samchain/econo-pairs-v1 huggingface dataset:
14  BIS Review 133/2010  I would like to underline that our revised forecast indicates that the monetary tightening required to keep inflation in line with medium-term targets would start later and would be more limited than implied by the previous forecast. Although inflation trend is expected to remain consistent with the medium-term targets and follows a stable path, the exact course of headline inflation until mid-2011 would depend on the base effects driven by the volatile unprocessed food prices in the past year and the tax hikes implemented at the beginning of 2010 (Figure 33). Therefore, in order to help economic agents to better interpret developments in headline inflation, which would increase the effectiveness of expectations management, I would like to provide you with some more information about this issue. Owing to the base effects resulting from the tax hike on tobacco in 2009 and the tax cuts on durable goods in March and April 2009, which began to cease in June 2009, inflation is likely to fall markedly in July 2010. Inflation is expected to rise in August due to the sharp drop a year ago, and decline substantially in the final quarter with the reversal of base effects from food prices. The contribution of tax hikes introduced in early 2010 will have largely disappeared and this will be the primary factor influencing the inflation trend in the first two months of 2011.

However, current inflation expectations for 12 and 24-months ahead hover slightly above year-end targets of 5.5 and 5 percent for 2011 and 2012, respectively. 2. Monetary policy response  After commenting briefly on inflation developments, I would now like to cover the policies pursued by the Central Bank during the last quarter. Anticipating that inflation would decrease sharply following the last quarter of 2008, the Central Bank of Turkey (CBT) focused on alleviating the potentially harsh impact of the global financial crisis on the domestic economy. In this respect, the CBT has delivered sizeable cuts in policy rates, while providing liquidity support to facilitate the smooth operation of credit markets. Accordingly, policy rates have been cut by 1025 basis points since November 2008 (Table 1). Considering the favorable developments in credit markets and the moderate recovery in economic activity, the Monetary Policy Committee (the Committee) ceased policy rate cuts in December 2009. Notwithstanding the rapid increase in inflation during the last quarter of 2009 and the first quarter of 2010, I would like to remind you that the Committee, highlighting the persisting downside risks regarding the global economy and the consistency of core inflation indicators with the medium-term inflation targets, expressed that policy rates would stay at low levels for a long period.
In the presidential election campaign, both the conservative candidate Nicolas Sarkozy and the socialist Ségolène Royal argued that the ECB should, for example, do more to support economic growth. I will only remind you that, by the will of the French democracy, the Banque de France was made independent from French politics before the establishment of the ECB, with a primary mandate for price stability. To allow the central bank to become independent, both chambers of the French parliament changed the constitution of General de Gaulle with a three-fifths majority. It rather looks like people in your home country have forgotten that. BIS Review 18/2007  1  Certainly not the people, who, according to surveys, are firm supporters of our independence. In any case, the Maastricht Treaty calls for the full independence of the central bank. Under the Treaty, governments are not even allowed to try to influence the ECB. Nevertheless, would it not be better for the ECB to be a little more flexible and – like the Federal Reserve – react more strongly to the needs of the economy as a whole? Our mandate is unambiguous. Our primary objective is price stability. And price stability is a necessary condition for sustainable economic growth and job creation. The central banks of nearly all industrialised and emerging countries have policies based around the combating of inflation, and that is precisely what our fellow citizens want.

