samchain/econo-pairs-v1 huggingface dataset:
About $ trillion in worldwide dollar financing comes from foreign banks, $ billion in the form of loans within the U.S. For these banks to provide U.S. dollar loans, they have to maintain access to U.S. dollar funding. At a time when it is already hard enough for American families and firms to get the credit they need, we have a strong interest in making sure that these banks can continue to be active in the U.S. dollar markets. Banks headquartered outside the U.S. make extensive use of dollars in their financing activities. In part, this results from the fact that the U.S. dollar is the world’s number one currency – a status that brings with it many benefits for our country. It is in our national interest to make sure that non-U.S. banks remain able to access the U.S. dollar funding they need to continue financing their U.S. dollar assets. If access to dollar funding were to become severely impaired, this could necessitate the abrupt, forced sales of dollar assets by these banks, which could seriously disrupt U.S. markets and adversely affect American businesses, consumers and jobs. One way we can help to support the availability of dollar funding, and ensure that credit continues to flow to American households and businesses, is by engaging in currency swaps with other central banks. Such swaps are a policy tool the Federal Reserve has used to support dollar liquidity for nearly fifty years.

The ECB is a novel and unique institution and in the performance of its tasks it is still navigating uncharted waters. Take, for example, the differing impact of monetary policy on economic activity in the different euro area Member States, which demands a well-balanced and comprehensive consideration of the precise timing and magnitude of interest rate decisions. The ECB must formulate a single monetary policy for an economic area made up of 11 distinct national economic policy jurisdictions. Our monetary policy decisions must thus always be oriented towards the conditions of this currency zone as a whole, since monetary policy by its nature is one and indivisible. Precisely this is our Treaty mandate. The ECB must develop into a truly European institution and we are making good progress in that direction. However, developing a wider perception of the euro area as an entity appears more complicated. Certainly, there are some areas where awareness of a single “euro area economy” is well developed. The financial market operators, for instance, appear to have adapted very quickly to the reality of the euro. The extensive recourse to the more favourable financing opportunities in the now more unified financial market or the ongoing consolidation in the banking sector bear witness to this shift of perception from the national to the European level. In this context, allow me to add the following observation.
Structurally, many studies 3 suggest that the Phillips curve, i.e. the relationship between inflation and fluctuations in economic activity or unemployment, appears to have flattened since the 1980s [slide]. Inflation seems less responsive to changes in economic activity in advanced countries, notably because of globalisation,4 which appears to exert downward pressure on inflation via the decline in imported goods prices and competition from low-wage countries. But a flatter Phillips curve does not call into question this relationship: we are in no doubt about the way we are heading: the recovery and job creations will lead to higher wages and, ultimately, more inflation. But we nevertheless remain less certain as to the speed of this adjustment. We are both confident about the effectiveness of our monetary policy and willing to be patient regarding the time it will take. II. What prospects for the future? Let me now turn to the consequences for our monetary policy. You are well aware that we at the ECB’s Governing Council will decide this autumn on the re-calibration of our policy instruments beyond the end of the year – and, I quote Mario Draghi, “probably the bulk of these decisions will be taken in October”. We are now faced with a simple requirement, in line with our mandate to maintain price stability, and the progress towards our inflation target: we have to reduce the intensity of our net asset purchases, while maintaining overall a substantially accommodative monetary policy.

Our forward guidance is clear as to the sequencing: “we expect [the key ECB interest rates] to remain at their present levels for an extended period of time, and well past the horizon of our net asset purchases.” There is no doubt within the Governing Council about this sequencing. In all events, we should not consider raising interest rates until we have reached a sustained adjustment in the path of inflation. 4/ The fourth instrument is the provision of liquidity to financial institutions. In October 2008, we introduced the fixed-rate full allotment policy in all our regular refinancing operations. It was designed in order to guarantee banks’ access to liquidity – and this policy is still active today, for both 1-week or 3-month operations. The maturity of this liquidity provision was then extended with the launch of 3-year long-term refinancing operations (LTROs) and, later, targeted longerterm refinancing operations (TLTROs). The latest series of TLTROs provided banks with up to 4year funding at attractive rates – as low as –0.4% – in order to further ease financing conditions. In September 2017, a total of EUR 760 billion is still lent to euro area banks through TLTROs, which is substantial, over 7% of euro area GDP. Before I conclude, let me add a few words on the recent evolution of the euro. A number of factors play a role; monetary policy is only one of them.
This phase has now been taken over by the banks in line with the model in other countries and the Riksbank is only responsible for the wholesale phase. Developments in the field of payments can be viewed in a similar way. As long as payments are made using notes and coins it is the Riksbank that guarantees the confidence of the means of payment. However, as an increasing number of payments are made using cards, this role is increasingly becoming the responsibility of the banks and card companies. It is against this background that I intend today to speak about the Riksbank’s view of the development of safe and efficient payments, what we are doing in our area of responsibility and what we hope various private players will do. The payment behaviour of the Swedes Swedes increasingly use cards to make payments. Over the last ten years, the value of the card payments made has increased fivefold, while the number of card payments made has increased eightfold. For couple of years now, the value of the card payments made has also exceeded the value of all cash payments. The value of all card payments is almost twice that of all cash withdrawals. In comparison with our Nordic neighbours, we previously used cards to a lesser extent in Sweden. This is no longer the case; cards are now used to more or less the same extent in Sweden, Denmark and Finland.

