samchain/econo-pairs-v1 huggingface dataset:
 While it is helpful to ask what might be the most adverse consequences of any decision taken, possible tail outcomes need to be balanced in a judicious and pragmatic way against more likely outcomes. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  I see these elements as being embodied in the so-called risk management approach to the formulation of monetary policy, which has been embraced by many central bank policymakers.17  At a practical level, in recent years this approach has acknowledged the need for monetary policy to be cognisant of uncertainties and risks stemming from (say) the lower bound on policy rates or the threat of a liquidity trap, while at the same time recognising that policy considerations cannot ignore the implications of decisions should the trap be avoided and inflation rise over the medium term. 18  The former aspect of risk management has justified a more aggressive response to downside shocks to price stability as the lower bound drew closer. Our discussions in the MPC now also address the latter aspect of the risk management approach: how policy should evolve as inflation rises and those asymmetric risks stemming from the lower bound recede. In undertaking this discussions, the risk management approach entails judgement and pragmatism. Engineering is not enough. The inevitable subjectivity of these judgements re-introduces some art into the science of monetary policy.

But behind those questions, the clarity of Pi-star as expressed in the form of the inflation target is the touchstone for the MPC’s approach to monetary policy. R-star and Y-star are trickier to deal with. These are both real variables that, at least over medium-term horizons, are largely independent of monetary policy.19 They cannot be determined or even much influenced by the central bank. Moreover, R-star and Y-star are not directly observable. They are latent variables, surrounded by considerable conceptual as well as empirical uncertainty. Researchers don’t always agree on what they mean, let alone how to measure them, and still less what their specific value is at any point in time. The Wicksellian neutral real rate of interest is a concept that may be recovered from the data and interpreted in a specific model context after the fact and with the benefit of hindsight. Even then, that exercise is difficult and unlikely to prove definitive. But R-star is not a very meaningful guide or reference for real time monetary policy making.
You may remember that there was a small Licensed Specialised Bank called Pramuka Bank, which failed in 2002. It was only in 2007 that the deposits of the Pramuka Bank were transferred to a new Savings Bank. In 2009, 8 financial institutions faced liquidity problems, mainly due to the collapse of the parent company of a particular group. Most of those financial institutions are still undergoing restructuring, as agreed with the Central Bank. In 2013, another small NBFI, namely, CIFL faced liquidity problems mainly due to mismanagement and non-commitment to corporate governance. The Central Bank is now in the process of restructuring this company under the consolidation programme. The important message that I want to share with you is that although the NBFI that failed in 2013 accounted for only 0.35 per cent of the assets of our financial sector, the publicity it created resulted in a huge uproar in the financial market and the economy. You can clearly see that transmission of information has become speedier in the recent years and such information is easily and widely accessible now compared to the past. The Managing Director of the IMF, Christine Lagarde also highlighted this fact when she recently spoke on “New Multilateralism for 21st Century”, from which I quote “We are living through a communications revolution, because information travels at lightning speed from limitless points of origin.

The Government has enhanced its efforts in this area by raising the capital of the Fund by Rls 9.0 billion to Rls 92 billion as from 2006. However, the accelerated population growth and the rising demand for housing have urged the creation of other real estate financing mechanisms in addition to the government’s financing mechanism. More finance and contribution by the private sector and reducing reliance on the government will give the private sector an opportunity to play a key role in this area which offers lucrative investment opportunities. Nonetheless, it is fair to say that the private sector in general and the banking sector in particular seek to obtain more guarantees to enter as financers in this vital sector. This demands working effectively by all relevant entities to develop mechanisms for meeting the rising demand in this sector. Dear Brothers, Over the preceding years, the Kingdom of Saudi Arabia has undertaken many economic reform measures, updated and streamlined its laws and regulations, restructured the national economy, approved a number of mega development projects, and joined the World Trade Organization (WTO). It has also made many important decisions aimed at attracting foreign investments and continued opening of the markets which will be reflected on the competitiveness of the national economy. All these positive developments are an incentive for investment in the Kingdom in general and in the housing sector in particular. Dear Brothers, This conference is held at a time when the Kingdom has achieved outstanding development results in all sectors of the economy.
However, despite the success attained in reducing inflation, I would like to underline the fact that we have not reached our final target yet. Turkey is one of the very few countries where double-digit inflation prevails. As I have mentioned repeatedly both at the very beginning of the disinflation program and the point we reached today, our final target is to achieve and maintain price stability. Now let me emphasize once more what price stability stands for. The well-known definition of price stability relates to the currently low inflation rate in one hand, and the expectation of economic agents that the ongoing decline in inflation will continue in the future. Such an inflation rate is so low that people do not need to take it into account in their investment, consumption and saving decisions. At the point we have reached in inflation, it is clear that our economy is surviving from chronic inflation. However, I would like to draw your attention to the fact that we have not fully maintained the price stability that I have just mentioned, and our economy is still in a “falling inflation” period. Honorable guests, The point we reached in the fight against inflation is remarkable. Both the dynamics of inflation and economy go through changes along with the transition from chronic inflation to falling inflation process.

