samchain/econo-pairs-v1 huggingface dataset:
Reforms are all the more important to help the economy adapt smoothly to external shocks such as those currently observed. In many countries, governments also need to press ahead with fiscal consolidation and fiscal reform. Budget deficits in the euro area as a whole are expected to improve this year, but this will mainly be the result of strong economic growth and one-off revenues from the sale of UMTS licences. Abstracting from these factors, there has been little further progress in the consolidation of public finances on average. Moreover, current budget plans for 2001 imply that the average fiscal stance will be slightly more expansionary next year. For the first time since 1993, the primary balance ratio as a percentage of GDP for the euro area is expected to deteriorate in 2001. This somewhat more expansionary stance demonstrates that the reform strategies have, in some cases, been unbalanced. Many countries have enacted reductions in personal and corporate income taxation and social security contributions, but have not set ambitious expenditure ceilings. While the tax reforms currently being implemented or planned in a number of euro area countries are a welcome stimulus to the supply side, they need to be accompanied by restraint in government spending. The longer-term sustainability of budget positions also needs to be ensured in several countries with regard to the consequences of planned fiscal reforms, such as those of pension systems, and the reduction of taxes. The policy adjustments necessary to create the financial leeway for these reforms should be prepared now.

The adopted solution was embedded in the so-called Emergency Act, which was passed by Parliament on 6 October 2008. The Emergency Act saved the domestic operations of the banking system by creating new banks, which involved carving domestic assets and liabilities out of the old, failing banks. The rest – and the much larger part – went into a resolution process. In order to reverse the ongoing run on domestic deposits, a declaration was made that all deposits in Iceland were safe, but this did not include deposits in foreign branches. Furthermore, all deposits in Icelandic-headquartered banks were given priority over other unsecured claims, including in foreign branches. As regards the blanket guarantee, the distinction made between domestic deposits and foreign currency deposits in the banks’ foreign branches added fuel to the fire of the so-called Icesave dispute about the settlement of deposit guarantees in the Dutch and British branches of one of the banks. But guaranteeing those deposits would never have been credible and might have bankrupted the Government had it been attempted. The deposits in question were in foreign currencies and amounted to 11½ billion euros – far in excess of Iceland’s available FX liquidity at that time, as the sovereign was completely closed off from foreign capital markets.
The impact of employee misconduct extends beyond the individual and can impact the firm as a whole, as well as the economy and financial markets more broadly. That is, misconduct risk has both prudential and financial stability implications. For a firm, employee misconduct can make it less resilient by diverting management attention, by harming the firm’s reputation in a way that impedes its business, by driving adverse change in the composition of the workforce, or by depleting its capital through losses or fines. Since 2008, 1/5  BIS central bankers' speeches  for example, firms have paid, in aggregate, in excess of $ billion in fines related to misconduct.2 For the broader economy and financial markets, misconduct can inflict harm directly on consumers and employees. In addition, over time, market participants may lose confidence in the financial sector as a whole and adversely impact the sector’s critical role in financial intermediation. In 2016, for example, Gallup found that confidence in the financial sector had fallen by half over the previous decade.3 These incidents of misconduct can introduce frictions and raise the cost of financial intermediation, which in turn, reduces the flow of productive financial services. These sorts of external effects that spill over to other firms, consumers, and businesses are a critical rationale for official sector intervention related to employee misconduct. In the U.S., official sector concern with the damage inflicted by employee misconduct dates back to the Banking Act of 1933.

