samchain/econo-pairs-v1 huggingface dataset:
But, if the subsidy is financed by incurring a loss elsewhere, it does not help to fight inflation. That is because at the place where the loss is incurred, there exists a deficit supply creating pressures for prices to rise. Similarly, price controls may keep the cost of living index under control. But, as long as there is excess demand in the macro economy, it does not help to contain inflation. Then, what about negative supply shocks such as a temporary fall in the output of agricultural products or increases in the prices of imported goods? They would reduce the real aggregate supply creating an excess demand in the macro economy. It would lead to the increase in the prices of certain consumer goods raising the cost of living of those who consume them. But, that is not inflation. For these one-off events to become inflation, the nominal aggregate demand should also rise continuously over the real aggregate supply. In other words, the macro economy should be characterized by the presence of an excess demand for goods and services. The elimination of this excess demand is the path for curing the malady of inflation. When there is no excess demand or excess supply, then, the macro economy is said to be in balance. Such a balance eliminates the pressure on prices to change. The public having observed the general stability in the overall price level would form low expectations on future changes in the prices. This would lead to future price stability as well.

The last easing in the latter part of 2012 was intended to provide an additional cushion against the impact of global economic slowdown and to further bolster domestic demand to sustain growth momentum. These policy decisions were deemed consistent with keeping inflation within the target range, as well as maintaining the overall financial stability. In fact, the first joint meeting between the MPC and the Financial Institutions Policy Committee (FIPC) took place last year, where the two committees shared their perspectives and information, as well as discussed in depth potential sources of systemic risk that could arise from economic and  BIS central bankers’ speeches  1  financial linkages. Regarding capital flow policy and in collaboration with the Ministry of Finance, the BOT continued to relax regulations to promote outward investment and foster more balanced capital movements. A clear lesson from the recent global financial crisis is that a good conduct of monetary policy alone does not necessarily guarantee a sound and stable financial system. As a result, central banks around the world have stepped up efforts to strengthen the supervision of financial institutions, improve risk management, and place a greater emphasis on monitoring systemic risks. Last year, the BOT introduced the Basel III capital regulatory framework with focus on improving capital quality, increasing capital base to provide cushion in the event of a crisis, and strengthening risk management procedures, especially in the realm of credit risks.
The reason is, of course, that the view I had on the system around the turn of the century was formed before one of the biggest stress tests of all time, when almost 90% of the banking system in Iceland collapsed in the autumn of 2008 in the wake of the post-Lehman intensification of the international financial crisis. So do I still have the same view? I will have to hold you a little bit longer in suspense on that question, as I should first discuss briefly how the financial crisis has played out here in Iceland. For more detailed account, I refer you to numerous publications, including a thorough and informative report of the parliament-appointed Special Investigation Commission, which reported last month on the causes of the financial crisis in Iceland. 3 To paint with a broad brush, we can say that economic and financial developments in Iceland during the last decade or so are a combination of two separate but interrelated stories. On the one hand, there is Iceland’s boom-bust cycle and problems with macroeconomic management in small, open and financially integrated economies. This is a well-known story that has played out in Iceland and other countries several times. On the other hand, we have the story of the rise and fall of three cross-border banks operated on the basis of EU legislation (the European “passport”) – banks that were mishandled by the owners and the bankers, and underregulated and undersupervised by Icelandic authorities.

