samchain/econo-pairs-v1 huggingface dataset:
Our assessment in our monetary policy reports during this year suggests that the strongest shock came from local demand. A recent analysis of micro data for non-volatile and nonfood goods inflation shows that the demand factors that have been affecting inflation have been retreating, in line with macroeconomic and consumption adjustment. Conversely, the cost factors that gained strength in recent quarters have begun to ease, although they persist at elevated levels. We can distinguish three periods. In the first part, between March and December 2020, Covid generated a supply shock that put upward pressure on prices, but at the same time, the drop in income and quarantines caused a drop in demand that acted in the opposite direction, neutralizing the effect. A second stage, during 2021, in which supply reactivates while demand pressures begin to grow strongly due to the withdrawal of pension savings and fiscal transfers, which amounted around 30% of GDP. Thus, in this period, demand pressures prevail strongly, feeding a huge imbalance in the economy and driving inflation upwards. 5  Finally, during this year, with already high inflation, we have had several shocks placed on top of an economy that was already seeking to contain inflation but had not yet managed to reverse the macroeconomic imbalances. First, the Ukrainian invasion by Russia, which massively raised food and energy prices globally. The second global development was the zero-Covid policy adopted by China’s authority, which disrupted global value chains and put downward pressure on copper prices.

As part of this process, in 2021 and in accordance with the definitions of the General Banking Law, a policy framework was published by the Central Bank to implement the Countercyclical Capital Requirement. The CCyB is the main macroprudential policy tool under BCCh authority, and BCCh-CMF coordination. As applied, the objective of this bank capital requirement is to increase banks’ resilience in the face of severe stress scenarios, resulting from systemic risks, thus contributing to reduce the impact of these events on financial stability, avoiding restricting essential banking services, such as credit supply, hence protecting the economy. The BCCh has so far not activated this requirement. As indicated in our latest Financial Stability Report, the banking system shows resilience, with contained risks and high levels of provisions, liquidity and capital that constitute sufficient buffers to withstand severe stress scenarios. Moving forward, it is necessary to advance in the coordination processes between the Central Bank, the CMF, and the Financial Stability Council to consolidate over time the implementation of these new tools within a framework of macroprudential regulation that follows international guidelines. 14  As we continue to observe the experience of jurisdictions that started the implementation of Basel standards before we did, we believe that the challenging last 3 years will provide extremely valuable information regarding the effectiveness of capital and liquidity measures implemented by Basel III and international standards.
Richard W Fisher: Comments on tailored regulation and forward guidance (with reference to Dr Seuss, Strother Martin in Cool Hand Luke and other serious economists) Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Louisiana Bankers Association 114th Annual Convention and Expo, New Orleans, Louisiana, 9 May 2014. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, Drake (Mills). Your service as president of the Federal Reserve Board’s Community Depository Institutions Advisory Council is greatly appreciated. You are kind to have a Texan come speak to you and your fellow Louisiana bankers, though this is not without precedent: The great blues guitarist and singer Clarence Garlow may have been born in Louisiana, but he had long lived in Texas before he recorded “Bon Ton Roula” in 1949 and gave New Orleans the reputation of the American city where les bon temps rouler. It would be hard to say that the good times are rolling for community bankers, though the pace and rhythm of the economies of the U.S. and Louisiana and your next-door neighbor, Texas, are getting stronger daily. I have been outspoken as to why our community banks feel besieged. Everyone in this room and their sister or brother knows what I preach about the continuing problem of banks considered “too big to fail” and the witches’ brew that was concocted by Congress, known as Dodd-Frank.

