samchain/econo-pairs-v1 huggingface dataset:
I am happy to report that this experience has been a successful one, particularly from the point of view of monetary autonomy. Indeed, the Basic Law has, since 1 July 1997, provided Hong Kong with far greater autonomy in its monetary and financial affairs, and this autonomy has been confirmed in practice by the clear confidence that the Central Government has placed in our ability to manage things on our own. I make this point, not because Macau needs any reassurance from Hong Kong, but because it is a striking illustration of how some of the deepest forebodings about future events can often be the product of the most dismal misjudgements. Two years ago, gloomy scenarios were being painted - not about an Asian financial crisis - but about the impending demise of Hong Kong’s monetary autonomy under Chinese rule: about the breaking of the link between the Hong Kong dollar and the U.S. dollar, the absorption of Hong Kong’s substantial foreign reserves by the Mainland, and so on. Of course, nothing of the kind has happened, and there may well be lessons here to apply to some of the more lurid scenarios that are being drawn up for the first of January 2000. Our topic this morning, however, is not the Year 2000 problem, but the perennial question of how to devise sustainable and realistic monetary and exchange rate policies in an uncertain global financial environment.

Putting all of the responsibility on monetary policy would probably mean such high interest rates that they would have seriously negative repercussions for the real economy. Moreover, the argument remains that it is difficult to determine when a credit boom changes from being beneficial for growth to becoming a risk that can trigger a financial crisis. I nevertheless think that the crisis has taught us that when we conduct monetary policy we must also follow a number of variables that are linked to the build-up of risk in the financial markets, primarily credit growth in different sectors of the economy. The fact that monetary policy alone cannot prevent financial crises does not mean that we can only look at an inflation target and otherwise disregard what a long period of low interest rates may entail with regard to risks in the financial system. This is also the view the Riksbank has expressed  BIS Review 149/2008  5  in recent years, occasionally, one must say under strong criticism from both academics and various other parties in society. Monetary policy can alleviate the consequences of the financial crisis The financial crisis has meant that the focus normally placed on monetary policy has been transferred to the measures taken to safeguard financial stability. Monetary policy cannot be used to resolve acute problems in the financial markets. This requires a different type of measure, as I have already described. What role can monetary policy then play in the current situation?
But, as the paper by Fischer, Lenza, Pill and Prof. Reichlin demonstrates, the careful analysis of monetary developments in real time has helped the ECB to shape its assessment of the economic situation and the associated risks to price stability and to better identify the nature of the shocks impacting on the euro area economy. As I already said I can bear testimony that, over the past eight years, monetary analysis has helped the ECB to improve its policy decisions. At the same time, the importance attached to the monetary pillar has also signalled that the ECB’s monetary policy has an appropriate medium-term orientation. I strongly believe that this has contributed to shaping agents’ expectations in a manner which enhanced the credibility of the ECB. In this context, the third issue raised by Jürgen – namely how monetary analysis should be presented to the public – is crucial. Presenting the monetary analysis in a manner that serves to stabilise private sector long-term inflation expectations by clearly signalling the ECB’s alertness with respect to risks to price stability at longer horizons is key. Thus, it is particularly important that markets and the public at large have a good understanding of the systematic and conditional conduct of monetary policy by the central bank, so that expectations about future price developments and the path of policy rates are in line with the central bank’s mandate.

