samchain/econo-pairs-v1 huggingface dataset:
We will be able to take a deeper insight into the economic growth slowdown after detailed GDP statistics are released. However, the 2018 data released in April and preliminary Q1 2019 estimates allow us to update our GDP forecast for this year. In particular, the revision is associated with lower export growth rates and a tempered outlook for growth in the global 1/3  BIS central bankers' speeches  economy and external demand. We have left the forecast for consumer and investment demand unchanged in view of the expected rise in public expenses in the second half of the year. As a result, we have updated the 2019 economic growth forecast from 1.2-1.7% to 1-1.5%. Third. Proinflationary risks have declined over a one-year horizon. First, we no longer expect any deferred effects of the VAT hike. Second, the US Fed consistently eased it rhetoric since the year start amid the expected slowdown of global economic growth. All else being equal, this constrains the risks of considerable capital outflow from emerging markets. In March-April, we noticed that the risks of accelerated growth in prices of certain food products diminished. Overall, they remain moderate, though current food inflation was somewhat higher in May than in the previous three months, seasonally adjusted. Moving forward, we expect that record crop areas, early spring, and overall favourable weather will bring a good harvest of vegetables, grains and other crops. Domestic and global grain prices have been down since the beginning of the year. This contains proinflationary risks for food products.

More so, the 7% of GDP cap was set a long time ago; yet another review is needed to establish whether this volume of liquid assets is adequate to resist to sharp and lengthy change in external conditions. As we review these and similar suggestions, we urge to fully consider the benefit and loss balance driven by change in macroeconomic conditions which may be tangible enough. Approaches to fiscal and structural policies will have a significant impact on both our forecast and estimates of the balance of risks for inflation. This will in turn determine the monetary policy path. 3/3  BIS central bankers' speeches
A rate hike in the present that is consistent with current conditions contributes to lower interest rates further ahead. Sometimes this happens very quickly — for instance, short-term central bank rates rise, causing longer-term rates to fall because the rate hike results immediately in lower inflation expectations. There are a number of examples where a rise in central bank rates leads to lower long-term rates rather quickly. 4  In the speech I gave here two years ago, I showed that real interest rates have fallen steeply in the past two decades, both in Iceland and internationally. I pointed out that the longer inflation expectations remain at target, the longer the propensity to save remains high, the more domestic debt levels fall, and the longer we have a positive net external position, the longer this trend could continue in Iceland. That still applies today. Last Friday, the Bank announced a reduction in the special reserve requirement (SRR) on capital inflows into the bond market and into high-yielding deposits, which was imposed in June 2016. The SRR was lowered because the interest rate differential with abroad has narrowed and the exchange rate of the króna has fallen. This was fully in accord with repeated statements by the Bank; i.e., that the premises for lowering the SRR would grow stronger, other things being equal, as the interest rate spread narrowed and the exchange rate fell.

For example, a study from a few years ago estimated that to comply with Basel III for a midsize European bank would require up to 200 full-time jobs.6 That is not per se a problem, but one has to look at it in the context of the current environment facing banks. If banks are simultaneously aiming to cut costs to restore profitability, while raising the resources they dedicate to compliance, there could be a consequence elsewhere: for instance, IT resources may be diverted away from innovation. That would hinder the process of technological adaptation that is key for their long-term viability. So I would argue that regulators should be mindful of the burden they are placing on banks and the potential unintended consequences. If banks are to adapt effectively to the new regulatory environment, they also need clarity on what it will look like. The risk of a prolonged period of regulatory reform – and remember the current phase has been ongoing since 2009 – is that it creates a moving target, which in turn prevents the industry from settling into sustainable new business models. To give just one example, some banks responded to the crisis by switching to a vision of retail deposit-funded subsidiaries, which was also supported by the initial wave of regulation, for example the Net Stable Funding Ratio. Now, with the introduction of the Total Loss Absorbing Capital rules, they may be forced to reconsider those business models as they will need to issue more unsecured long-term debt.
9  All speeches are available online at www.bankofengland.co.uk/speeches  9  (ii)  Forward looking stress tests of the Bank’s financial exposures  If the first case study illustrated an example where risk was already being actively evaluated, my second illustrates a completely new area of activity. The concept of enterprise-wide stress tests has transformed private sector thinking on risk management in recent years, driven in many cases by central bank regulators. The Bank of England conducts an extensive annual supervisory stress testing programme in the United Kingdom – and I note with interest the discussions taking place elsewhere in this conference on the potential to expand such exercises well beyond 11  banks, something we have also been considering . But, ironically perhaps, the Bank of England has not until very recently applied such techniques to its own balance sheet. That made sense when large-scale balance sheet expansions were expected to be rare and highly idiosyncratic. But the more permanent shift in the Bank’s firefighter role illustrated in Chart 5 suggests we need a more sophisticated, agile forward-looking way of evaluating the risks we might face, and (importantly) the resources required to deal with them. Development of a suite of stress tests has therefore been a core part of the early work of the new second line team. To shape this work, key judgments are required on ‘the 3 ‘S’s’: Scope, Scenarios and Severity. Scope describes the range of facilities that the Bank might be called upon to use.

