samchain/econo-pairs-v1 huggingface dataset:
BIS Review 66/2002  7  Despite these positive results, Norges Bank has decided to modernise the current settlement system because the existing system is complicated and tightly interwoven with other systems. This makes the settlement system vulnerable. Operation and maintenance of the current system also require relatively extensive resources. Following discussions with the banking industry about the division of responsibility and organisation of the Norwegian clearing and settlement system, it has been decided that the current division of responsibility will remain virtually unchanged. Banks will be responsible for gathering transactions and for netting and Norges Bank will be responsible for settlement. Norges Bank has decided to outsource the operational activities of settlement. We are currently preparing an invitation to tender for prospective partners. We will devote considerable attention to these issues in the future. We assume that we will have a definite plan for the site of our settlement operations by summer 2003, with implementation next autumn. International recommendations and work The Committee on Payment and Settlement Systems (CPSS) in the Bank for International Settlements (BIS) has established a separate Working Group on Retail Payment Systems. In September this year, the working group submitted a report on “Policy issues for central banks in retail payments”. 11.

While labour supply in these countries will remain abundant, it is not all that clear whether it will remain cheap. Indeed, we are currently seeing  1  Speech by Charles Bean, “Globalisation and Inflation”, to the LSE Economic Society, 24 October 2006. BIS Review 103/2007  1  an increase in export prices in emerging countries, which translates into higher import prices for developed economies. This inflationary impact seems to have grown over the past few years, while, by contrast, the disinflationary impact of globalisation seems to have slowed down. Going further, some analysts have suggested that, because of capital market integration, real interest rates will equalize around the world, thus reducing the ability of national Central Banks to control inflation. However, this need not be true. Indeed, the classic MundellFleming analysis concludes that monetary policy should be more effective, rather than less, in the case of international capital mobility, although it can operate through different channels of transmission including the exchange rate. But inflation is more than the direct result of macroeconomic shocks. It is a process in which business cycles as well as expectations play an important role. Has this process changed? A change in the output – inflation trade-off? Inflation dynamics have changed over the past fifteen years or so. Inflation persistence has declined, or, in other words, upward changes in the path of prices have become more temporary and easily reversed. Also, inflation itself has become less responsive to shocks. Both are very welcome developments for monetary policy.
Stability, Agility, Opportunity Speech given by Alex Brazier, Executive Director for Financial Stability Strategy and Risk, Bank of England Member of the Financial Policy Committee  Edinburgh Futures Institute, University of Edinburgh Monday 2 September 2019  I am grateful to Imane Bakkar, Jennifer Bell, Steven Dodkins, Nowrin Hossain, Miriam Kurtosiova, Emma Moriarty, Catherine Shaw, Meryem Torun and Sarah Venables for their assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches  More than a decade on, it would not be surprising if memories of the financial crisis had begun to fade. But the costs of that crisis have not. The level of output is still 17% below the path it was following before the crisis struck.1 So deep was the recession and prolonged was the recovery that each person in the UK is, on average, £ worse off as a result.2  The huge costs of financial crises explain why Parliament decided in the aftermath to tie itself to the mast. It recognised that a day might come when there could be temptation to loosen up regulation; to go for quick wins at the risk of greater costs down the road. It knew that temptation – if it ever came – must be resisted. So it delegated – in law - the job of maintaining financial stability to the Bank of England.

