samchain/econo-pairs-v1 huggingface dataset:
The domestic drivers of inflation, namely wages, are not yet responding to the recovery and the narrowing output gap. Maintaining the current very substantial degree of monetary accommodation is still needed for underlying inflation pressures to build up and support headline inflation in the medium term. However, beyond the contribution of monetary policy, we also need measures to address the legacy of the crisis, lift potential growth and upgrade our economic ecosystem to increase 3/5  BIS central bankers' speeches  resilience to future shocks. This requires action at the Member State level. Ambitious, country-specific, structural reforms are needed to raise productivity, make economies more resilient, and address persistent fragilities, including those inherited from the crisis. And Member States need to pursue prudent fiscal policies to build up buffers for difficult times. National parliaments can play a central role in supporting such efforts. Our accommodative monetary policy provides a window of opportunity for pursuing such policies, for example by alleviating some of the short-run costs of structural reforms and allowing their benefits to materialise faster2. Action at the European level is also required. The crisis has revealed significant fragilities not only at Member State level, but also in the economic governance of Economic and Monetary Union. Some of the fragilities could be addressed already by applying the common rules we have all agreed on. Others, however, need to be addressed by upgrading our governance. How? Banking union needs to be completed by making parallel progress on risk reduction and risk sharing.

Thank you very much. BIS Review 38/2005  5
The need to form as up-to-date and reliable a picture of the current state of the economy as possible means that the MPC makes extensive use of business surveys alongside the official data. That includes not only the quarterly Industrial Trends survey and its monthly sibling, but also the other, more recent, CBI surveys, such as those covering the distributive trades and service sectors. The various surveys carried out by other organisations, such as the Chartered Institute of Purchasing Supply and the British Chambers of Commerce, are also valuable sources of information for us. Moreover, we have our own network of 12 regional agencies, whose role is to collect intelligence as to what is happening on the ground. Collectively, our regional Agents have about 8000 business contacts and they represent an important additional source of timely information for us. The uses of the survey data are varied. First, different indicators more often than not seem to tell different stories and we need to figure out which is the right one. For instance, at the current juncture, there is a marked discrepancy between the official data on the volume of retail spending, which points to considerable robustness this year – including whopping growth of 3.6% in May alone, though that was fully reversed in today’s release for June – and the Distributive Trades survey, which suggests significant weakness (see Chart 2).

BIS Review 95/2008  5  I hope that this gives you a sense of the use we make of business surveys, and business intelligence more generally, in making our regular assessment of the state of the economy each month, before taking our decision on the appropriate level of Bank Rate. The timeliness of this information is particularly important at the current juncture, when the economic climate is changing rapidly. The global and UK economies have been subject to two large shocks of uncertain magnitude, duration and impact. The first is the continuing de-leveraging in the banking system and the attendant squeeze on the terms and availability of credit. The second is the fairly relentless rise in commodity prices, especially that of oil, driven in part by the robust growth in demand in the emerging economies. These two shocks both depress output growth, though they have divergent effects on inflation. In our May Inflation Report, our central expectation was for four-quarter GDP growth to slow markedly through this year, reflecting both subdued real income growth and tighter credit supply (see Chart 7, which also includes the same backcast information as Chart 6). It was then expected to gradually recover through 2009 as credit conditions slowly improved. The corresponding projection for CPI inflation is shown in Chart 8 (note that no uncertainty is shown for the past, as the data for CPI inflation are rarely revised).
It was against this background that we announced the Outright Monetary Transactions (OMTs). Like all our monetary policy measures, it has served to ensure compliance with our price stability mandate as provided for in the Treaty. 2  BIS central bankers’ speeches  And it builds on an established monetary policy doctrine that has gained prominence not least because it has been successfully pursued by the Bundesbank for several decades. Namely that the central bank should be endowed with a clear price stability mandate and, within this mandate, should be allowed – in fact obliged – to use its instruments in full independence to deliver price stability. Combining a clear mandate with strong independence in pursuing that mandate is particularly important when conducting a single monetary policy in EMU, which consists of 18 countries with heterogeneous economic structures and institutional landscapes. On the one hand, it allows us to flexibly tailor our policy measures to the specific monetary policy challenges that may arise in this multi-country context – most notably to tackle the financial fragmentation that has hampered monetary policy transmission during the crisis. On the other hand, it establishes a stable anchor for inflation expectations through our price stability objective. This approach of “constrained discretion” is what made the track record of the Bundesbank and then the ECB so successful. And this approach is further validated by the strong progress towards restoring the singleness of the euro area’s monetary policy observed since the announcement of the OMTs.

