samchain/econo-pairs-v1 huggingface dataset:
Obviously, a non-negligible part of the future environment for central banks hinges upon these developments. As time goes by, they will provide us with guidance as to which of the two corner solutions for exchange rate policy will prove the most popular – a freely floating currency or membership of a monetary union. However, although important, these developments are admittedly slow and differences in the end-result should not be exaggerated. I merely intend to suggest that the transition in stabilisation policy that comes with joining a monetary union perhaps is not as large as it first seems. Central banking has a long history and although it has been confronted with many changes in the past, it has far from lost its importance, if anything rather the contrary. Basic functions,  7  For a recent study of business cycle synchronisation, see Kose, Otrok and Whiteman (2005). BIS Review 73/2006  7  such as aiding financial intermediation through large value payment systems and acting as a lender of last resort, will remain important in the future as well. Needless to say, it will be very interesting to follow the transformation of EAC in general and the role of the Bank of Uganda in particular. References Annett, A., (2006), “Enforcement and the Stability and Growth Pact: How Fiscal Policy Did and Did Not Change Under Europe’s Fiscal Framework”, IMF Working Paper, No 06/116. Baldwin, R., (2006), “In or Out: Does it Matter?

- An Evidence-based Analysis of the Trade Effects of the Euro”, Centre for Economic Policy Research. Baldwin, R., Skudelny, F. and Taglioni, D., (2005), “Trade effects from the euro – evidence from sectoral data”, ECB Working Paper Series, No. 446. Boije, R., Borg, A. and Eklund, J., (2002), ”The Riksbank’s statement regarding the report ’Stabilisation in the monetary union’”, Sveriges Riksbank Economic Review, 2002:4, pp. 90-127. Boije, R. and Shahnazarian, H., (2003), “National Stabilisation Policy for Sweden in Stage Three of EMU”, Sveriges Riksbank Economic Review, 2003:1, pp. 18-49. Borio, C. and Filardo, A., (2006), “Globalisation and Inflation: New Cross-country Evidence on the Global Determinants of Inflation”, Mimeo, BIS, Basle. Böwer, U. and Guillemineau, C., (2006), “Determinants of Business Cycle Synchronisation Across Euro Area Countries”, ECB Working Paper Series, No. 587. Kose, M. A., Otrok, C. and Whiteman, C. H., (2005), “Understanding the Evolution of World Business Cycles”, IMF Working Paper, No. 05/211. Lamfalussy, A., (2006), ”Central banks, governments and the European monetary unification process”, BIS Working Paper, No 201, BIS, Basle. Mishkin, F. and Schmidt-Hebbel, K., (2006), “Does Inflation Targeting Make a Difference?”, Mimeo, presented at Bank of England. Mundell, R., (1961), “A Theory of Optimum Currency Areas”, American Economic Review, Vol. 51, No. 4., pp. 657-665. Persson, T., (2001), “Currency Unions and Trade: How Large is the Treatment Effect?”, Economic Policy, October, 0(33), pp. 433-48. Rose, A. and Stanley, T. D., (2005), “A Meta-Analysis of the Effect of Common Currencies on International Trade”, Journal of Economic Surveys, Vol. 19, pp. 347-365.
Although many central banks have cut their policy rates to almost zero, the expansionary effect of this has consequently not been as strong as could have been desired. In addition, the more serious the financial crisis becomes, the more poorly the financial markets function. This, in turn, means that monetary policy becomes less effective, that is to say that changes in the policy rate have less effect on the economy than is normally the case. Developments in the present crisis provide a good illustration of this phenomenon. Many central banks have experienced that changes in the policy rate have not at all had the same effect on demand that they have normally. In other words, the transmission mechanism between policy rate and the real economy has ceased to function normally. During the crisis, parts of the world were affected by an acute credit crunch, entailing that fully creditworthy companies encountered difficulty in obtaining credit due to a lack of capital in the bank sector. This, if anything, has been characteristic for this crisis, having clear consequences for the real economy, including the heavy decline in world trade. The credit crunch came to be and to remain a monetary policy problem in many countries as the supply of credits frequently became more or less insensitive to interest rate changes. In Sweden, we only saw the merest hint of such a credit crunch.

