samchain/econo-pairs-v1 huggingface dataset:
Krugman, Paul R. (1998). “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap”. Brookings Papers on Economic Activity 49, 137-206. BIS Review 19/2009  3  inflation, the real economy and the repo rate, the central bank can affect expectations of inflation and future repo rates. Even if the real economy becomes weak and inflation low or even negative in the short term, the central bank can, with a good and convincing analysis, present forecasts in which inflation returns to the inflation target and the real economy stabilises. This means, all in all, that the central bank's forecasts and scenarios constitute central tools in the effort to influence inflation expectations. Central banks that already have well-established numerical inflation targets may therefore find it easier to hold up inflation expectations and create credibility for their policy. In countries that do not have a numerical inflation target it may be good to introduce such a target in a situation with a binding zero lower bound for the interest rate, although it would of course have been better to already have the inflation target established and credible before ending up in such a situation. Inflation targets do, however, have a disadvantage . Following a period of unwelcome low inflation below the inflation target, inflation targeting entails, as it is usually applied, that the central bank subsequently seeks to maintain a level of inflation in line with the target.

We have moved away from an economy marked by detailed regulations, devaluation cycles and national perspectives, to an economy with well-developed credit markets, deregulation and greater international openness. The total of all these changes should contribute, with some time lag, to what has now happened, that is, that growth and productivity are developing more strongly. My point is thus that we should not overestimate the significance of information technology on what has happened so far in the Swedish economy. The fact that things are now going well is probably more due to stability policies, structural reforms and international influences and less due to new technology. There are some people who claim that the vigorous Swedish IT sectors is a sign that no further structural reforms are needed in Sweden. Things are fine as they are. This is a rather dubious conclusion. The Swedish IT miracle is largely the result of three deregulation processes in Sweden. The deregulation of the domestic credit market, the abolition of foreign exchange controls and the deregulation of the telecom sector. This opened the way for the growth of the Swedish IT sector. Risk capital flowed in to new companies from Sweden and abroad. This is not a new economy - it happens every time that strictly regulated markets are opened up to competition. To be fair, however, it should be mentioned that there is a two-way relation between the new technology and the deregulation processes.
Secondly, monetary union still has a long way to go to achieve sounder governance that will reduce the union’s vulnerability to shocks, provide for better coordination of its economic policies and promote the reforms needed to encourage and to be able to sustain long-term growth. 3/7  The role of monetary policy I shall first address the role that monetary policy has played and is continuing to play in the recovery. The confluence of the financial and sovereign crises in a European monetary union whose institutional architecture was incomplete meant that the ECB had to assume a pivotal role in the economic policy response. Initial measures took the form of a gradual reduction in interest rates and the granting of practically unlimited amounts of liquidity to banking systems, at increasingly longer maturities, with greater flexibility in the attendant collateral policies. In 2012, amid a second recession in the euro area and financial turmoil, the possibility of purchasing the public debt of countries subject to financial pressures was introduced. While this possibility was not actually activated, it contributed to staving off the threat of the single currency breaking up. Yet by mid-2014, and despite the fact that the most acute episodes of the crisis had been overcome, the euro area was immersed in a scenario of low growth and deflation risks in which various external and internal factors were at play. On the external front, the weakness of global growth and the collapse of commodities prices accentuated the downside pressures of producer prices.

