samchain/econo-pairs-v1 huggingface dataset:
However, some slowdown is foreseen, partly because of a weak international trend but also due to subdued consumption. The high level of equity prices has been cited as a risk to US economic development. US stock markets have recovered completely from last autumn’s fall and new all-time highs have been noted. Equity prices are considered by many observers to be unduly high in relation to the companies’ profit expectations and there has been talk of a future correction. Given the importance of the share price rise for the US economy’s upward trend, a price fall could by the same token lead to a slowdown. Prospects for the euro area as well as for the Japanese economy seem to have become somewhat poorer since the December Report, at least for the coming year. In the euro area, it is mainly manufacturing which has weakened, while the consumption trend still looks relatively good. At the same time, household sentiment is closely related to the development of employment, not least in Germany. Thus, the international outlook can hardly be said to have improved since the publication of the December Report and there still seem to be risks of a development that is weaker. Industrial activity weaker but domestic demand good so far Turning to the Swedish economy, the statistics suggest that industrial activity may go on weakening. But households’ expectations of their own economy indicate that private consumption may remain relatively strong.

Mr Bäckström discusses the monetary policy situation in Sweden Speech by the Governor of the Bank of Sweden, Mr Urban Bäckström, at Stockholm Chamber of Commerce and Veckans Affärer on 2/2/99. Thank you for the invitation to attend this conference and talk about “The krona and the interest rate”. I shall be speaking mainly about the current monetary policy situation and the factors that may be crucial for the policy’s future formulation. However, now that the Riksbank is directed by the six members of the new Executive Board, which also makes the monetary policy decisions, the decision-making process has changed. So I shall begin by briefly describing how monetary policy will be decided and presented in this new environment. The new process for monetary policy decisions At 1pm on Thursday 11 February, the new Executive Board of the Riksbank will be convening for its first meeting specifically devoted to monetary policy. Compared with the Board’s ordinary sessions, the discussion at what are called monetary policy meetings is to cover monetary policy more comprehensively and conclude with a decision on the policy’s future stance. The discussion will be minuted and published in this form on 6April, around eight weeks after the event. Moreover, a brief account of the grounds for the decision will be presented in a communiqué on the day after the meeting, in this case at 9.30am on Friday 12 February.
Not only did we hire 1.000 new staff members at the ECB, but we also integrated 5.000 staff members from 26 national supervisory authorities, who were formerly responsible for supervision in their home country, into the SSM. Since November 2014, the SSM is responsible for directly supervising 1200 individual banks, which until that point in time had been supervised according to 19 national interpretations of European law and according to specific national regulations, following a national supervisory tradition with varying degrees of quantitative and qualitative elements, with a historically grown reporting universe. It was a busy first year. And it was a successful first year as we made progress on many fronts. We achieved a lot regarding our main objective: we improved the resilience of 122 significant banking groups, of the 19 national banking systems, and of the European banking system as whole. The comprehensive assessment was the most publicly visible success, but many smaller and less visible steps followed and will still follow on our way to a safer and more sound banking system in the Euro Area. As the SSM changed the way supervision addresses problems and communicates what it expects to be done by banks, it also changed the timing and the way banks, their management and their owners acknowledge shortcomings and find solutions.

In this way confidence in the financial institutions can be restored, and the vicious cycle of liquidity bottlenecks, forced fire sales and bank runs can be ultimately avoided. By providing emergency liquidity assistance, central banks aim primarily to stabilise the precarious liquidity situation faced by solvent institutions. Above and beyond this, the increasing importance of systemic risk has made the emergency liquidity provision to entire markets ever more imperative. Markets can also be faced with liquidity runs. This was only too evident from the high risk premia observed in the interbank market during the recent crisis. It is conceivable that central banks will take on the role of market maker of last resort in such situations in order to secure key market functions. Indeed, in certain situations it is essential. 9 In an acute crisis, the costs and probability of a system collapse can be reduced in this way. However, the assumption of a lender of last resort or market maker of last resort function is not without problems. First, it does not guarantee long-term stabilisation in every case. Second, these crisis measures are no substitute for tackling the root causes or for lack of robustness on the part of financial market participants. In particular, the presence of a market maker of last resort is associated with a variety of incentive problems. 10 It can, for instance, encourage market participants to enter into excessive risk exposure in the expectation that the central bank will step into the breach if necessary.
Fortunately, all political parties recognise the need to put in place a credible plan for the consolidation of the public finances over the medium term, even if their preferred routes to doing so differ. Finally, question marks remain about the durability of the recovery in the rest of the world and particularly in the UK’s main export markets. Some of the advanced economies face headwinds similar to those facing the United Kingdom. The fate of the euro area, the destination of more than half our exports, is particularly important. The recovery there all but stalled in the fourth quarter and business surveys point to only moderate growth in the first part of this year. Moreover, Greece and some other euro-area countries face significant fiscal challenges. The necessary fiscal consolidations are likely to depress overall euro-area demand unless offset by demand expansion elsewhere. But as I noted, there are also reasons to be cheerful. Two factors in particular should provide a boost to the demand for UK goods and services. First, there is a substantial policy stimulus still working through the economy. Bank Rate remains at a historical low of 0.5%, while the Bank has bought some £ billion of assets, mainly gilts, financed by the issuance of central bank reserves (think of these as Bank of England IOUs that are held by the commercial banks) – so-called “quantitative easing”.

