samchain/econo-pairs-v1 huggingface dataset:
Figure 6 World inflation (*) a) Headline inflation  b) Core inflation  (annual change, percent)  (annual change, percent)  U.K. U.S.  10  10  Latin America Eurozone  8  8  6  6  4  4  2  2  0  0  -2  -2 00 02  04  06  Eurozone Latin America  U.K. U.S.  00 02 04 06 08 10 12 14 16 18 20 22  08 10 12 14 16 18 20 22  (*) For Latin America, the simple average of annual inflation of Brazil, Colombia, Mexico, and Peru is used. Sources: Statistics bureaus of respective countries. 13  Figure 7 Waiting times at Chinese ports (average wait, in days)  3.5  China  Shipping costs (1) (index, 2018=100)  1,400  Shanghai  Commodity prices (2) (index, 2018=100)  From China to the U.S. From China to Europe  1,200  3.0  Natural gas Oil (3) Wheat Metal index (4)  250  1,000  2.5  300  200  800  150  2.0 600 1.5  100  400  1.0  200  0.5  0 20  21  50 0 18  18 19 20 21 22  22  19  20  21  22  (1) Rate for transporting a 40-foot container on the respective routes. (2) For natural gas and wheat, one-month futures are used. (3) WTI-Brent average. (4) S&P GSCI Industrial Metals. Source: Bloomberg.

But they affected most of all those with high public debt levels, a lack of fiscal space, fragile market access and, especially, low growth. Sovereign risk was then transmitted into the domestic banking sector through two channels. The first was through banks’ direct exposures to their own governments’ bonds. Between January 2010 and July 2012, banks in Greece, Italy and Portugal incurred aggregate losses on sovereign bonds of vulnerable countries2 amounting respectively to 161%, 22% and 36% of their Core Tier 1 capital. 3 Regardless of whether these losses directly affected regulatory capital4, they had an adverse effect on perceptions of solvency in those national banking systems. The second channel was via negative confidence effects. Because the public sector makes up roughly half the economy in many euro area countries, and because of credit rating dynamics, the fear of possible sovereign defaults had a dramatic effect on confidence in the domestic private sector. Any distinction between firms and banks, and between banks with and without high sovereign exposures, disappeared. The general loss of confidence in these countries’ prospects reverberated through the banking sector via a further fall in growth.5 In this way, the crisis spread to banks that did not have significant exposures either to US subprime assets or to domestic real estate, and therefore had not until then needed to be bailed out.
However, it is also in the big banks’ own interest to hold sufficient loss-absorbing capital, as a high level of resilience strengthens their competitiveness in the core business of wealth management, and boosts market confidence. Situation at domestically focused commercial banks I would now like to turn to our assessment of domestically focused commercial banks. There are clear and growing signs of a build-up of imbalances on the Swiss mortgage and real estate markets. Over the past 12 months, mortgage lending volumes and real estate prices have once again grown strongly. Thus, the mortgage-to-GDP ratio, which was already high in a historical comparison, continued to increase. At the same time, residential real estate prices have reached levels that, in some cases, exceed those that can be justified by fundamental factors, such as demographics or per capita income. Taking the national average, this is the case for prices of owner-occupied apartments. In some regions such as Lake Geneva, Lake Zurich and Lake Zug, this is the case, on average, for all segments of the residential property market. 2  BIS central bankers’ speeches  Under the baseline scenario, the momentum in the mortgage and real estate markets continues. It is therefore to be expected that imbalances will continue to build up, and that, consequently, the risk of an abrupt correction of these imbalances will increase over the medium term. For domestically focused commercial banks, average capitalisation relative to regulatory requirements is at a historically high level.