When designing policy conduct, there are no mechanisms conducive to countries internalising the benefits of achieving a suitable economic policy mix for the area as a whole; and this especially at a time, such as the present, when the existence of a very accommodative monetary policy means that both the national effects and the impact on other countries associated with a specific fiscal impulse are greater. Against this backdrop, and as highlighted in the recent discussion paper on the deepening of EMU published by the European Commission, it would be necessary in the medium term to develop a fiscal capacity for the euro area as a whole that contributed to supporting monetary policy. 6/7  The estimates detailed in this year’s Annual Report of the Banco de España suggest that a study could be conducted of a common fiscal instrument, managed at the supranational level, but which does not entail permanent transfers between countries and which, without committing a high volume of funds (around 1% of GDP), provides the euro area with a fiscal stabilisation capacity similar to that other federal states have. It also appears necessary to seize the opportunity afforded by the favourable economic juncture and the overcoming of some of the political risks to complete the reform of European governance, along the lines considered by the Five Presidents’ Report published in 2015 and the recent discussion paper by the European Commission.
A common challenge our emerging economies are facing is the need to speed up convergence towards the development level of mature economies. In order to achieve this, the responsible policymaker should be concerned with steady progress and not with delivering bouts of accelerated growth, which may turn out to be reversible. This brings us to the need to address bottlenecks to potential growth – even though in Central and Eastern Europe, for instance, growth is now much stronger than in the euro area, most countries have still work to do in order to ensure that potential growth matches the catching-up needs. At least in the non-euro EU members in Eastern Europe, bottlenecks to sustainable growth usually stem from structural impediments to labour supply (high emigration, low participation rate, decline in working age population, skill mismatch), inefficiencies in public administration, quality of institutions, in general, and in some cases, inadequate infrastructure. 1/3  BIS central bankers' speeches  While inflation has reemerged in Central, Eastern and South-Eastern European countries, in most cases it remains tepid (broadly, around 2 percent). Nevertheless, it has spiked in such cases as Romania and Turkey, where it currently stands at 5 percent and 11 percent respectively. Part of this reemergence is related to the global cycle, as it comes from international commodity prices, with idiosyncratic supply-side factors and domestic demand pressures accounting for the rest of the explanation.

At the same time, unemployment continued on a downward path and economic sentiment improved across the board. Some recent signals point to a slowdown, yet they seem to have more to do with temporary influences, growth prospects continuing to look strong. The past year recorded, on average, positive developments in EU candidate and potential candidate countries as well, in spite of GDP dynamics delivering a more mixed picture (from over 7 percent in Turkey to around 2 percent in Serbia and even stagnation in the Former Yugoslav Republic of Macedonia). Nevertheless, the outlook is positive, with recent forecasts pointing to relatively robust growth in the coming years. However, against this relatively rosy background, I should highlight that our economies, even those that belong to the Eurozone, have still much to do in order to become robust and offer good living standards to most of their citizens. Some members of this Club, Romania included, had to go through very painful adjustments during the past decade, as the global crisis found them trapped in a pro-cyclical policy stance and it remains to be seen to what extent they will manage to break free from this pattern in the current good times; some need to fight high inflation, pressures on their currencies or to correct their external imbalances. Nevertheless, the common denominator of all our economies is having to deal with institutional weaknesses and the need to undertake reforms that should make them stronger.
6  “Accredited investor” refers to an individual with net personal assets exceeding $ million or a corporation with total net assets of more than $ million. 7  “Qualified investor” means an individual with net personal assets exceeding $ million, a corporation with total net assets of more than $ million, a collective investment scheme that is marketed only to accredited investors, or a collective investment scheme that is not marketed in Singapore. 8  Brooks, C. and H.M. Kat, 2001, “The Statistical Properties of Hedge Fund Index Returns and Their Implications for Investors”. BIS Review 52/2002  3  To enhance disclosure in prospectuses for offers of investments (including hedge funds), Part XIII of the SFA which came into effect in July this year introduced new prospectus checklists, prospectus registration procedures and advertising regulations. A prospectus must contain all material information that a reasonable investor would require to make an informed investment decision, such as the investment objective and specific investment risks of a fund, the fees and charges, and the track record of the fund manager. For the market to exercise discipline on prospectus disclosure, prospectuses that are lodged with MAS are posted on the MAS web-site for public comment for a minimum two weeks. We view this as an advance in speed and efficiency. As a safeguard, MAS may refuse to register a prospectus if it does not satisfy the disclosure requirements or if its registration is not in the public interest.