It is important that we divide the tasks related to non-performing loans into two – reducing the current level of nonperforming loans, and preventing new loans of this kind. As for the preparations for the entry into force of the new International Financial Reporting Standard No. 9, we have just aggregated the data received from you. I think, as a whole, the sector is ready for its implementation, but more work is to be done, especially in some banks. What I am trying to say is that this is not a one-off act; it is rather a process we are going to work on. And now a few words about the Law on Payment Services and Payment Systems, which will come into effect from the beginning of 2018. It sets higher standards and requirements for banks concerning the security of payment operations, including those made via Internet or through other IT devices. We expect that the new law would reduce the number of disputes between providers and users of payment services, as well as the number of cases where the BNB should get involved directly. Please allow me to thank you and to once again congratulate you on this year’s very good results. I wish you joyful celebrations, a happy Banker’s Day, and very happy Christmas and New Year, as well as good health and success in the New Year! Thank you for your attention. 2/2  BIS central bankers' speeches
I hesitate to put precise numbers on costs, because they do vary quite considerably. However, as Bank of England research which is to be presented later to this conference indicates, both the fiscal and welfare costs on all the measures used are very significant indeed. On some measures, in fact, the output costs of banking crises in developed countries tend to be higher than in emerging markets, largely because the length of crises is longer in developed countries. Overall, therefore, in the light of past experience, I think we would be taking an unjustified risk if we deliberately set out to lower the existing regulatory demand for capital. Crisis management and payments Standstills: I want to turn now from crisis prevention to crisis resolution and from domestic banking to more general international liquidity crises. While the banking system was a source of instability in many countries during the Asian crisis, a more immediate problem was the liquidity crisis triggered by the sudden outflow of capital from the region. It is the free movement of capital that I would like to discuss and, in such a regime, the need for arrangements that would deal with a liquidity crisis where developing countries get into payment difficulties. The international capital market Global capital flows have exploded since the 1970s. Between 1970 and 1996, real GDP in the G7 economies more than doubled. Over the same period, world trade volumes rose by roughly twice this amount.

But the official sector could possibly mitigate their cost by establishing a coherent framework for crisis management, with payment suspensions as one of the tools. None of this is at all to suggest that the issue of standstills - in or outside the Bank of England - is fully articulated and concluded. It is a difficult area requiring contributions from all sides and the  BIS Review 70/2000  8  intellectual argument is ongoing. Finding the right balance between rules and discretion, in this area as in so many, remains a key issue for policymakers. There is work to be done on the modalities of how standstills might operate in different crisis cases. What is the role of the IMF in the standstill process? Does the process need to be underpinned by statute or would non-statutory principles suffice? And when might a standstill require capital controls to guard against leakage? The Bank is currently working on some of these issues, practical and conceptual. I would encourage those among you with an interest in international public policy to help us in addressing them, joining the growing number of, in particular, US academics who are exploring this topic. It is very much a live debate and I have no doubt these issue will be discussed at length, at and around the World Bank and IMF Annual Meetings in Prague later this month. Conclusion I have now talked myself - quite literally - to a standstill.
2  It can be demonstrated that an incentive arises for the central bank to deviate from the unchanged repo rate as time passes and the forecast horizon is moved ahead, even if the forecast was initially on target two years ahead and no new information has been received. For a more in-depth discussion of this time inconsistency problem, see for example Kai Leitemo, “Targeting Inflation by Constant-Interest-Rate Forecasts”, Journal of Money, Credit and Banking 35, August 2003. 2  BIS Review 68/2010  Today, our reasoning is somewhat different. We attempt to determine a forecast path for the future repo rate that entails that monetary policy is, as we often put it, well-balanced. A wellbalanced monetary policy is normally a matter of finding an appropriate balance between stabilising inflation around the inflation target and stabilising the real economy, that is to say, production and employment. One way of illustrating this balance is to say that the deviations arising during the forecast period between, on one hand, inflation and the inflation target, and, on the other, the real economy and a trend, may not become altogether too great (Figure 2). As a measure of deviations in the real economy, the output gap is often used – that is to say, the difference between actual production and the economy’s long-term production capacity or potential output. Figure 2 Well-balanced monetary policy  Repo rate  Inflation  Output gap  That the Riksbank does not only care about inflation, but also about the real economy, is nothing new.

Retail sales in November and December posted a slight decline compared with the corresponding period of 1995. Activity in the construction sector fell back in the fourth quarter and posted a sharp twelve-month drop. Employment levels varied little in industry, with the exception of the automobile sector, where they posted a further substantial decline. They remained stable in the market services and retail sectors, but fell sharply in the building industry. BIS Review 4/1997
Consequently, trading tends to occur infrequently and largely on a bilateral basis. Through the prism of these two asset classes, I hope to provide some preliminary answers to five key questions. First, what do we mean by liquidity and how can we measure it? Second, what does the available evidence show in terms of how liquidity has changed in recent years in the U.S. Treasury and corporate bond markets? Third, what factors could influence liquidity provision? Regulation might be one factor, but there also could be others. Fourth, what are the costs associated with shifts in liquidity and how do these costs compare to the benefits of a more resilient and robust financial system? Fifth, what future work is needed to better assess whether increased regulation has damaged liquidity provision and whether the resulting costs exceed the benefits of higher capital and liquidity standards in terms of financial stability? As always, what I have to say today represents my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System. 1 What do we mean by liquidity and how can we measure it? I would define liquidity as the cost – both in expense and in time – of buying or selling an asset for cash.