The fact is that policy has to be made in ignorance of how the future will turn out, and one has to weigh certain near-term costs against uncertain longer-term gains. Moreover, it seems unlikely that higher interest rates in this country alone would have prevented us experiencing a severe recession. Events in the United States would have proceeded in much the same way, regardless of what the MPC chose to do. And, as we have seen, the downturn has been global in nature, not confined to those economies with overblown financial or housing markets. Would it have helped if our target variable had, say, included a measure of asset prices, particularly house prices? There is certainly a good case for including a measure of owneroccupied housing costs in any consumer price measure, as for many households it represents their largest single expenditure. And, depending on the measure used, that could have resulted in higher inflation figures during the years leading up to the crisis. That does not, however, translate directly into a higher level of Bank Rate. Monetary policy affects inflation with a long and somewhat variable lag and there is little the MPC can do to offset unanticipated movements in near-term inflation. Instead, we have to look at inflation prospects two or three years ahead. But it is in the nature of asset prices, including house  6  BIS Review 31/2010  prices, that one can say rather little about their likely direction of movement that far ahead.
Likewise, the Governing Council intends to continue reinvesting, in full, the principal payments from maturing securities purchased under the APP for an extended period of time past this first interest rate hike and, in any case, for as long as necessary to maintain ample liquidity conditions and an appropriate monetary policy stance. As concerns the PEPP, the Governing Council intends to reinvest the principal payments from maturing securities purchased under the programme until at least the end of 2024. In any case, the future rolloff of the PEPP portfolio will be managed to avoid interference with the appropriate monetary policy stance. As was to be expected, the monetary policy normalisation that began in December has translated into higher short and long-term interest rates in the euro area. Specifically, the 10-year OIS rate, which proxies the euro area risk-free interest rate, has risen by 143 bp since the beginning of the year, while the 12-month EURIBOR has increased by 170 bp. Over the same period, the risk premium on Spanish 10-year government bonds has increased by 44 bp. 4  The new Transmission Protection Instrument (TPI) The TPI is necessary to support the effective transmission of monetary policy. While we continue normalising monetary policy, the TPI will ensure that it is transmitted smoothly across all euro area countries. The creation of this new instrument stems from the conviction that the singleness of our monetary policy is a precondition for the ECB to be able to deliver on its price stability mandate.

