samchain/econo-pairs-v1 huggingface dataset:
…  6  BIS central bankers’ speeches  I therefore consider it important that monetary policy is conducted in a clear and comprehensible manner so that it can be evaluated easily and fairly. At present, the Riksbank makes a qualitative assessment of resource utilisation based on a number of different measures. This contributes to making the justification for the monetary policy decisions unclear and it also makes it more difficult to assess the Riksbank and hold it accountable. I thus instead want to focus on stabilising unemployment around a long-run sustainable rate and not on trying to stabilise a number of other, quite shaky measures of resource utilisation in the economy, such as the output gap. Compared with other measures of resource utilisation, unemployment has a stronger link to household welfare, is better understood and more familiar to the public, is measured often and with fewer errors and is seldom revised. The fact that other measures of resource utilisation are not appropriate as targets for monetary policy of course does not prevent them from playing an important role as indicators when assessing inflationary pressures and constructing inflation forecasts. Nor do I see that there is any support for a qualitative assessment of resource utilisation instead of a quantitative, measurable target fulfilment. In economic policy it is now wellknown that targets must be measured quantitatively to obtain sufficient weight and to be fulfilled in practice. “What is measured gets done,” as they say.

Australia has had an inflation target of between 2 and 3 per cent for CPI inflation over the cycle since 1993, and its average inflation rate in the period 1996–2011 was 2.7 per cent. 13  11  An older method of calculating the rate of inflation with an unchanged consumer basket was used in real-time data prior to 2005. Using the current method of calculating the inflation rate as the percentage change in the CPI, average inflation was 1.3 per cent during the period 1997–2011, but real-time data are more relevant when evaluating monetary policy. See Sveriges Riksbank (2004). 12  In the period 1992-1996 the target was expressed as 2.5 per cent or lower in terms of the RPIX. RPIX = Retail Price Index. In the United Kingdom the CPI corresponds to the HICP price index. Since 1993 the average HICP inflation rate has been 0.75 percentage points lower than average RPIX inflation. 13  New Zealand has had an inflation target since 1990, but its target has been adjusted upwards twice and thus one cannot say that it has had a fixed inflation target. 10  BIS central bankers’ speeches  How have things turned out for the large economies, the euro area and the United States? The euro area has had a target for inflation, although during a shorter period than the countries mentioned earlier. The target is that inflation should be below but close to 2 per cent.
While for more serious offences such as tipping-off and opening of account in false name would trigger maximum penalties of RM3 million or imprisonment of 5 years or both. Targeted mitigation efforts also mean higher expectations on the reporting institutions. The reporting institutions are expected to have proper policies and procedures in providing investigation supports to the LEAs and play proactive roles in deterring and detecting money laundering threats. For example, Bank Negara Malaysia and the Royal Malaysia Police are currently exploring the possibility of sharing the names of suspected mule account holders that facilitate illegal activities. This initiative aims to help the financial institutions to prevent their account facilities from being misused for criminal activities, especially by account renting syndicates. Another initiative is to assist financial institutions in developing and detecting suspicious activities related to high risk crimes. For this purpose, we are proposing for the establishment of working groups comprising the financial institutions and the LEAs in developing red flags related to high risk crimes identified in the NRA, including terrorism financing. Before we move into what is expected of financial institutions with the understanding of the risk, let me share with you the heat map of the threat of the other serious crimes in the country. This classification is based on similar methodologies that I explained earlier.