And this left a more distinctive and clearly defined role for monetary policy as the primary instrument for maintaining broad balance consistently over time between aggregate demand and underlying supply. All this has become the accepted wisdom just about everywhere. Since 1992 in this country the explicit objective of monetary policy has been to achieve stability defined in terms of a target for retail price inflation. And since 1997 the Bank of England - through the Monetary Policy Committee - has been delegated responsibility for setting short-term interest rates with the consistent aim of hitting the Government's symmetrical 2½% inflation target (on a precisely defined measure of retail price inflation - RPIX). Now the reason we've been set that task is not - as some people imagine - because either we or the Government think that consistently low inflation is the be all and end all of economic life. It is because we learned from our earlier experience that consistently low inflation is a necessary (though not in itself a sufficient) condition for the sustained growth of output of the economy as a whole, for high levels of employment, and for rising living standards, which are more fundamentally the things that we are all seeking to achieve. "Stability is a necessary condition for sustainable growth" has become the universal central-banking credo. So our objective - and the reasons for it - could not be clearer. But meeting that objective is not as straightforward as it may sound.
Lars Nyberg: Financial disturbances and the real economy Speech by Mr Lars Nyberg, Deputy Governor of Sveriges Riksbank, to Danske Securities, Stockholm, 11 March 2002. *  *  *  I would like to begin by thanking you for the invitation to come here to Danske Securities and speak to you, who are at the real heart of the financial sector, but also heavily dependent on occurrences in the real economy. In my speech today I intend to concentrate mainly on the relationship between developments in the real economy and financial developments, as it has looked in the past and as it may look in the future. The Riksbank's two objectives, maintaining price stability and promoting efficiency and stability in the payment system in a broader context, have both real economy and financial aspects. The objectives are more closely linked than might be thought initially. Turbulence on the financial markets has repercussions for economic activity and developments in the real economy and thus great significance for the shaping of monetary policy. It is difficult, if not impossible, to pursue an effective monetary policy when the financial markets are functioning inefficiently. At the same time, price stability and stable, low inflation expectations help to create security and stability in the financial markets. This far it is quite simple. It is rather more difficult to make an in-depth survey and understand the relationship between the financial and the real economies.

Caleb M Fundanga: Financing for gender equality Opening remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the official launch of the Financial Institutions exhibition in commemoration of International Women’s Day, Lusaka, 5 March 2008. * • • • • • • • •  *  *  The Honourable Minister for Gender and Women in Development The Country Coordinator of the United Nations System The Permanent Secretary, Gender in Development Division The Director, Environmental Council of Zambia Chief Executives of Financial Service Providers Heads of Non Governmental Organisations Invited Guests Ladies and Gentlemen  I am honoured this morning to address you at the launch of this important Financial Sector Exhibition by financial service providers, in commemoration of the International Women’s Day for 2008, under the theme “Financing for Gender Equality”. The purpose of this exhibition is for financial service providers to showcase how they are contributing to financing for gender equality. It also provides an opportunity for the various institutions to market financial products that can be accessed by women. A further objective is the sensitization of the financial service providers and indeed the public at large to the need for gender mainstreaming in access to finance. International Women’s Day began with the declaration of International Year for Women in 1975. Since then, many countries world-wide celebrate International Women’s Day to recognize the achievements of women without regard to national, ethnic, cultural, economic or political divisions.
More generally, supervision and regulation are designed to both support productive financial intermediation and limit disruption and financial stability risks.3 Today, I will talk about a simple framework for one view of policy efficiency in a world of two policy objectives – financial intermediation and financial stability. As in traditional finance theory, one can think about an “efficient policy frontier” that maps the trade-offs among these objectives. One might choose a set of policies that supports a high level of financial intermediation and also accepts a higher risk of disruption or crisis. This might be achieved, for example, with relatively light oversight or low capital requirements. Alternatively, one might choose a different set of policies, such as more intensive oversight and stringent capital requirements that likely reduces risk, but also limits intermediation. An efficient policy is one that minimizes risk for a desired level of intermediation—it is on the efficient policy frontier. This efficiency idea is distinct from the policy choice itself, as any of these policy regimes can be efficient in the sense that risk is as low as possible for a desired level of intermediation. I’ll emphasize that this framework is agnostic to the merits of one policy choice or another. That is, it is a positive framework and not a normative one, and I won’t look at this from a normative perspective. Policy preferences can vary and they are set by policymakers.