Role of the Official Sector These are some of the types of market failures that may explain why a firm might not invest enough in its cultural capital to mitigate risks, including misconduct risk. And they suggest a role for the official sector to encourage resiliency, including investment in cultural capital, beyond what the firm would choose to do on its own. That is, if firms don’t have sufficient incentives to overcome these forces, then the official sector should push toward a better outcome. In the case of misconduct risk, supervision seems like a particularly appropriate approach because the hard-to-define and evolving nature of behavior likely prevents easy regulatory solutions.9 Though some rule-writing could help re-align incentives, misconduct risk can take many different forms and, by its nature, seek to circumvent the rules. Essential drivers of culture and of misconduct risk, for example, relate to leadership and “tone from above,” areas that are inherently behavioral and qualitative in nature. Supervisors can assess behaviors in an ongoing manner and help to identify potential risks.10 I’ll note that the need for a supervisory focus on employee misconduct and its underlying drivers dates back one and a half centuries to the origins of bank supervision. Then, in the U.S., the emphasis was on the “responsibility and integrity” of bank managers and directors and its relationship “to public confidence.”11 Part of the role of supervisors is to close gaps in the rules to advance safe and sound banking practices that support the sustained provision of financial services.
A key element for the convergence of inflation to the 3% target within two years is that the significant imbalances that accumulated in the economy in 2021 are further resolved. In the central scenario, in 2022 and 2023 the economy will grow below potential, with the activity gap narrowing gradually and remaining negative for some quarters. This will be compounded by a slow reduction in the international prices of fuel and foods from their current levels and a declining real exchange rate (RER), but still remaining above its averages of the last 15 to 20 years (figure 11). It is important to note that this projection does not consider changes in the structural parameters of the Chilean economy, which we are currently updating and will make available later in the year. The liquidity that remains from the stimulus measures adopted in 2021 will continue to sustain consumption in the immediate future. However, most fundamentals suggest that it would weaken in the second half of the year. In the labor market, job creation continues, but has slowed down compared to previous months and with lower real wages, in a context in which the unemployment rate remains below 8%. The financial conditions faced by households have tightened, because of both higher interest rates and stricter credit requirements. Accordingly, coinciding with the effects of inflation on households' purchasing power, consumer expectations have deteriorated sharply in recent months, with worsening perceptions of employment, inflation, and purchases of goods.

News conference  Berne, 14 December 2017 Andréa M. Maechler  Introductory remarks by Andréa M. Maechler  I will begin my remarks with a review of the situation on the financial markets, before going on to discuss the progress made in reference interest rate reform. Situation on the financial markets  Let me start with developments on the financial markets. The monetary policy pursued by the large central banks was once again the focus of attention for the financial markets in the second half of the year. Given moderate inflation growth, financial market participants are expecting only a very gradual normalisation of monetary policy across the world. Against this backdrop, government bond yields have remained persistently low. Muted expectations regarding a move away from expansionary monetary policy, coupled with favourable economic data and good corporate results, have contributed to largely positive risk sentiment on the financial markets. This has been reflected, for instance, in a stock market rally, lower yield spreads on corporate bonds and reduced demand for safe-haven assets such as the Swiss franc. In this positive market environment, volatility has remained low and volatility for the US equity and bond markets, calculated using option prices, has dropped to record lows (cf. chart 1). Despite positive economic data in Europe, European stock indices have risen only moderately. The Stoxx Europe 600 has climbed some 3% since mid-year. One reason for the modest stock market performance in Europe is the strengthening of the euro, which impaired corporate earnings growth somewhat.
Foreseeably, however, spending on unemployment benefits will fall by slightly more than 6% due to the projected stability in unemployment figures and to regulatory amendments to the benefits system. Note, however, that changes in expenditure on social security pensions in 2013 will be affected by the revision that should be made, taking into account the inflation rate recorded to November 2012. Since an increase of 3.5% is projected and the corresponding adjustment payment could be around 2.5%, that would represent an increase in spending of approximately € billion in 2012, which would be consolidated in 2013 and in future years. I should mention that, in the next budget, one of the most important agreements of the so-called Toledo Pact will finally be concluded, in connection with the separation of the system’s sources of financing: on one hand, contributory pensions will be financed exclusively by contributions; and, on the other, the non-contributory top-ups and non-contributory pensions will be financed by taxes. This separation, which began to be applied in 2002, will be completed in 2013: and this is good news for the proper functioning of the system as a whole and for its future. Public debt As I indicated above, from the beginning of the crisis in 2007 until the end of 2012, the ratio of our public debt – as defined in the Excessive Deficit Protocol – to GDP has increased by 50 pp. Undoubtedly, this is the highest increase over the shortest period in this ratio in Spain’s economic history.

