samchain/econo-pairs-v1 huggingface dataset:
Case study 7: Judicious use of fiscal policies, based on inflation behavior and other macro-economic factors Mr. Chairman, I have so far discussed 6 case studies that confirm the co-operation and harmonization between the MoF and CB. The co-ordination however, went even further and was applied in several other situations as well. Now, I am going to describe one general  BIS central bankers’ speeches  11  example out of several similar instances which took place from time to time, over the past few years. Let us take our minds back to October/November 2011. At that time, the global oil prices had soared to dizzy heights, and the Ceylon Petroleum Corporation was incurring rather heavy losses. As a natural response therefore, an increase in the administrated prices in petroleum products seemed like a sensible action. However, at that time, inflation in the country was around the 7% level. Inflation projections for the next 2 months too, were around the 7% to 8% levels. In that background, our view was that, if the petroleum prices were to be adjusted upwards significantly, the inflation figures would have risen above 10%, and had that happened, the favourable sentiments that had been built up carefully over the previous 33 months would have been badly damaged. Then, we would have had to start our inflation control efforts all over again, and inflation expectations too would have suffered considerably.

Kalin Hristov: Monetary unions in history Welcome remarks by Mr Kalin Hristov, Deputy Governor of the Bulgarian National Bank, at the Conference “Monetary Unions in History”, jointly organised by the Bulgarian National Bank and the European Association for Banking and Financial History (eabh) e.V., Sofia, 1 July 2022. * * * Dear Members of the Association, Dear conference participants, Ladies and Gentlemen, It is an honour to welcome you to this conference which the Bulgarian National Bank organises in cooperation with the European Association for Banking and Financial History. I am also delighted to have this event, together with yesterday’s workshop on the “Digital rebirth of historical datasets”, taking place in Sofia alongside the annual meeting of the Association. This year marks twenty years since the Bulgarian National Bank became a member of the Association; this is the first time, however, that an annual meeting and events of the Association are hosted in Bulgaria. Let me, therefore, extend words of gratitude for the excellent cooperation with the Association regarding the organisation of this series of events. The Bulgarian National Bank is one of the oldest central banks in the world, thirteenth by order of its establishment in 1879. Our institution has understandably cultivated a profound respect for banking and financial history, as seen from our topical publications and research projects we take part in. For us history is also vibrantly present today – exactly twenty-five years ago, 1 July 1997 was the day of introduction of the currency board in Bulgaria.
1-65, September 2003. 2 Paul Krugman, It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap, Brookings Papers on Economic  Activity, The Brookings Institution, Volume 29, Issue 2, pp. 137-206, 1998. 3 John B. Taylor, Discretion versus Policy Rules in Practice, Carnegie-Rochester Conference Series on Public  Policy, Volume 39, pp. 195–214, 1993. 4 For an early example, see Jeffery C. Fuhrer and Brian F. Madigan, Monetary Policy When Interest Rates Are  Bounded at Zero, The Review of Economics and Statistics, Volume 79, Issue 4, pp. 573-85, November 1997; for further references see Reifschneider and Williams (2000), and Clouse et al., 2003. 5 Board of Governors of the Federal Reserve System, FOMC transcript, June 30-July 1, 1998. 6 3/4  BIS central bankers' speeches  6 Jeffrey C. Fuhrer and Mark S. Sniderman, Conference Summary, Journal of Money, Credit and Banking, Volume  32, Number 4, Part 2, pp. 845-69, November 2000. 7 Bennett T. McCallum, Theoretical Analysis Regarding a Zero Lower Bound on Nominal Interest Rates, Journal  of Money, Credit and Banking, Volume 32, Issue 4, pp. 870-904, November 2000. 8 David Reifschneider and John C. Williams, Three Lessons for Monetary Policy in a Low-Inflation Era, Journal of  Money, Credit and Banking, Volume 32, Issue 4, pp. 936-66, November 2000. 9 Marvin Goodfriend, Overcoming the Zero Bound on Interest Rate Policy, Journal of Money, Credit and Banking,  Volume 32, No. 4, Part 2, pp. 1007-35, November 2000.