This focus is appropriate. Like other central banks, our monetary policy mandate concerns domestic objectives: maximum sustainable employment and price stability. Our monetary policy actions, however, often have global consequences that, in turn, influence the U.S. economy and financial markets. At the same time, external factors can impact the monetary policy transmission mechanism in the U.S. and influence the effectiveness of our monetary policy in achieving our objectives. We cannot appropriately calibrate policy without keeping these spillover and feedback effects in mind. In some cases, these effects can be significant. An example is the market volatility we saw in the spring and summer of 2013 during the so-called “taper tantrum.” In the U.S., we saw a spike in Treasury yields, with the 10-year rate rising by more than 100 basis points from early May of that year before peaking in September. Financial markets in emerging market economies (EME) were hit hard as well, with declines in equity prices, a widening in sovereign debt spreads and a sharp increase in foreign exchange volatility. Volatility in EME financial markets re-emerged last summer and has continued into this year. For EMEs as a group, declines in equity prices and currency values have been larger than what we experienced during the taper tantrum. The recent episode, however, appears to largely reflect concerns about risks emanating from EMEs themselves, rather than concerns about the direction of Fed policy. Three related concerns appear to be at the forefront. First, there has been a broad-based slowdown in EME growth.
So many banks were bidding for money that, collectively speaking, did not exist in the interbank market. As a result, the interest rate for overnight money shot up to almost 300%18. Contrary to press reports and comments from analysts, the high interbank interest rates were the making of the banks themselves and not the result of the HKMA squeezing towards the end of 1996, requiring all licensed banks to maintain a clearing account with the HKMA for the account of the Exchange Fund. In operating the Accounting Arrangements (1988 - November 1996) and the settlement accounts (since December 1996), the Monetary Affairs Branch and subsequently the HKMA have ensured that the whole of the monetary base is subject to the discipline of the currency board arrangement. 17 On 17 October 1997, Taiwan’s central bank vice governor Liang Cheng-chin said there was “no need for the central bank  to intervene” and it was “the right time” to let market forces determine the Taiwan dollar rate.” As a result, the Taiwan dollar closed 3.3% lower at $ per US dollar on that day. 18 This was only for about an hour on 23 October 1997. When speculative shorting of the Hong Kong dollar was quickly  reversed, the overnight interbank interest rate came down quickly and closed at 100%-150% on 23 October and further to 7% on 24 October. BIS Review 19/1998  -7the money market.

Our main concern is that across euro area countries domestic vulnerabilities are still very large, which implies a limited ability to withstand adverse external shocks and to kick start a new phase of sustainable growth. The vulnerabilities of many euro area countries are related to the high stock of debt, both public and private, and to a number of structural rigidities and institutional bottlenecks that prevent an optimal allocation of resources across factors of production, and thus limit total factor productivity growth. The current environment not only urgently calls for the implementation of structural reforms, but also provides the right conditions for their implementation. With our monetary policy, the ECB is greatly contributing to an environment favourable to implementing structural reforms: our accommodative monetary policy stance helps countries to gain time, time to implement the necessary measures to increase resilience and thus support sustainable growth. However, there is only a limited role for demand-side policies. Fiscal space is limited and monetary policy cannot carry the burden of the adjustment alone. For the euro area to become more resilient and sustain stronger growth, national governments need to bring about further structural change 1. Work in this regard has already started, and the reform wave of the countries hardest hit by the crisis is showing some initial results, such as a GDP recovery related to comprehensive labour market reforms. Other reforms, mainly on product markets, are expected to bring about GDP gains, but they need to be implemented in full.
For example, in 2001 - the most recent date for which comparative global information is available - the most prevalent disclosures covered accounting and presentation policies, on a bank’s capital structure and its measures of capital adequacy, and, for those that had them, on the kind of market risk models the bank used. Few banks disclosed much about their credit risk models, the types of credit risk mitigation techniques that they employed, or even the external or internal ratings assigned to their credit exposures. The relative paucity of data available publicly on a typical bank’s credit risk profile appears inconsistent with the fact that, for most banks, credit risk remains the single most important source of potential losses. At present, market participants seem to know only little about the extent of most banks’ exposure to credit risk. One could conclude that it seems unrealistic today to assume that they have enough knowledge of a bank’s position to exercise properly a benign influence on its handling of credit risk. Disclosure practices do not seem to have kept pace with the very rapid evolution in the ways that banks take on, measure, and ultimately manage their risk positions. BIS Review 47/2003  3  Incorporating Market Discipline into the New Basel Accord To improve the ability of markets to contribute to greater stability in the banking sector, the New Accord will contain a series of disclosure requirements.