A one dollar increase in the oil price gives an increase in GDP of almost 1% and most of it arrives as increased budget revenues. With large and varying budget revenues, the basis for determining central government expenditure and taxes from one year to the next may easily be impaired. If budget expenditure is allowed to fluctuate in step with oil prices, the result may be abrupt shifts and instability in the Norwegian economy. Changes in oil prices may then quickly influence wage and price expectations, the exchange rate and long-term rates. In that case it will be very demanding to achieve nominal stability. Short-term interest rates would have to be changed frequently and sharply and would generally reflect a high risk premium for the Norwegian krone. It is therefore important that the annual budgets are anchored in a long-term strategy that takes into account that oil revenues may fluctuate from one year to the next. In addition, it is advantageous if fiscal policy can be used to counter fluctuations in demand and production. Final words By hosting this workshop, we hope to take part in an exchange of new knowledge about the conduct of monetary policy. We hope that the workshop will be a fruitful experience for both researchers and monetary policymakers. 3  BIS Review 101/2000
Due to investment expenditures and exports as well as the rapidly increasing industrial production since the second quarter of 2020, the number of people employed rose by 2.7 million (1.3 million being in the services sector and more than 900,000 in the industrial sector) as of the first quarter of 2022. In addition, employment has increased by approximately 846,000 people since the beginning of the year. This increase in employment is significantly larger than that of peer countries. Considering the population and the sources of employment growth in these countries, our employment performance becomes even more remarkable. Employment in the manufacturing industry in particular, exhibits a notably strong performance. In the pandemic period, many countries have not managed to compensate for the losses in labor force participation. On the other hand, both the labor force participation and employment indicators in our country have exceeded their pre-pandemic levels, showing how brisk and robust the labor markets were in the normalization process. Distinguished Members of the Chamber of Industry, The Turkish economy is going through a process of structural transformation centered on increasing investments, employment, production and exports, the focus of which is you. Adjusted for cyclical effects, the Turkish economy had a current account surplus for three consecutive quarters for the first time since this analysis began in 2004.

In this context, it is important that the investment need required for the continuation of the supply-side contribution to sustainable growth and price stability is met with accessible, long-term and low-cost Turkish lira financing. Machinery-equipment investments and net exports are the pillars supporting the economic performance of Türkiye centered on increasing investments, employment, production and exports, and their share in national income has been rising consistently. Their total share in national income reached the highest historical level at 18% as of the first quarter of 2022. The stable increase of machinery-equipment investments will enhance the supply capacity of our economy, thereby contributing to permanent price stability. The latest data indicate that industrial production remained on a favorable track in the second quarter of the year with the help of sustainable components. Industrial production has grown on an annual basis without interruption since the third quarter of 2020 and recorded an upsurge of 9.1% in May 2022. While this increase in production spreads across the manufacturing industry, industrial production in exporting sectors remains even stronger. Industrial turnover indices also indicate that external demand has a positive impact on industrial production. Strong economic growth is also apparent in capacity utilization rates. While capacity utilization rates increased in all sectors, in some sub-sectors they even exceeded historical averages. This points to a need for additional capacity, and supports the investment demand.
This will be done either through the purchase of foreign assets when market conditions permit or through lending Hong Kong dollars in the interbank market;  (b)  similarly a drawdown of fiscal reserves by the Government will be sterilized to ensure that there is no effect on the clearing balance of the banking system. This will be done either through the sale of foreign assets when market conditions permit or through borrowing Hong Kong dollars in the interbank market; and  (c)  proceeds from the issue of Exchange Fund Bills and Notes not for redemption of earlier issues will be recycled either through the purchase of foreign assets when market conditions permit or through lending Hong Kong dollars in the interbank market. BIS Review 19/1998

Of relevance is that excessive risk-taking behaviours featured prominently as a key factor contributing to the Crisis. In addition, what makes the Global Financial Crisis different is the extent of the economic and financial inter-linkages within and across borders, which explains the far-reaching impact of the crisis. While the greater interconnectedness of economies and financial systems has brought about opportunities, it has also resulted in greater risks. The Global Financial Crisis has resulted in the re-assessment of how policymakers view the achievement of macroeconomic and financial stability. There is a growing recognition that emerging risks to macroeconomic and financial stability have to be identified and managed in a more holistic and effective manner. As the economy and financial system grow in complexity, policymakers have to strengthen the understanding of the macroeconomic and financial inter-linkages in order to be able to effectively assess the implications of any potential risk on the economy. Before the Global Financial Crisis, the predominant view was that unfettered markets, selfcorrections and minimal interventions would deliver the best economic outcomes. However, recent experiences have shown that policy interventions to correct market misalignments after a crisis may prove too late as the aftermath could be extremely costly. This, therefore, call for policies to be pre-emptive rather than reactive. For policymakers, the aim is to preserve macroeconomic and financial stability, and build the country’s resilience to shocks. Macroeconomics stability is a very important prerequisite for businesses and individuals to undertake economic activities.
The ECB also takes note of estimates of the natural rate of unemployment but recognizes that these are subject to enormous uncertainty – like estimates of all other “natural” variables. The ECB would not tighten policy based solely on an estimated unemployment gap. 2. How could we clarify the price stability objective? The main substantive change by the FOMC is the introduction of an inflation make-up strategy. Rather than being solely forward-looking, the FOMC will, or could, now correct for past inflation shortfalls. Let us here also discuss the areas  Page 5 sur 10  of continuity as Jay Powell did in his speech of 27 Augustv – and the possible differences:  The Fed confirmed our common strategy of inflation targeting and it has kept 2% as its numerical goal. This “conceptual convergence” remains a cornerstone of modern central banking.  Average inflation targeting is a flexible tactic, possibly temporary, within a wider strategy of keeping inflation sustainably where expected. Still more importantly in my view, the inflation target should be perceived as flexible, symmetric and medium term. Allow me to be a bit more specific about these three requirements. o flexible is the most obvious one. We cannot guarantee to achieve precisely our numerical objective either all the time or straight away. o Symmetric means that our numerical objective is a target and not a ceiling. As a consequence we might be ready to accept inflation higher than 2% for some time, without mechanically triggering a tightening of our monetary stance.

