samchain/econo-pairs-v1 huggingface dataset:
The point I want to make is that our monetary policy strategy provides for such a contingency. Forecasting is difficult So far I have been discussing advantages of the Riksbank’s current monetary policy arrangements and the drawbacks alternative strategies may have. In doing so I hope I have indicated that the alternatives also have some advantages, too. But I still consider that the advantages with the Riksbank’s way of conducting monetary policy outweigh the disadvantages. But something should also be said about what is perhaps the current regime’s greatest drawback, namely the difficulty in forecasting future inflation, not least in such a comparatively distant perspective as one to two years ahead. Completely reliable forecasts of future inflation presuppose success in two respects. One is managing to predict how shocks in the current situation will spread successively through the economy and affect the future rate of inflation. The other is managing to predict the shocks that subsequently occur in the forecast period and generate a future increase or decrease in the rate of inflation. While the first task is certainly difficult but maybe not completely out of the question, given that the course of events stays reasonably close to historical patterns, the second is virtually impossible. In other words, forecasts can err and we must bear that in mind. So I want to make it particularly clear that even though forecasting errors occur, I still consider that most things indicate that our present forecast-based inflation targeting regime functions satisfactorily.

From 1995 onwards the average rate of inflation, measured with UND1X, has been fairly close to the 2 per cent target. This has been accompanied by higher GDP growth than before. A part of the higher growth is of course explained by there being plenty of unutilised resources after the crisis in the early 1990s. BIS Review 24/2002  5  Variations in inflation and GDP growth Thirteen industrialized countries  1995-00  6  6  5  5 St. dev. inflation  St. dev. inflation  1970-90  4 USA 3  Sweden  2 Germany  4 3 2  1  1  0  0 0  1  2  3  St. dev. GDP growth  4  Sweden  USA  Germany 0  1  2  3  4  St. dev.GDP growth Source: The Riksbank  It cannot be argued that inflation targeting countries would have done worse if they had followed the same strategy as Germany and Switzerland, or that those two countries would have done equally well if they had targeted inflation. It is also conceivable that similar results would have been achieved with other monetary strategies, such as the pragmatic procedure at the U.S. Federal Reserve or the fixed exchange rate regimes – amounting in practice to a delegation of monetary policy to the Deutsche Bundesbank – that were used at times in, for example, France, Italy and Denmark.
3 Economic activity in both the euro area and the United Kingdom, Malta’s largest trading  1  Eurostat Statistics in Focus 31/2008. 2  Financial Times “The cogs are clogged ”, 16 February 2010. 3  IMF Update of World Economic Outlook, January 2010. BIS Review 50/2010  1  partners, declined by 4.1% and 4.9%, respectively. This contraction had inevitable consequences for labour markets, with unemployment increasing to levels not seen in decades. The combination of lower tax revenues and higher outlays arising from the operation of automatic stabilizers and fiscal stimulus programmes took their toll on public finances, with deficits in a number of countries rising close to, or even exceeding, double digit levels. The growth rate of these economies over the coming years will be constrained by the inevitable fiscal consolidation required to bring deficit and debt ratios back to sustainable levels. These recessionary headwinds inevitably took their toll on Malta’s open economy. The impact, however, proved less severe than might have been expected. The economy came out of the recession in the fourth quarter of 2009, after contracting for three consecutive quarters. On a seasonally adjusted basis, the peak-to-trough drop in GDP was around 3.0%, compared to 4.7% in the euro area. The relative resilience of the Maltese economy is attributable to four factors. First, membership of the euro area has enhanced its capacity to withstand external shocks.