One of the more active SEPA communities, France, has already indicated an expected end date. This is a positive example, and other communities should follow. Should, however, banks need more preparation when they move to the new SEPA framework, the ECB and the European Commission stand ready to consider supporting measures, including regulation, if required. Let me now turn to the readiness of the industry for SEPA card payments. I will briefly present some of the ECB’s views on cards. Later today the panel will provide their views on the new cards landscape in SEPA and I am looking forward to an interesting discussion. Readiness of SEPA card payments? Card payments are closely monitored by the Eurosystem because they are now the most popular non-cash payment instrument in the euro area. According to our Blue Book statistics, more than 15 billion card payments were made in the euro area in 2006. 3 Between 2000 and 2006, we also noticed that the use of cards increased more quickly than the use of other instruments. The use of cards increased at an impressive rate of 15% per annum. The impact of any changes in the card market is significant for all stakeholders. Given that the overall cost of payments at a point of sale ranges between 0.4% and 0.65% of GDP 4 , it is clear that any development in the card market also has major implications for the economy. An increased use of cards will reduce some of the costs related to other payments, such as cash.
The one-week repurchase agreement rate, following the last cut in January 2013, reached the lowest historical level, to 3, 75%. It is a record low, not only historically but also if we compare it with all other economies in the region, including most new EU member states as well. The Bank of Albania deems that the monetary conditions are appropriate to ensure the meeting of inflation target in the medium run, providing at the same time the necessary monetary stimulus to support domestic demand. However, from the viewpoint of this meeting, the future of monetary policy is what really counts. As stated in the last Statement by the Bank of Albania’s Supervisory Council, the Bank of Albania will continue to pursue a stimulating monetary policy, as long as inflationary pressures remain weak. Furthermore, I would like to ensure the banking system that the operational framework we provide will maintain the same stimulating nature. It aims at preventing banks from any tensions, even sporadic ones, with regard to market liquidity adequacy (its quantity, price and maturity). 3 – Prudential pillar While both first pillars impact indirectly and over an extended period of time, the prudential pillar impacts directly and swiftly on credit recovery. It includes a number of measures that will release financial resources to banks and will encourage them to channel those resources toward lending. Regulatory changes are at the core of these measures: •  Reduced requirements for liquid assets by banks;  •  Changed risk coefficients in the investment structure to boost lending.

If we calibrate that using multipliers from the Bank’s model, cumulative recession probabilities would rise from around 45% to around 65% at a 3-year horizon. These ready-reckoners are, if anything, likely to understate the behavioural impact of a tightening in a nerve-frazzled environment. This suggests that a policy of early lift-off could be self-defeating. It would risk generating the very recession today it was seeking to insure against tomorrow. In that sense, the low current levels of interest rates are a self-sustaining equilibrium: moving them higher today would run the risk of a reversal tomorrow. These self-reinforcing tendencies explain why the glue sticking interest rates to their floor has been so powerful. Taking these risks together, my judgement on the appropriate monetary stance in the UK is relatively little altered from earlier in the year. The current level of interest rates remains, in my view, appropriate to assure the on-going recovery and to insure against potential downside risks to demand and inflation. Looking ahead, I have no bias on either the size or direction of future interest rate moves. Conclusion In Stuck, the boy’s attempts to unstick his kite from the tree come, well, unstuck. The cat, the gorilla and the ocean-liner, along with assorted other objects, get stuck up the tree too. In  10  BIS central bankers’ speeches  trying too hard to unstick his kite, the boy makes a difficult situation worse. Eventually, with the passage of time, the kite comes free of its own accord.
Reactivating national demand has taken on a decisive role in the recovery, enabling the rebalancing of the internal and external components of expenditure. This change in the dynamics of domestic expenditure compared with events during the crisis years is in response to a series of factors, including most notably the growing normalisation of financial conditions, headway in the construction of the Banking Union, favourable developments in the labour market and the unquestionable improvement in confidence. Against this backdrop, both private consumption and business investment have regained momentum, underpinned by the improvement in the financial environment. Mention should also be made of the role being played by investment in construction, which might begin to turn around in 2015 or 2016. Recent developments in house prices are along the same lines, although certain caveats should be voiced: for the first time in six years, growth rates in the aggregate domestic indices of real estate prices are close to zero, or slightly positive, although significant differences across regions remain. Since the crisis began, spending by private agents has been constrained by the need to reduce the high levels of debt built up during the expansion that ran to 2008. Recently, there has been progress in private sector deleveraging, while the attendant restrictive effects on spending are being mitigated by a shift in lending flows towards more creditworthy agents and, in particular, towards companies better placed to commit to new investment projects.