It seems that one trend is towards disintermediation and a more important role of capital markets, gaining ground to banks, in a global financial system that will probably end up being smaller and more attuned to the size of the global economy. Another trend points to a reduction of financial linkages between national financial systems, as BIS banking statistics, for example, are starting to show. Here, the role of Central Banks’ policies and operations, as well as regulators is crucial, as they must walk a fine line in promoting domestic financial stability without falling into the nets of protectionism, something that would be indeed damaging for growth and prosperity. As we all know, the risk of fragmentation and re-nationalisation of the financial system has materialized at the European level, in the unique institutional context of European Monetary Union; and the solutions to overcome this situation are changing the foundations of the euro. Each of the three sessions which make up the programme will focus on a particular perspective on how the new trends are shaping the global financial system. The crisis and the policy response – in the areas of financial regulation and monetary policy – are generating new patterns of funding, new players and changes in capital flows across global markets. Those issues will be reviewed in the initial session. As I mentioned before, the euro area has to deal with a severe crisis which has led to the fragmentation of the European financial system.
Norges Bank Economic perspectives 15 february 2018  The krone depreciation, combined with moderate wage settlements, has contributed to a marked improvement in business profitability and competitiveness. This has provided a considerable boost to Norwegian firms exposed to international competition. At the same time, an expansionary fiscal policy and lower interest expenses have been important in sustaining domestic demand. This year, the policy rate may be increased for the first time in seven years – this is a good sign. Two years since the cyclical trough was reached in Norway, growth has gained a firm footing and the unemployment rate is approaching a normal level (Chart 15). The impetus from abroad has strengthened and exports are picking up. There is renewed optimism in the petroleum industry. A number of large development projects will contribute to a rebound in oil investment in the coming years. Chart 15 Mainland GDP. Four−quarter change. Percent 4  4  3  3  2  2  1  1  0 2012  0 2013  2014  2015  2016  2017  Source: Statistics Norway  Increased economic activity should lead to a pickup in inflation. On the other hand, the effects of technological advances and a more integrated world economy may continue to exert downward pressure on wage and price inflation. In its conduct of monetary policy, Norges Bank weighs the outlook for inflation against developments in output and employment.

The return on the two asset classes is repre− sented by the fund’s benchmark indexes, measured in foreign currency, for the period June 2011 to May 2012. Sources: Statistics Norway and Norges Bank  Today, the fund is far larger than in 2011. As a result, return variations will have a greater impact. With the current size and composition of the fund, the same return as in 2011 would have resulted in a loss of almost NOK 1 000 billion, or close to 35 percent of mainland GDP. The fund has become important for the Norwegian economy. The fiscal rule links fiscal policy to the value of the fund. This year, 15 percent of general government spending is projected to be financed by transfers from the fund. Looking ahead, movements in global capital markets will be the main source of variation in the value of the fund, and at times in a negative direction. The actual stance of fiscal policy must allow for this uncertainty. The fund had several good years following the euro crisis. Markets turned around, and quickly the loss was more than reversed. We cannot take for granted that this will always be the case. Conclusion Let me conclude. The global economy finally appears to have fully recovered from the prolonged weakness that followed the financial crisis. Growth has also strengthened in Norway after the decline following the oil price collapse. The government’s solid financial position has been of considerable help.
Instead, I want to pose this question: Supposing that all countries had free capital movements, freely floating exchange rates, and first-rate macroeconomic policies aimed at internal balance, would everything then be fine, at both the national and global level? I think there are strong indications that it would not be. There are a few reasons for this. First of them is the tendency of exchange rates to move away from equilibrium values for extended periods, with sharp corrections at the end of the process and with excess volatility throughout. The research on this phenomenon is still ongoing, but there are strong indications a number of factors suggest that the process is related at least partly to how asset markets function and how expectations are formed, and would not disappear even if macroeconomic policies were perfect. There will be net capital flows associated with this process, as well as swings in current accounts and effects on domestic financial systems that can ultimately lead to serious financial instability. In a small, open, and increasingly financially integrated economy, the process runs as follows: Domestic interest rates at the longer end of the maturity spectrum tend to become more closely correlated with the global rate, or the rate of the largest trading partner, and less correlated with the domestic policy rate. This means that monetary transmission tends to go increasingly through the exchange rate channel, which is only a problem, however, if the exchange rate behaves badly. Unfortunately, there is copious evidence to suggest that it is a problem.