While the world has been analyzing and discoursing for years on the causes, manifestations, and lessons learned from the global crisis, our academic community rarely expresses any views on these issues and seems to be still encapsulated in its own circle, engaged in its internal management or even day-to-day problems. Therefore I am glad now to admit that in this also VUZF University is an exception. I have been following with interest the public appearances of your rector, vice rector, and other professors and academics of your university. VUZF University representatives have often  BIS central bankers’ speeches  1  come up with authoritative public comments on topical economic subjects of great public significance. Today I congratulate VUZF University for outpacing “the older” universities of economics by organizing this timely discussion. The announced topic – “Global and Regional Challenges to the Economy and the Financial System: Do We Have Working Solutions?” – speaks for itself and is an eloquent testimony to the importance of today’s forum. Because external environment is of special significance for the dynamics of such an open economy as that of Bulgaria. It is a known fact that the original causes of the global financial and subsequently economic crisis did not stem from our region or from Europe’s emerging markets. Still, we should in no way take comfort in the external origin of the crisis because no matter what the origins of the crisis might be, we, here in Bulgaria, must deal with its consequences.
CDS quotes on sovereign debt instruments issued by CEE countries  percentage points  450  basis points  180  3.0  400  160  2.5  350  140  300  120  250  100  200  80  150  60  100  40  50  20  0  0  2.0 1.5 1.0 0.5  Source: Reuters  Poland  Romania  Hungary  Poland  Nov.17  Sep.17  Jul.17  Mar.17  Sep.17  Jul.17  May.17  Mar.17  Jan.17  Nov.16  Hungary Germany  May.17  Czech Republic Romania  Sep.16  Jul.16  May.16  Mar.16  Jan.16  -1.0  Jan.17  -0.5  Jan.13 May.13 Sep.13 Jan.14 May.14 Sep.14 Jan.15 May.15 Sep.15 Jan.16 May.16 Sep.16 Jan.17 May.17 Sep.17  0.0  Czech Republic  Source: Reuters, NBR calculations 15  Figure 22. Composition of the deficit on the balance on goods  Figure 21.

An issue touched on earlier in the day was reporting and accounting, and one of the things the industry has done is to come up with something called the Enhanced Disclosure 2  BIS central bankers’ speeches  Task Force. The Taskforce proposed a set of recommendations for banks to develop highquality, transparent disclosures that clearly communicate banks’ business models and the key risks that arise from them, so that people who supply capital to the banks can follow how they make money, how they think about managing risk, and make judgments on the basis of that. The important point was that this was industry-led, and co-chaired by a London-based bank. There was some input from the authorities, but the industry led the initiative, and it’s a model we may use in other areas of finance. I mentioned Total Loss Absorbing Capacity earlier – I won’t use the acronym! I’m aware the full name doesn’t necessarily make it any more intelligible, but this is basically another layer of capital, and the ability to absorb losses in the event that a firm fails. It is more cost effective – so the cost is not passed on to borrowers. And the technology behind this was developed by the private sector, with the authorities contributing to ensure it could work effectively and on a global basis. But it was the industry, once again, that came up with the solution.
These insights from the crisis lie behind the regulatory work that is now underway in Sweden and abroad today. There is broad agreement that risk-taking in the banking sector must be limited and that its costs must be taken into account by the banks and their investors to a greater extent. Important steps have been taken in this direction in the global agreement on future standards for regulations in the banking sectors referred to as the Basel III Accord. The worlds’ banks will be safer when this is implemented, which will benefit everyone. Basel III increases the safety margins in the system The Basel III regulations represent the introduction of much-needed standards that will require the banks to hold more and better capital. The minimum requirement for CET 1 capital, that is share capital and retained earnings, will be raised to 4.5 per cent of the riskweighted assets. In addition to the minimum requirements there will be a capital-conservation buffer, a countercyclical capital buffer and a buffer for systemically-important banks, which all sharpen the requirements for the level of CET 1 capital. In total, the Basel III Accord will represent a capital-adequacy requirement of 7 to 12 per cent of CET 1 capital depending on how important the bank is in a global systemic perspective and where the country's economy is in the credit cycle. This is a much higher level than previously. The countercyclical capital buffer is particularly interesting.

The task force will provide recommendations including on developing the framework for prevention and management of crisis taking into account the lessons for reform of the international financial system. Thirdly, and importantly is that international integration of Islamic finance would be facilitated by the mutual recognition of financial standards and products across jurisdictions. In the area of Shariah, there has already been the progressive convergence of Shariah views and rulings, and the mutual recognition of financial standards and products across jurisdictions. As this continues to occur, it would be a major driver towards greater international financial integration. This convergence and harmonisation is taking place with the greater engagement among the regulators, practitioners and scholars in Islamic finance across jurisdictions. To promote greater mutual recognition of products, Bank Negara Malaysia has embarked on the initiative to develop the Shariah Parameters to promote more consistent application of Islamic financial contracts. This initiative aims to determine the essential features of Islamic financial products derived from underlying key Shariah principles. This is also to provide greater clarity to the international community thereby facilitating greater cross border transactions. An International Shariah Research Academy for Islamic Finance (ISRA) has also been established in 2008 to promote greater engagement among Shariah scholars from around the world and to undertake research activities and contribute towards a greater understanding and international convergence. In this respect, we welcome relevant British institutions to collaborate with I SRA to advance this endeavour.
Besides Switzerland, I will also be looking at the Czech Republic, Sweden and – a special case – Denmark (cf. chart 1). These are all small open economies with strong trade links to the euro area. With the exception of Denmark, these countries chose to continue pursuing an independent monetary policy even after the introduction of the euro. Furthermore, the central banks of all these countries have in recent years implemented unconventional monetary policy measures. I will return to this point in more detail later. Two questions stand at the centre of my speech today. First, can countries bordering a major currency area pursue an independent monetary policy – and have events since the onset of the financial crisis in 2008 affected the answer? And second, how have unconventional measures helped these countries in the implementation of an independent monetary policy? I will argue that the first question – whether countries bordering the euro area can pursue an independent monetary policy – can essentially be answered with a yes. However, for these countries, managing monetary conditions arising from interest and exchange rate levels has become significantly more difficult in recent years. Regarding the second question – how have unconventional measures helped these countries in implementing an independent monetary policy – I will argue that negative interest, foreign exchange market interventions and quantitative easing programmes – instruments each tailored to suit a country’s specific needs – have helped these central banks to regain a certain room for manoeuvre.