For example, the Governing Council has recommended that owner-occupied housing will in due course be included in the Harmonised Index for Consumer Prices. The ECB also understands the importance of factoring in the impact of climate change. There is 1/2  BIS central bankers' speeches  now an action plan on how the ECB will more systematically reflect climate change considerations in its monetary policy operations. This is not only about the moral imperative. Bear in mind that the physical and transition risks related to climate change affect not only price stability but also financial stability, having an impact on the value as well as the risk profile of assets held on the Eurosystem’s balance sheet. This is why the ECB will enhance its analytical and macroeconomic modelling capacities, while developing appropriate statistical indicators. Another aspect to emerge from the review was the importance of communication. Monetary policy communication has become a tool in its own right – and the communication needs to be understood not only by experts but also by the public if the ECB wants it to be effective. A number of changes will be made to the statements issued following monetary policy decisions, which should achieve this aim. And last but not least, the extensive feedback received from the review process has highlighted the importance of the exercise given the rapid changes in the global economy. The new review should not wait another 18 years.
These forces have kept interest rates depressed throughout the recovery and into the expansion, and include demographic change, slower potential growth, higher credit spreads, lower desired investment and a lower relative price of capital, changes in income distribution, private deleveraging and lower public investment. Given the likely persistence of these forces, our expectation is that the path for the real interest rate that balances demand and supply, will recover only gradually and to a limited extent compared to the pre-crisis era. The journey to monetary policy normalisation is still young. 24  There are potentially multiple interest rate paths consistent with inflation returning to target, as shown in Broadbent (2015b). Of these, a policymaker’s preferred path would reflect their perception of the balance of risks, preferences over policy trade-offs, view of the transmission mechanism, and “model” of the economy. BIS central bankers’ speeches  17  Annex: A simple Wage Phillips Curve A simple Wage Phillips Curve similar to Gali (2011) can be written as: =  +  +  +  +  is nominal wage inflation, is inflation expectations over where is a constant, is the unemployment rate, which, in theory, enters relative to the natural some horizon , rate of unemployment, ∗ . This is unobserved and is partly captured by the residual, (which also captures measurement error and other sources of unexplained variation in wage growth such as compositional effects). The presence of lagged wage inflation allows for some degree of wage indexation or inertia.

Finally, I should mention the agreement reached to introduce a new supervisory instrument, the leverage ratio, which is not directly linked to a bank’s level of risk; for this reason, it counters to some extent the potential shortcomings present in internal models for calculating capital needs. That leads us to one of the major issues currently under consideration: the use of internal models for evaluating the weighting of risks. There is known to be wide-ranging variability in the calculation of risk-weighted assets across different banks. The Basel Committee itself has published a report on this matter, and increasing numbers of experts and regulators deem it advisable to study the implications of the use of internal models in terms of how they affect the lack of transparency in the calculation of capital requirements and in order to ensure a level playing field for all banks. The prudential regime of systemic banks: more capital and a resolution framework A further aim of the FSB has been to eradicate, or at least alleviate, the externalities created by systemic “too-big-to-fail” institutions. Systemic banks are those which, given their interrelatedness, size and complexity, might entail, in the event of bankruptcy and disorderly liquidation, serious difficulties for the rest of the financial system. The systemic repercussions of the collapse of a bank of such characteristics, as evidenced following the Lehman Brothers bankruptcy, was the driving force behind the authorities having subsequently to bail out other institutions, with the ensuing burden on public funds.
For many banks, perhaps the ideal situation would be one in which they could adopt the same approach in every jurisdiction in which it operates. The widest possible adoption of Basel II would certainly have the benefit of reducing supervisory burden for banks, but it would have benefits for supervisors as well. Because Basel II fosters enhanced risk management, more effective supervision, greater transparency and financial stability, I believe that it is in many countries’ best interest to adopt the new Framework. Having said that, however, we also have to recognise that countries are in varying states of preparedness to adopt Basel II. When I talk with my fellow supervisors, I therefore emphasise the benefits of Basel II, but I also encourage them to get the basics right and not jump into Basel II implementation before they are ready. Even so, I believe that it can be extremely useful for countries to start implementing already some of the principles behind pillars 2 and 3 of the framework as preparation for the formal transition. This dialogue takes many forms. In addition to the informal discussions that I and my fellow Committee members have with our non-Committee member colleagues, we also have several formal mechanisms in place. For example, the Committee has a long-standing working group that includes representatives from sixteen non-member countries, and we have increased our interaction with this working group.