4  BIS central bankers’ speeches  Result – Relationship between threats and vulnerabilities Based on the analysis and methodologies employed, our assessment concluded that there are 5 types of crimes that pose high money laundering risk threat to the country. Those crimes are: •  Fraud (which comprises fraud-related offences, for example cheating offences under the Penal Code, illegal investments schemes offences under the Financial Services Act, Capital Market and Services Act, Direct Sales and Anti-Pyramid Scheme Act, and Companies Act),  •  Drugs trafficking,  •  Corruption and bribery,  •  Smuggling offences (including evasion of customs and excise duties), and  •  Tax crimes. Based on data from LEAs, except for corruption and bribery, the number of investigation conducted and the amount involved in the investigation on these types of crimes are high. This finding is in line with the results of perception survey and feedback from other LEAs. It also conforms to various credible independent international and external reports. In terms of vulnerability to money laundering and terrorist financing risks, sectors that are most vulnerable and attractive to money laundering and terrorist financing risks are the banking and money services business in the financial sector and casino in the non-financial sector. Key factors contributing to the vulnerabilities of these sectors are size of their institutions, high volume of transactions, high exposures to cash-based transactions, high geographical coverage, multiple channels of deliveries, and high exposures to cross-border transactions.
The geographical extension of territory coverage by the banking business, the strengthening of competitiveness, the introduction of new products without mentioning other recent developments, constitute an additional argument in the vital role the banking system has and will have to play in the future. The country’s map covering the banking business expanded further, including new regions ever covered before. At the end of August, the total number of branches reached 109 or 21 branches more than the end of the previous year. I seize the opportunity of this event to express that positive assessments about the banking system have been given also in the report prepared by both the World Bank and International Monetary Fund, after conclusion of the assessment they formulated on the financial system in Albania (FSAP). Of course, this is good news. The conclusions of FSAP, of this important international passport, are an indication of our earlier conclusions that the Albanian financial system is characterized by a supervised and effective banking system and by the other segments that are still in the initial development stages where the core issue remains their regulation and supervision. Despite the positive developments there is still much to do. The degree of financial intermediation continues to be relatively low (about 11 per cent of GDP). Some economy sectors, like agriculture, still continue to be less or not at all credited.

I would like to draw your attention on the following topics: •  The system should be more active and keep its public promises to put its windows at the service of selling Treasury bills directly to the interested public. We as Bank of Albania have kept our promises, applying a commission, which is supposed to cover the transaction cost, while this measure will be accompanied by the inhibition of cash receipts at the Bank of Albania windows. Also, banks should invest in modern technology to enable the reallocation of funds of their customers in various investment alternatives, by electronic means and not as it happens more frequently today that individuals still move carrying cash bags. •  Banks should be more active in the T-bills secondary market. We should clearly inform the public that whoever is interested can discount his/her bills at any time like each individual  3/4  who has put little money aside can refer to the banking system not only to deposit but also to purchase Treasury bills. •  The interbank market can and must improve. Nowadays, commercial banks exchange a big quantity of liquidity with the central bank. But, even exchange of this liquidity among commercial banks must be intensified. This would ensure more financing and investing opportunities for individuals and companies, including banks. •  Banks should give more attention to foreign exchange and Treasury bills markets, to further deepen and expand them.
Extending liquidity support to insolvent banks is a case in point. But, even in this admittedly fuzzier terrain that separates liquidity provision from solvency support, the ECB operates in a sound framework that has passed multiple resilience tests in recent years. In the case of Greece, for instance, the choices of the Governing Council were another example of strict adherence to this framework. In keeping with Article 123 of the Treaty, which prohibits the ECB from monetary financing, the Governing Council imposed strict limits on the use of government securities as collateral for loans that the Greek banks received from the ECB. We nevertheless continued to supply the necessary liquidity so as to ensure the functioning of the Greek banking system and the continuation of lending to businesses and households. This was in line with the principle by which the Eurosystem may lend to banks which are solvent and have sufficient collateral. To sum up, the balance we achieved with our interventions during the 4/6  BIS central bankers' speeches  Greek crisis was fully within our mandate; it respected the political commitment to the single currency contained in the Treaty, but at the same time we implemented that commitment within the limits of our Statute. The Treaty prohibition of monetary financing has been a key element in preserving the monetary policy nature of OMTs and the public sector purchase programme (PSPP). The technical features of OMTs imply that they would only be considered if warranted from a monetary policy perspective.