The banking system expanded very rapidly in just five years, from a combined balance sheet of less than 2 times GDP (at the end of 2003) to almost 10 times GDP (in mid-2008). Most of this expansion was cross-border, and a lot of it had very little to do with Iceland, as both financing and investment took place abroad. A number of domestic mistakes were made throughout the process, and I do not have time to go into them here, but the expansion of the banks was greatly facilitated by Iceland’s membership in the European Economic Area (EEA), as the EEA Agreement provides a legal and regulatory framework based on European Union Directives, including free movement of capital and provision of financial services. The underlying principles are those of home licencing for operations anywhere in the EEA and of a level playing field for competition, where size and location supposedly do not matter. This European “Passport” enabled the Icelandic banks to operate throughout the EEA, including through branches in other EEA countries. We now know that there are deep flaws in this framework and that these flaws are important elements in the current euro area crisis. A key issue here is the contradiction between, the European passport rights on the one hand and, on the other hand, national supervision, national deposit insurance and national crisis management and resolution regimes. This is what recent proposals of a banking union are supposed to deal with.
In addition, the experience of recent years, most recently from Asia shows that it has become more difficult to maintain a stable exchange rate with the liberalization of capital movements and ever larger and more active international financial markets. A response to this would be to allow the exchange rate to float, but in order to maintain low inflation and achieve narrower interest differential vis-à-vis abroad this would call for the adoption of a direct inflation target with the Central Bank entrusted to pursue it. A unilateral link to the euro is hardly an option, as it would yield little in terms of greater credibility of stability and narrower interest differential vis-à-vis those abroad. In addition it has the drawback of not reflecting the composition of Iceland’s external trade, at least for as long as the United Kingdom remains outside the monetary union. A bilateral link would be better, as it would enhance credibility by virtue of the commitment of the European Central Bank to defend the link, and would result in narrower interest rate differentials. The exchange rate risk premium would not vanish entirely because the commitment of the European Central Bank would never be without limits and conditions. It should be pointed out that it is unclear if and when the European Central Bank will be willing to discuss the possibility of bilateral co-operation with countries outside the union. Exchange rate changes could still take place in the case of a bilateral link with the euro.

Our inflation forecast for mid-2011 is 5.4 percent. We expect non-food inflation to be lower than these figures. Figure 14: Inflation Forecasts* Forecast Range*  Output Gap  Uncertainty Band for 2008  End-Year Inflation Targets  12  Control Horizon  10 8 Percent  6 4 2 0 -2 -4 2011-II  2011-I  2010-  2010-III  2010-II  2010-I  2009-  2009-III  2009-II  2009-I  2008-  2008-III  2008-II  2008-I  -6  Source: CBT * The shaded region indicates the 70 percent confidence interval for the forecast. To sum up, although economic activity in the past quarter have evolved in line with our expectations, the significant increases in oil and processed food prices have led to an upward revision in our forecasts. The main message of the forecast is that preventing the materialization of potential second round effects and ensuring a steady decline in inflation towards the medium term targets, requires the monetary policy to maintain a cautious stance for a while. BIS Review 100/2008  11  Therefore, the path for the policy rates indicated above should not be perceived as a commitment on behalf of the CBT. I would like to once more emphasize that any new data or information regarding the inflation outlook may lead to a change in our policy stance. 4.
Suffice it to say that efforts to address the resultant problems underpin the current far-reaching reforms undertaken by governments in the sub-region. These include financial sector reforms, public sector reforms and the privatization of public enterprises. Following several years of persistent reforms, some modest improvement has been registered in recent times. Real GDP growth rates of most countries in the sub-region averaged 4.3 percent in 2003, compared with 3.7 and 1.9 percent in 2001 and 2002 respectively. The average fiscal deficit to GDP ratio improved significantly, from 4.2 percent in 2002 to 0.7 percent in 2003, although most of the economies remained fiscally fragile. Inflation rate accelerated marginally to 6.0 percent from  BIS Review 43/2004  1  5.5 percent in 2002. Overall, the external sector of the sub-region improved somewhat as the current account position recovered from a deficit to GDP ratio of 4.3 percent in 2002 to 1.7 percent in 2003, driven by the significant turnaround in the export growth of 4.5 percent in contrast to the decline of 3.0 percent in the preceding year. Managing a post-conflict economy Here in Sierra Leone, the government has stayed the course in its reform programme with an accent on reconstruction and rehabilitation. Helped by the quick repossession of the agricultural and mining belts by government, real GDP grew steadily from 5.4 to 6.6 and to 7.0 percent in 2001, 2002 and 2003 respectively. The marked recovery in the export of cocoa and diamonds contributed significantly to GDP growth.

