samchain/econo-pairs-v1 huggingface dataset:
Positive and negative risks can have different costs There are also other cases where it may be a mistake to let monetary policy be guided by forecasts alone. A forecast-based monetary policy is good if it is believed that the costs of negative deviations from the target are the same as for positive deviations, but this is not always the case. Greater importance should be attached to a scenario in which the collapse of an asset bubble leads to a state of deflation that is difficult to escape from than to a scenario with high inflation, assuming that the inflation target still has credibility. Experience from Japan in the 1990s illustrates this. During the financial crisis, there were discussions in the Executive Board9 about temporarily allowing inflation to be relatively high with the aim of pushing up inflation expectations, which would lead to lower real interest rates and a wellneeded stimulation of the economy. Stimulating the economy with lower nominal interest rates was not possible as the Riksbank had already reduced the repo rate as far as was considered possible. I was doubtful about experimenting with our monetary policy framework in this way during an ongoing crisis. I admit, however, that there is a certain logic in the argument that underlines the fact that it is sometimes more costly for inflation to become too low than for it to become too high. However, if the credibility of the inflation target is threatened by high inflation then the reverse may also be true.

Another point that I usually make is that it can be difficult to draw monetary policy conclusions from our forecasts as they only cover a limited forecast horizon of three years. A certain repo-rate path may appear to provide better target attainment than other paths over this limited forecast horizon but could well lead to poorer target attainment beyond it. It is therefore desirable when making monetary policy decisions to take into account the possible state of the economy beyond the forecast horizon, even though it is difficult to do this in terms of quantified forecasts. One way to do this is to choose a repo-rate path that provides good target attainment at the end of the forecasting period but does not entail serious tendencies towards poorer target attainment beyond the forecast horizon. Even though we have a limited forecast horizon, the monetary policy decisions must also to some extent look ahead to what can happen afterwards. The development of house prices and household indebtedness could, for example, entail risks that materialise beyond the current forecast horizon, especially if monetary policy remains far too expansionary for far too long. The question of whether risks of this type should be considered in the monetary policy decisions has been widely debated. One view is that such risks should already be taken into account in our standard quantified forecasts.
I am doubtful whether a further easing of monetary policy in this group of countries would be able to help move the yield curve in the desired direction. It could actually have the opposite effect - if investors perceived it as heralding a weak euro. In any event, given the current level of short-term interest rates, monetary policy’s margin for manoeuvre is extremely limited. It is possible that the level of real long-term interest rates in Europe reflects, partially at least, that of real interest rates worldwide. Europe has no influence over that effect. BIS Review 67/1997  -3-  Europe can, however, have an influence on the effect which comes from the constant increase in public sector indebtedness in our countries. As a reminder, between the end of 1991 and the end of 1996 the general government debt rose from around 56 to above 73% of GDP for the European Union as a whole. This development, together with the worry that it might not yet have run its course, are not likely - to say the least - to lead to a fall in real interest rates. Nor do they create the climate of confidence necessary for consumers and investors to modify their current prudent behaviour. On the other hand, the certainty that governments are tackling the underlying causes of the public deficits which are responsible for the constant increase in the debt burden could well bring about such a change in behaviour.

And, so that the growth fostered in this way can create many jobs, structural policies will have to assume the principal role, while the role of monetary policy will then dwindle and fade away - alas - to nothing. BIS Review 67/1997
The main externalities in today’s international monetary system are most visible in the interaction between the advanced and emerging economies. The rising importance of the emerging economies has perhaps been the most important development since the Bretton Woods framework of fixed exchange rates was abandoned in the early 1970s. China and India alone have brought 2 ½ billion people into the world trading system, with many more in other countries such as Brazil and Russia. And over the next five years, emerging economies are expected to account for almost three quarters of total growth in world output. Trade has promoted development in China and other emerging markets, and has benefited the rest of the world as the costs of a range of traded goods and services, particularly manufactured goods, have been driven down. But the emergence of the accompanying imbalances in current accounts had huge effects on the global pattern of spending. Between 1998 and 2006, annual output in high-saving economies expanded by around $ trillion – $ more than the growth in domestic demand in the same economies. The rise in  BIS central bankers’ speeches  1  output relative to demand in the high-saving countries was only possible because there were matching capital flows. Capital flowed “uphill” from many of the emerging markets to advanced deficit economies, not an obvious sign of capital moving to exploit profitable investment opportunities.

