on events beyond our control - the state of the world economy for example - or gaps in our understanding of key economic relationships - such as the link between house prices and household spending. The minutes of our policy meetings reflect a lively awareness of the range of possible outcomes which need to be factored into decisions taking. But few subjects consume more of our time and energy than another, more insidious, source of uncertainty: one with which the MPC does daily battle - the data. As the last Governor liked to remark, “There are three kinds of economists - those who can count and those who can’t”.

This in itself reduces the risk that sharp shocks to activity or inflation will throw us off course. But there is no magic about monetary policy: good decisions depend on good information, and this continues to be a challenging area. Much of the MPC’s energies go into distilling the message from a battery of often conflicting data. We do not complain about this - it is what we are paid for - but it does complicate the task of explaining our decisions. Improving the quality of national statistics lacks some of the glamour of making the Bank of England independent. But it may be the best single way of ensuring that the MPC continues to respond effectively to challenging times ahead. BIS Review 71/2004  7
USD billion  800 600  Other Asian countires  400  Euro area  200 USA  0 -200  Japan  -400 China  -600 -800  OPEC countries  -1 000 1980  1983  1986  1989  1992  1995  1998  2001  2004  Source: MFW, World Economic Outlook. The situation where the world’s largest economy and at the same time the issuer of the global reserve currency has such a large savings deficit financed in such an unusual way has triggered a hot economic debate on the two following issues. Firstly, attempts are being made to explain how global imbalances have come into being. Secondly, both academic economists and strategists with investment banks are trying to assess the possible scenarios of further developments. Are global imbalances a regular phenomenon in the global economy and can they increase further without any harm to the outlook for the long-term global growth? Can a radical adjustment of these imbalances occur – and if yes, what will be the mechanism of such an adjustment and what will its consequences for the global growth be? Let us begin with the presentation of the main hypotheses that explain the phenomenon of global imbalances. In 2003, three economists presented a hypothesis that an informal Bretton Woods regime had been reactivated.

Following the increase in global workforce resources, relative to the capital resources, the workforce costs decreased and resulted in the fall of costs of manufacturing of many goods and services. Having deducted the cost of fuel, whose increase also results from the globalization process, inflation remains very low in many countries, whereas a surge in the global labour supply mitigates the possibility of occurrence of the second-round effects i.e. wage increases in response to a rise in current inflation. On the other hand, the global surplus of savings over investments causes the capital to be deposited on various asset markets entailing an increase in assets prices. Increases in stock exchange indices, bond prices or real property prices in the Anglo-Saxon countries may serve as examples here. Naturally, a question arises what monetary policy should be conducted in such conditions. In particular, the question is whether it should respond to the increase in the asset prices, despite the fact that inflation of consumer goods and services is low or very low. A debate continues over that issue, 37 where both arguments in favour of the necessity to respond to the bubbles on the asset markets, nd 38 those against it, are raised. The issue of response of monetary policy to changes in assets prices was raised by Donald Kohn, member of the Board of Governors of the Federal Reserve, in his speech delivered in the previous month. 39 According to Kohn, two approaches are possible.
Moreover, in the ten years that have passed since the introduction of the new regime, average inflation has been very close to our target. At the same time, growth has been higher than in previous decades. Prospective inflation has also been remarkably stable for the past 6-7 years despite periods of rather large transitory fluctuations in actual inflation. The stable inflation expectations have been particularly important for wage negotiations, which have been able to proceed against a completely different, more secure background than during the 1970s and 1980s. When we conduct monetary policy, we do so on the basis of forecasts of inflation for primarily the coming 1-2 years. The reason we work with this time perspective is that the effects of our actions are exerted mainly during this horizon. When our forecasts indicate that inflation in the relevant time horizon will be above target, there is normally reason to raise the repo rate, and vice versa. Particularly when it comes to debate situations such as that we have been involved in recently, it feels secure to gain a foothold in the clear framework that we have developed for our work in the past ten years. Although we do not mechanically set the repo rate in relation to our inflation forecasts, everyone that is interested in our work methods knows that our forecasts play a decisive role for our actions. Permit me now therefore to move on and say something about my current views on inflation perspectives before I comment on monetary policy.