BIS central bankers’ speeches  7  Figure 1 Inflation indicators (*) (annual change, percent) 8  8 Services EFE  6  6  4  4 CPI  2  2  CPIEFE  0  0  Good EFE  -2  -2  -4  -4  -6  -6 11  Jul. 12  Jul. 13  Jul. 14  Jul. 15  Jul. (*) As from January 2014, the new indexes with annual base 2013=100 are used, so they are not strictly comparable with earlier figures. Sources: Central Bank of Chile and National Statistics Institute (INE). Figure 2 Labor market (percent; annual change, percent) 12  12 Unemployment rate(1)  10  10  8  8 Wages (2)  6  6  4  Employment (1)  4  2  2  0  0  -2  -2 00  05  10  15  (1) Spliced series using monthly variation in February 2010. (2) For nominal wages, average ULC and IREM were used. Spliced series using monthly variation in February 2010. Sources: Central Bank of Chile and National Statistics Institute (INE).
In our monetary policy analysis, we must assess whether output and employment lie above or below their long-term trends; in our financial stability analysis, we must assess whether credit lies above or below its long-term trend. Both policy areas must give weight to the risk of a build-up of financial imbalances. The communication of monetary policy also offers some lessons. Whereas monetary policy was previously veiled in secrecy, we are now open about our view of the likely future interest rate path. The theoretical foundation for transparency builds on the notion that prices are sticky. Adjusting prices goes smoother if central banks’ response pattern is known. Market participants then have a solid basis for forming expectations about future interest rates. The same line of reasoning may be valid with regard to transparency about our advice on the countercyclical capital buffer. It takes time for banks to adapt to changes in capital BIS central bankers’ speeches  5  requirements. A predictable policy will facilitate the adjustment process. The size of the friction is difficult to assess. Banks tend to restrict themselves to a very limited number when they present their options for increasing capital ratios. If banks choose to raise new equity capital, the adjustment process will be considerably faster. Irrespectively, we believe that predictability will facilitate adjustment.

All these instruments, with the exception of foreign exchange reserves and interest rate caps, have been used or are being used in practice.” 2 Milton Friedman had already predicted five years earlier that this system of managing the economy would collapse because economic policy expectations reduced the scope for pursuing the objective of permanently low unemployment. Friedman proved to be right. The Great Inflation in the 1970s and into the 1980s, combined with an economic management crisis, spurred a new paradigm shift in the field of economics. Regulations and planned economies had to give way to economic thinking guided by the central role of wellfunctioning markets. The shift also occurred in Norway, but it took somewhat longer than in other countries. The US banks that had been harnessed in the 1930s were freed up. The trend gradually pervaded Europe. The freeing up of the banking sector was a bit too abrupt for many and banking crises again made their appearance in western countries, not least here in the Nordic countries. The big picture is nonetheless one of a long period of stable growth and low inflation from the 1990s and into the 2000s. At the same time, debt levels rose in many countries. Deregulation fuelled the flow of capital across borders. Banking regulation had to be coordinated at an international level. The Basel regulatory framework came into place towards the end of the 1980s and represented a breakthrough. But the regulations would prove to be too weak.
Remember that in a basic Solow growth model, investment should grow at the growth rate of productivity plus the growth rate of hours worked along the steady state path of the economy. For many European countries, there is scope to increase labour participation rates over time. But given demographic trends, a major part of raising investment demand must be engineering an upward shock to productivity. Besides, internal devaluation can be the backbone of reform in a small, open economy, but not in a larger and more closed one – and even less in the euro area as a whole, where it is by and large a zero-sum game. This is why the composition of reforms also matters – we need reforms that both boost competitiveness and raise productivity. The reforms undertaken so far, despite proceeding at different speeds, have achieved a significant internal devaluation in some euro area countries. Since 2009 Greece has almost entirely reversed the ULC growth it experienced in the pre-crisis period (–19.4% relative to the euro area), while good progress has also been made in Spain (–11.3%), Ireland (–12.3%) and to a lesser extent Portugal (–8.2%). As a result, most of these countries have been able to improve their competitiveness and export. Spain and Portugal, for example, have persistently outperformed the euro area between 2011 and 2013, with both countries gaining more than 10 percentage points of export market shares relative to their competitors.