Nonetheless, also thanks to your work, I find that the awareness of decision-making public authorities in this regard has improved significantly. I had the opportunity to communicate about these issues today to the parliamentary, Commission of Economy and Finance. I am confident that the work started by the Ministry of Justice for the revision and improvement of some important legal acts, including the Code of Civil Procedures, will be finalized, incorporating and approving some concrete proposals for amendments submitted by the banking industry and the Bank of Albania in order to enhance the process of collateral execution. In addition, upon the conclusion of legal processes, it is pivotal to proceed swiftly to write-off loss loans from the bank’s balance sheets, in accordance with the requirements of the regulatory framework. We would kindly ask you and your shareholders for dedication in this process, not only to find the necessary human and financial resources, but also the most appropriate forms for a quick, transparent, and consistent handling of non-performing loans. We need to bear in mind that lending carries along risks that are difficult to identify at the time of disbursement. These risks are determined not only by the quality of bank lending procedures, but also by significant external factors, including the performance of the economy. This uncertainty permeates the current phase our banking sector is going through. Therefore, it is indispensable that bank management structures and their shareholders commit the necessary financial resources to cope with the possible additional costs in the future.
19 It is difficult to assess whether the level of investment in Sweden can be regarded as having being unjustifiably low during the period in which the current account surplus has grown. Above all it is difficult to find any kind of reform that would generally have been able to increase the return on Swedish investments in particular and thus have led to a higher investment ratio. 18  The National Institute of Economic Research (2011) puts this forward as a possible explanation of the high level of household saving in Sweden. 19  The so-called Danell system implied a quick winding down of interest subsidies compared to the previous rules. BIS central bankers’ speeches  9  Figure 6 Investment in the EU and Sweden Percentage of GDP 24  24  22  22  20  20  18  18  16  16  14  14 Sweden - total Sweden -excluding housing  12  12  EU -total EU -excluding housing  10  10 80  82  84  86  88  90  92  94  96  98  00  02  04  06  08  Source: Statistics Sweden  After the fixed exchange rate regime was abandoned in 1992, the krona depreciated by almost 30 per cent in trade-weighted terms. The krona has in principle not recovered from this weakening, although it has strengthened significantly recently.

The current account on the other hand, which constitutes a flow that adds to or subtracts from these stocks, is less important. 22 Changes in the valuation of the assets and liabilities are affected to a great extent by changes in the exchange rate. 23 There are, however, considerable shortcomings in the statistics in this area. The values of some types of asset are definitely underestimated, as there is a lack of statistics on the Swedish households’ direct investments abroad. The net position can also be measured in different ways depending on whether direct investments are accounted at market value or at book or nominal value. However, both methods give a net position that is much lower than that given by the accumulated current account surplus (see Figure 8). 21  The nominal external position was –22 per cent of GDP in 2010, while the market-value net position was +4 per cent of GDP according to statistics from Statistics Sweden. 22  This is also found by Lane (2006) in an analysis of the Swedish exchange rate. 23  For a more detailed analysis of the external position see Blomberg and Falk, 2006.
China and Singapore have strong and comprehensive bilateral ties 5 Singapore-China relations too are growing and evolving, in step with the development of our economies and societies. The relations between our two countries began a new era after the first official visit to Singapore by late Chinese leader Deng Xiaoping in 1978. He and Mr Lee Kuan Yew paved the way for stronger diplomatic and economic ties between Singapore and China. 6 With regard to merchandise trade, China was Singapore’s 3rd largest trading partner last year. In services, China has been also our 5th largest export destination. Singapore was China’s 13th largest trading partner in terms of merchandise trade in 2012. Singapore was also the third largest source of FDI into China last year, after Hong Kong and Japan. 7 Bilateral trade was further boosted with the signing of the China-Singapore Free Trade Agreement (CSFTA) in September 2008 in Beijing. This was the first comprehensive bilateral FTA that China signed with another Asian country. It has led to greater cross-border economic links between our two countries. 8 Multiple Sino-Singapore economic projects are also evidence of our deep relationship, including the Suzhou Industrial Park which would be celebrating its 20th Anniversary in 2014 and the Tianjin Eco-City which would be celebrating its  BIS central bankers’ speeches  1  5th Anniversary this year.