In Hong Kong, the Gini coefficient has risen steadily from 0.476 in 1991 to 0.539 in 2016, whereas in the US, it has increased from 0.449 in 1991 to 0.519 in 2015.2 Economic inequality causes social divisions, with the rise in populism especially in the US and Europe being one of the unwelcome symptoms, and it also affects development and growth in the longer run. Indeed, problems with income and wealth disparity have become so acute that it has recently triggered a debate on the “crisis of capitalism”. IMF Managing Director Christine Lagarde, when presenting her Global Policy Agenda at the IMF Spring Meetings last month, also pointed out that the rewards of economic growth have not been shared, and called for a “new multilateralism” which will, among other things, foster inclusion. 4. With so much at stake, policymakers simply cannot brush aside the issue of the widening gap between the “haves” and the “have-nots”. Over the past two years, I have been talking about, on different occasions, how globalisation, technological innovation and monetary policy may have affected distribution of income and wealth. Today I wish to offer some further thoughts about the distributional consequences of monetary policies: what has happened so far, and the way forward for policymakers. The distributional effects of unconventional monetary policies 5.
Some might argue, however, that risk-takers are drawn to finance like they are drawn to Formula One racing, and that regardless of risk or reward, these types of individuals will always want to push the boundaries. This logic might lead one to conclude that incentives are unlikely to be an effective tool to limit excessive risk-taking and to promote more ethical behavior in the financial sector. I disagree. First, the degree to which an industry attracts risk-takers is not pre-ordained, but reflects the prevailing incentives in the industry. After all, risk-takers have options. Second, and, more importantly, incentives matter even for risk-takers. In my speech on ending too big to fail, I stressed the importance of reducing the likelihood that large financial firms would face insolvency, as well as the need for a credible resolution plan that does not involve taxpayer money. Compensation policies can play a useful role in reducing excessive risk-taking. Similarly, compensation policies can complement an improved culture, and play a role in reducing unethical and fraudulent behavior. Individuals who decide to bend the rules or to step over the line usually do this in the context of an assessment of the expected risks and rewards of their actions. This implies that one objective should be to rebalance the scales so that the expected risks from unwanted behaviors are more likely to outweigh the expected rewards. The expected risks are a function of the likelihood that an individual (or set of individuals) is caught and the attendant consequences.

The financial sector is key to mobilising Asia’s large pool of surplus savings more efficiently and channelling it to investment opportunities in the region. Situated at the heart of Emerging Asia, Singapore serves to intermediate the flows of savings and investments, helping to finance growth, manage risks, and connecting markets. Singapore’s financial centre is able to play this role because of four factors:   the credibility of its financial regulatory framework;    the competencies of its workforce;    the connectivity it has with the rest of Asia; and    the collaboration MAS has with the financial industry. Let me say a few words about collaboration. Working closely with industry is an important part of MAS’ work – be it in formulating regulatory policies or growth strategies. Regulation must be appropriate to the risks they are meant to address. We have not flinched from imposing high prudential standards – sometimes above international norms – but have always consulted industry actively to make sure that the prudential outcomes that we want are achieved at minimal compliance cost. Likewise, we have worked closely with industry to help create a strong financial ecosystem, deepening and broadening our markets, building critical infrastructure, and developing a skilled and competent financial sector workforce. JPM has been an important partner in our journey together to develop Singapore as a dynamic and vibrant financial centre.
On one hand, certain aspects of the application of current accounting rules for calculating credit risk are clarified. On the other, the aforementioned authorities have ruled that banks may effectively use the capital buffers available to absorb unexpected losses. Specifically, the aim of the clarification of the accounting rules is to prevent potentially temporary delays by borrowers in repaying their loans from receiving the same treatment as though what were involved was a lasting impairment in the quality of the loans. The latter would lead to an immediate and abrupt adjustment of credit ratings and, therefore, to an increase in the provisions required which, ultimately, would lead to a downward adjustment in the credit extended by banks. In exchange, it is necessary to prevent the wrongful use of this flexibility from leading to inappropriate accounting practices that translate into a delay in recognising the actual impairment of the quality of certain credit exposures. 27  In the second of the two areas mentioned, the Banco de España has conveyed to all the institutions it directly supervises the various measures introduced by the different macroand microprudential and resolution authorities to alleviate capital and liquidity requirements. Moreover, the Banco de España has recommended that banks under its supervision should temporarily eliminate dividend payouts and apply prudent criteria in the variable remuneration of their staff, so that they may channel the funds they generate towards reinforcing their capital positions.