In the process, national incumbents are being challenged by a combination of ambitious foreign incumbents eager to exploit economies of scale and nimble, unencumbered new entrants sometimes specialising in niche products. A process that is likely to lead in time to greater consolidation at international level is currently manifesting itself in terms of fragmentation at the national level as local incumbents are challenged. 36 The end-game may well be lower transaction costs at both the trade and post-trade level and more concentrated (if not monopoly) cross-border infrastructure in each. But it may take some time to reach a new equilibrium. Central banks and regulators need not only to prepare for and perhaps help shape the end-game, but also address challenges arising during the transition. BIS Review 130/2007  5  5. 37 (i)  Issues and challenges for central banks and regulators going forward Two key challenges, in particular, will need to be met: Preserve enough influence to protect the collective interest while maintaining a level regulatory playing field  38 The resilience and efficiency of the core infrastructure is an important public good and, given the tendency to monopoly, the authorities need to ensure that they maintain sufficient influence to ensure resilience in this increasingly complex landscape. That requires consistent and objective criteria to be applied to new as well as established systems.
We are expecting employment to fall by around 300,000 persons from the peak in 2008 to a trough in 2011 and that unemployment will continue to rise to around 11 per cent (see Figures 15 and 16)  5  See the OECD’s Composite Leading Indicators, 7 August, 2009, http://www.oecd.org/dataoecd/45/9/43453886.pdf. 6  Economic Tendency Survey, July 2009, National Institute of Economic Research, 30 July 2009. 7  Institute for Supply Management (SILF) and Swedbank, 3 August 2009. 4  BIS Review 98/2009  After the recent monetary policy meeting new information was received from the Labour Force Surveys, which was roughly in line with our assessment. Employment fell by 1.7 per cent in June compared with the same month in the previous year and unemployment increased to 9.8 per cent. This was respectively two-tenths and one-tenth of a percentage point better than we had forecast. 8 Underlying inflation is in line with the inflation target of 2 per cent Inflation has fallen rapidly in recent months and is expected to become negative for a large part of the year. However, CPI inflation is strongly affected by interest rate changes and by changes in energy prices. It is therefore better to study the underlying inflation rate. Underlying inflation measured as the CPIF, where mortgage rates are held constant, is expected to be close to 2 per cent throughout the forecast period (see Figure 17). New inflation figures published after the most recent monetary policy meeting have also been roughly in line with our assessments.

Indirect data suggest that aggregate demand has carried forward positive growth rates, but growth remains significantly below the potential of the Albanian economy. Macroeconomic factors determining private consumption and investments, and a prudent fiscal policy sustain the assessment for contained growth of the domestic demand in the first quarter of the year. Moreover, in the absence of complete data and in real terms on developments in the external sector of the economy, assessments suggest that the contribution of foreign demand to economic growth will be lower than in the past year. Fiscal policy was subject to a consolidation nature over the first quarter of 2012, in line with its objectives to keep budget deficit and public debt in check. The contained fiscal approach has been reflected in minimum public expenditure in the first quarter of the year, with an annualised rate of 0.7%. Furthermore, low growth rates of fiscal revenues continued their trend, settling at 1.2% in this quarter. The budget deficit was ALL 11.5 billion, or about 2.5% down compared with the first quarter of a year earlier. Developments in foreign trade over the first two-month period of the year point to contracted trade exchange in annual terms. Value of exports in these two months dipped by 20.5% against the corresponding period of a year earlier, reflecting the moderation of foreign demand and price developments in global markets. On the imports side, their growth rates were significantly decelerated, reaching a nominal annual growth of 1.8% during this period.
But to set the stage, let me say very briefly that all the usual suspects were present: very strong capital inflows fuelling a credit and asset price boom that subsequently turned into a bubble at the same time as the economy overheated and an unsustainable external position developed, as could be seen in a double-digit current account deficit. And macroeconomic and prudential policies were not up to the task. Quite the contrary: there was a policy conflict between monetary policy and the demand levers pulled by the Government, and the risks inherent in capital flows, FX balance sheets, and credit and asset price booms were left under-regulated and insufficiently supervised. But as so often before in this country, we dealt more effectively with the crisis than the buildup. There were two key elements to this. The first was crisis management vis-à-vis the failing banks, as embodied in the Emergency Act submitted by Prime Minister Geir Haarde to Parliament shortly before the banks failed. The second was the economic programme developed by the Icelandic authorities in co-operation with the IMF. The programme had three key goals: stabilisation of the exchange rate, fiscal sustainability, and reconstruction of the financial sector.