In particular, I would like to recognise the pivotal role played by the Asian Institute of Finance, the Asian Institute of Chartered Bankers, and the heads of the affiliate institutions, for their commitment and dedication in taking this ACE project forward as part of key infrastructure in skills and professional development and standards in the financial services industry. It is a significant milestone in transforming the financial education landscape for the financial services industry. 2  BIS central bankers’ speeches
However, in the long run monetary policy cannot influence overall employment or its distribution across industries. A lower interest rate would have resulted in higher price and cost inflation, which would also have weakened profitability in the manufacturing sector. The end result would have been the same for employment and production, but in addition we would have had to face the costs of high inflation. Even if employment and production in manufacturing are affected, the situation for Norwegian enterprises will not necessarily be negative. Some enterprises could be at the forefront of technological developments and increase efficiency in pace with the relatively high rate of growth in real wages in Norway. In recent years, we have also seen that many enterprises have moved large portions of their production abroad, particularly the most labour-intensive production. Norwegian manufacturing companies could therefore remain profitable even if the size of the manufacturing sector in the Norwegian economy is reduced. However, the scaling back of manufacturing also involves a risk. It makes the economy more vulnerable. The growth potential of the economy – the basis for learning, innovation and development – may be impaired when less of the business sector is exposed to intense foreign competition. Over the last thirty years, manufacturing industry has been scaled back in waves. The sharpest declines were observed in the years between 1977 and 1984 and from 1987 to 1992. The declines were preceded by a fall in profitability in this industry.

Wage moderation is a key factor in favouring the expansion of employment and in helping to create the conditions for a sustainable increase in the potential growth rate of the euro area economy. Current estimates for trend potential growth in the euro area are in the order of 2-2½%. There is much scope for raising potential growth in the euro area. The ECB will make its contribution by focusing on maintaining price stability in the medium term. But other policy actors also have to take up their responsibilities. The Broad Economic Policy Guidelines for 2002, which have just been approved in Seville, place the emphasis quite rightly on the need for further structural reforms in the euro area. I understand that this view is also shared in the draft resolution. The future welfare of euro area citizens will also depend to a large extent on the prudent conduct of fiscal policies. The solidarity pact of our monetary union requires all participants to maintain a mediumterm perspective in compliance with the framework of the Stability and Growth Pact. This implies that budgetary positions in all countries should be close to balance or in surplus over the business cycle as a whole in order to allow sufficient room for a smooth functioning of automatic stabilisers. We have seen some worrying developments in fiscal policy in some countries over the last few months.
In the aftermath of the BCCI closure, which affected many countries, the BCBS produced a paper in 1992 on the difficulties confronted. 10 Arguably, the authorities pulled their punches slightly. But, in any case, so far as I can tell, nothing was done outside of Europe, where insolvency law for banks was adapted. In particular, the EU  8  George Blunden chaired the Basel Committee when the original document was produced; and Peter Cooke did so in the 1980s. 9  In a single-entity insolvency regime, the home country authorities would seek to apply a single main insolvency proceeding to a bank incorporated in their jurisdiction and to all its branches in other countries. This is sometimes referred to as a universal approach to cross-border insolvency. This contrasts with a separateentity insolvency regime, in which separate insolvency proceedings may be applied to the parent bank (by the home country) and its branches in other countries (by host countries); this constitutes a territorial approach to cross-border insolvency. 10  Basel Committee on Banking Supervision (1992). “The insolvency liquidation of a multinational bank”, Bank for International Settlements.