Notwithstanding recent data that show consumers are borrowing again, four and a half years into the economic recovery, employment still has not reached its prerecession level, making this by far the slowest of the 12 post-World War II U.S. recoveries. One problem has been the sluggish pace of the recovery in the other advanced economies. The financial crisis was a global phenomenon, affecting advanced and emerging market economies alike. Yet the emerging market economies bounced back and in almost all cases have long since surpassed their precrisis levels of output. This has not been the case in the advanced economies. Europe and the euro zone, which have been hobbled by a series of sovereign debt crises in the wake of the financial crisis and the adoption of a single currency, remain important to the global economy, and problems there cannot help but have international repercussions. The good news is that European Central Bank (ECB) President Mario Draghi’s pledge in 2012 to “do whatever it takes” to stabilize the situation there seems to have worked and to have bought time for much-needed reforms. In conversations with President Draghi and the ECB governors last Friday, it was clear that recent data suggest the worst may be over. Meanwhile, in Japan, “Abenomics” seems to be succeeding in ending the decades-long deflation, though progress on structural reforms – crucial to restoring long-term growth – has been disappointing. There is an important lesson here, one to which I will return later: Monetary policy can only do so much.
The measures taken by our trading partners to enhance confidence in their financial systems and adjust the macro-financial imbalances hamper monetary policy transmission in the economy. They heighten public concern and undermine its confidence in the future. These are the very reasons preventing the banking system to finance the economy and the government at lower interest rates and, consequently, the central bank’s monetary policy transmission to easing the monetary and financial conditions. What is currently happening represents higher risk premium in the countries of the region for all the reasons referred to earlier, rather than an increase in real interest rates. Concluding, I would like to clarify that central banks should make their utmost to preserve the frail macrofinancial balances and bolster public confidence in institutions and the financial system. In this context, the Bank of Albania, as to date, will continue to foster macroeconomic and financial stability in Albania. This is our major obligation arising from the Constitution and relevant laws. We are committed to meeting this obligation with dedication and meticulousity. We are fully focused on these two major objectives, just like a good captain focusing on the horizon, rather than on the hands laid on the ship’s wheel. The Bank of Albania believes that, by guaranteeing these two vital pillars to the stability and prosperity of the economy, we have provided the best contribution to achieving higher economic growth.

The latter have considerable social costs in the short run. Social discontent against them and the governments proposing them erodes the credibility of reforms and the authorities, increasing, in turn, the sovereign debt risk. Euro area, and particularly its Southern members, are facing a concern, whose solution bears consequences with economic and political implications for the future of all member states and the common currency. The reforms and policies undertaken by euro area authorities, individually or in a concerted manner, have important and direct implications for our economies. Experience to date has shown that our partners and their large banks have adopted an approach that maximizes their benefits as “owners”. Consequently, their decision-making is entirely conditioned by the fear of loss of stability and sovereignty that associates the current concerns of the economy and the parent bank. This has pushed these countries to take biased measures against our economies, risk rating investment in our countries at 100%. This decision-making, which is directly linked to the events taking place within the euro area, has practically transferred the issue of stability versus sovereignty in our economies. These policies represent a negative phenomenon, which contradicts the positive and stabilizing role that our partners have been playing so far in South East European economies and societies. The countries of our region have in the last 20 years undertaken numerous structural, political and economic reforms, in view of consolidating the democratic state, the rule of law based on principles of market economy and supported by a consolidated financial system.
Trade deficit in the second quarter was 20% higher compared to a year earlier. Our exports shrank by about 2.8% year-on-year for this period, a reflection of reduced exporting of energy, which is a volatile component in exports. Despite this development, the core basis of exports continues to maintain more sustainable growth rates. On the other hand, imports continued their annual growth, albeit at a lower rate compared to the first quarter of the year. Aggregate demand performance triggered economic activity growth but was inadequate to fully utilise Albania’s output capacities. Developments in the labour market seem sluggish and do not have premises for emergence of stable inflationary pressures. Signals from economic information are confirmed also by the monetary indicator analysis. In June, annual growth of M3 aggregate was 11.8%, around average rates of the past 12 months. Our assessments show that the expansion of monetary supply is in line with the performance of the economy’s demand for monetary assets. In June and throughout the second quarter, the public sector demand for funding was high, in line with the intensity of the fiscal activity during that period of the year. Furthermore, the private sector demand for funding continued to be moderate. Lending to private sector posted annual growth of 11.6% in June, in line with the second quarter’s performance. Financial markets are characterised by a serene environment with contained risk premia. Interbank market experienced increased trade volume; interest rates were close to the key rate and had low volatility.