First, because even though the current economic cycle is in a very robust phase today, it will come to an end at some point. If we have not armed ourselves with stronger economic instruments by that time, there is a risk that monetary policy will be overburdened. This is a well-founded German worry that as a central banker I share entirely; but it is for that very reason that I say to our German friends that they must aspire to an enhanced economic union. Second, because the absence of a genuine economic union is holding the euro area back, at a time when we must stimulate growth to catch up our past lag, particularly vis-àvis the United States, and address the radical technological transformation. The theme of this evening is “new ideas for Europe". But to have new ideas, we must begin by putting the old clichés that are paralysing the debate behind us. That is what I will begin by doing, before setting out my three new ideas for Europe. ** 1. Three old clichés that we must put behind us The first old cliché that emerges when we speak about reforming the euro area, is the idea – and a lazy idea at that – that economic union would be a substitute for national reforms. I would like to repeat right away that on the contrary, national reforms are a prerequisite for any enhancement of the Economic Union, and today, France is well aware of this.
The Pensions Regulator has noted that as of end-2021, c. 15% of the roughly £ in UK LDI assets were in multiinvestor pooled funds, which equates to roughly £ Due to the volatility of gilt prices and yields, these estimates will not reflect the current position, and the rise in gilt yields in 2022 will have reduced the total amount of hedging. 11. The UK corporate bond and fixed rate mortgage markets are around £ trillion, and gilt pricing also underlies a broader set of markets beyond these. 12. The Bank’s recent CCP Supervisory Stress Test used reverse stress testing to look well beyond historical precedent. 13. The Bank and the FCA have sent Dear CEO letters to firms following the default of Archegos and conducted a supervisory review of global equity finance businesses. This requires relevant firms to carry out a systematic review of the business strategy and organisation and financial risk management controls and governance. And the Bank put out a consultation on supervisory expectations for contingent leverage within banks’ ICAAP assessments and new requirements of its reporting. 14. TPR regulates pension schemes; the FCA regulates LDI managers. 15. See Building Financial Market Resilience: From diagnosis to prescription – speech by Jon Hall 16. This progress has been led by the FSB, with the involvement of international standard setting bodies. The FSB has set out its analysis  of non-bank risks and a programme of work last year and is due to report on next steps soon.

Such a self-reinforcing price spiral would have resulted in even more severely disrupted gilt market functioning. And that would in turn have led to an excessive and sudden tightening of financing conditions for households and businesses. In response to this threat, the Bank of England intervened on financial stability grounds. But what led to that intervention? The root cause is simple – and indeed is one we have seen in other contexts too – poorly managed leverage. So today I’ll set out how leverage outside the banking sector can create risks to financial stability, starting with that small corner of the pensions market. And then I’ll set out what needs to be done - by participants, by their regulators and by financial stability authorities - if we are to ensure those risks to financial stability are reduced. How did a small corner of the pensions industry threaten financial stability? Many UK DB pension schemes have been in deficit, meaning their liabilities – their commitments to pay out to pensioners in the future – exceed the assets they hold. DB pension schemes invest in long-term bonds to hedge the interest rate and inflation risk that arises from these long-term liabilities. But that doesn’t help them to close their deficit. To do that, they invest in ‘growth assets’, such as equities, to get extra return to grow the value of their assets. An LDI strategy delivers this, using leveraged gilt funds to allow schemes both to maintain material hedges and to invest in growth assets.
If inflation is more than one percentage point either side of the target, we are required to write to the Chancellor explaining the reasons for the miss and the steps we are taking to bring inflation back to target. There was a flurry of excitement earlier this year when inflation reached 1.8%, and many commentators thought that we might soon have to polish up our letter writing skills. But so far we have not had to put pen to paper. Of course, a number of factors have contributed to the stability in inflation. Monetary policy takes time to affect inflation, so inflation in the early part of this period reflects decisions taken before the MPC was formed. And in the short term at least prices can reflect factors other than monetary policy. But, judged against previous policy regimes in this country, inflation targeting has been successful. Of course, you might expect me to say that. But the growing credibility of the arrangements is also reflected in measures of expected inflation in coming years, most of which remain close to the 2½% target. People often ask if this relative success at targeting inflation has come at a cost in terms of lost output or employment. It is increasingly accepted, I think, that there is no such trade-off in the long run. And, looking at the recent UK data, it is hard to see any trade-off even in the short run. Output has now risen for 36 consecutive quarters, the longest continuous expansion since post-war records began.