4  BIS Review 56/2008  •  New capital regulations based on the Basel I model were implemented. In the new regulation there was a more appropriate relationship between loans granted (risks) and capital, instead of deposits and capital. •  Banco de España was empowered to issue accounting regulations for banks. It duly laid down new prudent accounting rules, in particular regarding loan classification and loan loss provisioning. Since then, the authority to establish accounting standards for banks has proven to be one of the most powerful tools at our disposal. •  Supervisory reporting was established. This is an essential element of supervision which allows for proper monitoring of the situation of banks. •  The Central Credit Register was introduced in the sixties, with all credit institutions required to report regularly to it. This database is exploited for supervisory purposes and will play an important role in Basel II supervision. It can also be used by the banks for credit risk management purposes. •  Since the seventies Spanish banking supervision has paid particular attention to obtaining "first-hand" on-site assessments of developments, to complement its continuous and close monitoring of every institution. •  The growth of the financial markets called for more transparency and better regulation of external auditing. A new law was passed making the external audit of the annual accounts compulsory for every company above a certain size, and for all financial institutions regardless of their size.
Thus, the impact of the pandemic on domestic demand was less pronounced. Despite relatively successful public health measures, the large share of tourism services in Iceland’s GDP made the economy quite vulnerable to the economic consequences of global restrictions on travel and tourism services. In 2019 tourism and tourism-related services amounted to about 8% of Iceland’s GDP, a proportion second only to that of Portugal and Spain in the OECD. Reflecting the weight of tourism in exports, Iceland’s exports contracted by 31%, more than in any other OECD country, and service exports shrank by 54% in the wake of restrictive measures taken by all major trading partners. Other tourism-dependent countries such as Greece, Spain and Portugal also suffered severe export shocks. The weight of tourism and the effects of COVID on exports  In 2020, economic activity in Iceland contracted by 7.2%, compared to 4.9% on average in main trading partner countries. The difference may appear smaller than expected given the size of the shock to exports. As a small open economy, Iceland imports a large share of consumer durables, investment goods and tourism services. Therefore, a considerably larger share of shocks to aggregate demand tends to be absorbed by the external sector than in larger, more self-contained advanced economies.

The output gap moved to positive territory earlier that in most OECD countries  Wage growth in Iceland averaged above 7% during the pandemic, a somewhat faster pace than over the preceding decade and much faster than in main trading partner countries. Recently, short-term wage settlements have been concluded that imply that the fast pace of wage growth will continue at least for the coming year. Wage and ULC growth in Iceland has been much faster than among peers  This is worrisome for medium-term inflation prospects, since the buffers that existed in the decade prior to the pandemic, and allowed faster wage growth for several years without commensurate inflationary consequences, have been depleted. The depressed level of relative unit labour costs following the GFC, fast expansion of tourism services exports in 2015 - 2017 and a current account surplus had allowed the króna to appreciate, with moderating impact on inflation. As the buffers are depleted, the relationship between wage growth and inflation is likely to be much less benign in the period ahead than during the pre-pandemic period. The fiscal and monetary dimension of the response to pandemic and war Three factors are likely to have determined the fiscal and monetary response of different countries to the pandemic: i) fiscal and monetary space at the outset, ii) the severity of the outbreak and iii) structural factors that affected the economic impact of the outbreak and restrictions imposed to contain it. On the first two accounts, Iceland was in a relatively good position.
Bank of Albania will take all necessary actions to ensure an inflation rate of 3 per cent with a tolerance band of ± 1 percent, in the short and long run. Interest rates During the recent years interest rates have dropped reflecting the ease of monetary policy. This has been a general trend for all financial assets either in Lek or foreign currency. On average banking system applies 9.7 percent for loans in domestic currency. The yield of 12 month Government securities dropped at a minimum of 5.74 percent in June 2006. However, following the last decision of the Bank of Albania and latest trends in global markets, a modest increase in interest rates has been observed during the last three months for both domestic and foreign financial instruments. We expect this trend to persist within the next 6-12 months. Banking system The Albanian banking system continues to expand. It is solid, consolidated and fully capitalized. The system consists of 17 banks, of which only 3 are entirely domestically owned. Banking network has been extended continuously including remote areas. Banking products increased in number and improved in quality. Entrance in the market of important European financial groups created a better competitive environment and further enhanced efficiency. The expansion of lending portfolio and more competitive lending rates has deepened financial intermediation. Latest data show that in June 2006, the assets of the banking sector reached 60 per cent of the Albanian Gross Domestic Product (GDP).