In the space of five years (1792-97) it almost tripled, and Pitt’s government tapped not just financial markets but the resources of the Bank of England to finance it18. Second, fears of French invasion led to a steady increase in the desire to hold gold over paper notes and a further drain from the Bank’s holdings (Chart 1119). When in late February 1797 a small French force actually landed in Wales the government immediately took to the decision to suspend  Sources: Thomas and Dimsdale (2017) and Bank calculations. convertibility and with it the gold standard. This was a seismic event in British financial history and was vigorously debated, and in many quarters vigorously opposed, throughout the long Napoleonic wars20. Several early economists – notably  16  Kynaston (2017), Chapter 15. I discussed the role of beliefs about how inflation was determined in a talk earlier this year (Broadbent (2020)). 18 The Bank took only a fraction of new government debt – less than £ compared with an increase in the total of over £ – but it was enough to deplete its gold reserves significantly, by around a quarter, during the first four years of the war. Most of the growth in the Bank of England’s assets, in those years and throughout the Napoleonic wars, reflected higher “discounting” (i.e. buying) of private-sector securities. 19 Chart 11 excludes long-term government debt holdings from the assets and central bank equity from the liabilities.
In organising the agenda for today, we have made a conscious decision to have joint sessions for both IMAP and standard formula firms. This is because we recognise that some firms currently on the standard formula may wish to apply for an internal model after 1/1/16, and also because firms currently in IMAP that fail to obtain model approval, whether full or partial, will need to move on to the standard formula. Almost 90% of our regulated firms will be using the standard formula, and I can assure you that we will be taking a rigorous approach to ensure that the Directive is being implemented as intended by standard formula firms. As an organisation we are looking at Solvency II holistically, rather than in silos, and it is important for firms to do the same. Bank staff will be on hand throughout the day to answer any questions you may have; however if you have any queries that aren’t answered during the sessions today, please contact your supervisor. The end of the track is now in sight on Solvency II preparation. This will likely be our last large conference in advance of transposition. We recognise that it will take time for the new regime to bed in, perhaps a number of years; but now is the key time for firms to get in place the processes, approvals and, above all, the recognition and acceptance that Solvency II will be the new normal.

That said, the trend going forward is less favourable, calling for mobilisation  2.1  Three factors are currently raising concerns  Despite the quality of this snapshot for 2018, the outlook – the medium/long-term trend – calls for vigilance and mobilisation. Three factors are effectively weighing on the profitability of both French and European banks. The first two mainly concern retail banking: continuing low interest rates and digitalisation. The maintenance of a low interest rate environment is completely justified and necessary in light of the economic situation in the euro area. However, it is also squeezing net interest margins for retail banks, which finance themselves with deposits and not at variable rates in the market, as well as reducing returns on insurers’ investments. In the case of banks in particular, the issue should certainly not be ignored, but we also need to avoid blowing it out of proportion by claiming it is the only factor weighing on euro area bank profits. On April 10 the Governing Council explicitly said: “In the context of our regular assessment, we will also consider whether the preservation of the favourable implications of negative interest rates for the economy requires the mitigation of their possible side effects, if any, on bank intermediation.”ii Let’s allow time for this work to be done and for the necessary decision to be taken.
In other words, the critical point for the Bank is to assure that the impacts of the above-mentioned developments are confined to 2006 and avoid any deterioration in expectations, which stand as a significant determinant of the inflationary process, for the sake of achieving medium-term targets. At this point, I would like to draw your attention to a few important points about the interest rate policy of the Bank and underline some issues once again. Short-term interest rates are the main policy instrument of the Central Bank. The Central Bank makes its policies and interest rate decisions in line with its main goal of achieving price stability and inflation targets. The Bank makes all its policies and decisions in view of medium-term trends rather than daily or shortterm ones, and these policies and decisions are grounded on main trends. In this framework, while making its interest rate decisions, the Bank uses a very wide data set including supply-demand conditions, costs, model forecasts, expectations, domestic and external developments; and evaluates all these data with a forward-looking perspective. This process is certainly a dynamic one, and every new piece of data and development is being closely monitored within the framework of the Bank’s inflation forecasts. Another significant fact about the interest rate decisions of the Bank is that the impacts of these decisions are observed with a time lag. The impact of the decisions on economic activity becomes evident within a period of 3-9 months, while their impact on inflation is observed within a period of 9-18 months.