Süreyya Serdengeçti: Falling inflation Opening remarks by Mr Süreyya Serdengeçti, Governor of the Central Bank of the Republic of Turkey, for the conference on "Real Sector and Financial Sector in the Environment of Falling Inflation", organised by the Banks Association of Turkey, Ankara, 28 September, 2004, and given at the Monthly Meeting of Ankara Chamber of Commerce, Ankara, 29 September 2004. *  *  *  Dear Guests, In my speech today, I would like to dwell on the “environment of “falling inflation”, its main impacts on economy both in other countries and Turkey and finally, the significance of maintaining price stability for Turkey’s economy. The achievements obtained on the inflation front in the last three years under the current program allow us to speak about falling inflation environment and permanent price stability. Now, let me briefly review the point we have reached in the fight against inflation: CPI inflation, which was 68.5 percent at the end of 2001, remained below the targets set in 2002 and 2003 and fortunately, it realized as 18.4 percent at the end of 2003. In 2001-2003 period, the total decline in inflation exceeded 50 points. In August, CPI inflation fell to 10 percent thanks to the stability program, which was determinedly carried out in 2004, and the tight monetary and fiscal policies implemented within the framework of this program. Looking at the CPI inflation today, I do not see any serious problem that would prevent us from reaching the 12 percent-CPI inflation target for 2004.
We will continue to work for the return of calmer financial markets. But we should not rely on that to reverse quickly the broader macroeconomic slowdown that is underway. Indeed there are still risks to the downside and I thought it might be useful to spell out how they feed through the economy and therefore make plain what indicators I will be focusing on in the next few months. BIS Review 114/2008  3  Any contraction in lending to the real economy can amplify the slowdown in demand (Chart 6). Increases in retail lending rates for those who can still get access to credit discourage spending. Increases in credit rationing can have a more dramatic impact. If those households and companies are unable to tap other sources of finance, then their spending will have to fall back in line with income. Spending on high cost durable goods – such as purchases of cars and white goods by households and machines by companies – are likely to be particularly affected. And the contraction in mortgage lending pushes down house prices, further eroding the value of the collateral against which banks’ loans are secured. Tighter credit conditions raise income gearing, forcing households and companies to devote a larger share of their income to servicing debt. And as the impact of those tighter credit conditions bite on the economy, income is likely to be squeezed and that at the same time as real incomes are being affected by higher food and energy prices.

This means having an effective regime against: •  market misconduct and misdemeanours; and  •  illicit finance, namely money laundering and terrorism financing. MAS is stepping up enforcement action against misconduct such as insider trading, false trading and front running by individuals and traders in the securities market. •  We have sought criminal actions or higher civil penalties to send the right deterrent message. •  In April last year, MAS imposed a civil penalty of close to $ million for insider trading – the highest quantum in a single case so far. BIS central bankers’ speeches  5  When it comes to anti-money laundering and countering the financing of terrorism (AML/CFT), the rules are strict and in line with international standards. Financial institutions must: •  know their customers;  •  assess the risks and perform additional due diligence where the risks are higher;  •  monitor transactions on an ongoing basis and report any suspicious activities. Supervision of financial institutions is rigorous. •  In recent years, MAS has stepped up its onsite supervision of AML/CFT controls – increasing the number of inspections by six-fold. •  This is resource-intensive business: each AML/CFT inspection of a bank takes about 4–8 weeks and involves 4–6 supervisors. We have now set up a dedicated AML Department.
Over 500 organisations have endorsed the TCFD recommendations, with a total market capitalisation of $ trillion. 9  See TCFD (2017), ‘Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures,’ June 2017. 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  The implementation report issued by the Task Force in September 201810 – a year after the recommendations were first published – assessed some 1800 companies (that made some reference to climate in their reporting) using artificial intelligence, and analysed in more detail an additional 200 of the largest companies, drawn from eight representative sectors. Across both, it found that a majority of companies already disclose information in their 2017 filings that aligned with one or more of the TCFD’s recommendations. Reporting by the largest companies appears to have been more sophisticated – with a higher share of the firms reporting against more of the TCFD recommendations. This is remarkable given companies only had about six months to respond to the final TCFD recommendations in their 2017 filings. That said, compared to both the recommendations and user expectations, more progress is needed.