Inflationary expectations of economic agents continue to be within the target range, which is essential under the conditions of the simultaneous presence of the negative output gap and high foreign prices. The Bank of Albania is fully committed for anchored inflationary expectations in compliance with its inflation target and stands ready to accomplish its mandate, by preventing materialisation of constant pressures on inflation. Following discussions, the Supervisory Council concluded that the monetary conditions remain appropriate for meeting the medium-term inflation target and decided to leave the key interest rate unchanged at 5.25%. BIS central bankers’ speeches  3
For a long time, a stable exchange rate and the level of cost inflation among our trading partners provided an anchor for wage determination in Norway. In order to maintain competitiveness, wage growth in Norway had to be on a par with that of trading partners. Over time, growth in real wages must be consistent with growth in labour productivity. An inflation target of 2½ per cent and trend productivity growth of around 2 per cent, according to updated national accounts figures, imply annual nominal wage growth of about 4½ per cent. These figures are consistent with developments in the 1990s, when wage growth averaged 4½ per cent. This resulted in an inflation rate of 2½ per cent. The krone exchange rate was stable. The output gap shows the difference between actual production (GDP) and trend growth - estimated at close to 2.5 per cent in Norway. At the beginning of the 1990s, the economy was in a deep recession. Production was well below capacity. When growth in the economy picked up, capacity utilisation increased. The output gap closed around 1996. From then on, costs increased and the rise in prices for goods and services produced for the Norwegian market accelerated. The upturn peaked in 1997, with GDP growth approaching 5 per cent. The pace of such a strong upturn could not be sustained.

To conclude, I would like to thank CEMLA, the co-organizing central banks for putting together this meeting and the team at the Central Bank of Chile for their work and for arranging the logistics of this event. Currently, when we are living under very uncertain circumstances, it is especially relevant to be discussing risk issues. This is so because high uncertainty affects the evaluation process when making decisions, when assigning probabilities to certain events and, finally, how our institutions are governed and managed. There is no doubt in my mind that this meeting will enrich our knowledge on the subject. We will also benefit from the richness of the exchange of information between institutions, which I hope will show us the road to the future of risk management. I wish you very fruitful sessions today and tomorrow, which will encourage learning, generate more conversations over time and development collaborative work that will provide continuity to the topics that will be covered in these two days. Thank you very much. 3/3  BIS - Central bankers' speeches
Rodrigo Vergara: Global liquidity, spillovers to emerging markets and policy responses Opening remarks by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, at the XVII Annual Conference on “Central banking, analysis and economic policies” of the Central Bank of Chile, Santiago de Chile, 14 November 2013. *  *  *  I thank Claudio Raddatz, Luis Oscar Herrera, and Consuelo Edwards for helpful comments. Good morning. Welcome to the Central Bank of Chile’s Seventeenth Annual Conference on Central Banking, Analysis and Economic Policies. This year, our conference focuses on “Global Liquidity, Spillovers to Emerging Markets and Policy Responses”. You will probably agree with me that this is a very timely topic. The global financial crisis that started in 2008 prompted a quick and decisive reaction of monetary authorities around the world. The central banks of most countries soon slashed interest rates to boost their economies, and implemented various types of facilities to inject liquidity into troubled financial markets. However, while most emerging markets reversed some of these policies as their economies recovered, advanced economies have maintained historically low interest rates and engaged in unconventional policies that last to these days. I will discuss today some of the policy issues around these developments and share some thoughts about the pending research questions along the way. These years of global liquidity expansion have coincided with a surge in gross capital inflows into emerging markets, a real appreciation of their currencies, and an increase in the prices of their main commodities, stocks, and houses.

