samchain/econo-pairs-v1 huggingface dataset:
This focus is helping to contain inflationary pressures in the near term. Indeed, across advanced economies, wage growth remains weak and labour markets soft. Reflecting the combination of improving, but still subdued, demand and considerable, if uncertain, slack, monetary policy remains exceptionally stimulative. Recall that the recent  BIS central bankers’ speeches  1  decision of the Federal Reserve to begin tapering asset purchases meant only slowing the rate of additional stimulus. And that the 7% unemployment rate in the UK is merely the point at which the MPC begins to even think about adjusting policy. The key question for central banks is the expected evolution of the supply side of their economies. This is unusually uncertain at present. We know that our economies are operating well below their, admittedly unsustainable, pre-crisis trends, but we don’t know how much capacity was destroyed following the crisis. We know that depressed business investment is limiting productivity growth in the short term, but we don’t know to what extent and whether such shortfalls can be caught up. From a longer perspective, we know that total factor productivity growth has slowed over the past decade, but given the incredible flourishing of innovation, we don’t know whether this is due to lags, measurement errors or more fundamental factors. Statistical trend measures of labour productivity growth suggest it has slowed in the United States, the euro area (both core and periphery), the UK and even Korea.

On the other hand, the European Banking Authority (EBA) has demanded a capital increase of the system’s major banks. Finally, US dollar financing pressure persists in some major banks. This has resulted in more stringent credit conditions, which may continue and have a profound impact particularly on small and medium-sized businesses and, eventually, on some countries’ foreign trade. 2  BIS central bankers’ speeches  The situation of the Eurozone is complex and we cannot rule out as a possible risk scenario a disorderly default of peripheral economies, due to the challenging debt maturity profile they face. This high risk scenario is, however, less likely that at the end of last year. The US economic data of the last months have been a pleasant surprise. The labor market and households’ expenditure seem to have behaved better than forecast. Although, the difficulties that persist in the labor market and the fiscal adjustments that are needed explain the continuing doubts as to how true and sustainable the recovery we are currently witnessing is. In spite of the more positive indicators, the Fed authorities extended from 2013 to 2014 the period in which it expects to keep interest rate at minimum levels. Certainly, the problem of fiscal indebtedness continues. In emerging countries the data are diverse. Over the course of the second half of 2011 we witnessed a generalized deterioration of consumer and business expectations. Neither case can be compared to what happened between late 2008 and the beginning of 2009. Generally, the data show a deceleration of activity.
It soon grew into a regional, and in time global, network offering financial, housing, training and social support, to both men and women, cushioning the recessionary hit to societies. And that remains its role today. The story, then, is of a social infrastructure emerging to support workers and societies buffeted by technological change. These institutions aimed either to reduce the length or to limit the costs of adjustment by displaced workers. By enhancing skills and mitigating hardships, the incidence and cost of recessionary adjustment was reduced, for individuals and societies. And this, ultimately, was the difference between the living standards escalator of the Golden Era and the travellator of its Malthusian predecessor. Joseph Schumpeter spoke powerfully about the forces of “creative destruction”. 42  The lesson of history  seems to be that we need both to “cultivate the creative” and to “disarm the destructive” if innovation is to translate into rising levels of social, human and infrastructural capital and, then, higher living standards. It is only by establishing strong institutional roots that technological fruit can subsequently be harvested. Future Growth and Future Institutions  From the past and present to the future. What lies in store for future economic growth? It is difficult to know with any confidence. But if history is any guide, the story of growth will hinge on the interplay between the two “i”s – the disruptive forces of innovation on the one hand, the stabilising role of institutions on the other.

