samchain/econo-pairs-v1 huggingface dataset:
The fact that forecasters revise their assessments is not at all strange, as new information is received all the time. This indicates that as the conditions for the real economy change and new information is received the forecasts for the repo rate path need to be adjusted. There is nothing particularly dramatic about this. It applies to all market agents, to the major banks, to the Ministry of Finance and also to us at the Riksbank. The great uncertainty factor means that all forecasters should be humble, but this should not prevent them from making forecasts. I would therefore like to emphasise once again that the repo rate path we present in the Monetary Policy Report is a forecast and not a promise. The Riksbank cannot undertake, regardless of what  BIS Review 62/2007  3  happens in the economy, to follow the path published. The interest rate path is quite simply the best assessment we can make at a given point in time, given the information that is then available. New information may change the picture of the economy and then the Executive Board will have to rethink how we set the repo rate. The reason why we have chosen to publish our interest rate forecast despite the uncertainty over the future is largely because we believe this is the best way of explaining our thoughts on monetary policy. It also makes it easier for us to justify forecasts and interest rate decisions and to outline alternative scenarios for the repo rate.

We have now concluded that there is not normally reason to indicate prior to the monetary policy meetings in speeches and press releases how our views of the repo rate path have changed. Our assessment is that it is enough to signal our intentions clearly in connection with the seven monetary policy meetings held every year. In connection with three of these meetings we will publish our own forecast for the future repo rate, and our Monetary Policy Report will show clearly why we have chosen this particular path. On the other four occasions we will make a qualitative assessment of how the most recently published interest rate forecast relates to the new information received. Even if the interest rate path forecast is only a forecast and not a promise, a central bank can hardly be clearer than this with regard to its views on economic developments and the consequences for the interest rate. There may also in exceptional cases be justification for some signalling between two monetary policy meetings. If, for instance, something occurs to radically alter the economic situation, while there is a long time until the next meeting, it may be necessary to make a comment in order to avoid the risk of unnecessary uncertainty in the financial markets. It should then be clear whether the entire Executive Board supports this view or whether it is the opinion of an individual member.
This morning, I will do two things: •  First, take stock of the progress in making the global banking system safer. •  Second, highlight how we can ensure that banks continue to serve the needs of the real economy as we press ahead with the regulatory reform agenda. Progress in Making Banks Safer Let me start with the progress in regulatory reforms and their effectiveness. Key Regulatory Reforms are in Place Since the global financial crisis, regulators have put in place reforms to strengthen banking resilience and financial stability. There has been good progress in three key areas. First, capital. Basel III imposes more stringent capital requirements and larger buffers to cushion against losses. •  Capital requirements have been enhanced for specific exposures, including market risk, complex securitisation, and counterparty credit risk, all of which were major sources of losses in the crisis. Second, liquidity. Rules have been introduced to strengthen banks’ liquidity risk profiles and promote funding stability. Third, addressing the “too-big-to-fail” problem. •  Regulators have established frameworks: − first, to identify Global Systemically Important Banks (G-SIBs); and  BIS central bankers’ speeches  1  − second, to subject them to more intensive supervision, higher capital requirements, and resolution planning requirements. •  The Financial Stability Board (FSB) has set out key attributes for effective resolution, including the preparation of recovery and resolution plans for systemically important financial institutions.