As a minimum, an economic model to be used as support for interest rate decisions should be based on the assumption that monetary policy can steer inflation. Economic agents can be expected to look ahead when making consumption and investment decisions. It is not only current economic policy that is likely to matter to them, but also what they expect it will be in the future. Expectations must therefore be incorporated and play a role in a monetary policy model. Furthermore, the functioning of monetary policy should be in line with theory and experience. For example, Norway’s recent history tells us that there is little likelihood that monetary policy will be able to influence the economy’s long-term growth potential. Chart: Growth and inflation Many economists previously argued that unemployment could be reduced by accepting slightly higher inflation over time. Monetary policy was oriented accordingly and inflation  2  Factor models, indicator models and VAR models. For a detailed discussion, see Aastveit, K.A, K. Gerdrup, A.S. Jore (2011) “Short-term forecasting of GDP and inflation in real time: Norges Bank’s system for averaging models”, Staff Memo 9/2011, Norges Bank. 2  BIS central bankers’ speeches  accelerated in many countries, without a sustained decline in unemployment. It turned out that bringing rising inflation under control involved substantial real economic costs. In the past 20 years, inflation has been consistently low and stable.
At the same time, this will be the best contribution the euro area can make in terms of promoting strong, sustainable and balanced growth in the world. The cyclical recovery in the euro area is largely supported by developments in private consumption, and more recently also investment. Real GDP rose by 0.3%, quarter on quarter, in the second half of last year. Recent data provide some mixed signals as regards the near-term outlook. While hard data show some improvement in January and February, survey data for the first quarter are consistent with a somewhat weaker growth momentum. Nonetheless, the economic recovery in the euro area is projected to proceed at a moderate pace. Domestic demand should be further supported by the ECB’s monetary policy measures, continued employment gains, the low price of oil and a slightly expansionary fiscal stance. The risks to this growth outlook remain on the downside, however, and relate mainly to the heightened uncertainties regarding developments in the global economy. Headline inflation has remained low and its profile continues to be shaped by the path of energy inflation. In addition the recent partial unwinding of the past depreciation in the external value of the euro reduces the upward price pressure from the external side. Looking ahead, inflation in the euro area is likely to display slightly negative rates in the coming months before picking up later in 2016.

The ECB’s asset purchases are being expanded in terms of both size and composition: the monthly purchase volume has been increased from € billion to € billion and the universe of eligible assets now includes non-bank corporate bonds. Purchases are intended to run until the end of March 2017 – or beyond, if necessary – , and in any case until the Governing Council sees a sustained adjustment in the path of inflation to levels close to 2% over the medium term. Taking into account the current outlook for price stability, the Governing Council expects the ECB’s key policy rates to remain at present or lower levels for an extended period of time, well past the horizon of the net asset purchases. We are confident that the very accommodative monetary policy stance will provide further support to the euro area recovery and will accelerate the return of inflation to levels that we consider to be consistent with our objective. The Governing Council has done and, within its mandate, will continue to do whatever is needed to pursue its price stability objective. Our very accommodative monetary policy stance has provided considerable support for the euro area recovery. By supporting growth prospects, our actions have also been beneficial for financial stability.