At the time, pension payments from the public system were still somewhat larger than those from the occupational pension funds, but the difference was slight and, as the total pensions paid out by the occupational pension funds were growing much faster, they did overtake the public system in subsequent years. It is instructive in this regard that, according to OECD, the balance between public and private provision of mandatory pensions is heavily in favour of the private provision in Iceland, or 84%, which is the highest rate amongst OECD countries. As a result, public pension spending in Iceland is 2% of GDP, compared to the OECD average of 7.2%. The occupational pension funds have grown very fast in the last few decades, through mandatory contributions from all wages and salaries, low operational costs, and long spells of good returns. Around the turn of the century, they were the third-largest in EU and EFTA countries in terms of assets as a share of GDP, at around 80%, after Switzerland and the Netherlands. Shortly before the international financial crisis struck, Iceland had overtaken even these countries. The funds were bound to grow much more, as they were far from reaching maturity in the sense that most of those receiving pensions had not accumulated rights based on their lifetime earnings. The clearest measure of this was the fact that the pension burden, or pensions as a share of contributions, was still below 50%.
Earlier this month, the China Securities Regulatory Commission announced three new initiatives to strengthen mutual access between Mainland and Hong Kong financial markets. These are, first, broadening the scope of Stock Connect to include foreign companies with primary listings in Hong Kong and more companies listed on the Shanghai and Shenzhen stock exchanges; second, development of an RMB- securities trading counter in Hong Kong and possible inclusion of RMB securities in Southbound Trading via Stock Connect; and third, the introduction of Mainland government bond futures in Hong Kong. These measures will enrich the investment choices for Mainland investors, attract more foreign companies to list in Hong Kong, and provide more offshore risk management tools to meet global investors’ hedging needs. Apart from the expansion of the Connect Scheme, in July this year, the HKMA’s currency swap agreement with the People’s Bank of China was also increased from RMB500 billion to RMB800 billion and made permanent. Following this change, Hong Kong’s facility is the largest of any jurisdiction and the only one that is not subject to renewal, giving us an effective liquidity back-stop to support the development of the offshore RMB market in Hong Kong. Also in July, the HKMA enhanced the operational flexibility, size and repo rates of its RMB Liquidity Facility. The changes will make it easier for banks to provide services to clients and other offshore centres in different time zones.

16 Sep 2022  Keynote speech at the Treasury Markets Summit 2022 Eddie Yue, Chief Executive, Hong Kong Monetary Authority “New Impetus for Hong Kong” Distinguished guests, members, and friends of the Treasury Markets Association (TMA), ladies and gentlemen. Opening 1. It is an honour and a pleasure to be asked to give the keynote speech at this year’s Treasury Markets Summit. 2. As much as I wanted to be with you all in-person, I have to join this event virtually while travelling to international meetings. Travel has been rather difficult for the past two-anda-half years but now that most cities and countries have achieved high vaccination rates and COVID-related symptoms have generally become less severe, I am taking every opportunity to physically represent Hong Kong at key international meetings. There is really no substitute for face-to-face connection, and I do hope such gatherings are back to stay. This is a great time and a perfect opportunity for us to show the world that Hong Kong is back, stronger and better than ever. 3. In my remarks today, I wish to talk about Hong Kong’s progress as an international financial centre, and to highlight the rapid growth of Mainland China and the RMB. No appreciation of Hong Kong’s growth can be complete without acknowledging the rest of the nation’s progress: Looking at one without the other would be like admiring a sunrise without seeing the sky behind it. 4.
Even though it is fashionable at present to badmouth our local currency – even among those who ought to see it as their duty to refrain from indulging in such calumny – most currencies, large and small alike, have fluctuated wildly in the recent market turbulence; and it can easily happen that as soon as the króna depreciates, the yen and the Swiss franc, for example, appreciate even more, and borrowers who have been following the Pied Piper of Hamelin along the path of foreign loans end up trapped by their own gullibility. Despite the headwinds that face us now, not least in connection with the international financial markets and the profound impact that they could have on business here in Iceland, it is not necessarily a given that the Icelandic nation is careening headlong into a recession. It is much more likely that we will experience a slowdown and, at worst, a sharp economic dip that need not be long-lasting. We have experienced the like before and have been quick to shake off the effects of it with the adaptability that the Icelandic nation has so often demonstrated. It is reasonably clear, however, that the national economy will not achieve any real equilibrium unless there is a contraction in demand.

