samchain/econo-pairs-v1 huggingface dataset:
Next, I shall discuss how uncertainty and the degree of credibility with which monetary policy is associated influence policy formulation. These two factors play an important role in practice. The third issue concerns the exchange rate. For small open economies this issue is one of the most important determinants of inflation at the same time as it is also an important measure of how stable economic policy is seen to be. How changes in the exchange rate ought to be handled when monetary policy decisions are taken has been an important monetary policy issue in Sweden in recent years. Finally I shall discuss the issue of how the monetary policy goal has been defined and should be interpreted. The Inflation/Growth Connection The Riksbank’s chief task is the achievement and preservation of price stability, which should be interpreted as keeping the rate of inflation at a low and stable level. Behind this view of the role of monetary policy lies the understanding that growth and employment cannot in the long run be achieved via an inflationary policy. There are other factors that determine growth: technological development, the way in which the economy functions, human resources development, etc. Attempts to stimulate the economy in the short run by allowing higher inflation tend to rebound in the long run. Swedish experience in the last decade, and also experiences in other countries, demonstrate this. Participants in the economy see through the policy, revise wage demands upwards and raise prices.

Heightened volatility in global financial markets can be associated with the presence of very low and even negative rates rather than the underlying macroeconomic and external imbalances. In these circumstances, any change in interest rate differential across countries is likely to create greater impacts than otherwise. If this interest rate change takes place in the largest and the most significant economy in the world, then the impact will expectedly be further magnified. The Fed’s start of interest rate normalization has demonstrated that its impact on the global economy and financial markets indeed has been large, giving rise to significant capital outflows from emerging market (EM) economies, large adjustments and volatility in exchange rates as well as widened EM spreads and interest rates. The adverse effects of the Fed’s interest rate normalization has been on average larger than those occurred in previous two financial turmoil episodes, namely the Eurozone sovereign debt crisis and the US tapering tantrum. However, the disparity between the effected countries has been large too. The plummeted commodity prices as well as other factors led to this outcome as commodity exporters suffered from both the lower commodity revenues and the tightening global financial conditions. Financial markets also differentiated EM countries by policy frameworks and prudent policies. Those having rich and better policy frameworks and prudent policies have withstood the recent global financial turmoil better than the others.
Mario Draghi: ECB press conference – introductory statement Introductory statement by Mr Mario Draghi, President of the European Central Bank, and Mr Vítor Constâncio, Vice-President of the European Central Bank, Frankfurt am Main, 3 November 2011. *  *  *  Ladies and gentlemen, welcome to our press conference. Today is the first time that I have had the privilege and pleasure of chairing the meeting of the Governing Council of the ECB. I am delighted to proceed now with our well-established practice of real-time communication and to report on the outcome of our meeting, together with the Vice-President. Based on its regular economic and monetary analyses, the Governing Council decided to reduce the key ECB interest rates by 25 basis points. While inflation has remained elevated and is likely to stay above 2% for some months to come, inflation rates are expected to decline further in the course of 2012 to below 2%. At the same time, the underlying pace of monetary expansion continues to be moderate. After today’s decision, inflation should remain in line with price stability over the policy-relevant horizon. Owing to their unfavourable effects on financing conditions and confidence, the ongoing tensions in financial markets are likely to dampen the pace of economic growth in the euro area in the second half of this year and beyond. The economic outlook continues to be subject to particularly high uncertainty and intensified downside risks.