In Europe, we have gone further with our second Directive on DGS (Directive 2014/49/EU) that harmonises the reimbursement of covered deposits within 7 working days and with the ongoing negotiations for the establishment of a Single DGS for European Member States participating in the Banking Union. Is a single DGS a prerequisite for a genuine Banking Union or is it the final stage to be implemented when everything else has been harmonised? In all events, the European stance will be prudent, favouring the establishment a European Scheme based on a re-insurance approach. It is not only standards that matter but practices too Common standards alone are not sufficient because day-to-day work on financial stability requires practical solutions that cannot be implemented in isolation by a single jurisdiction. This does not mean that everything must be unified but bridges must be built between stakeholders, in accordance with their legal remits and constraints. At the European level, we pushed forward this approach through European agencies such as the European Banking Authority (EBA), the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) to help implement the standards consistently and ultimately by the creation of the Banking Union. The latter is wholly dedicated to the practical exercise of supervision, resolution and, at a later stage, deposit insurance. More specifically, we welcome the completion of the cooperation agreement guidelines prepared by the EBA and mentioned in the last panel today.
We may not be entirely comfortable with the thought that every purchase we make is recorded. It may be too reminiscent of the society described in George Orwell’s 70-year-old novel 1984. Fourth, Ola no longer has access to money directly backed by Norwegian authorities. We no longer have functional legal tender. The monetary system has been turned over to private entities. Alternatively, Ola has to use another country’s currency – in our hypothetical case, the euro. We have to ask ourselves: should we allow private solutions to compete freely in developing means of payment, or must the authorities play a role? The crucial factor is whether solutions based on private money deliver the characteristics the payment system should have. The system must be able to channel payments swiftly, safely, at low cost and in a user-friendly manner. The means of payment itself – our money – must be universal, because money is only useful if it is widely used. This requires trust. Deposit guarantee schemes and banking regulation promote trust. The objective of monetary policy is to maintain stability in the value of the currency. Norges Bank assists private operators in implementing faster and safer payments. We cooperate with other authorities to oversee and supervise the payment infrastructure to ensure robustness and efficiency. Privacy rules prevent unauthorised access to payment information. But there are some characteristics deposit money lacks. It cannot offer anonymous payments. The system is vulnerable to advanced attacks. Having more money on deposit than is covered by the deposit guarantee scheme involves risk.

This money is created by banks, not by Norges Bank. Chart 1 shows the money supply and the supply of banknotes and coins in Norway since 1960. In Norway, the money supply mainly comprises deposit money in banks. 6 In the early 1960s, banknotes and coins accounted for a fifth of the money supply. Current accounts and cheques were already becoming commonplace. Since then, banks’ deposit money has increased dramatically, and today, banknotes and coins make up less than 2.5 percent of the money supply. In other words, virtually all the money we use has been created by banks. 3/9  BIS central bankers' speeches  So how do banks create money? The answer to that question comes as quite a surprise to most people. When you borrow from a bank, the bank credits your bank account. The deposit – the money – is created by the bank the moment it issues the loan. The bank does not transfer the money from someone else’s bank account or from a vault full of money. The money lent to you by the bank has been created by the bank itself – out of nothing: fiat – let it become. The money created by the bank does not disappear when it leaves your account. If you use it to make a payment, it is just transferred to the recipient’s account.
It is a well-known fact that the qualitative responses to the European Commission’s monthly consumer survey on inflation perceptions tended to indicate an upward trend following the introduction of the euro banknotes and coins in 2002, while the HICP exhibited a fairly stable rate of change. 10 Perceptions of inflation then tended to moderate, with renewed increases being observed as of mid-2007, increases which on that occasion coincided with a rise in the annual HICP inflation rate. However useful this perception indicator is, it should be borne in mind that perceptions may be based on a partial inflation concept that places too much weight on frequent and out-of-pocket purchases such as food and petrol – for which above-average price increases have been observed – and does not take full account of other less frequent purchases and quality improvements. If only for that reason, the HICP inflation rate, which is derived from no less than 1.7 million price observations in 200,000 shops throughout the euro area every month gives an objective representation of the evolution of prices. The strategy for the further development of euro area statistics The ECB’s vision for euro area statistics envisages both product and process innovations. The former include the closing, in the near future, of some of the remaining gaps in the ECB’s statistics.