In the spirit of the MoU agreement, a primary step in our cooperation is to establish high level policy dialogue with the Bundesbank on a regular basis, the first of which will be held in 2014. This is timely, considering that not only will Turkey assume the G20 presidency in 2015 and engage in an even closer interaction with the central banks of the G20 member states, but will also help meet the recently increased need for policy dialogues over the implementation and implications of new unconventional monetary policies. In general, the CBRT places great emphasis on bilateral relations with fellow central banks, especially those of the G20 member countries. The year 2012 is a testament to our commitment, as the CBRT opened six new representative offices, which brought the total number to ten. The first-round representative offices include those in Frankfurt, NY City, London and Tokyo. The ones opened later on are in Moscow and Sydney – to strengthen relations with other G20 presidency countries; Beijing and Kuala Lumpur – to strengthen relations with the Asian countries; Paris – to strengthen relations with the OECD, and finally Washington, DC – to strengthen relations with the IMF. In her efforts to enhance regional cooperation, the CBRT laid the foundations of the dialogue among central banks that paved the way for the establishment of the Central Banks Governors’ Club of Central Asia, the Black Sea Region and the Balkan Countries.
According to the results of the 2015 PISA report, which evaluated for the first time the financial capabilities of pupils at the end of their secondary education, Spain stands significantly below the average for the 15 countries that participated in this evaluation, and it is ranked eighth out of the 10 OECD member countries that participated. Sustainable finance One last change directly affecting us, and which merits highlighting, is the environmental challenge. The term “environment” should be viewed as broadly as possible here. Previously, when talking about the environment, I was referring to the regulatory framework in which we move, to the prudential supervision we undertake, to the economic reality in which agents act and to society as a whole. Now, “environment” must go beyond this, referring also to climate and to the consequences human actions have on it. It is here, moreover, that the aforementioned conflict between short-term actions and future benefit, in the very long term, are most manifest. The long term in this case is related to the life of future generations, which magnifies the importance of the matter. If we turn to look at society again, there is clearly growing awareness regarding the climate challenge. What are the public authorities doing in this respect? Though not with sufficient speed, it is to be acknowledged that the ecological transition is gaining visibility and importance on the agenda of international financial organisations.

I shall confine myself to saying that the changes have affected all the elements making up the well-known capital ratio, which is the centrepiece of solvency regulations.3  2  “A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional way along with his fellows, so that no one can really blame him.” 3 Any regulatory ratio is structured on the basis of the definitions of what should eligible for calculation purposes, both in the ratio’s numerator and denominator, and of the level it should reach. The new regulations have changed these three elements of the ratio: (i) the numerator shows a figure for capital calculated in keeping with a new, much more demanding definition; (ii) the way in which risks are translated into weighted assets has been changed in the denominator and various caveats have been added regarding the use of internal models; and finally, (iii) the required ratio level has been raised considerably, and additional "buffers" have been added, inter alia, to cover the risks systemic institutions evidence. 7/13  While the capital ratio is important, it is not by any means the only significant measure. The crisis has shown that focusing solely on one metric may be counter-productive. Thus, other elements have been added. These complement the classic solvency metric, and relate to banks’ liquidity or leverage. Moreover, the focus has been placed on banks’ business model and governance.
Allowing firms to use internal models to calculate their solvency requirements is an example of how Solvency II meets the needs of the UK insurance sector. UK insurers are many and varied – from Lloyd’s and the wholesale London market, to motor and household insurers, to large life companies with significant annuity books, to specialist providers and mutuals. The Solvency II standard formula works well for many of these firms. But no standard formula – however well designed – can work for all of them. That is why the PRA has now approved 22 partial or full internal models and several more are in the pipeline. The UK is unusual within the EU in having insurance companies with large annuity books – and insurers are increasingly purchasing the legacy annuity obligations of defined benefit pension schemes that corporate sponsors have closed to new members. Solvency II seeks to balance the need for companies and regulators to take account of all the underlying economic risks of annuity obligations – for example, changes in market prices of assets and long-term interest rates used to discount liabilities – with the need to avoid excessive volatility in capital positions, which would create the potential for procyclical investment behaviour by firms as market prices move. Where insurers have long-term, ‘buy and hold’ investments backing long-term, sticky annuity liabilities, the so-called Matching Adjustment allows them to filter out movements in the market price of risk.

The aim is not to infringe on FINMA’s jurisdiction. Instead, FINMA and the SNB need to clearly define how the new responsibilities and tasks arising from the urgent need for more rigorous analysis and regulation of systemic risk should be divided between them. At this point, I also want to stress that this macroprudential task does not call into question the SNB’s primary mandate, which is the maintenance of price stability. Instead, it supports the long-term fulfilment of this mandate. The SNB has also expressed its opinion – along the lines of this proposal – on the recommendations made by the business audit commissions of the National Council and the Council of States in their report on the financial crisis. 2  BIS Review 173/2010  SNB balance sheet risks In my following remarks, I would like to look at the SNB’s balance sheet risks. As the Chairman of the Governing Board, Philipp Hildebrand, has already mentioned, it was primarily the large-scale purchases of foreign currency that contributed to the expansion of our balance sheet to its current level of approximately CHF 280 billion. Of this amount, CHF 260 billion is made up of currency reserves, which comprise not only foreign exchange, but also gold and the IMF’s special drawing rights. If we add to that the SNB’s loan to the stabilisation fund, over 95% of our assets are denominated in foreign currency. Not only is the balance sheet longer as a result, it also carries more risk.
Central banks probably invest greater resources than any individual agent into studying the economy, assessing the economic situation and making forecasts. Reasonably, central banks should also know more about their own intentions than any other agent. It is therefore possible to construct theoretical cases where a lower degree of transparency is preferable to a higher degree. But on the whole the research appears to indicate quite clearly that a high degree of transparency is something the central banks should aim at. It is easy to agree with this conclusion. Here I think that the demands on a public authority in a democracy have great importance. Then I believe that in practice there are limits as to how transparent a central bank can be. In some respects it is quite simply difficult to be open and clear. This applies, for example, to how much emphasis the central bank places on stabilising the real economy relative to stabilising inflation. In theoretical models this is usually represented by a special parameter in the central bank’s so-called goal function. However, placing a value on this parameter which is then published would probably be  2  Morris, S. and H.S. Shin, (2002), "The Social Value of Public Information”, American Economic Review 92, 1521-1534. 3  Svensson, L.E.O., (2006), “Social Value of Public Information: Morris and Shin (2002) Is Actually Pro Transparency, Not Con,” American Economic Review 96, 448-451. BIS Review 40/2007  3  very difficult in practice.