Searching for answers Even if we can provide some general answers to the question of what has characterised central banking activities, we must continue to search for answers to what central banks are and what makes them useful. Norges Bank will celebrate its two hundred year anniversary in 2016. We plan to write three books: The History of Norges Bank will be written by historians, and The Monetary History of Norway will be written by economists. The third book from the project will offer an international, historical perspective on central banking, and has been given the working title What is a useful central bank? Norway will only be mentioned in this book if our experiences contribute to the international understanding of the question at hand. This last question was also the topic of the Governor’s speech yesterday and the theme of today’s symposium. He pointed out that a useful central bank must have a clear mandate with relevant objectives and instruments. The central bank must also seek to reach these objectives in a manner that ensures confidence. Arranging this symposium on a theme that interests the Governor is our way of honouring him after having served his two periods. Today we begin with a historical perspective on central banking. Professor Bordo will offer some long-term perspectives, while professor Toniolo will discuss some experiences from central banks’ challenges in the interwar period. Later, Governor Aziz will address current challenges for central banks in emerging market economies.
There are also reasons for closer study of the potential threats to the stability of the financial system arising from such developments. Finansinspektionen and the Riksbank play important roles here. If the infrastructure is instead mainly owned and run by the users, the problems may not primarily concern pricing, but rather how the conditions for changing established structures are affected. Here I am thinking of the incentives for new developments and the possibilities for new participants to become established in the market. This is extremely important to avoid rigid structures in the financial markets. The conclusion is that it must be possible to adapt the rules and supervision governing the companies working in the financial infrastructure to the organisational form chosen by the companies. In a changing world, our task is to ensure we employ the best methods for carrying out our supervision and oversight work. The picture is further complicated by the fact that the authorities in different countries become involved when consolidation work crosses national boundaries. EU regulations Another important driving force for change is the new regulations being produced within the EU, arising from the Financial Services Action Plan of 1999. One of the purposes of these plans was to harmonise regulations for securities trading between the different European countries. The EU has decided to introduce what is known as the Lamfalussy Process to achieve the target of implementing all parts of the plan prior to 2005.

At retirement age, net saving becomes negative once again. When the percentage of people in the respective age groups changes, it affects savings at a national level. Seen from a longer perspective, the most spectacular demographic trend is that we are living longer. In 1950, 10 per cent of the population was aged 65 and over. Today the figure has risen to 17 per cent, and in 2035 it will be 23 per cent, according to Statistics Sweden’s forecasts. Savings at a national level need to be adapted to be able to support this growing band of long-lived, active pensioners. The collective social insurance systems are currently undergoing development, which emphasises the need for additional private saving. There is uncertainty over what expectations and needs the welfare state should and can fulfil, but most people appear to agree that the role of the welfare state must decline as a declining workforce has to support a greater number outside of it. The original delegation of savings from the individual to society will revert to the individual in different ways. For instance, individual choices have been introduced within the framework of the pension system, giving the individual some responsibility for management of the savings. This applies to both occupational pensions and the state pension system. These changes stimulate savings and also channel some of the earlier collective savings into savings markets, particularly mutual funds and pension funds. The fact that we have had a large inflow of capital into the securities markets is therefore fairly unsurprising.
The long run containment in inflation necessarily relies on containment of monetary expansion and increase in production in the country, particularly by improving productivity. As the Central Bank, what we can do? Obviously we cannot produce goods or services for the consumption of the economy, but certainly we can create the right conducive environment enabling the country’s economic performance. Why should the Central Bank be interested in productivity? Our role is to maintain economic and price stability and financial system stability. We also provide necessary payments and settlement infrastructure. We advise the government in economic affairs and policy making, and we provide important agency services such as exchange control, public debt management, provident fund management and regional development activity. In all these functions, our Mission is to “contribute to Sri Lanka’s prosperity”. At the same time, the Central Bank widely pronounces the theme of “success through productivity”. 4  BIS Review 116/2008  But, obviously this cannot be done by ourselves… The success through productivity needs a consolidated national effort. That is why we all have to push ourselves to a greater productivity level. We have to, •  work smarter,  •  combine better,  •  deliver results,  •  get it right. It should be noted that the private sector has continued to make commendable efforts in order to improve productivity in the country. What can the ICC Sri Lanka do? ICC Sri Lanka too can play a prominent and essential role.