With reference to the question above, I can tell you that there have been several reasons to begin with these three countries, but the main reason for which we compare today the present situation in Sweden, Turkey and Romania is due to the diligent and assiduous activity of the Ambassadors of these two countries in Bucharest. Then, I would like to salute their presence here today: His Excellency Mr. Anders Bengtcén, Ambassador of the Kingdom of Sweden, and His Excellency Mr. Ömür Şölendil, Ambassador of the Republic of Turkey and to particularly extend my gratitude to them and to all the persons involved in the materialization of this conference. I also thank Mr. Klas Eklund, Senior Economist at the Swedish Bank SEB and Adjunct Professor of Economics at the Lund University and Mr. Çağri Memişoğlu, Deputy General Manager at Garanti Bank Romania. There are, of course, historical links between the three countries. I do take this opportunity to highlight a few of them. With the Republic of Turkey one could go back to the proclamation of the new state as a republic, last century, and even more, centuries of ties between the Romanian Principalities and the Ottoman Empire. I also like to notice the connection between our two central banks. In the National Bank of Romania’s archives there are letters, exchanged between Governor Mitiță Constantinescu and Governor Salâhattin Çam, regarding the organization of a conference for the governors of the central banks in the Balkanic Coalition, in November 1937, in Ankara.
On the one hand, the Bank of England is required set interest rates so as ‘to maintain price stability and subject to that to support the economic policy of HM Government, including its objectives for growth and employment’. On the other, the Government is required to specify what its economic objectives are, including what is meant by price stability. The remit of the Monetary Policy Committee (MPC) must be set out in writing at least annually and it must be published. The remit has always had important elements of flexibility. For example, while the MPC is directed to aim for the target ‘at all times’ and to treat deviations from target symmetrically, it is not expected to react mechanically. Instead, if inflation deviates from target by more than 1%, the Governor is required to write to the Chancellor explaining the circumstances and setting out what action the MPC considers necessary to return to target. No letter has been written so far, but only because circumstances have not warranted it. There is an explicit understanding that operational independence must be accompanied by transparency and clear accountability to Parliament and the general public as well as to Government. The Bank’s forecasts are published in the quarterly Inflation Report, the minutes of MPC meetings are published within two weeks, and the nine members of the MPC appear regularly in front of Parliamentary committees as well undertaking between them some 50-60 regional visits a year to different parts of the UK.

Rachel Lomax: Inflation targeting - achievement and challenges Speech by Ms Rachel Lomax,1 Deputy Governor of the Bank of England, to the Bristol Society at the University of the West of England, Bristol, 18 February 2004. *  *  *  Ladies and Gentlemen, it is a great pleasure to be here in Bristol tonight. Bristol and the Bank go back a long way. Our Agent in the South West, the late Michael Knight, was a founder member of this Society. And nearly two centuries ago - in 1827 to be exact - Bristol was one of the first branches that the bank established outside London. Not that it was plain sailing. The Bank’s first Agent in Bristol, Mr John May, resigned after only a few years complaining of the unhealthy situation of the branch premises, situated as they were next to the City Poor House and a pool of stagnant water, at risk of cholera and - this was the time of the great Reform Bill - riots and fire. By these standards, our present Agent, Kevin Butler, has no grounds for complaint. My subject tonight is a more recent episode in our economic history: the improvement in economic performance associated with the adoption of inflation targets just over a decade ago. I’ll look first at why this approach to monetary policy seems to work, and then consider what challenges remain for policy makers.
If bonds are highly substitutable (as might be in the case of UST and JGB) then if Japan were to stop buying US debt instruments the effect on US rates would be minimal. PBoC cannot stop buying foreign debt instruments as it would imply very big appreciation of renminbi, it can change the currency structure of its reserve holdings. This would force a change in composition of debt in hands of private investors and the impact on US rate would be small again. •  in the scenario of rapid adjustment of US current account deficit, for example following sizeable Asian currencies appreciation, current account surpluses in EM would have to correct massively, some countries may find that their current account surpluses are smaller than debt amortizations, and history shows that in 18 percent of cases sudden stops in emerging markets took place under current account surpluses. •  Calvo view implies very low risk of US long term rates going up (high likelihood of soft landing, low likelihood of hard landing), and relatively high risk of some emerging markets experiencing sharp current account reversals and possibly sudden stops. •  Calvo view is reinforced in the recent paper by Faruqee, Laxton, Muir, Presenti (2006) 18 , which shows that even when a new wave of protectionism hits the global economy, the US growth will slow only marginally by 0.2 percent, while impact on Asia could be sizeable, reducing growth by more than 1 percent.

