samchain/econo-pairs-v1 huggingface dataset:
Aleš Michl: The road to the target II Speech by Mr Aleš Michl, Governor of the Czech National Bank, at the Czech Banking Association (CBA) Assembly of Members, Prague, 15 June 2023. *** President, Members of the Czech Banking Association, Thank you very much for inviting me to speak at the banking association's annual assembly. Your work follows up on that of the Union of Czech Banks (and later the Union of Czechoslovak Banks), which was established in 1917. The Union not only defended the interests of Czech banking, but also contributed significantly to the survival and subsequent development of the new republic. The then senior managers of Czechoslovak banks and chairmen of the Union were Jaroslav Preiss, Managing Director of Živnostenská banka, and Karel Svoboda, Managing Director of Agrární banka (Kunert, 2017). They collaborated with leading Czechoslovak economists like Alois Rašín and Karel Engliš. Together they made a substantial contribution to the creation and success of Czechoslovak banking and thus to the economy of the time. Even if they disagreed with some of the financial or monetary measures, their priority was, in their own words, "to work objectively for the nation and the state"1, meaning their priority was not only to defend their own interests, but to defend the interests of the state. Let's bear that in mind in our work today – we are not here to promote our own interests, but to promote the interests of the republic. But what does that actually mean?

Chart 1 Price-based and quantity-based composite indicators of financial integration (Quarterly data; price-based indicator: first quarter of 1995 to fourth quarter of 2020; quantity-based indicator: first quarter of 1999 to third quarter of 2020)  Sources: ECB and ECB calculations Notes: The price-based composite indicator aggregates ten indicators for money, bond, equity and retail banking markets, while the quantity-based composite indicator aggregates five indicators for the same market segments except retail banking. The indicators are bounded between zero (full fragmentation) and one (full integration). Increases in the indicators signal greater financial integration. From January 2018 onwards the behaviour of the pricebased indicator may have changed due to the transition in the money market component from EONIA to the € OMT stands for Outright Monetary Transactions.. For a detailed description of the indicators and their input data, see Hoffmann, P., Kremer, M. and Zaharia, S. (2019), “Financial integration in Europe through the lens of composite indicators”, Working Paper Series, No 2319, ECB, September. The challenges of climate change This higher vulnerability occurs at a time when the financial system faces emerging risks related to climate change – a common shock faced by us all, albeit one with potentially asymmetric impacts on different sectors and regions of the euro area. [5] On aggregate, euro area bank exposures to the most carbon-intensive sectors, such as mining, are relatively contained. However, the concentration of carbon-intensive industries and activities can differ across countries.
Example: SGX’s Marketnode seeks to enhance the efficiency of fund raising through international debt capital markets, shifting from a largely analogue process today, to a digital, automated environment supported by distributed ledgers and smart contracts. We anticipate that in the near future, the ability of real-time validation through a distributed ledger will shorten settlement cycles, which in turn allows for more cost-effective margin requirements. Third, a growing bond market that serves the needs of global and regional issuers. The size of Singapore’s bond market has expanded by 50% over the last 5 years, reaching almost half a trillion Singapore dollars as at the end of 2020. SGX is the largest bond listing exchange in Asia with over 3000 bonds from 45 countries in 19 currencies. More than two-thirds of the bonds issued in Singapore are in foreign currencies including the G-3 and Asian currencies. Over 60 international and regional banks have debt origination teams and capabilities here to support international bond issuance out of Singapore. More than half of the bonds issued in Singapore come from foreign issuers. Example: China’s Three Gorges issued a dual-tranche jumbo issue of $ billion in 2/4  BIS central bankers' speeches  2020, and the Philippines’ Jollibee issued two tranches totalling $ billion. Singapore also has a vibrant green and sustainable bond market to support the region’s transition to a low carbon future. The green bond market started only in 2017 but issuances are expected to cross $ billion by the end of this year.