Ajith Nivard Cabraal: The role of productivity improvement in achieving economic prosperity Keynote address by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, at the Annual General Meeting 2007/08 of the International Chamber of Commerce Sri Lanka, Colombo, 17 September 2008. *  *  *  Mr. Chairman, Distinguished Invitees, Ladies and Gentlemen, I consider it a unique honour to be invited to deliver the Key Note Address at this Annual General Meeting of International Chamber of Commerce Sri Lanka (ICC Sri Lanka). I also consider it a great privilege to share my thoughts and views on a very timely topic, “The Role of Productivity Improvement in achieving Economic Prosperity” since productivity improvement is essential from both a micro and macro perspective. Therefore, at the outset, I wish to thank the ICC Sri Lanka for inviting me to deliver the keynote address on a vital theme at this important forum and giving me an opportunity to plant a few seeds in your distinguished minds so that such seeds may be nurtured by you in your future endeavours positioning the country at a higher level in the global environment. As we all agree, as individuals, our main objective is to experience a better life and we think, act and react aiming to achieve this. At the same time, the main objective of economic management is to enhance standard of living of the people.
Our governance framework has lost much credibility that must now be carefully reacquired. BIS central bankers’ speeches  5  Here, particular responsibility rests with the national authorities. In particular, the European governance framework will function best if national finance ministries conscientiously perform their role with respect to multilateral surveillance. The sovereign debt crisis has taught us unequivocally that – in spite of the no-bail-out clause in Article 125 of the Treaty – the euro area countries are not insulated from one another. In an integrated single European market with a single European currency, spillover effects from one Member State to the other should make us all take a strong interest in the pursuit of sound fiscal and structural policies by our European partners. Because of the close integration of the European economies, governments have also set up a European crisis resolution mechanism, the European Stability Mechanism. Its purpose is not, as some have argued, to bail out euro area countries that have failed to pursue sound economic policies. Its stated purpose is to safeguard financial stability if one or more countries endanger the euro area as a whole. Conclusion To conclude, the ECB’s policies have been guided by price stability considerations, with policies targeted at those elements of the crisis that threatened to prevent it from fulfilling its mandate. Responsibility for the resolution of the sovereign debt crisis rests with the governments of the euro area Member States.

The ECB should support the adjustment process in the Member States in the best manner possible, namely by providing price stability in the euro area as a whole. The ECB’s response to the crisis Let me now address the measures taken by the ECB in response to the crisis, before turning to the response by the euro area governments. During the crisis, the ECB has been confronted with unprecedented threats to monetary stability in the euro area. Broadly speaking, these have come from two sources: first, the deflationary forces stemming from the economic downturn and, second, the impairment of the transmission of its monetary policy, which reflected to the growing tensions in financial markets. The ECB had to react decisively to these challenges. First, we used our standard monetary policy measures to address the downward pressures on price stability that resulted from the sharp slowdown in economic activity in the crisis. In full consistency with our mandate, we reduced our key policy interest rate rapidly between October 2008 and May 2009, from 4.25% to 1%. In other words, we reduced our policy rate faster than any euro area country has ever done in recent history. Given that the ECB has ensured that inflation expectations in the euro area as a whole remain very solidly anchored, we have been able to maintain an accommodative monetary policy stance over the past four years.
Nigel Jenkinson: Financial innovation – what have we learnt? Speech by Mr Nigel Jenkinson, Executive Director, Financial Stability, Bank of England, to the Reserve Bank of Australia Conference on “Lessons from the Financial Turmoil of 2007 and 2008”, Sydney, 14-15 July 2008. This speech is co-authored with Adrian Penalver and Nicholas Vause. *  *  *  Section 1: Introduction 1. At last year’s conference, we presented a paper highlighting the profound impact of rapid financial innovation, deregulation and capital market integration on the performance, risk and management of the global financial system. We particularly noted the benefits of financial innovation. 1 We argued that the development of new financial instruments has created opportunities for households and corporates to improve their management of financial risks and has facilitated the smoothing of consumption and investment over time and across different states of the world. But we also emphasised that the breakdown of barriers to the supply of financial products and the large volume of risk pooling and shifting within and across borders has increased the network interconnections within the global financial system. That has added to the system’s complexity. And we underlined that understanding and addressing the corresponding evolution of financial system risks poses major challenges for financial institutions and for financial stability authorities. 2. The past year has seen these potential major challenges turn into real practical problems.

8  BIS Review 126/2010  Figure 6 Stock market volatility (percent)  Long-term interest rates in developed economies (3) (percent)  120  120  6  6  100  100  5  5  80  80  4  4  60  60  3  3  40  40  2  2  20  20  1  1  0  0  0  0  07  08  09  10  Developed markets (1) Emerging markets (2)  05  06 U.S.  07  08 Japan  09  10 Eurozone  (1) Uses VIX volatility index. (2) Estimated volatility of the MSCI index in dollars. (3) 10-year government bond interest rates. Sources: Bloomberg and Morgan Stanley Capital International. Figure 7 Output gaps (*) (percent)  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  08  09 June 2010 Report  10  11  -6  September 2010 Report  (*) Gray area shows forecast as from the third quarter of 2010. Source: Central Bank of Chile.