Looking ahead, they are likely to stay above 2% for some months to come, before falling below 2% in the course of 2012. Inflation rates are expected to remain in line with price stability over the policy-relevant horizon. This pattern reflects the expectation that, in an environment of weaker euro area and global growth, price, cost and wage pressures in the euro area should also moderate. The Governing Council continues to view the risks to the medium-term outlook for price developments as broadly balanced, taking also into account today’s decision. On the upside, the main risks relate to the possibility of increases in indirect taxes and administered prices, owing to the need for fiscal consolidation in the coming years. In the current environment, however, inflationary pressure should abate. The main downside risks relate to the impact of weaker than expected growth in the euro area and globally. In fact, if sustained, sluggish economic growth has the potential to reduce medium-term inflationary pressure in the euro area. Turning to the monetary analysis, the annual growth rate of M3 increased to 3.1% in September 2011, up from 2.7% in August. The annual growth rate of loans to the private sector, adjusted for loan sales and securitisation, was 2.7% in September, unchanged from August. As in August, inflows into M3 also reflect the heightened tensions in some financial markets. In particular, inflows into money market fund shares/units, as well as into repurchase agreements conducted through central counterparties, appear to have significantly affected monetary developments in September.
Surveys suggest this message was understood by a majority of companies and 46  some households. By allaying fears about too-rapid a rise in rates, it is likely to have encouraged spending  and supported the economy. When the MPC did come to raise interest rates, in November 2017 and again in August 2018, it is interesting to see how well these were understood by companies and households. Around three-quarters of households, and around 90% of companies, had expected a rise in rates within the year ahead in surveys held immediately prior to the decisions. Simple, directional forward guidance on monetary policy appears, for this non-expert audience who comprise most of the spending in the economy, to have been effective. A second monetary policy example comes from the Bank’s quarterly Inflation Report. This was first produced over 25 years ago, as part of the first wave of the transparency revolution. It is a long and technical document, with language requiring at least 13-14 years of education to understand. 47  The  complexity of its language meant the Report was probably only accessible to around 10% of the population. 45  Bank of England (2013) provides a useful summary of concepts and issues relating to forward guidance; see Carney (2018) for a more recent discussion. 46 Carney (2018). 47 Haldane (2017a). 20  All speeches are available online at www.bankofengland.co.uk/speeches  20  In November 2017, the Bank began publishing two simpler, “layered” versions of its Report.

(c)  A Distributed Architecture  Central banks historically have tended to be, well, centralised. But in a world where understanding of the economy is often localised and trust is built on a distributed basis, a centralised infrastructure may be far from ideal. What is needed instead is a distributed architecture for engagement. In response, central banks have over time changed their structures and further change seems likely. The Bank of England has had a network of Agents around the UK for around 90 years. Today, the Bank’s twelve regional agencies cover all corners of the UK, with an extensive network that generates around 9,000 meetings with company contacts each year. This is a valuable source of intelligence on the economy and financial system. Indeed, I would say it is increasingly valuable. It provides colour and context to accompany our data and models. It offers folk wisdom, the wisdom of the company crowd. But companies are only one crowd among many. Companies are an important lens on the economy, but far from being the only one. Reflecting that, the Bank has recently sought stronger connections with some other crowds, crowds with a different lens on the economy with which it has perhaps had less contact historically – trades unions, charities, community organisations and the like. For more than a year, I have augmented those Agents’ efforts with my own “Townhall” meetings across the UK.
The degree of financial unease then varied during the course of the following year. The TED spreads peaked when the banks wanted to secure their liquidity ahead of the turn of the year 2007-2008. A further peak was reached in March 2008 when Bear Sterns suspended payments, but things calmed down again after the Federal Reserve mediated the takeover of the bank by JP Morgan. In mid-September 2008, when Lehman Brothers was forced to file for bankruptcy protection, the financial unease became an acute financial crisis. The TED spreads were driven up to very high levels. Many banks, institutions and funds were highly exposed to Lehman Brothers. Few had expected that such an important bank could fail. Previously the US authorities had let the shareholders take the consequences. Now the borrowers also had to take some of the losses. There was a great deal of concern that more players would end up in a similar situation. The remaining large investment banks in the United States also disappeared as independent investment banks. The TED spreads have risen and varied during different periods of time in Sweden, too, but they have been lower than in the United States and the euro area. Causes of the crisis – mortgages, imbalances and inadequate supervision The factor that triggered the financial crisis was thus the problems on the US housing market and mortgage market. An important element behind the prolonged rise in US housing prices was the rapid growth of lending for house purchases to low-income households.

