samchain/econo-pairs-v1 huggingface dataset:
This is to ensure its orderly evolution as an integral component of the international financial system. Strengthening international financial infrastructure The focus of cooperation has been particularly significant in the area of the development of the international financial infrastructure relating to financial stability. A key development since the setting up of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) in 1990 has been the establishment of the Islamic Financial Services Board (IFSB) as the international prudential standard setting body for the Islamic financial services industry in 2002. The important goal of strengthening the foundation of the global Islamic financial system was recently reinforced further following the recent global financial crisis, through the work of the IFSB-IDB Task Force of Islamic Finance and Global Financial Stability. In its report that was released in 2010, eight building blocks were identified to deal with the potential risks and vulnerabilities to the Islamic system in this now more challenging international financial environment. These include steps that need to be taken for the implementation of the prudential standards; the development of a liquidity management infrastructure; the introduction of strong financial safety nets; the development of an effective crisis management and resolution framework; the development and implementation of accounting, auditing and disclosure standards; the formulation of an effective macro prudential framework; the development of credible credit rating institutions and processes; and finally, to strengthen efforts for capacity building and talent development for the Islamic financial services industry.

Chart 14. Revisions to Oil and Import Price Assumptions Oil Prices (USD/bbl)  Import Prices (2003=100)  Source: Bloomberg, CBRT. Source: TurkStat, CBRT. Particularly due to supply-side developments, oil and other commodity prices remained considerably above our assumptions presented in the January Inflation Report (Chart 14). Hence, we revised our assumptions for oil and other commodity prices upwards (Table 2). As illustrated on the slide, these changes in assumptions led to an upward revision of about 50 basis points for the end-2011 inflation forecast and a slightly upward revision for the 2012 inflation forecast. BIS central bankers’ speeches  7  Table 2. Revisions to 2011 Assumptions  Oil (Annual Average, USD)  Prices  Import (Annual Percent Change)  Prices  Food Price (Year-end Percent Change)  Inflation  January 2011  April 2011  95  115  10.9  16.2  7.5  7.5  Another factor affecting 2011 inflation forecasts has been the tariff hike on fabrics and apparels. Although major uncertainties exist about how this development will be reflected on prices, we assumed that this would add to year-end inflation by about 50 basis points while revising our forecasts. Despite the recent benign course of food prices, we preserved our assumption regarding food inflation for end-2011 at 7.5 percent in view of the extreme volatility in unprocessed food prices and rapid increases in agricultural commodity prices (Table 2).
Challenges ahead: The Central Bank of Malta’s prime responsibility is to ensure price stability. From this  perspective the challenge is to ensure that the Maltese economy continues to expand at a sustainable pace, without overheating. It is vital that we avoid the formation of asset price bubbles. The recent global financial crisis has shown the huge costs that can arise when asset prices depart from their fundamental values, eventually jeopardising the financial system and the economy as a whole. At the Central Bank we are keeping a very watchful eye on the price developments in the property market. Earlier this year we have published work by our Economic Research  Department exploring property price misalignment with fundamentals based on an index of 5 separate indicators. It shows that at the end of 2015 house prices were still below their equilibrium fundamental value but nevertheless price trends in this regard will continue to be closely monitored. There are, however, other asset classes which need close observation to avoid formation of asset bubbles. In the current low interest rate environment investors’ search for yield may stimulate excessive risk-taking behaviour. More investors’ education is needed to ensure that there is better appreciation of the risks of unrated corporate debt, especially where markets are somewhat thin. At the same time, we have to recognise that, as members of the euro area, the monetary policy tool is no longer available at the national level.