13 As a central bank, MAS enjoys warm and substantive relations with our counterparts in the People’s Bank of China (PBC). We have been in close coordination with PBC over the past year to enable cooperation in the RMB business and related arrangements. 14 PBC has recently appointed the Singapore branch of ICBC as the RMB clearing bank in Singapore earlier this year. ICBC has been working closely with the industry since then to prepare for the offering of their RMB clearing and settlement services. I am delighted to share that ICBC has officially launched RMB clearing services yesterday. Key banks in Singapore are ready to actively participate in this promising new market. 15 MAS also has growing relations with the key sectoral regulators, namely the China Banking Regulatory Commission (CBRC), China Securities Regulatory Commission (CSRC) and China Insurance Regulatory Commission (CIRC). MAS and CBRC currently hold annual meetings to exchange views on regulatory cooperation and market developments. MAS also plans to step up its engagements with CSRC and CIRC in areas of common interest. 16 These initiatives clearly indicate the increasing importance and connectivity between the financial markets of our two countries. Certainly, we hope for more of such bilateral collaborations as China continues the progressive internationalisation of its financial market and currency. 17 MAS therefore sees great value in establishing a physical presence here to facilitate such future cooperation and regular interactions.
A large body of the literature illustrates that the exchange rate pass-through depends on factors such as the monetary policy framework, import composition, trade integration, currency invoicing and the rise of global value chains.5 Broadly speaking, as globalisation has advanced and inflation and inflation volatility have declined, these factors have contributed to progressively reduce the exchange rate pass-through in most developed economies. For example, in the case of the euro area, it has been found that a growing share of local currency pricing has mechanically reduced the pass-through.6 You can see this on slide 2 for the euro area. Today the pass-through to final consumer price inflation may be less than a third of what it was at the beginning of the century. The second reason is more cyclical in nature. It relates to the state of the economy and the response of monetary policy to it. The theory is that exporters will not set their prices as a constant mark-up over costs, but will adjust them to expected changes in their future marginal costs and demand prospects. The implication is that what ultimately matters for the exchange rate pass-through is the type of shock that is hitting the economy. This notion goes back at least to Corsetti and Dedola (2005) but has received more prominence lately following the work of Kristin Forbes and co-authors (2015).7  3 / 14  BIS central bankers' speeches  On the left-hand side of slide 3 you can see initial evidence to support this claim.

Indeed, such is further complicated by the fact that this invisible crime operates on the fringe of society, acting as a bridge between the underworld and the rest. Hence, we need a collaborative approach to work together to overcome such challenges that could damage the image and reputation of Samoa’s financial system, as well as the good standing of NPOs in the country. I now have the pleasure of officially opening this Anti-Money Laundering and Countering Terrorist Financing Activities Workshop. BIS Review 85/2009  5
What was the defining characteristic of this approach to policy, and other broadly contemporary frameworks developed by countries like Canada, New Zealand and Sweden? The best short answer is encapsulated in a term originally coined in 1997 by two US academics, Ben Bernanke and Frederick Mishkin (now Chair and member of the FOMC respectively). It is ‘constrained discretion’ 2 . Bernanke described this as “an approach that allows monetary policy-makers considerable leeway in responding to economic shocks, financial disturbances, and other unforeseen developments. Importantly, however, this discretion of policy-makers is constrained by a strong commitment to keeping inflation low and stable.” 3 In the UK, the Government is constrained by the institutional framework, which is set in statute. And the MPC is constrained by the need to meet the inflation target. But while the MPC are told what to do, they are not told how to do it. At the operational level, there is a lot of discretion. The commitment to meet the inflation target is fundamental, as a matter of law and economics. As long as it is credible, such a commitment will help to anchor people’s expectations about future inflation, and stabilise their response to unexpected shocks. But the scope to exercise discretion about how long temporary inflation disturbances will be tolerated is critically important too, for the performance and long term credibility of the framework. Of course it must be used with integrity – saying one thing and doing another, for short term advantage, is toxic.