This pragmatic view is consistent with the idea that monetary policy decisions should be based not only on the most likely scenarios but also on other, less probable ones which, however, may have far-reaching implications  2  BIS Review 53/2006  for the entire system should they materialise. Certainly, an abrupt asset price correction pertains to this class of low-probability event that may ultimately entail significant costs for a country’s welfare. More importantly, to place this approach to monetary policy in its right place, it is critical to recognise that some of the risks inherent in the financial sphere should first be the subject of an appropriate prudential framework. It is no exaggeration to say that any concern about unbalanced market developments is, at core, a concern about a problem of inappropriate risk management. This statement applies to the case in which, due to over-optimism or short-sighted behaviour, market participants fail to appreciate the true risk of their investment or lending strategies. Yet even if their behaviour can be thought as being fully rational from an individual perspective, nothing ensures that the final outcome will not convey important risks at a systemic level that are not properly internalised by single agents. As a result, a portion of the marked volatility and procyclicality of some key financial variables, like asset prices and credit, may be understood as a reflection of individual and collective risk misjudgement.
Mojmír Hampl: The euro – the case of the European monetary integration project and its former hegemon Speech by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, at the Mont Pelerin Society Annual Conference, Prague, 4 September 2012. *  *  *  Many thanks to the organizers for their kind invitation – I’m really honoured to speak on such a distinguished panel. But excuse me first for making a small detour: the organizers forgot to mention in my CV that I also had the honour – together with a group of distinguished colleagues (some of whom are here today) – to help launch Laissez Faire here 14 years ago. This is a magazine devoted to the promotion of liberal/libertarian ideas in the Czech public domain (“liberal” not in the American sense of this word). Such libertarianism is rather unusual intellectual equipment for a poor central banker, especially in the current times. However, I very much believe it is an advantage, and many of the ideas mentioned in Laissez Faire are very much missing from normal European policy debates. What a shame. But back to the topic: What is the euro? As Barry Eichengreen demonstrated, it is a really unique animal, a unique monetary arrangement. I do not buy into many of Barry Eichengreen’s ideas, but I do agree with this particular statement. Why? Here is my definition of the euro.

Unemployment has been close to a low historical average. Although it is of course difficult to compare and assess different central banks’ deliberations, the repo-rate decisions in Sweden during most of 2013 would appear to be one of the clearest examples of a monetary policy that leaned against the wind. When the prospects for inflation fell, the repo rate was held unchanged with explicit reference to household debt. This makes it interesting both for us in Sweden and for central banks in other countries to assess how successful the policy has been. It is far too early to make a complete assessment. But as there is a substantial need to manage financial imbalances in some countries, and there is a discussion on the role of monetary policy in this context, it may nevertheless be useful to make a preliminary assessment of the policy. Swedish inflation moving further from the target CPIF inflation was around 2 per cent in 2010, when the increases in the repo rate began after the record-high cuts in connection with the global financial crisis. But since then inflation has fallen and CPIF inflation has been around 1 per cent for a couple of years. Last autumn, inflation fell further. It is now very low; in February CPI inflation was –0.2 per cent and CPIF inflation was +0.4 per cent.
The less sloped straight line is an iso-loss line that corresponds to equal weight on inflation and output-gap stabilization, that is to a “lambda” equal to one. 4 With such equal weight, the high policy-rate path is preferred. The steeper straight line corresponds to lambda equal to 0.3, that is, with a weight on output-gap stabilization equal to 0.3 relative to the weight on inflation stabilization. With such a weight, the main policy-rate path is about as good as the higher and clearly better than the lower policy-rate path. At the time, Norges Bank had announced that its decisions were consistent with a relative weight on output-gap stabilization equal to 0.3 and a relative weight on interest-rate smoothing of 0.2 (Bergo 2007 and Holmsen, Qvigstad, and Røisland 2007). With some weight also on interest-rate smoothing, the main policy rate is best. The use of the mean squared gaps is one more step towards more systematic and transparent inflation targeting, in which central banks can be evaluated and held responsible for their decisions with even greater accuracy than before, following the introduction of numerical inflation targets, published forecasts of inflation and the real economy, published policy-rate paths and other important steps taken in the development of a systematic and transparent monetary policy. References Adrian, Tobias, and Hyun Song Shin (2010a), “Financial Intermediaries and Monetary Economics,” in Friedman, Benjamin M., and Michael Woodford (eds. ), Handbook of Monetary Economics, Volume 3, Elsevier, forthcoming.