But, of course, it would also entail lower risk for bank equity and bond investors, and surely it is risk-adjusted returns that matter. And it would also deliver lower risk to society more generally, which matters hugely. To be clear, we want banks and the financial sector more generally to thrive. The institution I come from believes in a market economy, in capitalism. The financial sector has played an enormous role in the development of modern economies. But a regime in which banks can thrive standing on your own feet would be a better market – for all of us. BIS Review 83/2009  9
I first made reference to the New Silk Road at the 2nd World Islamic Economic Forum (WIEF) on "Unleashing the Potential of Emerging Markets" in Islamabad, Pakistan in November 2006. It is my pleasure today to share some thoughts on the potential role of Islamic finance in strengthening the New Silk Road. My remarks will focus on four areas that is the emergence of the New Silk Road; how the linkages on the New Silk Road have built on the comparative advantages of Asia and the Middle East; how Islamic finance is able to foster the linkages along the New Silk Road; and finally, how we can extend the New Silk Road to the rest of the world to advance global economic stability and prosperity. The emergence of a New Silk Road Today, signs that a New Silk Road is flourishing are abundant. The economic and financial linkages between Asia and the Middle East are growing. While the world trade has on the average expanded by 10% over the period 2001-2005, Asia's trade with the Middle East has increased on the average by 24%. More than half of the exports from the Gulf states 1 goes to Asia and more than one-fifth of its imports are from Asia. The Gulf is the major supplier of fuel to Asia, while Asia in turn supplies manufactured goods and food to the Gulf. Recent trends in investment activities have been equally significant.

This mechanism which uses crude palm oil as the underlying commodity will facilitate Islamic financing applying the concept of murabahah or tawarruq. BNM commodity murabahah acceptance As part of these efforts to promote development of products to meet the diversified requirements of investors, Bank Negara Malaysia is pleased to announce the introduction of a new Islamic monetary instrument, Commodity Murabahah Programme (CMP) as part of its diverse range of policy instruments in managing the short-term liquidity in the Malaysian Islamic inter-bank money market. Unique to Malaysia is that the CMP is designed to be the first ever commodity-based transaction that utilises the Crude Palm Oil based contracts as its underlying asset. The Bank has executed CMP master agreements with the eight Islamic banking institutions including the three foreign owned banking institutions to promote the use of the instrument for liquidity management. Several CMP transactions have now been conducted between the Central Bank and the respective Islamic Banks. As commodity murabahah is widely used in other Islamic centres, it is envisaged that this CMP will promote increased linkages between Malaysia and these centres. BNM Sukuk Murabahah/tawaruq short-term securities The Central Bank also intends to diversify the issuance concept of the existing Islamic monetary notes from being based on Bai Inah and Ijarah into murabahah. Currently, the outstanding amount of the respective notes is RM 8 billion. This initiative is the continuation from the commodity murabahah acceptance initiative as the issuance involves the securitisation of the acceptance facility.
Today I intend to give my views on these issues. I shall concentrate on the role played by elevated asset prices and indebtedness with regard to developments in demand and thereby price stability. Let me begin with a brief summary of my speech: •  Many central banks are worried by rapidly growing house prices and lending over long periods of time. The historically very low interest rate levels could create unrealistically low expectations of interest rates in the future. However, it is difficult to determine whether this development actually increases the risks to demand and inflation and whether – and how – monetary policy can in this case take these factors into account. •  These risks cannot be captured by the traditional models and forecasting methods normally used by central banks, which means that opinions differ as to how the central banks should act. Should we react in advance to subdue possible negative effects, or should we wait until a possible correction takes place? •  My opinion is that we must make the best possible assessments and act in advance to try to prevent the risk of large corrections leading to significant falls in demand and to lower inflation further ahead. •  There are both cyclical and structural factors which could motivate high growth figures for loans and house prices in Sweden over a period of time.

The stock market upturn was probably pushed up initially by fundamentally motivated expectations of future profits and growth in the IT and telecom sector, but also by the fact that technology was generally considered to create the conditions for higher growth over a long period of time. However, there soon appears to have arisen a general over-optimism regarding the durability and strength of the expected future increases in income. Low interest rates as a result of low inflationary pressures contributed at the same time to an increase in companies’ and households’ indebtedness in many countries. Investment growth was high in many sectors. When the share bubble burst, it was followed by an economic downswing, where high indebtedness created a requirement for consolidation in the corporate sector. This led to demand for goods and services being subdued, together with an increase in precautionary saving in many households. To avoid a deep economic recession and a further decline in inflation, the central banks cut their policy rates from the already low levels. However, growth in investment and employment was a long time coming, as instead of new recruitment and expansion, companies chose to rationalise their production and achieve scope to reduce their debt ratios through lower costs and to meet the increased competition from low-cost countries. The low interest rates thus did not seem to have any immediate effect on consumption and investment, but gave further stimulation to household sector demand for housing and loans in many countries.
But additional equity capital is now very expensive and perhaps also difficult to procure. The alternative for banks may be to hold back on lending. If they do this on a large scale, it will have considerable negative effects on output and employment. It is understandable that  BIS Review 17/2009  1  credit growth is now slowing, both because demand for credit is lower and because fewer investments are profitable. But in addition, it appears that banks are applying stricter criteria in credit assessments and rationing credit. Norges Bank’s Survey of Bank Lending shows the banks’ own perception of this practice. The chart shows that over the past year banks have reported a tightening of credit standards. It appears that credit flows to households have improved somewhat, but banks are still tightening credit standards for corporate loans. An important lesson to be learned from this economic crisis is that compelling banks to increase their equity capital when the downturn has already started has a considerably negative impact. It is important that banks have sufficient capital to make them resilient even if the downturn should persist over a longer period. For this reason, we have proposed government capital injections in banks. The government bond fund will buy bank and corporate bonds. In Norges Bank’s view, it is particularly important helps to improve demand for corporate bonds. The fund shall primarily buy high quality bonds. The chart shows that it is on the whole borrowers with weaker ratings that are now being excluded.