These trends have been particularly visible in Latin America. During 2012, annual gross capital inflows to the seven largest Latin American countries – as classified by the IMF – amounted to more than 250 billion dollars. Sovereign EMBI spreads shrank to around 150 basis points, and, with a few exceptions, stock market prices recovered or surpassed their pre‐crisis levels.1 After the large depreciation suffered at the peak of the crisis, the real exchange rates of these countries persistently appreciated, continuing with a trend coming from the mid‐2000s. House prices in the region also experienced high annual growth rates, in many cases reaching two‐ digit figures. Chile was no exception to these patterns, although they were a bit less pronounced than in the average emerging or Latin American country. Our real exchange rate appreciated by about 15 percent between the peak of the crisis and the end of 2012, real house prices grew about 20 percent between 2009 and 2012, and our current account moved from a surplus of 2 percent of GDP in the last quarter of 2009, to a deficit of 3.5 percent of GDP by the end of 2012. Sure enough, these patterns could be explained by pull factors. The faster recovery of growth rates in emerging markets, the quick rebound of their commodity prices after the crisis, and the sounder policies being implemented by several of them during the last decade could give reason to allocate more capital to this group of countries.
33  All speeches are available online at www.bankofengland.co.uk/speeches  33  Chart 13: How Americans of different ages got their news in 2016  Age Group 18-29  30-49  50-64  65+  5  10  23  28  29  24  29  20  Newspaper Radio  27  14  Online  49  50  TV  27 Per cent  85  72  45  Per cent  Per cent  Per cent  Source: Pew Research Centre (Barthel et al, 2016).

Whenever I speak with colleagues from other countries, I stress that only national authorities can decide when to adopt Basel II. Members of the Basel Committee believe that it is beneficial to move in the direction of Basel II, but no country should adopt Basel II if it feels that it is not yet ready. If a country does decide to adopt Basel II, the timing should be determined by its own circumstances, not the timetable for Basel Committee members. I hope you will pardon my pronunciation, but I am told that there is a Turkish proverb that says “hamama giren terler,” or “he who enters a Turkish bath sweats.” If I understand correctly, the point of this proverb is that you should understand the consequences of your actions. If the result is to be very positive, some work and thus some sweat is required. I don’t know whether adopting Basel II is similar to entering a Turkish bath, but I do know that it is important to understand that this is a high-quality and demanding standard. Unlike the 1988 Accord, which was relatively simple to adopt, Basel II is more complex and demands more of banks and supervisors. Therefore, we don’t expect Basel II to be adopted as widely and quickly as the 1988 Accord, at least at the outset. However, we do believe it is appropriate for all economies, and we expect and hope that the number of countries that adopt the new framework will grow over time.
Is the dominance of the dollar in world reserves a reflection of historical factors that are less and less relevant today? Or are there fundamental reasons for the world's central banks to continue using one main currency as a source of liquidity? Second, given that each bloc’s policy choices reflect domestic objectives, what could be achieved through international meetings? The starting point is the need to find a common analysis. Domestic policies should at least be based on mutually consistent assumptions. Only when there is agreement on the nature of the risks inherent in current international monetary arrangements will there be the possibility of a cooperative outcome that is an improvement for all, not just for some. Third, how might we arrive at such a common analysis? The G-7 arose out of an earlier episode of concern about exchange rate movements in the 1980s. Most smaller countries can choose their exchange rate regime without worrying about its impact on the rest of the world. But the large countries – especially the three blocs I identified at the outset – cannot ignore their interdependency. That is why it is important to expand the group of countries that discuss these issues beyond the G-7 to include those, such as China and India, whose actions increasingly have global economic consequences.

It is clear that the aim of central banks to make monetary policy less exciting and more boring needs to be complemented by a collective effort to bring boredom to the international monetary stage. 1  Over the past year, senior policymakers from within the G-7 are reported to have claimed that “It’s awfully important that the euro zone adopt policies that will allow them to grow faster. Their slow growth is hurting our growth” (John Snow, AFX news 24/03/04), and that “Our American friends need to put in place a determined policy to control their deficits and so that their currency does not distort commercial trade” (Nicolas Sarkozy, AFX news 25/11/04), or indeed that China’s exchange rate policy “has become a destabilizing force in the world economy, has led to major international exchange rate and trade imbalances throughout the world” (Open letter from US senators Schumer, Bunning, Durbin, Graham, Dodd and Bayh to Vice President Richard Cheney, 22/01/04). 2  BIS Review 9/2005