samchain/econo-pairs-v1 huggingface dataset:
It is precisely the increases in asset values and increased ability to borrow that stimulate the economy that are the proper concern of prudential regulation.” The hypothesis that there is a risk-taking channel for monetary policy is not undisputed, but it has become increasingly accepted and the empirical support for it is increasing (see, for instance, Altunbas et al., 2014 and Gungor and Sierra, 2014, for a couple of recent contributions). 6  BIS central bankers’ speeches  Let us be more concrete – some simple calculations So far, I have spoken about monetary policy and macroprudential policy in theoretical terms. Let me now go on to talk about them in more concrete terms with regard to resolute decisions. An obvious problem we need to deal with immediately is the high and increasing indebtedness in the Swedish household sector. On aggregate, household debt currently amounts to 174 per cent of their total income.16 However, this figure is based on all households, regardless of whether or not they have any loans. If we only include households that actually have loans, the figure is higher, 263 per cent, which is shown by data from the eight largest banks in Sweden gathered by the Riksbank. The same data show that the figure has risen to 313 per cent, if we only include households with mortgages. These figures give cause for concern, and should not just be allowed to continue growing; we will unfortunately need to deal with this situation in the foreseeable future.

The crisis gave rise to a new policy area – macroprudential policy – which partly works by influencing the volume of credit in the economy, in roughly the same way as monetary policy. To me, it is fairly obvious that these two policy areas need to interact. If monetary policy is to carry out its tasks well, then macroprudential policy must function properly and most likely also vice versa. The crisis also made necessary a monetary policy that was in many leading countries more expansionary than ever before, and which was conducted in ways not previously tested. Given this, the debate that has arisen on international monetary policy spillover effects is perhaps not particularly remarkable. We do not yet know what our final conclusions will be with regard to these two areas. These are a couple of the loose threads that I am not able to tie up here today. However, a certain amount of new thinking will probably be required, both with regard to monetary policy and financial supervision and the regulation of the financial markets – but also concrete  31  See Ostry and Ghosh (2013). 32  A further possibility that I will not take up here, but which has been tested in emerging markets in particular, is to use capital regulation. For a detailed and partly critical review of the efficiency of capital regulation, see Klein (2012). BIS central bankers’ speeches  15  measures.
To attract investment on a large scale, however, it is necessary to have a reasonably effective judiciary, an adequately skilled labour force and other facilities; these are by no means always available and here it is the developing countries that need to act. It is on account of problems such as these that investment from the industrialised countries still goes in the first place to so-called emerging markets and to only a minor extent to the poorest countries. The situation also calls for structural adjustments in the industrialised countries, a process that leads in turn to new job opportunities; these countries have to focus on new activities of a different kind that can carry higher wage costs, for example. This is the same in principle as what happened earlier in Sweden, for instance. We have moved from a state more than a century ago when nearly everyone worked in agriculture to one where first manufacturing and now service industries have taken over as the dominant source of employment. This is the process that has doubled our material prosperity many times over. But it has not been painless. While many people became better off, the need for adjustment excluded others from production. Countries like Sweden can now afford extensive social safety-nets but in developing countries these are often absent. And although barriers to international trade have been greatly reduced in recent decades, there are still a good many obstacles in both industrialised and developing countries.

The implementation of structural reforms in euro area countries needs to be substantially stepped up to increase resilience, reduce structural unemployment and boost euro area productivity and growth potential. Regarding fiscal policies, the broad-based expansion calls for rebuilding fiscal buffers. This is particularly important in countries where government debt is high and for which full adherence to the Stability and Growth Pact is critical for safeguarding sound fiscal positions. Likewise, the transparent and consistent implementation of the EU’s fiscal and economic governance framework over time and across countries remains essential to bolster the resilience of the euro area economy. Improving the functioning of Economic and Monetary Union remains a priority. The Governing Council urges specific and decisive steps to complete the banking union and the capital markets union. We are now at your disposal for questions. 2/2  BIS central bankers' speeches
3  See, for example, Press Briefing on Q4 2012 Household Debt and Credit Report; Meta Brown and Sydnee Caldwell, “Young Student Loan Borrowers Retreat from Housing and Auto Markets Liberty Street Economics  4  BIS central bankers’ speeches  close look at the question of just how weak today’s labor market is for new college graduates by putting their recent experience into context using some hard data. It is important for us to undertake this kind of analysis because, as we’ll show, newly minted graduates always take some time to transition into the labor market and find jobs that utilize their education. And young people with college degrees still fare far better than those without. At the same time, with the sluggish jobs recovery from the recession, it’s clear that the transition of recent graduates into the labor market is taking longer, and they’ve experienced higher unemployment and higher underemployment than in years past.4 Still, while times have gotten tougher for recent graduates, we shouldn’t be too hasty in concluding that getting a college education won’t help people find good jobs. I will now ask Jason Bram to present an update of economic conditions in our region. Blog Post, April 17, 2013; and Andrew Haughwout, Donghoon Lee, Wilbert van der Klaauw, and Joelle Scally, “Just Released: The Geography of Student Debt,” Liberty Street Economics Blog Post, May 14, 2013. 4  Underemployment, for purposes of this presentation, refers to college graduates working in jobs that typically don’t require a college degree.