Situations remain very diverse among advanced economies: while the balance sheet of the Bank of Canada amounts to 5% of its nation’s GDP, the Swiss National Bank holds assets equivalent to 80% of the Swiss GDP. Discretionary and technical factors both explain those differences and evolutions. The former holds for countries that choose to accumulate foreign exchange reserves. The latter is topical in the case of the euro area: the ECB’s balance sheet performs an intermediation function between National Central Banks through the so-called Target 2 system. So, as a mechanical phenomenon, balances in the system tend to grow in times of market segmentation i.e. an impaired interbank market and strong capital flows inside the euro area. Similarly, conducting monetary operations via open market or via repos makes the size of the balance sheet more or less dependent on the size of the interbank market. However, the recent increase in size mainly results from a shift in the monetary policy regime. Central Banks have taken a proactive – rather than purely passive – approach to their balance sheets. They have, according to the common parlance, “put these balance sheets to work”. And, as a result, in the formulation of monetary policy, “quantities” – the amounts of assets and liabilities – have come to play an increasing role as compared to “prices” – the level of interest rates. This, of course, is a component and a consequence of unconventional monetary policies.
In the pre-industrial era, the laws of motion and discovery of hydrogen were foundational achievements by UK scientists. They paved the way for future scientific progress – from autos to aerospace – so that present day heroes like Lewis Hamilton and astronauts Tim Peake and Helen Sharman truly “stand on the shoulders of giants” [Newton, 1675] and continue the legacy of UK-led innovation. The invention in the UK of the steam engine, electric motor and telegraph powered the first two industrial revolutions, bringing our world closer together and bringing prosperity to many. In medicine and biology, the discoveries of penicillin, x-rays and the double helix by UK scientists afforded people healthier and longer lives. Meanwhile, the creation of the world wide web by Tim Berners Lee brought the sum of human knowledge to the masses in the third industrial revolution. The UK is expanding this frontier in the fourth industrial revolution through the development of Artificial Intelligence with the likes of Demis Hassabis. Scientific terms like black holes in vitro and Higgs Boson particles are now part of our vocabulary thanks to pioneering UK scientists who have popularised science and brought it into the mainstream. This high regard of the sciences shows up in polls and currency alike. From Darwin to Newton, eminent UK scientists are regulars on top 100 Britons lists and have featured on some of our historic banknotes.

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Financial inclusion facilitates productive financing and investments which generates income for the underserved, improves equality and contributes to sustainable growth. Having an inclusive financial system is also important to ensure economic and social progress on the development agenda is achieved. Therefore, CGC’s goal of ensuring access to financial services for SMEs via a fair and transparent marketplace for financial products and services, including extending credit that provides a pathway towards balanced economic growth and prosperity for all Malaysians should be lauded. Based on the Economic Census 2016: Profile of Small and Medium Enterprises by the Department of Statistics, Malaysia (DOSM), SMEs in Malaysia constituted 98.5% of the total business establishments. Majority of the businesses were in services sector, mainly in wholesale & retail trade, followed by manufacturing, construction, agriculture and mining & quarrying. Financial institutions are the major source of financing for SMEs. As at end-2017, growth in financing to SMEs continues to be sustained above 5%, outstripping financing growth to households and large corporates. The approval rate for financing applications by SMEs of 75%, has also been consistently higher than that for all customers. The share of SME financing over total business financing has steadily trended upwards to more than 50% from 38% in 2010. This reflects an increased focus on SMEs as a strategic growth driver for financial institutions. According to the latest bi-annual survey by SME Corporation Malaysia (SME Corp), 97% of SMEs which applied for financing from FIs affirmed that they were able to obtain financing.

I have, however, for the reasons I mentioned earlier in my speech, been somewhat more pessimistic than the majority of the Executive Board as regards inflation assessments at the forecast horizon. Fluctuations of consumer prices a few tenths of a percent up and down around the target in an economy with a strongly accepted price stability regime are per se less important than the mode of functioning of the economy. I am more concerned about what can happen with inflation and growth after the forecast period if demand increases at the rate we have anticipated. The simple rule that says that monetary policy shall only react if the target for inflation is not met during the forecast period is a good help when conducting monetary policy. However, it is not reasonable to mechanically apply this rule in every situation. The consequences that the economic development can have for macroeconomic stability and inflation beyond the forecast horizon must also be weighed in. The risk for financial imbalances now being built up when indebtedness is increasing and of inflationary pressure accumulating at the same time must in my view therefore be taken into account in the monetary policy decisions. A development that I described earlier can be the consequence if the expansion of demand and credit continue to increase at a high rate. The quantity of money and lending, especially to households, are for instance increasing at present at a rate which is probably not sustainable in the long term.
First, Spain faces the challenge of reducing the unemployment rate and the temporary employment ratio, which have been persistently high in recent decades. In particular, the unemployment rate of the Spanish economy was, on average, 15.9% over the 2000-2019 period, as against 9.3% in the euro area. Also the share of temporary employment was 28.3% over the same period in Spain, but only 15.4% in the euro area. Young people (those under the age of 24) have been particularly affected by this instability, with their rate of unemployment (32.5%) and their share of temporary employment (69.5%) standing well above the euro area average in 2019 (15.6% and 52.4%, respectively). Reducing this high employment instability is key, especially for young workers, given its adverse economic effects in many spheres. For example, employment instability affects the 3  accumulation of workers’ human capital and can thus have very persistent effects on their working lives. Furthermore, it also increases uncertainty over the future income path of the affected workers. This not only has consequences for spending decisions, but also for emotional well-being, the formation of new households and the birth rate. In this context, one of the main objectives of the labour market reform enacted in 2022 in Spain is precisely to combat the high proportion of temporary employment. And indeed, since the approval of this legislation, permanent hiring has quickened significantly and temporary hires have slowed, with permanent contracts increased most among permanent seasonal workers and permanent part-time workers.