PRODUCTIVITY AND STABILITY FOR SUSTAINABLE GROWTH  ADDRESS BY DR MARIO VELLA GOVERNOR, CENTRAL BANK OF MALTA DELIVERED DURING THE IFS ANNUAL DINNER  18 NOVEMBER 2016  Dear President and Members of the Committee of Institute of Financial Services (IFS) Malta, personally and on behalf of the Board of Directors of the Central Bank of Malta and of its Senior Management, I thank you for the opportunity to address this distinguished audience. Dear Minister. Ladies and gentlemen. This annual event brings together key stakeholders in this country’s economic development and growth, and in the development of the social, educational and cultural conditions without which economic development and growth are not possible. It is now an established tradition that the Governor of the Central Bank seizes the opportunity of the Annual Dinner of IFS Malta to make a number of factually grounded remarks about some matters in the remit of the Central Bank. The traditional presence of the Minister of Finance at this event is of vital importance because it provides the stakeholders present with a more dynamic view of the whole, in the light of the statutorily distinct roles of the Ministry of Finance and the Central Bank. Before sharing some thoughts with you, I would like to commend IFS for its ongoing commitment to responding to the changing needs of the marketplace and its pursuit of excellence in the provision of financial services education.
William C Dudley: Panel remarks at the International Symposium of the Bank of France Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the International Symposium of the Bank of France “Central Banking: The Way Forward?” Paris, 7 November 2014. *  *  *  If all goes according to our forecast and the U.S. economy continues to make progress towards the Fed’s dual mandate goals of maximum sustainable employment and 2 percent inflation, the Federal Reserve will likely begin to raise its federal funds rate target off the zero lower bound sometime next year. For the United States, the start of the normalization of U.S. monetary policy will be a very welcome development. It will indicate that the U.S. economy has made great strides in healing itself from the damage caused by the U.S. housing boom and bust, and the financial crisis. However, this shift in policy will undoubtedly be accompanied by some degree of market turbulence. Moreover, it could create significant challenges for those emerging market economies (EMEs) that have been the beneficiaries of large capital inflows in recent years. What can the Federal Reserve do to minimize these risks? These are some of the very important issues raised by Helene Rey’s work. Let me begin by highlighting some of the key points I will be making.

A second issue I would like to touch upon is the need for an in-depth analysis of the framework for smaller retail institutions, particularly those typically funded by deposits. By now, there is a common understanding that we need to rethink the way to treat those in crisis. I am sure we are all aware of initiatives to develop special administrative liquidation procedures, and of alternative proposals on the need to extend the scope of resolution by reassessing the concept of public interest. My personal feeling right now is that both ways could be workable, and the argument I would like to present is that we should first try to agree on an optimal way to absorb losses and facilitate eventual restructuring costs. In non-systemic crises, bailing-in depositors or bailing-out institutions are socially costly options. At the same time, high MREL levels could be very expensive to achieve for many of these institutions. Therefore, I would suggest striking the right balance between, on the one hand, the internalisation of losses above capital requirements and, on the other, collective industry funding to facilitate the transfer tools. Connected to the previous topic is the issue of the level playing field. Failing banks that do not satisfy the public interest test are subject to insolvency procedures in accordance with national regulations that vary substantially across jurisdictions. At the end of the day, this results in an unlevelled playing field as some have upgraded their insolvency proceedings to quasi-resolution frameworks.
The EU’s emission trading system (ETS) is the world’s largest carbon market. Its “cap and trade” scheme provides a mechanism for both reducing the total amount of emissions in a cost-efficient way and ensuring that pollution is priced adequately. A recent study shows that the ETS saved more than one billion tons of CO2 between 2008 and 2016, a 3.8% reduction in total EU-wide emissions. [5] And only this week, carbon prices hit their highest level in more than a decade, despite the sharp contraction in aggregate demand and energy consumption, possibly reflecting the anticipation of tighter climate policies under the European Green Deal (see figure 2). Figure 2 EU ETS price (in euro per ton CO2 emissions)  Source: Bloomberg. Last observation: 15 July 2020. Notes: Energy Broker pricing on Bloomberg updates on a near realtime basis. Updates only occur when there is activity in the market, so there may not be updates to every contract every day. There is no reason for complacency, however. Currently, the ETS only covers economic sectors that together account for less than half of total carbon emissions in the EU, whereas the remaining sectors are subject to a patchwork of non-harmonised measures across the European Union. A global solution is out of reach. Moreover, carbon pricing is not a sufficient condition to manage the transition towards a more sustainable economy. Fostering green investment and innovation This brings me to the second pillar.