In addition, as the returns in Islamic banking are uncertain and can only be ascertained on an ex-post basis, well-developed IT systems would be necessary to enable Islamic banking institutions to make projections on future returns so as to reduce the degree of uncertainty in the returns to be paid to the depositors. This would also strengthen the potential competitiveness of the Islamic financial services industry. Another facet to risk management is the need for the Islamic banking industry to develop a derivatives market. In the current increasingly uncertain global financial environment, investors need to be in a position to mitigate and manage these emerging new risks. Islamic banking institutions, in particular, have to a large extent long-term assets which include long-term Islamic housing mortgages and Islamic financial instruments, that are funded by short-term deposits, thus giving rise to a maturity mismatch between the assets and liabilities. There is therefore a need for the development of a broader range of Islamic financial market instruments to provide the industry with effective risk mitigating instruments. In addition to the derivatives market, the Islamic financial system also needs deeper and more efficient money and capital markets to facilitate sound asset and liability, and liquidity management by Islamic financial institutions. In this regard, Bank Negara Malaysia will issue Sukuk al-Ijarah, to meet the requirements of participants in the Islamic money market.
20  All speeches are available online at www.bankofengland.co.uk/speeches  20  Chart 17: Ethnicity pay gaps by gender  Gender  Female  Male  ‐15  ‐10  ‐5  0  5  10  15  Ethnicity pay gap, per cent Sample average  2018  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive pay gap in this chart indicates that ethnic minorities of this gender earn less than their white counterparts of this gender, whereas a negative pay gap indicates that ethnic minorities of this gender earn more than their white counterparts of this gender. Section 4: Explaining Pay Gaps In this section, we explore the factors contributing to gender and ethnicity pay gaps. Accounting for individual and job characteristics helps us to estimate conditional gender and ethnicity pay gaps. Can pay gaps be explained by characteristics of the individuals (such as their level of education or location) or the jobs they are doing (such as the sector or occupation)? How much of the pay gap remains “unexplained” once these characteristics are accounted for? As well as providing a greater understanding of the drivers of pay gaps, this approach helps resolve some of the puzzles otherwise apparent in the unconditional pay gap data. The ability to “explain” pay gaps in terms of worker or job characteristics does not necessarily imply these pay gaps are justified or are not therefore a policy problem.

Perhaps surprisingly given the significant share of ethnic minorities in the workforce, ethnicity pay gaps are larger in London than outside London, for all qualifications (Chart 12). These gaps are larger for those with higher levels of qualification, such as a degree. This presents a second puzzle in the unconditional pay gap data. Recent data do not change this picture. In the latest calendar year (2018), ethnicity pay gaps are positive across all qualifications, averaging 8%. They remain larger in London than elsewhere, with the highest ethnicity pay gaps in degree and A-level qualification categories. Unconditional ethnicity pay gaps are still consistently smaller than unconditional gender pay gaps. 15  All speeches are available online at www.bankofengland.co.uk/speeches  15  Chart 12: Median ethnicity pay gap by qualification, sample average Ethnicity pay gap, per cent  London  20  Other 15  10  5  0  ‐5 Degree or equivalent  Higher educ  GCE A Level or equiv  GCSE grades A‐C or Other qualifications No qualification equiv  Ethnicminority minority ethnic  White white  Source: ONS Labour Force Survey and Bank of England calculations. Note: A positive ethnicity pay gap in this chart indicates that ethnic minorities earn less than their white counterparts, whereas a negative ethnicity pay gap indicates that ethnic minorities earn more than their white counterparts. Ethnicity pay gaps differ significantly by occupation and sector.