In terms of the different agents, a deficit target, in National Accounts terms, of 3.8% of GDP is proposed for central government and the Social Security system, compared with a deficit of 4.5% of GDP projected in 2012, which would represent an improvement of 0.7 pp of GDP, similar to that projected for the regional governments, which should reduce their deficit from 1.5% in 2012 to 0.7% in 2013. The adjustment would be completed with the projected reduction of 0.3 pp in local government to reach a balanced budget in 2013. Revenue On the revenue side, this budget tightens the fiscal pressure both in terms of direct and indirect taxation, with a range of new measures. Furthermore, it should be recalled that, in 2013, the measures approved in 2012 in relation to higher personal income tax rates, the increase in the rate on income from fee-earning activities, changes to corporate income tax and the rise in VAT rates will still have a significant impact. Despite the background of recession, the tax take is projected to increase overall by 3.7%. The net effect of all the tax regulation measures with an impact in 2013 is estimated to be approximately € billion. Net of this impact, revenue would fall by 0.5%. As for the Social Security Budget, the 1 pp reduction planned last July is postponed or ruled out, and a 1.1% fall is projected in 2013 in total social security contributions compared with the initial budget for 2012.
Such doubts can ultimately lead to an expectation of higher inflation and therefore complicate monetary policy. Seen from the perspective of regulatory policy, demands for the SNB to directly finance government tasks are therefore to be clearly rejected. The SNB’s monetary policy must not be driven by profit or loss. These are just by-products of our monetary policy. Our mandate is to conduct a monetary policy that ensures price stability in the medium and long term while taking due account of economic developments. Price stability is the most important contribution the SNB can make to our country. The SNB will therefore continue to advocate a framework for monetary policy based on the principles of regulatory policy. Page 4/5  The challenge of ensuring price stability Ladies and gentlemen, the current global situation highlights the importance of central banks’ focus on price stability. The monetary policy environment has changed considerably due to the pandemic and the war in Ukraine. After years of expansionary monetary policy aimed at preventing inflation from falling too low, the central banks of many countries are today faced with the challenge of fighting inflation that is too high. I will therefore close by saying a few words about the SNB’s current monetary policy. Inflation in Switzerland is lower than abroad. However, in this country, too, it has still increased much more than was generally expected. At 3.5%, it is at its highest level since the 1990s.

To facilitate banks’ access to borrowing from Norges Bank during the period of financial turbulence, collateral requirements for loans were temporarily eased. In October 2009, it was announced that the temporary rules for collateral requirements would be changed. Acceptance of new securities eligible under the temporary rules was discontinued in October. Securities already approved under the temporary rules would be eligible as collateral until maturity, or at the latest until 15 February 2012. Changes in the so-called bank quota were also announced. Under the current rules, up to 35 per cent of a bank’s borrowing facility can be based on collateral in bonds issued by other Norwegian banks. Debt instruments issued by foreign banks will be included in the bank quota as from 1 December 2010. Securities issued by banks will no longer be eligible as collateral for loans as from 15 February 2012. Covered bonds will still be eligible as collateral, including, until further notice, bonds to which no credit rating has been assigned and bonds issued by a bank’s own mortgage company. This is expected to contribute to the development of the Norwegian covered bond market. The housing market – a source of disturbances in the economy Banks have had strong incentives to extend credit for house purchases. Even during the banking crisis around 1990, Norwegian banks’ losses on residential mortgages were low. This is reflected in the low risk weights for residential mortgages in banks’ risk models. For an individual bank, residential mortgages are low-risk loans.
See ECB (2021), “An overview of the ECB’s monetary policy strategy”, July. 6. These include global supply chain disruptions, zero-COVID policies, production cuts by oil exporting countries and the effects of the war in Ukraine on energy and commodity prices. 7. Panetta, F. (2022), “Mind the step: calibrating monetary policy in a volatile environment”, speech at the ECB Money Market Conference, Frankfurt am Main, 3 November, Chart 2. 8. Rees, D. and Rungcharoenkitkul, P. (2021), “Bottlenecks: causes and macroeconomic implications”, BIS Bulletin, No 48, 11 November. 9. In the second quarter of 2022, 0.7% of the euro area labour force was still enrolled in such schemes. 10. Consolo, A. and Dias da Silva, A. (2022), “The role of public employment during the COVID-19 crisis”, Economic Bulletin, Issue 6, ECB. 11. ECB (2022), ECB staff macroeconomic projections for the euro area, September. 12. Rudebusch, G. (2016), “Will the Economic Recovery Die of Old Age?”, FRBSF Economic Letter, No 201603, Federal Reserve Bank of San Francisco, 4 February. 13. For instance, the European Commission’s Autumn 2022 European Economic Forecast published on 11 November 2022 foresees that the output gap in the euro area closes in 2022 but turns negative again in 2023 and does not fully close in 2024. 14. For instance potential output level estimates for 2022, 2023 and 2024 were revised down in the European Commission’s Autumn 2022 European Economic Forecast compared to the Autumn 2021 European Economic Forecast (by 0.9%, 1.3% and 1.5% respectively) but remain higher compared to the Autumn 2020 European Economic Forecast.