2  Normally, the reserve rate acts as a floor and the overnight lending rate as a ceiling for the overnight interbank rate, as banks will not normally lend reserves at an interest rate that is lower than the rate they receive from the central bank or borrow reserves at an interest rate that is higher than the rate they have to pay the central bank. There may be a stigma attached to using this lending facility. When this stigma cost is high, the market rate may exceed Norges Bank’s overnight lending rate. If one or more banks do not have access to the central bank’s deposit facility, the market rate may fall below the reserve rate. 3  Competition among banks keeps the overnight interbank rate close to the key policy rate. A bank holding reserves in excess of its quota towards the end of the day can avoid having to deposit these excess reserves at the reserve rate by lending in the interbank market to a bank with room on its quota. This bank will be able to deposit the borrowed reserves at the key policy rate and earn an interest rate margin as long as the borrowing rate is lower than the key policy rate. Competition among banks with room on their quotas pushes up borrowing rates and pushes down interest rate margins. 2  BIS central bankers’ speeches  the level of short-term money market rates. This also applies when the reserve rate is negative.
And back then, everyone agreed that the revised rulebook needed to be a global one. The crisis clearly demonstrated that banking is a global business, so the rules that govern it should also be global. Today, however, it is much less clear whether everyone still subscribes to the idea of a global rulebook. And this worries me. It worries me because it shows that people are starting to forget the lessons we learned from the crisis. That’s why we need to finalise the global rulebook, Basel III, as quickly as possible. But that is just the first step. The second step is to implement and apply the rules in a broadly consistent manner at regional and national level. And this is a challenge – sometimes we see quite a different interpretation of the standards when it comes to implementing and applying them at national level. You won’t be surprised that I will focus on the euro area. The euro area countries have become closely intertwined. For many years now they have shared a single market and a single currency. Since the crisis, they have even begun to build a banking union, which includes a single supervisor. But when it comes to regulation, we still see differences between countries. It is true, of course, that we have a single rulebook in Europe. As one might expect for a union, 1/4  BIS central bankers' speeches  we had to come further than other countries. However, parts of that rulebook come in the form of EU directives.

Sabine Lautenschläger: Regulation, supervision and market discipline - striking a balance Statement by Ms Sabine Lautenschläger, Member of the Executive Board of the European Central Bank and Vice-Chair of the Supervisory Board of the European Central Bank, at a conference hosted by the Financial Stability Institute, Basel, 18 September 2017. * * * Almost nine years ago to the day, the investment bank Lehman Brothers failed. What followed was a financial crisis that wreaked havoc on economies around the globe. But it did more than that. The crisis also shattered many beliefs about how the banking system works and how it should be regulated and supervised. There was a time when many people believed that the market could bring about a stable and efficient banking sector on its own. They thought that market forces would ensure banks had sustainable business models that were resilient to the ups and downs of the economy. We now know that this did not turn out so well. In fact, there are three pillars that support a stable banking sector: regulation, supervision and market discipline. The crisis made clear that all of these pillars were in need of some repairs. The good news is that we have come a long way – today, the banking sector rests on more solid foundations than before. But some issues still need to be resolved. Let us briefly look over them, beginning with regulation. Once the crisis had started, everyone agreed that the rulebook needed to be rewritten.
For instance, it is very high among people who do not have upper-secondary school approved grades, as well as among immigrants and young people. These groups comprise a relatively large share of job-seekers. Structural measures to enable these groups to gain a foothold in the labour market are a better recipe than expansionary monetary policy for bringing down unemployment. A further indication that long-run labour market developments are governed by factors other than monetary policy is that unemployment has varied substantially between the countries in the euro area, despite their common monetary policy. Trying to place the responsibility for employment with monetary policy and the central bank is thus, in my opinion, not very meaningful. It could even be counter-productive as the focus is moved from the places where the problems really can be dealt with – the labour market and the political sphere – to a place where they cannot. Sometimes one almost gets the impression that the actual purpose of trying to transfer responsibility for employment to the central bank is to avoid having to take the fairly unpleasant decisions that might be needed to create good conditions for employment. Of course, it would be much easier if the employment problem merely concerned cutting the policy rate to a low level and keeping it there. But it is not that simple.13 Has monetary policy been unclear? Let me now move on to the third type of criticism. It claims that monetary policy has been unclear and difficult to comprehend, particularly in recent years.