Diversity in financing instruments has also widened beyond green bonds, with around half of the funds raised so far in 2021 expected to come from the issuance of sustainability, sustainability-linked bonds as well as transition bonds. Fourth, an equity capital market with significant potential for growth. Singapore’s public equity market has seen increased trading interest amid the COVID-19 pandemic. However, other exchanges in the region have grown even faster. SGX has traditionally had more active volumes in less volatile, income-generating investments, such as REITs, compared to other growth-focused exchanges. This is a gap we are committed to bridging. An extensive consultation with market participants last year highlighted two key challenges: a perceived lack of institutional investor interest, and a dearth of high-growth companies listing in Singapore. These are chicken-and-egg challenges. The public and private sectors have together come up with a slate of measures to enhance the ability of our equity market to better meet the needs of issuers and investors: strong co-investment support; reduced listing costs and improved research coverage; a new listing pathway; and a platform for sustainable investments. We have launched two new funds for co-investment. The government has come together with Temasek Holdings to establish a new $ billion fund, called Anchor Fund @ 65, which will act as a cornerstone investor for promising companies looking to list on SGX.
A counter-factual monetary policy 1997–2007 I want to ask whether, with the benefit of hindsight, monetary policy should have been set differently during the period of the so-called Great Stability. Should interest rates have been higher during that period in order to mitigate some of the growth of credit, rise in asset prices, and increase in the leverage of the banking system? Many commentators today seem to think that the answer is clearly yes – though I seem to remember that fewer said so at the time – and most of the  21  Another mechanism, working through banks’ leverage, is posited by Adrian and Shin (2011). They show that if banks target a Value-at-Risk constraint, then monetary policy loosening can increase risk taking. The reduction in policy rates boosts asset prices (by lowering discount rates), and also steepens the yield curve which tends to increase banks’ net interest margins. Other things equal, this reduces bank leverage by boosting the net worth of the bank and increasing its ongoing profitability. To hit its target Value-at-Risk the bank expands its balance sheet, purchasing assets and pushing up the price of assets thereby amplifying the effect of the initial monetary policy loosening. 22  There is a further consideration that is even more intriguing. The existence of misperceptions, the “cycle of confidence” and the use of heuristics, and the search for yield, all create direct welfare costs over and above their impact on inflation and output because they distort household behaviour.

Since those long rates were set in world capital markets by the interaction between the demand for investment and the (very large) supply of saving, only a strategy of persistently higher interest rates at home than overseas – which to some extent we did follow – would have prevented a significant rise in asset prices, thus reducing some of the upward pressure on credit growth. 28 Such a strategy might have brought some benefits for financial stability. It is possible that without rising asset prices we might have kept expectations of future incomes on a more modest path that did not later require a correction. Higher rates and the resulting recession and unemployment might have reminded firms, households and financial markets that the economy was not  23  For the record, over the relevant period I was in a minority voting for a higher level of Bank rate on fourteen occasions. 24  See the minutes of the Monetary Policy Committee, especially during 2001. All MPC minutes are available at www.bankofengland.co.uk/publications/minutes/Pages/mpc/. See also Barker (2003), Bean (2003), King (2000, 2002) and Large (2005). 25  King (2000). 26  See in particular the Minutes of the MPC for January 2002. 27  http://www.bankofengland.co.uk/publications/Documents/speeches/2002/speech156.pdf. 28  The analysis in Bean et al (2010) suggests that the output cost of slowing credit growth to the non-financial sector would have been substantial. There is a good deal of simple-minded comment to the effect that central banks should have “burst the bubble” before the crisis occurred.
10  Chainalysis (2021), “The 2021 Geography of Cryptocurrency Report”. The Banco de España does not guarantee the accuracy of these figures as they depend, exclusively, on the data processing capacity of a private provider. 11  J. M. Carbó and S. Gorjón (2022), “Application of machine learning models and interpretability techniques to identify the determinants of the price of bitcoin”, Working Paper No 2215, Banco de España. 4  volatility is much more pronounced in the case of unbacked crypto-assets, but it also impacts others. Moreover, interconnections with the rest of the financial system have increased substantially. One such example is the sudden rise in the number of crypto-asset investors (both institutional and retail). In addition, the range of sophisticated products around cryptoassets has expanded, with a growing portfolio of exchange-traded funds (ETFs),12 investment funds and futures contracts referenced to crypto-assets. The latter was key to attracting new investor cohorts to the digital assets’ space.13 What’s more, some large private firms did publicly announce their interest in using cryptoassets for cash management purposes, while others were campaigning in favour of their wide acceptance as a means of payment.14 Some major financial players, such as global banks and international card service providers, have enlarged the selection of ancillary services around digital assets (including custody and trading services) which they offer or have allowed them to be used directly as a medium of exchange in their proprietary networks.