Iceland’s overall level of debt has grown to an uncomfortable degree, and the CDS spreads of Icelandic banks have reached exceptional heights despite their excellent capital adequacy ratios, their steady history of profitability, and the improvements they have made in their funding procedures relative to, for example, two years ago. The present credit crunch and difficulties in the market are far from being uniquely Icelandic; they are a global phenomenon, and the recent turnaround seems to have taken everyone by surprise. When the current problems reared their heads in mid-2007, many  2  BIS Review 36/2008  clung to the hope that these headwinds would be short-lived and soon pacified. The general feeling seems to have been that there was still a glut of capital around the world, and that the temporary distrust in the market – even a sort of misunderstanding of the market – would vanish as soon as it became clear that the sub-prime mortgage market in the United States, despite its scope and size, was only a drop in the proverbial ocean of international finance, and that cheap capital must surely be unleashed anew and the Utopian dream would take the market in its arms once more. At which point, all would be happy once again and all unpleasantness a forgotten dream.
Often in the past in this country we behaved as if we thought that promoting higher growth and employment – which I repeat is, of course, what we all want to see – was largely a matter of pumping up demand. We paid too little attention to the structural, supply-side, constraints. All too often we tried to buy faster growth and higher employment at the expense of just a bit more inflation. But that was like trying to squeeze a quart out of a pint pot. And you all know the result: inflation accelerated, often accompanied by a worsening balance of payments, until it could only be brought back under control – as eventually it had to be brought back under control – by pushing up interest rates dramatically and forcing the economy into recession. We get uptight these days when interest rates rise by ¼%: it was only 14 years ago that we were driven to increase interest rates by 4% in the space of 17 days. I don’t need to remind you – or perhaps I do – of the really miserable social as well as economic consequences, as right across the economy people lost their jobs, their businesses and their homes. But even more insidiously, repeated experience of boom and bust produced a pervasive short-termism in business behaviour, which infected both industry and finance, and both employers and employees, however much we all like to blame everyone else.

But even if we can – and the financial markets’ response to the latest developments in Brazil, as well as the beginnings of a recovery in capital flows to some countries in Asia, are reasonably encouraging in this respect – we are now having to cope with the economic aftereffects of these earlier financial disturbances. The IMF has cut its most recent forecasts for world growth to close to 2%. And the risks almost certainly remain on the downside. That’s still not global slump or recession. But large parts of the world economy are in fact in recession and the prospect for the world as a whole turns very much on what happens in the major industrial countries. In essence, what we have seen is a brutally sharp cutback in capital flows to much of the emerging world and to some of the transition economies, creating a corresponding need for  5  BIS Review 19/1999  urgent improvement in their current accounts. This has caused massive currency depreciations and forced the emerging countries to make equally sharp cutbacks in domestic demand. The counterpart is a sharp decline in net external demand in the industrial countries, which, if it were not to be offset by action to stimulate domestic demand in those countries, could indeed lead to weakening global activity and price deflation.
Chart 4: MPC over-predicted demand coming out of the pandemic  Sources: ONS, Bank of England, Bloomberg Finance L.P. and Bank calculations.Chart shows the cumulative percent change in real consumption relative to its level in 2021 Q2. The ‘monetarist’ forecast is based on an error correction model of consumption estimated over 1992-2019 that includes separate terms for liquid assets and illiquid assets in both the long-term relationship and short-term dynamics. It is based on a consumption function set out in Aron et al (2011)  . Second, inflation driven purely by a monetary expansion might be expected to raise all prices equally. That’s very clearly not what’s happened over the past couple of years. As Chart 14 illustrates, there have been huge variations in relative prices – some have risen much faster than others. In 2021, the inflation was most marked in prices of core traded goods. In 2022 the big jumps were in energy and food prices (Chart 15). Page 25  Chart 14: Big shifts in relative prices since the pandemic  Sources: ONS and Bank calculations. Chart 15: Large increase in global prices of durable goods in 2021, then those of energy (especially in Europe) in 2022  Sources: ONS, FRED and Bank calculations. Page 26  Furthermore one can readily identify things that account for this pattern. The pandemic caused a big shift in global consumer demand towards goods (and away from services) while at the same time impairing their supply.

13 Article 173 of the French Energy transition Act of 17 August 2015. 14 Joint statement by the Founding Members of the Central Banks and Supervisors Network for Greening the  Financial System, 12 December 2017. 15 New Climate Economy (2016): The sustainable infrastructure imperative Financing for Better Growth and  Development. newclimateeconomy.report/2016/wp-content/uploads/sites/4/2014/08/NCE_2016Report.pdf 16 www.climatebonds.net/files/reports/cbi-green-bonds-highlights-2017.pdf  4/4  BIS central bankers' speeches
David Clementi: A bank for all regions: promoting monetary and financial stability in the United Kingdom Speech by Mr David Clementi, Deputy Governor of the Bank of England, to the Ulster Society of Chartered Accountants, Belfast, 14 March 2002. *  *  *  Introduction Ladies and gentlemen, thank you very much indeed for your kind invitation to be here with you tonight. Despite its name, the Bank of England is the central bank of the United Kingdom, and as such it is essential for us to get out and about in the country at large, explaining our actions, and listening hard to the views of businesses and the wider public about the way we are doing our job. In the past year, members of the Bank's Monetary Policy Committee have made some 50 visits across the UK. On this trip, apart from attending this dinner, I have held a meeting with the regional council of the CBI, discussed trading conditions with local business people, and explained our mission to some of the Northern Irish press. I want to cover three main themes in my comments tonight. First, I want briefly to explain the Bank's general approach to monetary policy. Second, I want to give you my current assessment of the outlook for the economy. And, third, I want to explain the Bank's other key role - that of maintaining stability in our financial system.