Niklaus Blattner: System stability and security of the systems Summary of a speech by Prof Dr Niklaus Blattner, Vice-Chairman the Governing Board of the Swiss National Bank, at the Luzerner Tage für Informationssicherung (LUTIS, conference on information security), Lucerne, 25 May 2004. The references for the speech can be found on the Swiss National Bank’s website. *  *  *  The stability of the banking system and the security of the financial market infrastructure - including the stock exchanges and especially payment and securities settlement systems - have become an important concern of central banks all over the world in recent years. This has notably happened against the background of the numerous financial crises witnessed during the past decades. Moreover, events such as 9/11 have heightened awareness for the security of the financial markets and other infrastructures. In Switzerland, the growing importance of system stability has also been reflected in the new National Bank Act, which entered into force on 1 May 2004. Within the framework of its principal mandate of pursuing a monetary policy in the interests of the country as a whole while at the same time ensuring price stability, the Swiss National Bank (SNB) is legally obliged to make a contribution to system stability and to facilitate and secure the operation of cashless payment systems. In implementing its mandate, the SNB takes preventive measures as well as measures aimed at overcoming crises. For instance, in a crisis the National Bank plays an important role in providing liquidity.
The picture of employment is nevertheless rather divided. The number of jobs in the manufacturing industry has declined markedly, while jobs in the public sector and the service industries have increased. Given this, the situation on the labour market is of particular interest. It appears to be relatively constrained, considering that we are at the end of an economic downturn and wage increases have also been slightly higher than expected, particularly in the construction sector and the service industries. As the level of employment has been retained, despite the decline in demand, productivity has shown a weak development, particularly in the services sector. To some extent, the effect of companies' higher costs has not had an impact on prices, but instead led to falling profit shares. However, it now appears that the demand situation has enabled companies to shift a larger part of the cost increases onto consumers. So, how come wage increases have been higher than expected? One possible explanation may be that the resource utilisation in the economy has been higher in recent years than we had earlier believed. A strained resource utilisation means quite simply that the total demand is high in relation to the production capacity of the economy. This is usually revealed, for instance, in rising wage increases and higher underlying inflation. In the Inflation Report presented on 19 March 2002, we have made a slight upward revision for resource utilisation.

These include the low precipitation that affected hydroelectric power, various diseases that affected livestock and the fact that Sweden and southern Europe suffered poor harvests. We are in agreement with other forecasters and analysts that the inflation rate will fall as the effects of the transitory price rises abate and inflation approaches 2 per cent in early summer. In the longer term perspective, however, the picture looks slightly different and developments indicate an inflation rate above the target of 2 per cent. The assessment contained in the main scenario of the most recent Inflation Report has CPI inflation at 2.2 per cent one year ahead and 2.4 per cent two years ahead. The corresponding forecast for underlying inflation, UND1X, is an increase of 2.2 per cent at both one and two years ahead. It is the latter measure that is the most central to monetary policy. However, each inflation assessment also takes into account the risk spectrum. The risk spectrum mainly concerns domestic inflationary pressure. If resource utilisation comes under greater strain than the Riksbank has estimated in its main scenario, or if the potential growth rate has been overestimated, there is a risk that inflation will be higher than expected in future. Taking into account the risk spectrum, underlying inflation comes out at 2.3 per cent both one year and two years ahead. Although the inflation rate is expected to fall over the coming months, the forecasts indicate that it will exceed the inflation target one to two years ahead.