Rachel Lomax: The MPC comes of age Lecture by Ms Rachel Lomax, Deputy Governor of the Bank of England, at De Montfort University, Leicester, 28 February 2007. I am very grateful to Gareth Ramsay for his help in preparing this speech, and also James Proudman, Tony Yates and other Bank colleagues for their help in preparing this speech, and to a number of colleagues at the Bank of England for useful comments. * 1  *  *  Introduction  It’s a great pleasure to be in Leicester tonight, particularly given my long association with De Montfort University, as a Governor. Tonight I want to focus my remarks on the Monetary Policy Committee, which is ten years old this year. This is a blink of an eye in the life of the Old Lady of Threadneedle Street as she approaches 313. But UK monetary policy frameworks have lived dangerously and died young. For them, ten years is good going. To mark the occasion the Treasury Committee has launched a special enquiry. An impressive weight of written evidence has already been published, including a detailed review by the Bank of England. Everyone agrees that the UK has experienced an unprecedented degree of economic stability over the past decade. The average rate of inflation has come down from nearly 10% in the seventies and eighties, to 2.5% since 1993, and the volatility of inflation has fallen very sharply. At the same time, output growth has been higher on average and less volatile.
When it is not possible to use fiscal policy to stimulate domestic demand, it is tempting to put one’s hope in exports. Countries will then be unwilling to allow exchange rates to take a direction that will lead to poorer competitiveness for them. One consequence of my assessment of foreign policy rates is that the main scenario’s repo rate path entails a greater interest rate differential in relation to other countries than was assumed in the Riksbank’s forecast. In the most recent monetary policy decision, the gap between the main scenario’s forecast of foreign policy rates and the forecast I preferred was certainly significantly narrower than it was during the autumn of 2010 – but, even so, it still concerned a difference of more than 50 basis points towards the end of the forecast horizon (see Figure 6). This could mean that the krona will appreciate more than the forecast suggests. To illustrate the effects that lower international interest rates would have on Swedish monetary policy if the actual interest rates were to be adjusted completely towards the Riksbank’s repo rate path, I would like to show you an analysis included in the minutes of the most recent monetary policy meeting.

It is more extensive than the FOMC’s as it will cover, among many things, structural change; climate change; financial stability; and the effects of digitalization. The Eurosystem will take its time, as the Fed did, to consider the different alternatives. What professional economists find theoretically appealing may not be either easily applicable or comprehensible to the general public. What financial markets expect in the short run is not always consistent with long-term economic objectives. But let me try today to share some preliminary thoughts on four key questions: 1. Is there such a difference between a dual mandate and the ECB’s twotiered mandate? 2. How could we clarify the inflation objective? 3. What about the “second pillar” of the ECB and is there a link with the socalled “secondary” objectives? 4. Last but not least, how can we improve communication with the general public and economic actors? My aim obviously is not to give you conclusive answers to these four questions but to highlight important elements of the debate. The Fed’s conclusions are a significant part of it but one shouldn’t assume that the ECB will simply follow suit. Other contributions – such as the ECB Listens exercise, our academic roundtables, Sintra or the current review of the Bank of Canada – are also important and differences are not always where expected. Page 4 sur 10  1. Is there such a difference in mandates?
This conclusion stems from the observation that the current economic environment is qualitatively different from previous post-World War II business cycles. Most post-war recessions were preceded by high rates of resource utilization and rising trend inflation. This prompted a tightening of monetary policy, which, in turn, dampened interestrate sensitive spending, particularly on housing and consumer durable goods. Then, as underlying inflation pressures subsided, monetary policy was eased and interest-rate sensitive spending rebounded, often quite sharply. The current business cycle is different in one key respect. It was preceded by a global financial crisis. The financial crisis was due, in large part, to excessive leverage and excessive investment in real estate assets. It will take time to unwind these excesses. Today, I will offer a framework for assessing the forces that have shaped the recent performance of the U.S. economy. This framework will provide context to the fiscal and monetary policy responses to what is now being called the “Great Recession.” Then, I will discuss the economic outlook for the United States over the next year. Before I proceed, I want to emphasize that these views are my own and do not necessarily reflect the views of the FOMC or the Federal Reserve System. Building an analytical framework Say’s law – named after the French economist Jean-Baptiste Say – states that the aggregate value of incomes earned in an economy over some period of time must by definition equal the value of all goods and services produced over that same time period.

This requires many steps, including systemic risk oversight and solving the so-called too-big-to-fail problem. In this respect, we need to think hard about what we can do to prevent the type of speculative bubbles that occurred from causing so much damage in the future. In particular, are there macro prudential tools that the Federal Reserve and other regulators can use to limit leverage and speculation and thus prevent the type of asset price booms and busts that have proved so troublesome? Second, we need viable exit strategies from this recent period of monetary and fiscal policy stimulus. On the monetary policy side, we have been working hard to ensure that we have the tools in place so that we can be effective in tightening monetary policy when the time is right, even with an enlarged balance sheet. Third, we need a rebalancing of global economic growth. That means a smaller share of consumption relative to GDP in the United States and offsetting shifts in Asia. Circumstances have improved considerably from what they were a year ago. But job creation is still much too slow and we have much to do on the regulatory side to make our financial system more resilient and robust. Thank you very much for your kind attention. I would be happy to take a few questions. 5  Financial Market Turmoil: The Federal Reserve and the Challenges Ahead, William C. Dudley. Federal Reserve Bank of New York, March 6, 2010.