A decade of inflation targeting The Norwegian economy emerged quickly and fairly painlessly from the recent global economic downturn. Since 2001, economic policy in Norway has been guided by a fiscal rule and a flexible inflation target. With solid government finances based partly on petroleum revenues and firmly anchored inflation expectations, there was room for manoeuvre both in monetary and fiscal policy when the financial crises hit. Inflation in Norway is currently low, but it has been close to target over the past decade. During this period, monetary policy has faced demanding trade-offs, and the application of judgment has been put to a test. We have gradually learned more about the functioning of our economy under an inflation targeting regime. Let me touch upon some of these insights. Fairly soon after we had adopted inflation targeting, we learned how demanding it may be to strike a balance between different monetary policy considerations in a small open economy. When the key policy rate is raised to restrain a pronounced rise in domestic inflation, it may strongly impact the exchange rate, as we experienced in the period 2002–2003. Both the real economy and inflation were affected. Midway through the decade, global inflation rapidly declined. China’s entry into the WTO, and increased imports from Asia to the west led to a persistent fall in import prices. The combination of very low inflation and strong economic growth posed new challenges for monetary policy. Interest rates – both in Norway and abroad – were set at low levels.
Any partner of a bank had the duty and right to warn against and take steps to constrain another partner from taking excessive risks, if such risks could bring down not just the culprit but all the partners who were jointly responsible for the well-being of the firm. In contrast, in modern times, banks operate predominantly in the form of limited companies, often listed on stock exchanges, with very diverse public ownership. Senior managers who run the bank do not have most of their personal worth tied up in the firm and the prospects for life-long employment have become few and far between. Nowadays (in particular during the period preceding the GFC), senior bank managers are generally rewarded by a combination of very high salaries coupled with very substantial annual bonuses tied to performance in the preceding year. Even where share options are included in their remuneration packages, the lock up or vesting period is relatively short – just a couple of years at most. The effect of this change is that the previously strong alignment of long term interest between bankers and customers has been materially weakened, leading to the classic situation of an agency problem, with the bank management using depositor funds to leverage up the scale of business while the downside risk that they face in doing so is limited.

For a number of decades in the middle of the 20th century there was a notable absence of serious bank crises; one explanation may be that credit markets were tightly regulated. But the regulations also created other problems, though it would take too long to go into that here. Around the 1890s, when the Swedish economy took a great leap forward, new banks were established in quick succession and credit expanded rapidly. This was followed by massive price increases for shares and real estate. The bank crisis that occurred when the boom finally peaked in 1907 had far-reaching consequences: four banks closed, five were reconstructed and fifteen smaller banks were taken over by larger establishments. After world war one there was a new wave of speculation. The prospect of large profits and the inflow of capital contributed to a stock-market boom when bourses achieved a breakthrough as suppliers of venture capital. In 1918 the Stockholm Exchange reached a turnover that at constant prices was unrivalled until the late 1980s. Another factor behind the flourishing stock markets was that commercial banks lent more and more extensively with shares as collateral. The trend ultimately peaked and the mood became less optimistic, as sooner or later it always does. When the high value of the risky assets that had served as collateral fell, a crisis was precipitated in the banking system as well as in the economy as a whole.
Under this scenario, economic policymakers would not only observe the long-term benefit for general prosperity that credibly committing to evidence-based policies can provide; they would also appreciate the potential short-term political return of incorporating the results of these evaluations into their decision-making. Yet as I have previously stated, Spain’s starting position is not a good one. Once again, resorting to an example close to home to illustrate the point, it is telling that over 40% of the Spanish population does not properly understand the meaning of inflation.4 We are aware what this means about citizens’ actual capacity to understand and assess the performance of institutions – such as the European Central Bank and the national central banks – whose mandate precisely includes price stability. The Banco de España, together with the National Securities Market Commission (CNMV), is promoting a Financial Education Plan. We will be joined next year by the Ministry of Economic Affairs and Digital Transformation and, with the participation of a wide number of public and 4/6  BIS central bankers' speeches  private partners, including the Spanish General Council of Economists, the aim is to increase the economic and financial knowledge of the population at large. To achieve this, I believe it will be important to further embed economic and financial knowledge in both the primary and secondary education syllabus, as recommended by international institutions.

The proposal will be based on an in-depth analysis and assessment of the situation on the Swiss credit market, which will, in principle, be carried out once a quarter. 1 The signs of a build-up of imbalances on the Swiss credit market relate to the residential mortgage segment. Thus, if the buffer had to be activated, it would be aimed solely at this segment of the credit market. When assessing the necessity of activating the buffer, the SNB will take into account the impact of other recently announced measures focusing on the mortgage and real estate markets. These measures include a further revision of the selfregulation rules and a tightening of risk weightings for mortgage loans. In addition, as part of its monetary policy mandate, the SNB will closely monitor the impact of a possible activation of the countercyclical capital buffer, in order to assess the consequences for the economy as a whole. The current situation justifies the fact that this instrument, scheduled for implementation under Basel III, has been made available to the Swiss authorities at an early date. Numerous past crises have highlighted the costs associated with credit market excesses. Even if the countercyclical capital buffer does not enable us to prevent the build-up of all imbalances in the Swiss credit market, it should help to reduce these costs in the future, provided it is activated early enough for its preventive properties to take full effect.
In modern times, most societies would demand proper protection of consumers when they purchase a wide variety of goods and services, such as food, electrical appliances, drugs, health care and financial services. Consumers, as compared to suppliers and their intermediaries, are normally in a disadvantaged position in terms of product knowledge and bargaining power. Therefore, they need to be protected from unscrupulous sales practices or misrepresentations. Regardless of what kinds of goods or services are involved, the basic principle in consumer protection is that consumers should be treated fairly. In essence, what it means is that consumers should be able to know what they are buying, the costs involved and all other relevant terms and features of the transactions and should not be subject to high handed sales tactics. In Hong Kong, when a customer walks into a typical retail bank, he or she can undertake a wide variety of financial transactions, ranging from conventional banking services, such as deposits, currency conversion, credit cards, remittances and loans, to the purchase of wealth management or insurance products. This is what we call “universal banking”, a regime in which banks operate like financial supermarkets. Naturally, banks like the universal banking regime as it offers non-interest income such as fees and commission as well as diversification of businesses. At the same time, customers also like universal banking as it offers great convenience in the form of a one-stop service instead of having to go through different firms for different types of financial transactions or products.