One prime example of this preventive work is the recent joint statements from the CNMV and the Banco de España warning the general public of the risks in relation to crypto-assets. Another example, specific to financial education, is the set of actions envisaged under the National Financial Education Plan. 1  We support this preventive work by exercising our corrective powers, wherever regulations and jurisdiction so allow, and by advocating legislative initiatives with regulators and legislators to remedy any shortcomings that we identify. The main strength of this protocol is that it deepens the cooperation needed to efficiently and effectively carry out our functions. This collaboration will also help to delimit each signatory’s respective field of action. Close cooperation between supervisors is particularly important in this domain, since we are often confronted with schemes that do not fit easily within a single regulatory field or sphere of competence. The idea is to avoid any grey areas where potential criminals can commit financial fraud. Not only are financial supervisors involved in the protocol, but so too are players as important and diverse as the public prosecution service, law enforcement authorities and associations representing notaries, registrars, the financial sector and the media. This, we are certain, will be a critical advantage in our efforts to combat financial fraud in both the preventive and corrective dimension. A warm welcome, then, to this initiative, which will have the Banco de España’s full support. 2
In terms of risk-weighted assets, the median Core Tier 1 ratio of the largest euro area banks currently stands at 12.7%, above their American counterparts. The majority of significant euro area banks already comply with the minimum capital requirements of the fully implemented Basel III framework. In terms of leverage – as measured by the ratio of equity over total assets – EU banks may at first sight appear to have lower ratios than their US peers, but as FDIC Vice Chairman Thomas Hoenig has showed, if the same accounting standards are applied then the median of the leverage ratios of large EU and US banks are quite similar. In terms of absolute nominal size, if we look at the 20 largest banks in the EU and the US, the EU banks now have a capital level approximately 100 billion dollars larger. 2  Gabriel Jiménez, Steven Ongena, José-Luis Peydró and Jesús Saurina (2012), “Macroprudential Policy, Countercyclical Bank Capital Buffers and Credit Supply: Evidence from the Spanish Dynamic Provisioning Experiments” Sveriges Riksbank working paper. 4  BIS central bankers’ speeches  Where euro area banks do not compare so favourably with their US peers, however, is in their low profitability and fragile investor confidence. Investors seem to be uncertain whether banks have proper asset valuations and are adequately provisioned. But this is precisely the issue the comprehensive assessment should address – it is an exercise in removing uncertainty by giving investors all the facts.

Some central banks are presently undergoing the process of shaping and consolidating their  BIS central bankers’ speeches  5  governance, an endeavor intended to transform them into modern monetary authorities. And, believe me, I know from experience how complicated such a process can be! In the early nineties, when I took over as Governor of the National Bank of Romania, a tremendous effort was needed to put into practice the transition from a monobank-type system to a two-tier system. It was by no means a simple task to reform an institution that had operated in the context of centralised planning of the entire economic activity and to separate commercial banking operations from central bank operations, which remained the responsibility of the NBR. The new NBR only counted less than 5 percent of the former central bank employees, most of them in the cash management and accounting units! Therefore, we had to build from scratch several departments that are key to the functioning of a modern central bank, such as monetary policy, economic research, banking supervision and regulation... Fortunately, the NBR was given a helping hand in improving its governance structure when it needed it the most. Just to give two examples, banking supervision was set up at the NBR with the extremely useful support of De Nederlandsche Bank and the forex market was put in place with the assistance from the central bank of Belgium. We are extremely grateful to both institutions for their generous support.
A strong krone may also lead to lower activity in exposed industries and thereby lower capacity utilisation in the Norwegian economy. This suggests that the interest rate should not be raised too rapidly. Monetary policy cannot fine-tune developments in the economy, but it can mitigate the most severe effects when the economy is exposed to shocks. Overall, the outlook and the balance of risks suggest that the key rate should be gradually increased ahead, although somewhat later than we envisaged in October 2009. On 24 March, the Executive Board decided that the key policy rate should be in the interval 1½–2½ per cent in the period to the publication of the next Report on 23 June 2010 unless the Norwegian economy is exposed to new major shocks. The interest rate was kept unchanged at this meeting. This is based on the assessment that inflation and capacity utilisation may for a period be slightly lower than previously projected and that the interest rate should be increased somewhat later than expected in autumn 2009.

When quizzed for an explanation by a Parliamentary Committee in 1930, Montagu Norman replied: “I don’t have reasons, I have instincts”. But the public’s attitudes towards trust have altered and so too has the trust-building process. Faith in public institutions is no longer blind. Trust is no longer endowed anonymously. Instead it is built through direct connections, often personalised and localised. Trust is no longer centralised in institutions. Instead it is built on a distributed basis, peer-by-peer, across the network. In short, the Age of Innocence is over. As the public’s trust has shape-shifted, central banks and other public institutions have faced new challenges to their trust. Indeed, this helps explain the first revolution in central bank transparency practices. But the crisis has added cyclical push to this structural fall in trust. Central banks are no longer surfing a wave. They face instead a retreating tide. For them, too, the Age of Innocence may be over. While some loss of trust in central banks might have been expected, it is disappointing that the pre-crisis revolution in transparency practices did not provide a greater degree of insulation against it. Why was central banks’ stock of reputational capital, built steadily through various transparency initiatives, inadequate to protect them from the crisis storm? I think there were two factors at play. First, central banks have tools, such as interest rates and banking regulations, which support the whole of the economy and financial system.