In its statement, the FOMC said that it may vary the pace of purchases as economic conditions evolve. As Chairman Bernanke stated in his press conference following the FOMC meeting, if the economic data over the next year turn out to be broadly consistent with the outlooks that the FOMC sees as most likely, which are roughly similar to the outlook I have already laid out, the FOMC anticipates that it would be appropriate to begin to moderate the pace of purchases later this year. Under such a scenario, subsequent reductions might occur in measured steps through the first half of next year, and an end to purchases around mid2014. Under this scenario, at the time that asset purchases came to an end, the unemployment rate likely would be near 7 percent and the economy’s momentum strengthening, supporting further robust job gains in the future. Here, a few points deserve emphasis. First, the FOMC’s policy depends on the progress we make towards our objectives. This means that the policy – including the pace of asset purchases – depends on the outlook rather than the calendar. The scenario I outlined above is only that – one possible outcome. Economic circumstances could diverge significantly from the FOMC’s expectations. If labor market conditions and the economy’s growth momentum were to be less favorable than in the FOMC’s outlook – and this is what has happened in recent years – I would expect that the asset purchases would continue at a higher pace for longer.
Øystein Olsen: The conduct of monetary policy Introductory statement by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the hearing before the Standing Committee on Finance and Economic Affairs of the Storting (Norwegian parliament), Oslo, 15 May 2014. *  *  *  Accompanying charts can be found on the Central Bank of Norway’s website: Charts (PDF). Please note that the text below may differ from the actual presentation. I would like to thank the Chairman of the Committee for this opportunity to report on the conduct of monetary policy. My statement here today is based on Norges Bank’s Annual Report for 2013 and has been updated based on new information and assessments up to the monetary policy meeting last week. Norges Bank’s operational conduct of monetary policy is oriented towards low and stable inflation. The operational target is annual consumer price inflation of close to 2.5 percent over time. Monetary policy shall also contribute to smoothing fluctuations in output and employment. The key policy rate is the main instrument of monetary policy. Chart: Inflation and capacity utilisation In 2001, an inflation target was assigned to Norges Bank. The experience has been positive. Over the past ten years, consumer price inflation has on average been somewhat below, but close to 2.5 percent. The world economy has to a large extent been marked by imbalances through this period. Growth in the Norwegian economy slowed in the wake of the financial crisis, but has since been close to a normal level.

The MIFC initiatives that were announced yesterday would propel Malaysia into becoming a vibrant, innovative and competitive international Islamic financial services industry supported by high calibre human talent, world-class infrastructure and best international standards. Building on what we have, we need to create a global brand to be promoted more aggressively in the global arena. This will be key to penetrate markets as well as to attract global players to our shores, henceforth enhancing the viability and sustainability of Malaysia's Islamic financial system. Malaysia will embark on more strategic promotional and marketing efforts through greater collaboration and smart partnership. MIFC WILL BE OUR GLOBAL BRAND. 2  BIS Review 75/2006  On this note, on behalf of the hosts and organisers, I would like to thank the distinguished panellists and moderators, media and the respected audience for making this Forum a success, and I hereby declare the forum officially closed. Thank you. BIS Review 75/2006  3
However, such turnaround may lead to new concerns and challenges going forward. Today’s event thus provides an opportune occasion for us to deliberate and exchange views on this topical issue. 3. Although latest economic data point to stronger growth momentum and smaller tail risks, uncertainty and short-term threats still remain. For example, the situation in Europe can easily come back to take centre stage thus providing a reality check and a pointed reminder that structural problems take time to resolve. Besides, anti-austerity pressure could delay ongoing reform efforts. This may, from time to time, raise uncertainty and spark volatility in the market. Meanwhile, improving economic outlook in the US needs to be tempered with reality of the fiscal drag and the near-term risk from spending cuts which can come back to hit market sentiment. Thus, we should proceed with care since the market has somewhat overly priced in the global recovery story. 4. The challenges from the great rotation can be viewed in two dimensions. First, risk preference has shifted from safety to riskier assets with the improved global sentiment. Particularly, global stock markets have rallied far beyond the modest global recovery. This can be seen in the MSCI World Index which surged by almost 25% during the last 9 months while global growth remains at low level. 5. Rallies in stock prices on the back of over optimistic sentiment may sow the seeds of potential bubble.