One possible solution I think is that of making all contracts on AFET U.S. dollar denominated. This way, the arbitrageurs are not exposed to any foreign exchange risk and they can manage their positions across markets with ease. Of all the commodities listed on SICOM, only one contract namely ribbed smoked rubber sheet no. 1 is Singapore dollar-denominated and coincidentally, it is also the least liquid contract on the SICOM. All other contracts are denominated in U.S. dollar. Moreover, commodity prices in the world are generally quoted in U.S. dollar, therefore, corporate buyers and sellers are already aware of their costs and revenues in terms of U.S. dollar. If we aim to establish futures price of, for instance, white rice on the AFET as a benchmark, it is logical for this reference price to be denominated in an international currency such as the U.S. dollar. That way, the price quotations would purely reflect all relevant information relating to demand and supply conditions of the products and are not influenced by exchange rate fluctuations. Some may express concern, however, that by eliminating foreign exchange risk for foreign arbitrageurs, we in turn, expose our local producers and end-users to the very same risk. I feel, on the contrary, that local buyers and sellers are already accustomed to commodity prices being quoted in U.S. dollar in the world market and manage the risk in a proficient manner.
Lim Hng Kiang: Singapore – pursuing broader and deeper economic integration with major economies Opening keynote speech by Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, at Deutsche Bank Access Asia Conference 2013, Singapore, 20 May 2013. *  *  *  Distinguished guests, Ladies and gentlemen, A very good morning to all of you. It is my pleasure to join you at Deutsche Bank’s Access Asia Conference 2013. Let me first thank Deutsche Bank for the invitation to speak at your conference. This is the largest event hosted by Deutsche Bank each year globally, and a huge turnout is a clear indicator of the strong corporate and investor interest in Asia. In the last 10 years, the centre of gravity of the world economy has been moving away from the US and Europe to Asia. Asia is expected to continue to prosper in the decades ahead as the middle class expands in line with strong economic growth. China is set to be the largest economy in the world by 2030 and is already creating megacities of over 10 million at an average rate of one per year. Besides China, India’s middle class is expected to grow to almost 600 million people by 2025. In Indonesia, almost 60 per cent of Indonesian households, in a country of 240 million people, are expected to reach middle-class status by 2020. Being a very small state, Singapore has and will continue to maintain an open economy.

At this time, the Thai bond market has a strong potential to become the important third pillar of Thailand's financial structure next to the credit and the equity markets. At present, the size of the bond market in terms of market capitalization to GDP is about 50 percent. Hence, there is considerable scope for the local bond market to grow and expand. Thai bond market in 2004 Last year, the Thai bond market grew by about 9 percent in terms of the amount of bonds issued, while activities in the secondary market increased by about 12 percent. The growth reflects mostly transactions in government securities, particularly treasury bills and Bank of Thailand bonds. Last year was also an important year for bonds as it was the year that we saw a shift in the stance of monetary policy. The policy interest rate was raised three times in the second half of last year in response to increased pressure on prices and economic stability. Looking back, one has to say that the bond market adjusted very well to the shift in the monetary policy stance. Bond market interest rates responded in an orderly manner and moved in line with policy signal. This smooth adjustment reflects two important qualities that we are now seeing in the local bond market. The first is greater market liquidity which has allowed the bond market to adjust to the change in monetary policy without difficulties.
Criterion 2, which states that for given inflation developments, the loss Lt will increase with fluctuations in economic activity, is covered by the first and second segments. Criterion 3, which states that monetary policy shall be robust, is covered by the second, third and fourth segments. The adjustments made in March were expressed by slightly increasing the weight given to the output gap, , because financial imbalances can often build up in periods of high capacity utilisation. At the same time, weight was given to avoiding substantial deviations in the interest rate from a normal level. This consideration is expressed in the final segment in the loss function. This can help to mitigate the risk of a buildup of financial imbalances, even in periods when capacity utilisation is not particularly high. Chart: Key policy rate Normally, the key policy rate cannot achieve several objectives simultaneously. In the case of conflicting objectives, the choice of interest rate path will involve a trade-off between different considerations. If monetary policy only took into account the low level of inflation, the key policy rate would be rapidly reduced and kept close to zero for a good while. Inflation might then pick up faster, partly as a result of a weaker krone. In the light of the trade-off against other considerations, however, the Bank does not want to accelerate the pace of inflation. The result would be a pronounced impact on output and employment.