In the United States, responsibility for supervision is divided between a large number of authorities and in Europe between a large number of countries, which makes it difficult to take the overall approach required. Another problem has been that the causes of the crisis largely relate to macroeconomic phenomena such as the development of housing price bubbles, while supervision traditionally focuses on microeconomic issues such as how individual institutions manage their lending. Nor have the supervisors reacted to the fact that the banks have built up considerable risks alongside their balance sheets. These risks have then returned to the banks via lines of credit, that is, earlier loan agreements entered into, and in other ways when the funding problems have increased. There are further reasons behind the crisis. For example, the regulations for the financial markets have been procyclical, that is they have tended to reinforce cyclical fluctuations. There has also been a rewards structure among the private players on the financial markets that has encouraged a short-term approach and a high level of risk taking. Handling of the crisis The authorities in Europe and the United States have tried to counter the effects of the crisis in a variety of ways and to restore confidence on the financial markets. The central banks have primarily contributed by adding large amounts of liquidity via loans against collateral to the banks. This has been necessary as the banks have found it difficult to borrow in the short and medium terms.
8/14  Chapter III also describes the measures adopted to support the retail holders of shares and hybrid instruments affected by the restructuring exercises at the banks which moved into the FROB’s orbit (pp. 180-181). The two measures adopted were: 1) to enable the Deposit Guarantee Scheme (DGS) to purchase the shares that retail holders of preference debt instruments and subordinated debt had received in exchange for their securities when the shares were not listed (this was the case of Novacaixagalicia and Caixa Catalunya); and 2) to create a committee to establish the criteria that would govern the arbitration to be offered by FROB investee banks to the retail holders of these instruments to resolve cases of misselling. Subsequently (Table 3.4, p. 194), the amount of the instruments issued by Bankia, Caixa Catalunya and Novacaixagalicia is given, along with the arbitration requests received and the awards favourable to customers: overall, arbitration with a favourable award amounted to € relating to almost 300,000 customers. Bearing in mind the doubts over the viability of the euro and over Spain continuing in the single currency, and given the serious crisis facing our financial system, I believe that the restructuring strategy and its financing as set out in the 2012 Memorandum of Understanding was proportionate and has managed to achieve the normalisation of our financial system, as explained in Chapter IV of the Report.

Today, from this modest ceremony, I would like to assure you that we are fully responsible for this as useful as difficult mission. The Bank of Albania will be always attentive to ensure macroeconomic and financial stability for the country. In the spirit of end-year celebrations, I cannot help focusing on the Albanian young generation, an inspiration to our work and a fruit of our investments for a better future. Following its established tradition, the Bank of Albania has the pleasure to announce the Governor’s Award for the best diploma theses in 2011”. This year, we decided to announce this award in this important activity, in the presence of friends and colleagues. This is an expression of our appreciation for research by these today’s students – tomorrow’s colleagues. The Bank of Albania pays particular attention to the young generation, especially to its education. When I look back and see how we started financial education five years ago, I recall what may be a naive but a significant comparison; Neil Armstrong’s landing on the moon. In addition to his famous quote “...That’s one small step for (a) man, a giant leap for mankind” he said “...the surface is fine and powdery. I only go in a fraction of an inch, maybe 1/8 of an inch, but I can see the footprints of my foot from the trail”. Looking back, we may spot our footprints.
Therefore, in 1997, we stated the rule should be “Caveat Emptor” - let the buyer beware, and watch out for his own interests. However, we have not left consumers entirely alone to fend for themselves. There may be an imbalance of power between consumers and financial institutions. Consumers may lack information and resources to participate confidently and knowledgeably in the marketplace. Thus, MAS has helped to empower consumers and to promote fair dealing by establishing a regulatory framework for  increased information disclosure and sound market and business conduct standards. This regulatory regime requires offerors of investments to provide full, timely, accurate and meaningful disclosure of information to consumers, on a continuous basis. The intent is for consumers to make their own informed decisions. One objective of the “Money-SENSE” financial education programme is to equip consumers with the skills and tools to evaluate financial products, judge the risks involved and take responsibility for their actions. To address the issue of mis-selling and misrepresentation by financial intermediaries, MAS has facilitated the setting up of affordable and efficient channels for aggrieved consumers to seek recourse. This is necessary if market discipline is to work, and consumers are to receive fair dealing. With these channels in place, we aim to develop consumer self-reliance. Let me now illustrate these principles with two examples. My first example is the AIA Critical Year issue.

Investment banks whose customers were professional investors had a freer hand, but no safety net.8 Banking gradually became a growth industry in many countries. Strict regulations in one country prompt banks to flee to another. The result was the dilution or elimination of many regulations that attempted to rein in the imagination of the financial sector. The rationale behind the Glass-Steagall Act was discarded. This trend was universal. Unfettered financial markets were apparently a success. Mortgage-backed securities enabled more Americans to become homeowners, and a bullish stock market was good for pension funds – as long as it lasted.9  7  Debt levels among European countries were, on the whole, excessive in 2008, though this varied substantially from country to country. For example, Ireland and Spain had moderate sovereign debt, but both countries have later incurred additional obligations owing to the problems in their banking sectors. By 2008, the government debt of Italy and Greece had already exceeded 100 percent of GDP. 8  In the US, under the Glass-Steagall Act, which was passed in 1933, banks were no longer allowed to engage in retail banking (deposits, lending and payment services) while also engaging in more risky investment banking activities. When the act was formally repealed in 1999, it had long been the subject of intense discussion in the academic literature.
William C Dudley: Regional economy and current trends in regional employment Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Quarterly Regional Economic Press Briefing, New York, 6 May 2011. *  *  *  Good morning and welcome once again to the New York Fed’s Quarterly Regional Economic Press Briefing. I am pleased to have this opportunity to talk with the journalists covering our region – and through you, to the people in our District. This morning I will discuss national and regional economic conditions, with particular attention to employment trends in the Second Federal Reserve District, which covers New York; northern New Jersey; Fairfield County, Connecticut; Puerto Rico; and the U.S. Virgin Islands. I will not comment on the outlook for monetary policy today but instead will focus on the economy itself. Following my remarks, my colleagues will provide more detail. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. National economic conditions I’ll begin by commenting on national economic conditions. Since the recession ended in 2009, the economy has grown at a modest pace. When we met in February, the brisker pace of growth in the last quarter of 2010 appeared to be carrying over to the beginning of this year.