On the other hand, regulatedprice goods and non-food goods had a low and downward contribution to this month’s inflation. In line with Bank of Albania’s expectation, controlled inflationary pressures by the domestic economy, as well as anchored inflation expectations created a favourable environment for a rapid reduction of imported inflation effects. Consumer prices during 2011 were mainly affected by supply shocks, materialised in higher prices of imported goods and some products subject to excise, or with regulated prices. These effects appeared to be more moderate in July; in the absence of sudden shocks, they are expected to decrease further in the months ahead. Below-potential economic growth continued to generate controlled inflationary pressures on the demand side. Hence, core inflation stopped increasing and is set around the Bank of Albania’s target of 3%. Moreover, stabilisation of inflation expectations of economic agents and the prudent policy of the Bank of Albania regarding their anchoring are reflected in moderated second-round effects on inflation. (Following, I will describe in more detail economic highlights defining the inflation performance and their expected development.) Although in an unfavourable external environment characterised by added uncertainties in our trade partners, the Albanian economy continued to grow during the second quarter of 2011. In the absence of direct data, the Bank of Albania deems that economic growth during this period is similar to the one recorded in the preceding quarter, thus remaining below Albania’s potential growth rate.
4/10  Given these outlooks, we expect the growth momentum to be more balanced with a stronger contribution from domestic demand. In our March forecast, the GDP growth for both 2018 and 2019 was projected at 4.1 percent. These figures are likely to be revised up given better-than-expected growth outturns in the first quarter this year. Headline inflation in April and May has turned up above the lower bound of our target, which is set at 2.5±1.5%, mainly due to the recent pickup in energy prices. Yet inflationary pressure remains soft overall and we must continue to closely monitor inflation developments once these supply-driven fluctuations fade. Over time, improvement in domestic demand and rising energy prices are expected to bring about higher inflation, although it is likely that headline inflation would still remain below the midpoint of the target over the year. For now, an accommodative monetary policy stance would be maintained to foster a strong economic growth and facilitate the return of inflation to the target. Going forward, the Monetary Policy Committee will closely monitor the strength of growth momentum, inflationary pressure as well as underpricing of risks in the financial system that could lead to financial fragility and financial stability concerns. Ladies and gentlemen, So far, I have given you an overall near-term summary of the Thai economy. Let me now move on to the second part of my talk which looks further into the backbone of Thailand’s economic growth engine over a longer horizon.

Thus, larger and productive firms are able to reap the benefits of economic recovery and adapt to changes in the new business environment. Indeed, the difference in business performance between medium-sized and large firms in the stock market has been widening. This is evidenced by several financial indicators including the return on assets and the net profit margin. These developments partly explains why the NPL situation has yet to improve for SMEs across the board, while we see improvement in loan quality among large corporates in the same sectors. The third reason for the uneven economic recovery is the impaired function of the spending multiplier. Usually, when recovery starts to emerge in certain segments of the economy, the multiplier effect of spending should create positive spillovers to the other parts of the economy, thereby securing a more broad-based recovery over time. However, export-oriented firms which currently spearhead the ongoing economic recovery are capital-intensive. They utilize more machinery rather than relying on labor. Thus, positive spillovers to employment are less prevailing. This partly explains why the manufacturing employment growth has been rather moderate despite strong export growth and pickup in the manufacturing production index. Furthermore, having a high level of household debt, especially during the debt deleveraging period, dampens this multiplier mechanism. This is because households have to use additional income to service their debt obligations rather than spending on goods and services.