Despite rising housing construction, the number of housing completions remains low in relation to population growth. The housing deficit has grown over several years and is pushing up house prices. The housing shortage requires measures in the real economy – in this case, an increase in housing construction. Monetary policy cannot aim to redress such real economic imbalances. Low interest rates over time can increase the risk of driving up debt levels and asset prices, bringing them to a level that is unsustainable over time. This is an important lesson from the financial crisis. We take account of this when setting the key policy rate, as has been made clear in the most recent formulation of the loss function. At the same time, there is – with one instrument available to us – the key policy rate – a limit to how many tasks can be assigned to monetary policy. In order to counter financial imbalances, instruments in addition to those available to monetary policy must come into play. Macroprudential regulation of the financial industry will play a greater role in the years ahead. The overall risk in the financial system is greater than the sum of the risk represented by each individual bank. Which macroprudential instruments would be the most suitable is currently being discussed in detail in various international fora and central banks. One instrument that will be introduced is the countercyclical capital buffer for banks. The purpose of this buffer is to reduce the procyclicality of bank lending.
Leveraged finance is certainly not a major supervisory concern at the moment, but the recent development of the relevant market exemplifies the need for good risk governance, a welldefined and closely monitored framework for risk appetite and highly assertive risk management. Search for yield has intensified competition in the market for leveraged finance. The result is that the terms for borrowers have become more favourable – ultimately, that increases the risks for the lender. We as supervisors take a close look at the credit quality of borrowers as measured by their level of leverage. Lending to highly leveraged counterparts may entail significant risks. And in the euro area, we observe that the leverage of corporate borrowers has increased. In 2014, 35% of transactions arranged by significant institutions actually refinanced borrowers at an increased level of leverage. Moreover, we as supervisors are not always impressed by the quality of loan contracts. Some loans contain only limited obligations for borrowers, for instance with regard to payment terms. Particularly when refinancing or renewing commitments, banks might be inclined to accept the removal of covenants in order to preserve existing commercial relationships. We as supervisors also care about returns. Banks are taking on risks; but do they gain adequate returns? Well, over the entire credit cycle, they may not necessarily earn more returns because there are other factors at play.

1973, P. 208  BIS Review 2/2001  1  against the yen. It took place in an environment where neither current nor expected inflation differentials have changed to any noticeable extent. Second, the volatility of floating exchange rates by far exceeds the volatility of the fundamentals. It is impossible to explain short- and medium-term exchange rate fluctuations with the aid of traditional fundamental factors such as inflation and productivity differentials. Against the background of such experiences, it is hardly surprising that two considerations characterise the ongoing discussion on currency regimes. First: Floating versus pegging is not a question of right or wrong. What seems appropriate for one country may be a bad choice for another economy. Structural differences in trade flows, productive capacities, features of the financial sector and the credibility of the political process may result in different choices. Second: Even among ardent protagonists of floating the dogmatic position that central banks should take an attitude of benign neglect towards exchange rate movements is out of favour. The exchange rate is generally regarded as a core determinant of monetary conditions to be carefully taken into account when money market interest rates are set. This aspect of policy making is of particular importance in small and medium-sized, open economies. Short- and medium-term adjustments – Muddling through in ignorance Taking the Forex environment into account, however, does not mean actively steering exchange rates by fine-tuning. Such an endeavour would not only jeopardise stability goals.