2002, No 2, and Beyer, A., Gaspar, V., Gerberding, C. and Issing, O. (2009), “Opting out of the Great Inflation: German monetary policy after the break down of Bretton Woods”, Working Paper Series, No 1020, ECB, March. 26. ECB staff estimates find that the change in market pricing of the short-to-medium term interest rates and in survey evidence of Eurosystem balance sheet expectations between December 2021 and the assumptions implied in the September 2022 ECB staff projections would on average subtract around 1 percentage point from annual real GDP growth each year until 2024 (i.e. annual real GDP growth is estimated to be reduced by around one percentage point on average in 2022, 2023 and 2024). Since the September 2022 ECB staff projections, tightening expectations have further increased, implying a further impact on GDP growth. The estimated impact refers to the average across a set of models used by the ECB for policy simulations, including the NAWM-II model (Coenen, G., Karadi, P., Schmidt, S. and Warne, A. (2018), “The New Area-Wide Model II: an extended version of the ECB’s micro-founded model for forecasting and policy analysis with a financial sector“, Working Paper Series, No 2200, ECB, November (revised December 2019)), the ECB-BASE model (Angelini, E., Bokan, N., Christoffel, K., Ciccarelli, M. and Zimic, S. (2019), “Introducing ECB-BASE: The blueprint of the new ECB semi-structural model for the euro area”, Working Paper Series, No 2315, ECB, September) and the MMR model (Mazelis, F., Motto, R. and Ristiniemi, A.
In the context of the ECB’s strategy, macroeconomic forecasts and projections therefore play an important - albeit limited - role. Two important points follow from the role of projections in the ECB’s strategy and the procedures used to produce projections within the Eurosystem. First, the projections are produced by staff experts and do not embody the policy judgement of the Governing Council. They therefore represent one input into the policy-making process and not the outcome of the Governing Council’s deliberations. The Governing Council must exercise a policy judgement in evaluating the projections it receives, alongside all other analyses, when drawing implications for policy decisions. Second, since policy decisions are based on a broad range of analyses conducted under the two pillars of the ECB’s monetary policy strategy - of which the Eurosystem’s projections constitute only a part one should not expect policy decisions to respond mechanically to developments in the published macroeconomic projections. In this respect, the projections published by the ECB and their role differ considerably from the forecasts published by some other central banks. One question which has been raised since the announcement is why the Governing Council does not assume full responsibility for the projections to be published by the ECB, whilst of course accepting full responsibility for the staff that produces them. Let me answer this question by recalling the Governing Council’s ultimate responsibility, namely to maintain price stability in the euro area.

The projections will be published in the June and December issues of the ECB Monthly Bulletin, commencing in December 2000. Projections will be published for the growth rate of real GDP and its components and for HICP inflation. They will have a two-year horizon, so that the projections for both 2001 and 2002 will be published in December this year. In order to accurately reflect the degree of uncertainty attached to such exercises, the projections will be published in the form of ranges, based upon the average absolute errors made in previous national central bank and Eurosystem projections. The projections will be accompanied by a text describing their main features. I should emphasise that we use the word “projection” in order to signal that the published projections are the results of a scenario based on a set of underlying technical assumptions, including the assumption of unchanged monetary policy. This is the way forecasts are produced in many central banks in order to best inform monetary policy decision-makers. As the Eurosystem’s staff economic projections are the products of a technical exercise, which assumes, inter alia, that short-term interest rates and the exchange rate will not change over the forecast horizon, it should be clear that the staff projection will not, in general, be the best predictor of future outcomes, in particular for somewhat longer horizons. Rather, it represents a scenario which is likely to be falsified in practice, since monetary policy will always act to address any threats to price stability.