Mainly: •  Proprietary versus public information  •  Principles versus Rules  •  Consistency of Accounting Standards and the New Basel Accord  Finally, I will review the present status of the Accord, the significant progress made in our last meeting in Madrid and I will outline the next steps in its rapid finalisation, as well as our plans for keeping it fit for the future. Basel II: a new, comprehensive approach to achieve greater financial stability To begin, I would like to re-emphasise the importance of market discipline to banking supervision, especially in a rapidly changing environment. Supervisors seek improvements in the public’s access to information on a bank’s condition precisely to bolster the ability of rating agencies, of business counterparties, and even of investors or depositors to evaluate the profile of a bank’s risks and the quality of its controls. Yet as safety and soundness regulators, we wish to fortify the stability and resilience of the financial system. In our view this goal requires not just greater transparency, but also  BIS Review 47/2003  1  significant advances in the state of the art of risk management and adequate capital when unexpected losses materialise. For the first time, the Capital Accord will include not only explicit economic incentives expressed in the minimum capital requirements but also implicit incentives built into the processes for supervisory review and market disclosure.
Instead, there are many reasons to believe that more stable economic performance over time also leads to conditions that foster high growth and employment. Moreover, a simple comparison of unemployment data between the periods before and after the shift in regime proves rather misleading. This is because of the attempts in the 1970s and 1980s to meet the target of full employment through a policy that was unsustainable in the long run - it was exactly because of this that the change in regime was implemented. As I mentioned earlier, this policy involved Sweden devaluing the krona as soon as we were hit by a cost crisis that resulted in weaker developments in exports and employment in the private sector. The devaluation of the krona restored competitiveness by lowering real wages for a number of years until excessive increases in prices and wages compared with abroad once again eroded the scope that had been created. The other way in which unemployment could be kept down was through a sharp increase in public sector employment. From having comprised 15 per cent of the labour force in 1960, the proportion of the employed accounted for by the public sector rose to just over 30 per cent by the end of the 1980s. So even though jobs were being lost in the private sector, employment held up through increased employment in the public sector. However, neither the decreases in real wages due to the devaluations or the increased public sector employment could solve the problems in the long run.

One important explanation for the relatively low domestic inflation is, as I mentioned earlier, the high productivity growth. Combined with low wage increases, the favourable productivity growth has meant that cost pressures in the Swedish economy have continued to be moderate. This has been the case despite electricity prices failing to fall as sharply as we assumed in May. Imported inflation, which I also touched upon earlier, has been weak as well. The high oil price has been countered by price falls for other imported goods, including clothes and footwear. This question is in turn connected with another: how is it that we expect inflation to remain relatively low during the forecast period when we have revised up our growth forecast? One explanation is that we have allowed our assessment to be affected by the new productivity figures, the lower wage outcomes and the continued weak situation in the labour market. In our current assessment, inflation would probably have been around a tenth of a percentage point higher if we had not taken into account the new information received. The balance of risks To sum up, the forecast in the main scenario is that Swedish GDP growth will be 3.6 per cent this year and 3.2 per cent a year in 2005 and 2006. Private consumption and investment are expected to take over from exports as the main driving forces behind the pickup in demand in 2005 and 2006.
Both the Spanish economy and its banking system suffered and continue to suffer from the coincidence of these three high-intensity crises, any of which may return at any time, since the economy moves in waves. But it appears highly unlikely that the conjunction of three such crises could recur for many years. The challenges Spain had to face at the onset of the crisis were enormous. Public attention has focused on cutting the budget deficit, but the tasks of reducing the towering debt accumulated by households and firms, and that of regaining lost competitiveness within a monetary union are also huge. A Latin American colleague used a metaphor which, while exaggerated, clearly expressed the difficulty ahead of Spain: “regaining competitiveness”, he said, “is like painting a house. If your brush is the exchange rate and it is flexible, you simply let it move from the top downwards. But since in Spain you’re in the euro and you can’t move the brush, all you can do is move the house upwards from below”. The task is an arduous one but not impossible if we believe that, though it is very difficult, we are capable of changing and reforming. This is why I shall begin my speech with an optimistic message, offering you some examples showing how Spain has already progressed with some adjustments and has undertaken major reforms during the difficult times we have faced during these years of crisis.

We want our monetary and financial systems to be stable, not only throughout the economic cycle, but also across cycles. And what we also share is that we are still very much uncertain about how to achieve this goal perfectly. One, rather harsh expression of this uncertainty of ours, is the adage popular among some policy-makers. As financial stability is hardly a quantified (or maybe even quantifiable) goal, some in the community grumble that central banks targeting inflation are delivering price stability, while central banks targeting financial stability are delivering just financial stability reports. Yes, this is really a bit too strong statement, as we all know, explicitly or implicitly, that the banking sector faces a trilemma – or an impossible trinity of a kind, if you will. Banks can never be simultaneously: 1.  perfectly safe,  2.  perfectly efficient and  3.  always free of moral hazard  It is like in the area of public health care. This complex system also cannot simultaneously achieve three goals perfectly and be: 1.  cheap,  2.  of the highest quality and  3.  universally accessible to all without entry barriers  In the banking sector – like in the area of health care – we can either abandon one principle in order to achieve the remaining two more or less perfectly, or we have to balance all the three principles somehow, but all of them will be achieved and maintained only partially, imperfectly (and sometimes deeply imperfectly).