These mechanisms can take various forms, but all seek to offer sufficient certainty to system participants as to the correct status of the transaction ledger at any moment in time. One of the most well-known tools is the so-called proof-of-work or PoW, which requires complex and costly – primarily in energy consumption – computational calculations. It is precisely this latter aspect which is expected to deter irregular behaviour on the part of validators. However, the price of electricity, concerns about the environmental impact, the limited access to the specialised hardware required and scalability problems are some of the factors that are encouraging gradual migration to other types of solutions.8 Proof-of-stake or PoS is one such alternative. Its main characteristic is that validators are selected according to their direct economic stake in the network; in other words, depending on the amount of crypto-assets they own and must block to ensure that the operation is validated correctly. As they have a direct interest in preserving the value of the crypto-asset, in principle, this mechanism creates incentives to behave honestly. Moreover, as the possibility of their being assigned operations is generally connected with the volume of crypto-assets blocked, the network is less decentralised than under the other mechanisms. Although there are more options, where blockchain networks are set up as closed circuits (permissioned networks), a third mechanism, dubbed proof-of-authority or PoA, is generally prominent.
Third lesson: on off-balance sheet investment vehicles The originate-to-distribute model also drew on the development of off-balance sheet investment vehicles, namely conduits and SIVs. The way in which these vehicles operate is to make long-term investments and to finance themselves short term, by issuing collateralised commercial paper. As concerns the term structure of their assets and liabilities, these special-purpose entities engage in a very similar activity to banking. However, unlike banks, they are not required to have their own capital and are not subject to appropriate supervision. They could be said to be parallel banks without capital or regulation and, therefore, they do not have access to central bank liquidity. These conduits and SIVs have played a considerable role in amplifying the turbulence, and in the speed with which it has spread. This was because some banks had to lend to these vehicles under the liquidity facilities they had open with them, or because an attempt was made to prevent a massive sell-off of securities, or else because large institutions considered that the cost of letting conduits and SIVs go to the wall, in terms of the reputational risk involved, was greater than the cost of coming to their assistance. The fact is that many of the risks that were believed to have been transferred to the market have unexpectedly returned to bank balance sheets. The proliferation of these investment vehicles is due to, at least, two reasons. First, because some banks saw them as a means of achieving greater profitability, while alleviating their capital requirements.

This is an example of how the TMF can help promote product development in Hong Kong. The TMF has also worked on other issues to facilitate market development. Examples include the NDF documentation for Asian currencies, promotion of overnight index swaps and constant maturity swaps, review of electronic prime broking system, and work on standard documentation in Chinese for use by Mainland and other customers who prefer to use their mother tongue as the working language in financial transactions. Last but not least, the “profile”. Even with good people and product, it is important to promote the profile of our financial markets to the Mainland and overseas markets. As the Mainland gradually liberalises its markets, the demand for treasury market products and services from the Mainland customers is likely to grow. Hong Kong has a clear niche in tapping this huge potential with our unique advantages in geographical proximity, culture and language, as well as a talented pool of professionals and a highly efficient marketplace. With this in mind, the TMF has started reaching out to the Mainland. For example, TMF organised a seminar for the Mainland regulators last October to deepen their understanding of financial markets in Hong Kong. HKCMA representatives, including the Chairman, Brian, also participated as a speaker in the seminar. As the seminar was very well received, plans are underway to organise similar seminars this year to promote the exchange with Mainland officials and major financial institutions.
And I find increasingly as I travel around the country that local businesses and their representative organisations - including both commercial and industrial sectors and the professional services sectors - are working together, with the local academic community, and with the regional and local authorities, to identify - on the basis of their local knowledge - the particular obstacles, and the particular opportunities, they face, recognising that there is a great deal that they themselves can do through partnership - including public-private partnership - to help create a more positive supply-side environment at the regional and local level. That partnership typically embraces not only issues facing the mainstream economy but extends to direct involvement in activities designed to draw into the mainstream economy communities which for one reason or another are liable to be left on the sidelines, but which, if they are given the right opportunities, clearly can contribute to both the economic prosperity and the social cohesion of the region. And I find that positive approach here too in the West Midlands. It's very much the purpose of this conference - organised by AWM - Advantage West Midlands - alongside the IOD and the ICA. It's the purpose, too, for example, of the West Midlands Regional Finance Forum organised by AWM and bringing together the banks and accountants, representatives of the ethnic minorities and community finance organisations - including Aston Reinvestment Trust, as well as academics and the Small Business Service, with the aim of improving access to finance for business at all levels.