2  BIS central bankers’ speeches  In recent years, goods and services exports have been the engine of our economic activity, against a background of marked weakness of domestic private expenditure and contained imports from the rest of the world. During 2014, foreign trade flows have undergone changes of some scale, as a result of the loss of steam in our export markets (in the emerging economies and, since the spring, in the euro area alike) and the acceleration in imports as the recovery progressively took hold. As a result, the contribution of the external sector to GDP has declined appreciably and the pace of adjustment of the external imbalance has been less rapid than expected. Conceivably, some of these developments are temporary and will be reversed, in part, in the coming months. Moreover, the depreciating trend of the euro may help improve the external balance in the near future. However, the weakness of the euro area, along with the high sensitivity of our imports to changes in final demand, highlight the need to further improve the competitiveness of our economy. As regards inflation, the Spanish economy is currently posting very low rates. This partly reflects temporary factors, but also structural factors that account for the subdued tone of core inflation. Inflation rates have been trending downwards for months throughout Europe, and Spain is one of the euro area countries that has moved most markedly in this direction. We can argue about the advantages and disadvantages of a price situation such as that described.
Labour market reforms enacted over the past twenty-five years have led to a more flexible workforce. Unemployment has fallen without generating unsustainable growth in wages, and hence inflation. And in recent years the role of migrant labour has been important in easing the bottlenecks and skill shortages in what was otherwise an undoubtedly tight labour market. Firms have been able to adjust and adapt to events more quickly and that has produced less volatility in output, employment and inflation for the economy as a whole. With economic growth expected to slow over the coming year pressures in the labour market are likely to ease, reducing the demand for migrant labour, and possibly beginning to reverse recent strong inflows. A second fundamental change has been to the monetary policy framework. The experience of those three recessions and bursts of inflation has led to a settled consensus that monetary policy should be directed at controlling inflation and that there is no long-run trade off between inflation and output growth. This consensus has been embedded by transferring interest rate decisions to an independent Bank of England, with a clearly defined inflation target of 2% measured by annual CPI inflation. That has helped build confidence that if inflation does move away from target, we on the Monetary Policy Committee will act to ensure that it returns to target in the medium term. That confidence should ensure that  2  It has only deviated by more than 1 percentage point from that average on 4 occasions.

Presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR) Press conference, Friday 28 May 2021  Speech by François Villeroy de Galhau, Governor of the Banque de France Chairman of the ACPR  Ladies and Gentlemen, It gives me great pleasure to be with you again for the presentation of the 2020 Annual Report of the Autorité de contrôle prudentiel et de résolution (ACPR – Prudential Supervision and Resolution Authority), in the company of the new Vice-Chairman, Jean-Paul Faugère, Dominique Laboureix, Secretary General of the ACPR, and Alain Ménéménis, President of the Sanctions Committee. I would first like to pay tribute to the staff at the ACPR – more than 1,050 men and women whose professionalism is exemplary and recognised – who have worked especially hard, both on-site and remotely, to monitor closely the effects of the economic crisis on financial stability. Exactly a year ago, when we were just at the start of the Covid crisis, I pointed out to you, in this exact same setting, how vigilant we were being and how confident I was, both in the competence of our supervisor and in the resilience of the financial system. Looking back, we haven’t done too badly at all: at this stage, the financial risks are, on the whole, under control, thanks to resilient financial institutions with solid fundamentals (I).
Generally, it is appropriate to increase the contributivity of the system and its transparency, ensuring a level of sufficiency for those households with more limited resources. Also, establishing automatic adjustment mechanisms would help stabilise the system, adapting it to demographic and economic changes. Indeed, several EU countries (such as Germany, Sweden and Italy) have already established a link between the level of benefits or retirement age and life expectancy. Combating climate change and smoothing the transition to a more sustainable economy are another of the fundamental challenges we face. Fiscal policy should take the lead in attaining objectives in this field, both to deter the most environmentally harmful activities, through an internationally harmonised tax system, and to foment the public and private investment needed to develop cleaner technologies and alleviate the social costs of the transition. As to inequality, we began the current crisis with a higher level than was the case at the end of the previous upturn, and everything suggests that this crisis will entail a further increase. The employment protection and income support measures approved should contribute to lessening the vulnerability of the households most affected. Also, many of the reforms intended to improve productivity or lower unemployment and job insecurity are vital for  7  reducing inequalities. The minimum life income scheme could, in coordination with regional government arrangements, contribute to alleviating extreme poverty. In this connection it will be important, as provided for in the scheme’s founding legislation, to assess its application on an ongoing basis.