Since then growth has been somewhat softer than anticipated, with real gross domestic product (GDP) increasing at only a 1.8 percent annual rate in the first quarter of 2011. A number of factors contributed to the slowdown. Construction activity fell – likely reflecting the continued large supply of unsold homes – and government expenditures at the federal, state and local levels declined. In addition, real, or inflation-adjusted, consumption growth in the first quarter was slower than in the last quarter of 2010. This occurred, in part, because of the rise in gasoline and food prices that pushed up consumer price inflation last quarter and reduced discretionary income. The rise in energy prices contributed to a fall in consumer confidence, which also may have had a negative impact on consumer spending. However, the weakness of real GDP growth in the first quarter probably will prove temporary. In particular, production and business survey indicators, including the New York Fed’s own Empire State Manufacturing Survey, generally continue to signal strength. And financial conditions continue to improve. The temporary reduction in payroll taxes and other fiscal measures also are providing support to demand. In addition, demand abroad – particularly in Asia – remains robust, supporting our exports. Most importantly, the labor market has shown further improvement, as demonstrated by today’s employment report. Although payroll employment growth has been subdued during most of this recovery, the latest figures show the economy added 244,000 jobs in April – and an average of 233,000 over each of the past three months.
It is naturally difficult to establish the point at which price movements of this kind need to be considered as excesses. In the past, long periods of rising prices were always followed by corrections. The hefty reaction of risk markets to the tapering debate can be read as a sign of the instability of certain asset prices. In Switzerland, for instance, the low interest rates have stimulated activity in the mortgage and real estate markets, where, for a number of years now, we have seen considerable momentum which can only be partially explained by movements in fundamental factors. As a result, imbalances have built up. For example, mortgage volumes have grown significantly faster than GDP for many years, as can be seen in chart 9. The SNB has issued repeated warnings about the risks for financial stability associated with these developments. This is the background to the Federal Council’s activation of the countercyclical capital buffer (CCB) at the beginning of this year, upon the proposal of the SNB. The CCB has been in force since the end of September and its primary aim is to increase the resilience of the banking system against these risks and to combat excessive credit growth. Since low interest rates can be expected to persist in Switzerland for some time yet, we are keeping a very close watch on developments in the mortgage and real estate markets. Waning motivation for reform measures: Lower interest rates mean more favourable refinancing costs for banks, companies and governments.

European financial markets calmer thanks to monetary policy If you take a look at chart 1, you can follow the movements in both the euro/Swiss franc exchange rate and the average risk premium for the government bonds of five peripheral euro area countries (Italy, Spain, Greece, Portugal and Ireland). The risk premium is drawn on an inverted scale, in other words, a movement downwards signifies a higher risk. This chart serves as an illustrative example for two developments. On the one hand, it shows that uncertainty in the euro area has decreased greatly over the past twelve months. At the time of the last Money Market Event in Geneva, the risk premium was almost 1,200 basis points; it is now below 400. On the other hand, the chart illustrates the fact that the upward pressure on the Swiss franc has abated. Following a long period last year when the exchange rate stuck closely to the minimum exchange rate of CHF 1.20, it moved away in January and, since May, has fluctuated within a relatively narrow range of CHF 1.22–1.26 per euro. BIS central bankers’ speeches  1  Here, the situation has calmed in two respects. In order to reduce the risk of the euro area collapsing, the European Central Bank (ECB) resorted to an unconventional measure in late summer 2012, the outright monetary transactions programme. Market participants were persuaded, and since then the risk premium for peripheral economies in Europe has declined steadily. What is remarkable is how persistent this trend has been.