I want to commend WAIFEM for this initiative which has become an important platform for policy dialogue between the two arms of government and more importantly, strengthening the capacity of the parliaments in the vital areas of economic and financial management. It is in the realization of the useful role of such platforms in forging greater understanding among key stakeholders in the policy process that the Committee of Governors of Central Banks of ECOWAS member countries called for the reactivation of the periodic Consultative Forum of Ministers of Finance and Central Bank Governors of ECOWAS countries at its meeting in Dakar, Senegal on June 16, 2004. Looking at the pertinent issues to be dealt with in the course of your deliberations and the calibre of resource persons to facilitate the process, I have no reason to doubt that you are in for a round of stimulating and fruitful deliberations. Permit me therefore, to anticipate that you will come up with concrete and implementable proposals to facilitate a harmonious working relationship between the legislature and the executive in pursuance of their shared economic management objective. Towards regional monetary integration This has become particularly urgent in the light of the need to ensure that West African countries stay the course in their commitment to achieve economic convergence. But as you are aware, virtually all the countries have found it difficult to achieve and sustain, over time, the required level of economic performance under the convergence criteria.
Creating greater simplicity and comparability in the regulatory framework A vigorous public debate has developed recently as to whether the Basel regulatory framework strikes an appropriate balance among different desirable characteristics: simplicity, comparability and risk sensitivity. The policy development process must take these and several other – often competing – factors into account, and finding the right balance often involves a difficult set of trade-offs. Nevertheless, it is important to keep this issue under review, and so the Committee established a high-level task force last year with a view to looking at this concern from a broader, strategic perspective. The Committee has already had some discussions on the task force’s findings, and will have more in the coming months (including at our meeting that begins tomorrow). The way forward will also be guided by the findings of the reviews of riskweighted assets that I mentioned earlier, since at the heart of that work is a concern about comparability. It is too early to say how we will take this work forward. Some issues, such as those in relation to market risk modelling, can be taken up via our existing trading book review. Others might require tweaks to the framework, or supervisory guidance, which can be implemented in the near term. And others might necessitate a deeper, longer-term review before we can decide on any solution. We will publish a discussion paper in the coming months that deals with discusses some of the complex trade-offs that need to be made.

Before I discuss what’s left to do, let me recap what has been done over the past year. The key initiatives completed by the Committee in the past year include: •  reaching agreement on a package of revisions to finalise Basel III’s Liquidity Coverage Ratio (LCR);  •  revising the Core Principles for Effective Banking Supervision;  •  developing a policy framework for dealing with domestic systemically important banks;  •  establishing disclosure requirements for the new Basel III definition of capital; and  •  updating the supervisory guidance for assessing the effectiveness of a bank’s internal audit function. In addition, the Committee established a sound operating framework within which to assess its members’ implementation of Basel III. As a result, the Committee produced: •  two regular semiannual reports on Basel III implementation in all member countries (along with two special reports to the G20 on implementation);  •  assessments of Basel III implementation in the European Union, Japan and the United States; and  •  a report analysing the variability of risk-weighted asset calculations for market risk in individual banks. Further down the agenda, my colleagues from the Basel Committee Secretariat will provide additional insights on our implementation work. I would like to make the point now, however, that these efforts are critical to delivering on the benefits that Basel III offers. Rules written have no effect if not implemented: we cannot fail on this front, and I will say more about our efforts shortly.