On the contrary - we believe that the Swiss financial centre has infrastructures that function better than most and come out very well in an international comparison of security and efficiency. By overseeing payment and securities settlement systems, the National Bank is helping to ensure that it will remain so in the future. BIS Review 58/2003  3
19, 20 Some have argued that this confers a particular responsibility on US policy makers. Yet US policy is not the sole determinant of global rates. Many recent movements in US long-term government bond yields have appeared to be influenced by ECB monetary policy actions. 21 This is in line with some recent evidence that funding conditions in other financial centres, notably the UK and the euro area, affect funding conditions globally and, therefore, the cross-border supply of funds. 22 Moreover, it is the divergence of monetary policies itself rather than the stance of one central bank in isolation that points to more volatility in exchange rates and asset markets with associated effects on global liquidity conditions. 23  17  Not surprisingly in light of its importance, issues related to pass-through are the subject of intense work at the Bank of England. 18  Bruno and Shin (2015). “Cross-Border Banking and Global Liquidity,” forthcoming in the Review of Economic Studies. 19  Rey, Helene (2013). “Dilemma not Trilemma: The global financial cycle and monetary policy independence” proceedings of the Federal Reserve Bank of Kansas City Economic Symposium at Jackson Hole. 20  Cesa-Bianchi, Cespedes and Rebucci (2015). “Global Liquidity, House Prices, and the Macroeconomy: Evidence from Advanced and Emerging Economies”, Journal of Money, Credit and Banking, Vol. 47, Issue S1, No. 1. 21  See May 2015 20150323a.htm. 22  Cerutti, E., S. Claessens, and L. Ratnovski (2014): “Global Liquidity and Drivers of Cross-Border Bank Flows,” IMF Working Papers 14/69, International Monetary Fund.

After adjusting for unconventional policy there’s greater monetary policy divergence than implied by a simple eyeballing of the currently highly synchronised global rates cycle. And there remains the prospect of a further widening. In other words, domestic economic conditions – conditions affected by domestic monetary policy – still very much matter. None of this diminishes the considerable challenges of returning inflation to target in the face of global developments. There are profound secular and cyclical disinflationary forces at work in the global economy, and for economies like the UK their impact is being reinforced by exchange rate movements which will drag inflation down further at the policy horizon. Moreover, as events of the past few weeks have reminded us, a variety of global factors can affect global financial conditions and influence the neutral rate of interest. Central banks must take these Disparate Confounding Dynamics (DCDs) into account when setting policy. 2 Even for those economies with the strongest recoveries and the best functioning financial systems, they mean that the policy rates consistent with returning inflation to target will likely need to rise in a gradual fashion and to a limited extent despite robust domestic demand and firming domestic costs. For the UK at least, global DCDs influence but do not dictate policy. 1  Subramanian, A and Kessler, M (2013), “The hyperglobalization of trade and its future”, Global Citizen Foundation working paper 3, June.
Many countries had suspended the gold standard during the war, but no other country pursued such an ambitious par policy in the 1920s.35 Norges Bank was deaf to growing contemporary criticism and sustained a substantial reputational loss.36 As a consequence, the Bank’s ability to fulfil its role in society was weakened for decades to come. The par policy failure was an important reason behind the post-war opposition to allowing the central bank to make monetary policy decisions independently.37 A prominent feature of the post-war period was the conviction that the economy could be micromanaged by coordinating instruments drawn up by the government. At the time, few people considered this state of affairs as problematic. Although inflation was higher than before, unemployment was low and growth strong. This approach was in line with the dominant philosophy abroad, although the Norwegian variant was probably taken a step further than in most other countries. 33  Also the other Scandinavian countries and the UK embarked upon a similar policy to reintroduce gold convertibility. However, there was a crucial difference. While the Swedish krona had depreciated marginally and sterling by only ten percent, the Norwegian krone had depreciated by 50 percent in terms of gold. In other words, a substantially tighter policy was necessary compared with Sweden and the UK. It is also an open question whether returning the krone to gold parity after such a steep depreciation actually was in keeping with the orthodox understanding of the gold standard.

Interest rates are at an all-time low and the proposals in the Government’s Budget Bill imply a looser fiscal stance. Household consumption will continue to grow steadily in the period ahead, and business investment also appears to be picking up again following a number of years’ weakness. Taken together, this means that GDP growth in 2004 is forecast to be around 3.7 per cent, after which it will be dampened somewhat, standing at about 3 per cent in 2005 and 2006, which is a fairly high level in historical terms. Despite the firm growth Swedish inflation is very low – in January it stood at 0.4 per cent, measured as the annual change in UND1X. The weak inflation is primarily due to surprisingly low import prices. Other causes are the strong productivity growth; the krona’s appreciation in the past half year, above all against the dollar but also against the euro; and low electricity prices. There are many indications that we won't be seeing any significant inflationary pressures in the coming year either. That made it natural for us to decide not to raise interest rates at the end of January. My personal view is that it will probably be a while before a rate hike comes into question. The risk outlook Surrounding this rather bright picture are a large number of risks that our growth and inflation forecasts will not be met in the coming two years. The key risk factor is how the US deficits will be corrected.