So, even though the EU membership has acted as a catalyst for country-level real convergence, the development gaps across the regions of Romania have actually increased. Shortly after the EU accession, there was a surge in economic optimism, translating into an acceleration in economic growth, along with a credit and real estate boom. Despite the efforts of National Bank of Romania, which maintained a prudent policy stance, macroeconomic imbalances widened: the current account peaked in 2007 and remained in the double-digit territory in the next year. Unfortunately, fiscal policy poured more gas on the fire by switching to a strongly expansionary stance after EU accession. Thus, when the global financial crisis hit Romania in the fall of 2008, the country had already expended all the bullets in its fiscal policy magazine and was in the unenviable position of having the second largest structural general government imbalance (around 9 percent of GDP) after Greece. There was no choice but to embark on a process of painful fiscal consolidation that was one of the largest and least gradual in the EU. Having prudently built policy buffers in the run-up to the financial crisis, monetary policy was able to maintain a countercyclical stance, yet it could not preclude a large contraction in aggregate demand in 2009 and 2010. Nevertheless, the ensuing correction in macroeconomic disequilibria created the conditions for resilient GDP growth and the loss in output was made up for by the end of 2014. Currently, we are in our ninth year of consecutive economic growth.
Banks were stronger. In the UK they were three times better capitalized than at end 2008. And to be clear –very significant government support and central bank interventions were required. I’ll come back to this later. But there is one other reason for the missing panic that I want to focus in on. After the 2008 global financial crisis, the G20 put in place reforms designed to make the global financial system simpler - to untangle the spaghetti bowl of bilateral derivatives trades that had fed the 2008 panic.2 They incentivised - and for many products mandated - central clearing of derivative trades. Global clearing has as a result, grown significantly in the past decade. Today, about 60% of credit default swaps are cleared, as well as 80% of interest rate contracts, up from about 10% and 40% respectively in 2008.3  This brought greater stability to derivative markets by ensuring that if a major financial institution were to collapse, you needn’t worry about a domino effect – with the failing firm’s derivatives contracts potentially threatening the viability of any number of other firms.4 1  Ben Bernanke, Op-Ed at Brookings Institution, 13 September 2018 G20 Leaders’ Statement Pittsburgh Summit, September 2009. 3 Bank of International Settlements Statistical Release, November 2020 4 Although it’s not my focus today, reforms to bilateral derivatives trading have also helped to reduce the chance that bilateral contracts fuel a panic.