As regards the collection of data, the ESCB’s Statistics Committee (STC) and Banking Supervision Committee (BSC) will, in cooperation with the Committee of European Banking Supervisors, look at means of better aligning supervisory and statistical concepts, definitions and reporting formats, with the aim of reducing the reporting burden for financial institutions in the case of overlapping data requirements. The STC will also investigate the feasibility of reusing and sharing available micro-data for Eurosystem statistical purposes – particularly data contained in central credit registers, central balance sheet offices and business registers – while maintaining strict confidentiality standards. Furthermore, it is considered best practice for a central bank to integrate the overlapping parts of the various statistics it produces and to concentrate the production of all of its statistics within a single statistical organisational unit. As far as data processing is concerned, the feasibility of a move towards the consolidated or pooled collection and production of some types of Eurosystem statistics will be explored. In addition, NCBs are invited to exploit comparative advantages in their cooperation with other national statistical authorities, 11 for instance by setting up joint business registers. In this context, it is generally agreed that an enhanced exchange of confidential information between NCBs, the ECB, NSIs and Eurostat, strictly for statistical purposes, is indispensable in order to keep the response burden to a minimum and ensure the quality of both European and national statistics.
The euro area bank lending survey for the fourth quarter of 2016 indicates that credit standards for loans to enterprises are broadly stabilising, while loan demand has continued to expand at a robust pace across all loan categories. To sum up, a cross-check of the outcome of the economic analysis with the signals coming from the monetary analysis confirmed the need for a continued very substantial degree of monetary accommodation to secure a sustained return of inflation rates towards levels that are below, but close to, 2% without undue delay. Monetary policy is focused on maintaining price stability over the medium term and its accommodative stance supports economic activity. In order to reap the full benefits from our monetary policy measures, other policy areas must contribute much more decisively, both at the national and at the European level. The implementation of structural reforms needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost investment, productivity and potential output growth in the euro area. Structural reforms are necessary in all euro area countries. In particular, reforms are needed to improve the business environment, including the provision of an adequate public infrastructure. In addition, the enhancement of current investment initiatives, progress on the capital markets union and reforms that will improve the resolution of non-performing loans, are a priority. Fiscal policies should also support the economic recovery, while remaining in compliance with the fiscal rules of the European Union.

In many economies where central banks are not yet independent, there is substantial support for independence and tangible progress toward making that happen. Alongside this evolution, central banks have become more transparent about their objectives and about the framework they use to conduct policy. Despite the substantial degree of convergence in the prevailing model of a modern central bank, the Fed still is different in a number of respects from the institutional arrangements produced by the latest wave of reforms in central bank arrangements in many of the major economies. Two things in particular distinguish the Fed in this respect: the first relates to the scope of the responsibilities we have for financial stability and the second to our monetary policy regime. The central bank of the United States, unlike the model now prevalent in the other major economies, integrates in one institution responsibility for the principal instruments relevant to financial stability – monetary policy, the lender of last resort responsibility, supervision of the major bank-centered financial institutions, and oversight of the payment system. This was true at the inception of the Fed. Then, as now, the rationale for this model rests on two important judgments. One is that monetary policy decisions will be wiser and the conduct of monetary policy more effective if informed by the direct knowledge of the financial system and the economy that comes from responsibility for bank supervision and market and payment system oversight.
In such a scenario, the net result in the short term will not necessary be falling inflation - it could just as well be rising inflation. This is one of the risks in this context. Another risk that has not been discussed much yet refers to a longer-term perspective. Changes create both winners and losers. Lower purchase prices for a business owner or for us consumers may involve a lost profit margin for other companies. An increase in productivity may involve redundancies and that companies which are unable to keep up with developments are wiped out. The structural transformation thus contains not only possibilities, but also social maladjustment that must be dealt with by the labour market, the capital markets, the education system, etc. What does this mean for monetary policy? I intend to discuss four areas that have figured in debates on monetary policy and the ‘new and old’ economy: the effects on interest rates, the effects on purchasing power, the economic relations and the Riksbank’s intellectual framework. It would not have been possible for interest rates to lie at the current levels if price stability had not lowered the risk premium that lenders require for the uncertainty factor. In addition, the reduction in public borrowing and declining indebtedness has led to real interest rates being pulled down. But would this still apply if we had a higher growth in productivity in the future? One effect of higher growth and increasing investment could be rising real interest rates.

There are connections to the fixed income market in both of these considerations. However, this does not mean that we have an opinion on which system solutions the market chooses as long as they fulfil reasonable requirements for security and efficiency. This area lies outside of our core objectives. This is why we also remained outside of the discussion on a fixed income future a few years ago. Given this, I would like to share a few, brief reflections with you. Firstly, I shall go through the advantages of electronic trading. My views on this are mainly a matter of principle. After that I intend to make some brief comments on a few aspects of the Swedish fixed income market today and in this context say a few words on the consequences that electronic trading may entail. Finally, I intend to take up a more specific question, settlement on the fixed income market. We do not consider that this functions sufficiently well from a financial stability perspective. Electronic trading, an opportunity Let me begin by pointing out that electronic trading systems are being used to an increasing extent around the world. It seems reasonable to assume that this means they have clear advantages, otherwise private players would not invest in them. However, a public authority naturally also wonders whether they involve some kind of risk. With this in mind, there has been a study on electronic trading 1 systems made within the framework of the G10 central bank co-operation.