A pattern can be discerned here; on several occasions before we have underestimated US consumer demand, in spite of rather optimistic forecasts. Thus, there may be reason to revise down the forecast of households’ saving ratio in the coming years, which if so would point to higher consumption growth. The increasingly weak dollar and stronger euro should also boost US exports, particularly in Europe. In the short term, there is really only one serious concern in the US economy: that employment growth continues to be weak. This could create uncertainty among households and contribute to subduing consumption. But it is hard to believe that it would derail the current upswing. Also with regard to Europe, we began to see signs of somewhat more robust growth and greater optimism at the end of last year. In our assessment in December, we forecast a rise in growth in the years ahead. New data received since December broadly supports this assessment. Business tendency surveys for manufacturing indicate that optimism has continued to increase while industrial production has now begun to rise slowly, although for the euro area as a whole the picture is still not as unambiguous as in the US. The strong performance of the euro could also result in higher imports and lower exports than expected, which of course would have an impact on demand in the economy and growth.
If dishonesty is unacceptable, then it is unacceptable regardless of whether we are dealing with a neighbour or with a counterparty. The global financial crisis has been a sobering reminder of why we must not divorce ethics from finance. Second – we must all face up to the difficult but necessary decisions of keeping out bad apples from the financial industry. Recruitment and promotion plays a key role here. Organisations should pay careful attention to the individuals they hire and promote. Recruitment assessments should be done with utmost vigilance, and financial firms must be more candid in dealing with cases of misconduct. Complaints and suspicions should be investigated properly, with an opportunity for the individual in question to make representations. If their name is cleared, then this should be recorded, to protect them against unfounded accusations in the future. If they are found to be in the wrong, then proportionate disciplinary action should be taken and recorded. Often, bad apples are allowed – and even requested – to leave quietly before investigations are opened. This leaves them with a clean record to go on and stir wrongdoing in another organisation, and the next, and so on. This practice should stop. We are collectively responsible for upholding the integrity of our entire industry, not just our respective institutions. What is important is transparency, to allow the job market to make informed decisions. In this regard, the Bank is currently pursuing an initiative that will mandate the sharing of employment references with future employers.

Learn more about the New York Fed’s work on governance and culture reform. 1 See, for example, Peter Eavis and Keith Collins, “The Banks Changed. Except for All the Ways They’re the  Same,” New York Times, September 12, 2018; Yalman Onaran, “Stung by Big Fines, Big Banks Beef Up MoneyLaundering Controls,” Bloomberg, April 4, 2019; “Citi Hit Hardest as EU Fines Banks $ Billion over Foreign Exchange,” American Banker, May 16, 2019. 2 This scenario is adapted from work by the Education and Industry Forum on Financial Services Culture, a  private-sector voluntary membership group sponsored by the Federal Reserve Bank of New York. 3 Max H. Bazerman and Ann E. Tenbrunsel, Blind Spots: Why We Fail to Do What’s Right and What to Do about  It(Princeton University Press, 2011). 4 Asch, S. E. “Effects of Group Pressure upon the Modification and Distortion of Judgments,” in Groups,  Leadership and Men; Research in Human Relations, ed. H. Guetzkow (Pittsburgh: Carnegie Press, 1951). 5 Saul McLeod, Solomon Asch-Conformity Experiment, SimplyPsychology.org, December 28, 2018. 6 Building Cultural Capital in the Financial Services Industry: Emerging Practices, Risks and Opportunities,  Conference Summary, Federal Reserve Bank of New York, June 4, 2019. 7 Banking Standards Board, Assessment Results 2018, (United Kingdom). 4/4  BIS central bankers' speeches
I voted to tighten policy earlier than the majority of the MPC in September 2021 and November 2021 and to tighten by more than the majority of the MPC in February 2022 and September 2022. 5. See Bank of England announces gilt market operation | Bank of England, Jon Cunliffe response to Mel Stride letter on gilt market operation  and Message received and understood – speech by Dave Ramsden, Bank of  England 6. See Recent developments in the economy and markets − speech by Huw Pill | Bank of England 7. See Navigating the economy through the Covid crisis - speech by Dave Ramsden | Bank of England 8. See Monthly Decision Maker Panel data - September 2022 | Bank of England 9. In addition, the MPC completed its most recent quantitative easing programme in December 2021 and has since started quantitative tightening, first stopping reinvesting the proceeds of maturing gilts from March 2022 and voting at the September 2022 meeting to start a gilts sales programme which will commence on 31 October, after being delayed because of the market disruption observed in long-dated UK government bond market.

Ravi Menon: Smart regulation and sustainable insurance growth Speech by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Insurance Institute of London, London, 12 May 2015. *  *  *  Mr Stephen Riley, President of the Insurance Institute of London Mr John Nelson, Chairman, Lloyd’s of London Ladies and gentlemen, good afternoon. I wish to thank John for inviting me to speak to you today. It is a privilege to address members of this esteemed Institute, and a pleasure to do so in a heritage building of such architectural and historic interest. I have been to this building before. And my first thought as Lloyd’s Building came into view, along with its plumbing, stairways and lift shafts, was transparency. So it is apt that in the same spirit of transparency, I should make a couple of disclosures: •  one, I am not an actuary or an accountant, and  •  two, I am not responsible for Solvency II. But John has kindly assured me that the musings of a central banker and regulator from the Far East counts towards fulfilling your continuing professional development requirements. So for my speech today, I will offer an overview of MAS’ roles as central bank and integrated supervisor, our approach to regulating and developing the financial sector, and prospects for the insurance industry in Asia.