Since 2000, and especially in recent months, the picture has changed. The mines have opted for another strategy and have cut back on price hedging. This strategy change can be partly attributed to more positive expectations regarding the gold price. As a result of the central bank agreement on gold sales, producers no longer fear large-scale sales by the central banks. Moreover, it seems that producers have recently become more upbeat in their assessment of private investment demand. It is interesting, in this respect, that gold producers' hedging activity tends to accelerate market trends. When they expect price decreases, prices do in fact decrease faster as a result of hedging, and when they expect price rises, prices do rise faster owing to the decrease in hedging. Such strategy changes, which are always due to changed market expectations, have to be reckoned with in future as well. •  Reviving private investment demand in the industrialised countries has also contributed to giving the gold price a boost. This phenomenon has been particularly pronounced in Japan, but Europe and the United States have also seen gold demand booming. Economic imponderables, concern over the financial health of some companies, heightened political tension in different parts of the world, the terror attacks of September 2001 and concomitantly subdued stock markets have caused investors to increase their holdings of the  BIS Review 39/2002  1  yellow metal. It seems as if gold is, for the time being, once again assuming its role of a safe haven investment.
While most countries have leveraged on the existing legal or regulatory frameworks developed for consumer protection in general, there is a need to recognise the limitations of such general frameworks in addressing consumer protection in the context of promoting a more inclusive financial system. A consumer protection regime that relies on full disclosures may mean very little to consumers that have neither the capacity to understand the disclosures, nor the ability to exercise the appropriate choice between the products being offered. Existing consumer protection frameworks may need to be adapted to address the specific needs of the more vulnerable groups. Finally, the development of a financial education programme is vital to enhance financial capability for consumers to participate effectively in the financial system that is dynamic and fast evolving. We are now in an environment that is seeing the proliferation of financial products and services and the emergence of electronic finance. Greater financial literacy will also ensure that the financial industry will be responsive to the more discerning demands. Being ill equipped or having a lack of understanding of the nature of the products could increase vulnerability to misselling by financial institutions or to fraud and scams. Proficiency in financial knowledge will contribute towards greater empowerment and competent financial decisions. Studies have shown that financial education that is made available at an early age, in the school education system, will strengthen this potential and enhance the greater financial inclusion.

Let me conclude. Policymakers have a critical role and a distinct opportunity in these present times to effect significant and positive change in the development of more inclusive financial systems. This change will not only catalyze progress for the poorest and marginalized segments of society, but also uplift those groups that are already in the financial mainstream but are highly challenged by the environment. This will ultimately serve to achieve truly inclusive growth and development. This is an important agenda, and our efforts must be trained on interventions that will encourage competition, provide the right incentives to both financial service providers and individuals, and help overcome access barriers in ways that will contribute to growth and stability. While the challenges are significant, the prospects for improved living standards and hopes for the millions of people in poverty and the struggle for survival should encourage us to persevere and advance forward with greater focus and purpose. Before I end my remarks, allow me to express my appreciation to our key partners in making this forum a reality. I wish to record my appreciation to Her Royal Highness Princess Maxima for her support to this Forum in her capacity as United Nations Special Advocate for Inclusive Finance for Development. The Alliance for Financial Inclusion, the Consultative Group to Assist the Poor and the OECD’s International Network on Financial Education have become important collaborators in our aspirations to promote more inclusive financial systems.