However, let us suppose that the appropriate and effective instruments for ensuring financial stability are not available, for instance because of serious problems with the regulatory and supervisory framework that cannot be remedied in the short run. In such a second-best situation, if there is a threat to financial stability, one may argue that, to the extent that policy rates do have an impact on financial stability, this impact should be taken into consideration when choosing the policy-rate path to best stabilise inflation and resource utilisation. Such considerations could result in a lower or higher policy-rate path than otherwise, in order to trade off less effective stabilisation of inflation and resource utilisation for more financial stability. 2 To the best of my knowledge, the evidence so far indicates that in normal times such a trade-off is very unfavourable, in the sense that the impact of policy rates on financial stability is quite small and the impact on inflation and resource utilisation is significantly greater. Then, in normal times an optimal trade-off would still result in policy rates directed towards stabilizing inflation and resource utilization with little impact on financial stability. In particular, it seems clear that monetary policy should not be used to target housing prices. A considerable amount of research has concluded that policy rates have a modest impact on housing prices but a substantial impact on output, implying high real costs for using the policy rate for this purpose (Assenmacher-Wesche and Gerlach 2010).
Jean-Pierre Danthine: Market developments, Swiss monetary policy and foreign exchange reserve management Introductory remarks by Mr Jean-Pierre Danthine, Member of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 16 June 2011. *  *  *  In my remarks, I would like to examine three topics. First, I will comment on developments in the international financial markets. Then I will briefly address the situation in the Swiss franc money market and the implementation of monetary policy. Finally, I will talk about the management of the foreign exchange reserves. Developments in the international financial markets Developments in the international bond, share and foreign exchange markets are mixed and, as before, characterised by relatively high volatility. The relatively favourable global economic developments and the fact that the balance sheets and the liquidity situation of corporations outside the financial industry are in relatively good – in some cases very good – shape are having a positive effect. By contrast, the balance sheets of many governments reflect the consequences of crisis measures and increasing structural debt problems. Thus, in recent quarters, the financial markets have presented a mixed picture. Signs of an improvement in the prevailing mood have been followed by setbacks attributable to the serious impending challenges. At the beginning of the financial crisis, these were mainly concentrated in corporations’ balance sheets. Since then, the market has increasingly shifted its focus towards the risks associated with government debt.

Andréa M Maechler: Developments on the financial markets and Swiss National Bank’s experience with negative interest in Switzerland Introductory remarks by Ms Andréa M Maechler, Member of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 16 June 2016. *  *  *  I will begin with a review of developments on the financial markets, before commenting on our experience of negative interest in Switzerland. I shall conclude with some remarks about important innovations affecting financial market infrastructure relevant to the SNB. Situation on financial markets Let me start with developments on the financial markets. Risk sentiment deteriorated markedly at the beginning of 2016 due to weak economic data worldwide and a sharp decline in oil prices. Volatility increased temporarily during this period, leading to significant losses on the equity markets (slide 1). In mid-February, investors’ risk appetite returned for a time, thanks to a stabilisation of oil prices and, in particular, improved economic data in the US, China and the euro area. However, by the beginning of June, investor confidence had once again come under pressure due to concerns about a possible exit of the UK from the EU. With the exception of the US and the emerging markets, the major share indices are trading significantly lower than at the beginning of the year. This turbulence caused many market participants to seek refuge in safe investments. Yields declined substantially on the major government bond markets.
These three elements - independence of the ratings process, internal review of those ratings, and transparency - all contribute toward stronger controls over the ratings process. Such controls over the risk ratings process must be complemented by the collection of good data on which to base those ratings, which is the third area of focus for banks. c.  Data requirements and validation  Clearly, a system is only as good as the inputs that go into it. Accordingly, banks using the IRB approach will need to be able to measure the key statistical drivers of credit risk. I would emphasize that the Basel Committee clearly recognizes that there is more than one way to accomplish this purpose. The minimum Basel standards provide banks with the flexibility to rely on data derived from experience, or from external sources, as long as the bank can demonstrate the relevance of the external data to its own exposures. Regardless of source, high quality data are critical for formulating meaningful internal risk assessments. From a broader risk management perspective, access to such  BIS Review 15/2003  3  data will enable a bank to evaluate the performance of its internal rating and risk estimation systems in a consistent and meaningful manner. The Basel standards outline the data history banks will need in order to use the IRB approach. The Committee recognizes that banks may not currently have all of the required information on hand.

For this reason we have continued to engage market participants in a dialogue on this issue. As implementation of the New Accord approaches, we encourage banks to consider their data needs very seriously and to comprehend fully the techniques they will need to use to derive appropriate estimates of loss based on those data. In practical terms, banks will be expected to have in place - or be actively developing - a data "warehouse". By data warehouse, I mean a process that enables a bank to collect, to store, and to draw upon loss statistics in an efficient manner over time. d.  Corporate governance  The design, controls, and data that figure into a risk rating system must all be developed within the framework of good overall corporate governance, which is the fourth area of focus for banks that I’ll mention today. The involvement of senior management and directors will be critical to the successful implementation of the New Accord. This will be particularly true for those banks seeking to adopt the more advanced approaches to calculating regulatory capital. As a bank’s capital requirements draw increasingly on firm-specific performance and systems, there will be a need for its board of directors and senior management to gain a deeper understanding of the conceptual underpinnings, and even operational mechanics, of a bank’s internal rating systems and the measures of risk derived from them.