Before all else, the point that I would like to emphasize is that our inflation targets are point targets. These targets have been set as consumer price index inflation. Our policies are established solely with the aim of achieving these targets. In our monetary policy implementations, we have announced our inflation targets for a three-year period in order to increase the emphasis placed on medium-term. In this context, the inflation target is 5 percent for 2006 and 4 percent for 2007 and 2008. To apply a rule to the Central Bank’s accountability in the event of any deviation or the possibility of deviation from the inflation target, a + 2 point-uncertainty band has been established around the point target. Once again, I would like to underline the significance of this issue. This band, which has been formed around the inflation target, aims at setting the accountability criteria. Looking at the practices around the world, we see that a 40 percent-uncertainty band has been formed around the point target in most countries. Our implementation is based on this approach. In the event that inflation is realized outside this band or, in case of such a possibility, the mechanisms specified with respect to accountability will start. With the introduction of the formal inflation targeting regime, interest rate decisions are made by voting at the Monetary Policy Committee meeting. Monetary Policy Committee meetings are held once a month on pre-announced dates. Nevertheless, when deemed necessary, extraordinary meetings may be held, such as yesterday’s meeting.
A similar message emerges from two papers presented in Session 3, which have scrutinized the factors that contributed to the very rapid credit expansion in the specific cases of Romania 2 and Lithuania 3 , and from the World Bank report 4 presented in Session 6, which provides a detailed overview of the recent credit developments in all ten new EU member states from Central and Eastern Europe. While stressing the demand factors that have fuelled the expansion of credit to the private sector, these papers also point out that the supply side has played a role too: the boost in credit volume was made possible by the privatisation of banks, deregulation of financial systems, and the deepening of the financial markets in the region. Both the above-mentioned World Bank report and the paper 5 prepared by International Monetary Fund staff, also presented in Session 6, were aimed at identifying vulnerabilities and risks that might threaten the financial stability of CEE countries. The former concludes that these countries vary rather widely with regard to the sustainability of the credit growth. While the largest new EU member states seem to be still on the safe side, the Baltic states and, to a lesser extent, the emerging economies of South-Eastern Europe probably witness a credit boom that leads to significant macroeconomic imbalances and might ultimately end in a crisis.

Without any doubt, the distinguished economists and practitioners who have actively taken part in this conference have been its most valuable asset. * Turning to the rapid credit growth that has been observed in CEE economies over the past years, the first question that comes to an economist’s mind is the following: do these developments pose a threat to the macroeconomic stability of the countries of interest? In order to answer that question, one has to ask another: what forces have been the decisive factors behind the rapid credit expansion? Several papers presented at this conference have sought to provide answers to these questions. One approach, followed by the papers 1 presented in the first session, has been to estimate the equilibrium rate of credit growth and check whether the actual growth has been below or above that equilibrium path. The decomposition of credit growth into a convergence and a boom component has shown that for most of the CEE economies, the former component has been dominant, i.e. the rapid credit expansion can to a large extent be attributed to a continuous improvement in the macroeconomic fundamentals and the initial low credit volume in these countries.
As you may have guessed though, the main reason for central bank transparency is not to make your weekends more relaxing. Central bankers today pursue a policy of broad information because we believe that transparency helps us fulfil our mandate. We are convinced that monetary policy is most effective and least disruptive if it is predictable: no news on monetary policy is good news. In the following, I would like to discuss why, today, central bankers think transparency is crucial for a successful monetary policy and how the Swiss National Bank attempts to achieve transparency in practice. I shall then debate the limitations of what transparency Finally, I would like to reflect upon how transparency in monetary policy may affect the relationship between you, the journalists, and us, the central bankers. 1. The case for transparency  At the Swiss National Bank we see three main reasons to be transparent about our monetary policy. The first reason is that we count on transparency to enhance the effectiveness of our monetary policy. In the public eye, central banks may be viewed as almighty. The plain reality is, however, that our open market operations only have a direct influence on current short-term interest rates. Economic activity and thus future price developments are, however, determined primarily by the shape of the yield curve, i.e. by the expectation of future monetary actions. Transparency about how we judge future inflationary pressures enables us to guide expectations about future short-term interest rates and thus also long-term interest rates.

Indeed, the current crisis may be the most severe seen since the 1930s. However, caution is warranted when interpreting these developments. Not only are deviations from average historical regularities observed, but the full impact of the recent severe crisis is still uncertain. Third, it is clear that both supply and demand factors have driven credit developments in the euro area so far, as confirmed by the evidence provided by the bank lending survey. Overall, our assessment is that credit developments have thus far been affected more strongly by factors associated with weak macroeconomic conditions, such as lower credit demand and a decrease in the average level of creditworthiness of potential borrowers. However, supplyside factors have also played a role and should not be underestimated. SMEs’ access to finance I will now turn to some more direct evidence on SMEs’ access to finance in the euro area provided by a recent ECB survey. This survey, which was conducted for the first time in June-July 2009, asks firms across the European Union about their financing conditions over the previous six months, meaning broadly the first half of 2009 in this case. This survey should help over time to fill the gap regarding information on the financing conditions of SMEs in the euro area, since quantitative statistics provide very little evidence on the actual situation.