After reducing the key rate to 1.75 per cent, we indicated that the uncertainty associated with previous monetary policy easing and the unusually low interest rate implied that we should be cautious with regard to further interest rate reductions. At the same time, the prospect of continued low inflation for a period ahead implied that wide deviations from projected economic developments would be required before the interest rate should be increased. Economic developments in the latter half of 2004 were broadly in line with expectations. The interest rate was left unchanged in line with our statements. We gradually experienced that the monetary policy easing was effective. The uncertainty diminished. The krone exchange rate The first signs of the effects of the interest rate cuts appeared in the foreign exchange market. The interest rate differential against other countries narrowed. It became more attractive to borrow and less profitable to invest in the Norwegian krone. The movement in the krone exchange rate was reversed and the krone depreciated through 2003 and into 2004. The depreciation of the krone contributed to restraining the fall in prices for imported goods. The effect occurred gradually. Higher prices for oil and gas and other exports goods - an improvement in the terms of trade - have increased Norway’s disposable income. This may fuel expectations of higher demand for goods and services in financial markets and lead to a deterioration in competitiveness in the bid for economic resources.
With the surge of the financial crisis, it also became very clear that macroprudential policy needed to complement both monetary policy and microprudential supervision. The European Systemic Risk Board (ESRB) and the European Supervisory Authorities were then established at the beginning of this decade. However, these reforms quickly proved to be insufficient to keep pace with adverse financial sector developments – especially concerning the role of the banking sector in the Monetary Union. In response, the banking union project was launched in the depths of the financial crisis in 2012. But convergence in regulatory and supervisory standards is not enough to spur the development and integration of capital markets that is needed for growth and private-risk sharing. Therefore, efforts in this direction were also undertaken, with the launch of the capital markets 1/9  BIS central bankers' speeches  union (CMU) initiative. In short, the history of EMU is marked by an evolving search for the right institutional embedding of financial markets. And in that search, Europe has to be agile to react to changing circumstances. In doing so it has to find a balance: between markets and regulation, between liability and control, and between the European and national level. However, the crucial question is whether we will achieve a sustainable financial integration that is commensurate with a single currency. Why financial integration is currently insufficient for EMU The crisis made it clear that deep financial integration is essential to prevent EMU going into reverse.

While I firmly believe it is up to history to judge as to whether I have been successful or not in discharging my responsibilities as Governor, I also believe that even at this late stage, it may be useful for those critics to reflect on the profile  BIS central bankers’ speeches  13  that John Exter had in mind for the position of Governor when drafting the MLA, and then perhaps consider, whether or not, I fitted the envisaged profile! In that background, I am inclined to believe that the education, training, and professional skills imparted by the Institute of Chartered Accountants of Sri Lanka, had a major role in my being appointed to this pivotal position as the Governor of the Central Bank of Sri Lanka. Therefore, please permit me to officially and publicly thank the Institute of Chartered Accountants of Sri Lanka for the tremendous impact that the Institute has had on my academic and professional career, in addition to the singular honour you bestowed on me this evening, by inviting me to deliver this prestigious Oration. Conclusion – running between the wickets! Mr. Chairman, let me now conclude, with a little story. About 6 months ago, a journalist friend asked me to explain the official relationship between the Governor and the Secretary, Treasury. In response, I gave him a long lecture for about half an hour, like what I have done today! While listening to me, I could see that he was quite restless, and somewhat bored.