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We have configured the activities and reporting lines in order to ensure full operational independence and to avoid conflicts of interest between the supervision and resolution functions. Of course, this takes place without prejudice to the exchange of information and cooperation obligations. To be more specific, supervisory decisions do not pose constrains to resolution-related ones. Moreover, the staff involved in performing the resolution function is structurally separated from the other NBR functions. 3. Romania: a short history of institutional changes for ensuring financial stability The global crisis has made obvious for all of us that price stability and financial stability are much more intertwined than we used to think. I believe this development has farther-reaching consequences when it comes to the future of central banking. As I pointed out in November last year at the World Policy Conference organised in Montreux, I cannot imagine a future where the explicit concern for financial stability and the macroprudential policy are not central banking fixtures. In Romania, the concern for ensuring and strengthening financial stability was visible in several significant changes of the institutional framework, operated already before the outbreak of the global economic and financial crisis. Specifically, the NBR’s Financial Stability Department was created as early as 2004, with the first edition of the annual Financial Stability Report – a report that will be published on a half-yearly basis starting this year – being released in 2006.

What the crisis has indeed challenged is the widespread conviction that meeting one particular stability criterion, while necessary in order to achieve the others, is also a sufficient condition  BIS central bankers’ speeches  1  to do so – after all, maintaining price stability, while valuable in itself, has proved insufficient to ward off major financial or macroeconomic instability. As a matter of fact, Andrew Crocket claimed ever since 2003 that the “peace dividend” yielded by the successful war against inflation had not lived up to expectations and therefore the battlefront against financial instability should not be overlooked. Regardless of how this battlefront is approached, it is of the essence to make sure that the tasks entrusted to the central bank are feasible. Otherwise, if the monetary authorities are overburdened with possibly conflicting goals, the major risk is to render them inefficient and unable to deliver a single one of their objectives. This is the very reason why the issue of central bank governance is so intricate and delicate: one needs to reconcile objectives that, under certain circumstances, might even prove incompatible. 2. Integrating or separating price and financial guardianship Given that the conference focuses on central bank and supervisory governance, allow me to touch on the issue of integrating price guardianship and financial guardianship within the central bank. As you probably remember, the idea that the two tasks should be completely separated has gained ground in the 1990s.
We know that employment in some service industries has fallen. This may indicate that many service enterprises have adjusted their workforces. To some extent, higher costs can more easily be passed on to customers through higher prices in this sector. This picture is typical of the final phase of an expansion. A tight labour market and the contest for economic resources lead to a sharp increase in real wages. This results in high growth in household income, consumption and housing investment. The propensity to borrow increases and house prices rise sharply. On the other hand, the business sector faces pressures on profitability, a high cost level and declining investment. Commercial property prices fall. At the same time, corporate restructuring brings growth in employment to a halt. When costs reach a high level, employment starts to fall. The period of expansion has then come to an end. The cost level must be adjusted to restore balance in the labour market. Wage formation in Norway is subject to an institutional and statutory framework and agreements that have been developed over several decades. The result of negotiations is influenced by labour legislation, including regulations relating to job protection, unemployment benefits and the rules that apply to cooperation and settlement of industrial disputes. In important segments of the labour market, there appears to have been a shift in the social partners’ strategic position in negotiations in favour of employees.

The operational target of monetary policy as defined by the Government is inflation of close to 2.5 per cent over time. The inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. Households, businesses, public entities, employees and employers can base decisions on the assumption that inflation in Norway will be 2½ per cent over time. The responsibility for implementing monetary policy has been delegated to the central bank. This is also the case in comparable countries. The central bank shall exercise professional judgement within the framework of its mandate. Assessments of economic developments and the basis for interest rate decisions are presented to the public. This makes it possible for others to gain insight into the assumptions and analyses underlying interest rate decisions. The operational target is well defined. The Bank’s judgement can therefore be evaluated retrospectively. Norges Bank explains the reasoning behind its judgement in its annual report. The Bank’s reporting requirement is set out in § 75, litra c of the Constitution, which stipulates that the Storting shall supervise Norway’s monetary system. Up to 1950, the annual report was submitted directly to the Storting. Today, in keeping with the Norges Bank Act, it is sent to the Ministry of Finance for submission to the King in Council and communication to the Storting in the Government’s credit report. The law thereby provides a framework that allows the government authorities to follow up the performance of the delegated responsibility for monetary policy.