2  2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  One of the key ways central clearing counterparties – CCPs – help prevent panic is to be sure that as markets move, firms quickly pay for changes to their derivatives contracts, and insure against likely further changes. First, when derivatives contracts change value, the holders of those contracts exchange money right away. Losses and gains are promptly allocated to the firms on either side of the trade. This limits the chance that, if one side of the trade defaults, the other firm is left holding the bag for the defaulter’s bad trades. This is called variation margin. Second, CCPs require firms to place pre-paid self-insurance with the CCP to cover the predicted liquidation costs in the event of their default. Because derivatives markets can be fast moving, a key factor in how large this self-insurance needs to be is how volatile the markets are. This is known as initial margin. Importantly in times of market turbulence, both losses and gains of individual participants and required pre-paid self-insurance will rise. They are inherently pro-cyclical. As Deputy Governor Jon Cunliffe said last summer, this is a feature, not a bug.5  So did the simpler, post 2008- system work? In March and April 2020, we saw some of the biggest two-day price moves for some cleared products in the past decade. In a number of products the price moves were much larger than ever seen before.
The fourth lesson is the benefits to long-term growth and stability that come from disciplined policy management and the pursuance of policy that enhances flexibility in the economic system. The 1997–1998 crisis has been an important lesson for Asia on this point. Disciplined policy reduces the risk of an internally-induced crisis due to policy error and provides the authorities with greater room and flexibility to deal with unexpected events or shocks. In the current crisis, the ability of many Asian economies to respond aggressively to the impact of the crisis without undermining policy credibility is a case in point. From my own experience, policy discipline relates closely to decisions that are made with a long-term perspective. The lack of discipline more than often reflects policy that focuses overwhelmingly on short-term outcome. In economics, emphasis on short-term outcome tends to reduce volatility initially but a cost of a much larger volatility and welfare loss at a later date as the needed adjustment is postponed. A long-term perspective, on the other hand, allows the adjustment to be spread out with lesser volatility and effects on economic welfare. Next, enhancing flexibility in the economy through policy that raises the role of the price mechanism in the allocation of resources is another crucial policy choice that can make important differences to the economies of emerging markets. Again, we in Asia learned this lesson well in the 1990’s.

A clear lesson from events last spring is, in any event, the value for market observers of constructing independent forecasts of inflation as a foundation for their repo rate predictions. For the Riksbank, what happened has prompted us to work even more on continuously monitoring market opinions so as to be able to react in good time if the assessments of market players seem to be deviating from our own. Main scenario and balanced risks BIS Review 81/1998  -5-  Now for a look ahead in the context of our current assessment of inflation. In the latest Inflation Report, published at the end of September, the Riksbank emphasised that inflation prospects contained a large element of uncertainty. The cyclical picture had changed somewhat since June in that growth was judged to be strongest this year and then slacken somewhat. But we still counted on reasonably good activity, with annual growth in the coming years averaging almost 3 per cent. Inflation, measured as the 12-month change in the CPI, was assumed to be below 2 per cent in 1998 and 1998 but to reach approximately 2 per cent at the end of the period. The composition of demand had also undergone a shift. The international crisis was expected to render net exports weaker than assumed earlier, while domestic demand was likely to be somewhat stronger than foreseen in June.
Perhaps a society has to undergo a learning process on a broad front so that earlier mistakes yield new insights. Economic policy decision-makers like myself are, of course, no exception here. But as financial turbulence does not inevitably lead to a serious crisis in the real economy, we need to ask why it is that in certain cases output and employment do suffer severe setbacks and the attendant deflation. Much will have been gained if we can learn to tell whether or not an extensive share price fall, for example, besides being troublesome enough for many people, is likely to result in a situation with general deflation, rapidly falling output and rising unemployment. An answer to that question was suggested in the summer of 1999 by the Federal Reserve chairman, Alan Greenspan: While bubbles that burst are scarcely benign, the consequences need not be catastrophic for the economy. The bursting of the Japanese bubble a decade ago did not lead immediately to sharp contractions in output or a significant rise in unemployment. Arguably, it was the subsequent failure to address the damage to the financial system in a timely manner that caused Japan’s current economic problems. Likewise, while the stock market crash of 1929 was destabilising, most analysts attribute the Great Depression to the ensuing failures of Policy. Most things indicate that when banks run into trouble on account of financial turbulence, the supply of credit may dry up and the payment system cease to function.

Thomas Jordan: The significance of academic research and teaching for the Swiss model for success Summary of a speech by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the Dies academicus, University of Bern, Bern, 1 December 2018. * * * The complete speech can be found in German on the Swiss National Bank's website (www.snb.ch). The success of Switzerland in recent decades has largely been driven by the strong performance of its education system, which is crucial for economic prosperity, social cohesion and equality of opportunity overall. The Swiss National Bank (SNB), too, sets great store by a good education system, including universities that can hold their own against international competition. Many of the staff recruited by the SNB are destined for roles in which a university degree is a prerequisite. In addition, the SNB maintains close ties with the academic world, so that the latest related research findings can be incorporated into monetary policy decision-making. The competition of ideas stimulates and creates incentives for higher-quality monetary policy. This pursuit of excellence in academic education should not just be aimed at research, however; it should also target teaching. Experience has shown that foundation courses have a lasting effect on students' attitudes to certain topics. Teaching lays the basis for subsequent academic specialisation and career choice. As role models, professors carry a heavy responsibility.