To counter this risk SWIFT, the telecommunications firm, is developing a product – known as the Market Infrastructure Resiliency Service (MIRS) – that will act as virtual third site for the Bank on an independent IT platform. Moreover, because SWIFT would operate MIRS from one of its European operating centres, it would not be affected by IT failure affecting both of our locations, increasing the degree of latency that MIRS will offer compared to a traditional model for a third site. MIRS will be available from January 2014, and we are the first central bank to take advantage of it. The Bank’s costs in relation to this project have been funded by the CHAPS member banks, who will benefit from the additional resilience MIRS will provide. 2  BIS central bankers’ speeches  Turning to the lesson that ‘liquidity matters’, we introduced a Liquidity Saving Mechanism (LSM) in April this year. There are some technical similarities to the Canadian “Jumbo algorithm”, which periodically looks to offset high-value (“Jumbo”) payments in bilateral queues, speeding up their settlement and reducing collateral requirements. The LSM in our RTGS system is an offsetting mechanism that seeks to match groups of payments, regardless of size, via bilateral and multilateral algorithms that run in short cycles around 275 times each day. All the payments matched by the algorithms will settle individually and simultaneously at the conclusion of the matching cycle.
The vertical line marks the shift between forecast and technical projection. Source: The Riksbank  14 [16]  1  See Sveriges Riksbank (2017a). 2  See Archer and Moser-Boehm (2013). The major features of the Swedish operational framework are not unique, but common to monetary policy in most countries. 3  Regulatory frameworks set other liquidity requirements for banks, but the liquidity need not consist of central bank money. 4  Up until 2009, banks’ remunerated liquidity surplus was not part of the monetary base in Sweden, but in 2009 the definition was changed to include the liquidity surplus (see Sveriges Riksbank, 2009). The new definition is more in line with international recommendations and practice, but, in my opinion, is a poor measure of what the literature refers to as the “monetary base”. 5  This is a simplified description of the Riksbank’s operational framework for the implementation of monetary policy. More detailed descriptions can be found in Nessén, Sellin and Åsberg Sommar (2011) and Sveriges Riksbank (2014). 6  Goodfriend (2011) calls this way of conducting monetary policy “interest on reserves policy” which he differentiates from the textbook model’s “monetary policy”. See also Woodford (2000) for an analysis of how monetary policy works in a world without a monetary base. 7  There was a liquidity deficit in Sweden before the financial crisis. At that time, the Riksbank supplied liquidity to the market by lending to banks via repos (hence the “repo” rate).

Using today’s definition, one could say that we in a sense had a negative monetary base in Sweden. This illustrates that the currently used definition of “monetary base” is actually rather strange. The liquidity deficit has thereafter shifted to a surplus. The Riksbank is now draining the surplus liquidity by issuing certificates (and sometimes via finetuning transactions) with one-week maturity at an interest rate which we still call the repo rate. A better term would be the “certificate rate”. 8  See Yu (2016) and Chapter 1 in Walsh (2017) for summaries of studies based on US data. These studies usually investigate the immediate impact on asset prices when news of asset purchases is made public. It is more difficult to study whether the price effects are permanent and here the empirical support is therefore weaker. Altavilla et al. (2015) find that the ECB’s purchasing programme has pushed down interest rates across quite a broad spectrum of European assets, and particularly as regards government bonds in countries with high interest rates (such as Italy and Spain). De Rezende et al. (2015) find that the initial stages of the Riksbank’s purchasing programme contributed to rate falls in about the same way as purchasing programmes in other countries. 9  In a survey of central bank governors and leading researchers, a high percentage in both groups say that the purchasing of government bonds and/or other assets is a tool that should continue to be part of the central bank toolbox even after the crisis (Blinder et al., 2017).
I am going to have a blog. It’s usual in the United States; in other places, not so usual. I will comment on general questions about the future, about Europe, about macroeconomics. What will your first post be about? I am still hesitating. It could be about the future of monetary policy and the points I left out in my recent speech, from neutral interest rates to yield curve control. Are there any rules that bind you in terms of what you can write about? Beyond the ECB rules what will bind me is European decorum. 1 The role of central banks in prudential supervision 2 See Funke, M. Schularik, M. and Trebesch, C. (2016) “Going to extremes: politics after financial crises, 1870-  2014” in European Economic Review, 88, 227-260. 8/8  BIS central bankers' speeches