We had to abandon our fixed exchange rate policy in December 1992. One important reason for this was the inherent weaknesses in the fixed exchange rate system in an environment of free capital flows and deep financial markets. When the fixed exchange rate policy was formally abandoned, there was a risk that the Norwegian economy could again lose its nominal anchor. However, the krone exchange rate showed little movement and soon found a new range. Fiscal policy had a stabilising effect. The exchange rate remained stable until autumn 1996. This was partly due to low wage growth and a level of total demand that did not generate pressures in the economy. After a period, the krone began to show wider fluctuations. The experience of the latter half of the 1990s demonstrated that monetary policy cannot fine-tune the exchange rate. Developments in the international financial markets led to greater fluctuations. And more fundamentally – exchange rate developments no longer sent signals back to wage formation and fiscal policy when labour market pressures mounted and incomes policy failed. High petroleum revenues, fiscal slippage and expectations of increased use of petroleum revenues contributed to this. The exchange rate was therefore no longer suitable as a nominal anchor. As a result, Norges Bank gradually placed increasing emphasis on low and stable inflation. In 2001, the Norwegian authorities decided that monetary policy in Norway was to be oriented towards low and stable inflation through a numerical target for inflation, as was the case in many other countries later in the 1990s.
As the size and importance of financial systems have grown, so have the sources of potential threats to their stability. Apart from the magnitude of short-term private funds which move across the globe daily, financial stability stands to be undermined by the emergence of such factors as asset price bubbles and by the blurring of the erstwhile distinction between financial markets and institutions, developments which complicate the task of the authorities charged with overseeing the financial system. Clearly, “financial stability” has assumed a much broader meaning than that implied by the terms “financial supervision” and “banking stability”, with which it used to be associated in the past. These wider ramifications of the concept are well captured, I believe, by the definition proposed by Mr Malcolm Knight, the Senior Deputy Governor of the Bank of Canada who is soon to take over as General Manager of the Bank for International Settlements. He defines a stable financial system as one in which all economic agents - households, business firms, financial services firms and government - can confidently hold and transfer financial assets without experiencing serious risks of 2 disturbances that undermine financial values or repayment prospects. The notion which this definition conveys very clearly is that risks to stability need not originate within the financial system itself. In particular, while a sound clearing and payment system and regulatory framework remain vital prerequisites, a healthy macroeconomic environment characterised by stable prices, interest rates and exchange rates is equally necessary for financial stability.

A large currency area, furthermore, means deeper and more liquid financial markets, which allow participants to diversify their risks and, in the absence of currency risk, to focus more on credit risk. Another contribution which EU membership should make to financial stability in accession countries stems from the increased competition which will result from the entry of foreign service providers, particularly if this induces indigenous institutions to find innovative ways to hedge risks and diversify asset portfolios, and to adopt international best practices generally. While cross-country studies on this 4 aspect remain sparse, a recent World Bank study reveals instances where foreign bank entry did lead to improved operations and to greater access to foreign capital. Drawing on data for 80 countries, this study also shows that foreign bank entry does tend to reduce domestic bank profitability, non-interest income and, to some extent, overall expenses. Coupled with the finding that the presence of foreign banks contributes to a higher level of loan-loss provisioning, this leads the authors to conclude that, through its effects on competition, foreign bank entry improves the efficiency and functioning of indigenous banks. While there is nothing automatic about the realisation of such benefits, one might reasonably expect that in the long run the completion of the Single Market in financial services should contribute to the emergence of a healthier financial system in the accession countries.