The prevalence of SME sector in the structure of WSE debuts is the factor behind these statistics. Consequently, the supply-demand imbalance on the stock market was one of the reasons for the strong price rise, which may not always be explained by fundamental factors. For example, the P/E ratio for medium-sized companies included in the mWIG40 index rose from 9.0 to 34.7 between January 2005 and June 2007, and this growth was even higher in the category of smaller companies. Excess concentration of investments on a small number of markets poses a particular challenge, should an asset bubble develop and burst. This development would be the more dangerous that open pension funds cannot hedge their portfolios against the fall in prices. It is worthwhile to mention that pursuant to the Regulation of the Council of Ministers of 13 September 2005 8 , it was anticipated that as from 1 January 2006, open pension funds could take recourse to derivatives to provide hedging to their investment portfolios. Regretfully, in December 2005, this Regulation was repealed 9 , and henceforth, as of today, should prices go into a significant decline, open pension funds have no other instruments to hedge the value of their portfolios but to sell some of their equities . Given a high value of share portfolio, such a sale would significantly aggravate the decline.
Lower returns in the new normal 8. First, lower returns in the new normal. There has been increasing acceptance that the era of low yields is not just a cyclical phenomenon, but is in fact the New Normal. In advanced economies, policymakers are faced with conflicting challenges as they seek to maximise economic growth on the one hand; while having to pursue fiscal consolidation and financial sector reform on the other. Meanwhile, emerging economies will grapple with tighter financial conditions and by implication, slowing growth when unconventional monetary policies are unwound. The outlook is highly uncertain as the normal cyclical recovery template cannot be applied to structural deleveraging episodes such as the one we are currently in. Although bond yields are expected to rise from their current low levels, it is likely that insurers will have to settle for much lower returns from fixed income investing in the years ahead than that achieved in the pre-crisis period. Over the next 20 years, the slowing demographic outlook for the world will also exert pressure on economic growth and lower the expected returns for most asset classes. Shortage of long duration assets 9. Next, a shortage of long duration assets. Asia has often been singled out as the bright spot in the global insurance industry, as rising incomes and lower than average  2  Allianz Global Investors estimates. 3  OECD Global Insurance Statistics. 2  BIS central bankers’ speeches  insurance penetration in many markets offer rosy opportunities for growth.

More generally, I am happy to report that the Committee on the Global Financial System – one of the Bank for International Settlements’ central bank groups – is engaged in a project to determine what lender-of-last-resort gaps currently exist, focusing, in particular, on those that may create vulnerability in terms of financial stability. One area that I anticipate will receive considerable attention is whether there are any gaps with respect to the activities of globally systemic firms that operate on a cross-border basis. Another issue that still needs greater attention is the appropriate role for the home- versus host-country supervisor. The regulatory and supervisory responses for large, systemicallyimportant firms that operate on a cross-border basis need to be closely coordinated, especially during times of stress. In particular, expectations about who will be the lender-oflast-resort need to be well understood in both the home and host countries. We have made considerable progress in recent years in enhancing the safety and soundness of the U.S. financial system. But there is more that we need to do. In particular, we need to study and understand how market liquidity and funding liquidity conditions are changing and what factors are driving that evolution. Conferences like this one go a long way in that regard. They serve as an important forum for discussing ideas and improving our knowledge and understanding. This will provide a solid foundation for any policy actions. Thank you for your kind attention. I would be happy to take a few questions. 6  BIS central bankers’ speeches