However,  4  See, for example, Ljungqvist, L and T J Sargent (2006), ”How Sweden’s unemployment became more like Europe's” in Freeman R, B Swedenborg and R Topel (ed), ”Reforming the welfare state – American perspectives on the Swedish model”, SNS Förlag. BIS Review 52/2007  5  it is not exactly easy to assess the level of resource utilisation in the labour market. There are many indications of fairly large labour reserves in total, although this may not be reflected in the recently agreed wage increases. Employment appeared to be developing in line with the forecast we made in February. However, the labour supply was showing weaker development than we had expected. Altogether, this means that unemployment has been slightly lower than we assessed in our forecasts in February and the labour market situation is therefore slightly more strained. Our assessment in May was that on the whole, the repo rate would need to be raised gradually and by more during the forecast period than was indicated by the forecast we made in February. I did not consider the changes in the economic outlook to be so great that they required an immediate adjustment in the repo rate. The reason for this was that inflation is low and there are still factors holding it back. What we must do is to balance the pace of our interest rate increases so that inflation does not accelerate more quickly than expected, but so that growth in production and employment are not slowed down too soon.
The outcome of the negotiations in manufacturing industry set the ceiling for wage growth in sheltered industries. In recent years this model has been challenged. Since 1998, wage growth in Norway has been on the rise and markedly higher than that of our trading partners. High pay increases also for groups whose wages are determined through individual agreements indicate that the labour market has been tight. However, the rise in salaries for white-collar workers may also reflect weak cost control in enterprises and public entities following a long period of economic expansion. We have gained costly experience from previous developments of this type. Both in the mid-1970s and the mid-1980s, the Norwegian business cycle diverged from that of trading partners. In the period 1975-1978 and 1982-1988, wage growth was markedly higher than wage growth among trading partners. As a result, competitiveness deteriorated sharply in internationally exposed industries, which in both cases led to a cyclical downturn with low real wage growth and high unemployment, also in sheltered industries. This is a mechanism that will occur again. Public sector employees also have to pay for the imbalances. Real wage growth for teachers and health sector employees was negative both at the end of the 1970s and the end of the 1980s. Around the mid-1990s these groups also benefited from stable economic growth with low inflation. Annual real wage growth averaged around 3 per cent between 1996 and 1998.

Growth in compensation per employee fell slightly in the last quarter of 2018 from 2.5% to 2.2%, but remains just above its long-term average. Unit labour cost growth rose to 2.4% in the same period, partly driven by a fall in productivity growth reflecting the resilience of employment growth to the economic slowdown. The key question – and one currently being asked in many advanced economies – is why these labour cost pressures are not already being reflected in rising prices. Underlying inflation has moved broadly sideways over the last year, repeatedly falling short of expectations and staying below the levels recorded before 2008. Academic literature based on US data has responded by casting doubt on the link between labour costs and inflation, in particular at shorter horizons. Studies find no conclusive results on whether, empirically, labour costs tend to precede or follow prices. 10 This has led to a debate as to whether “cost-push” models from wages to prices can still accurately describe the inflation process. There are certainly a number of forces at work today that make forecasting inflation more complex, not least the effects of globalisation and digitalisation. Yet research by ECB staff finds that, unlike in the United States, the structural conditions for pass-through from wages to prices remain in place in the euro area.
According to the Basel Committee’s guidelines, the buffer should come into play when the ratio between aggregate credit provision in the economy and the development of GDP deviates from an average trend. The greater the deviation the greater the increase, and vice versa. However, this is not something that will happen automatically. The decision on whether the buffer should be activated or not will lie with the national authorities. As countries develop at different rates, the capital requirements will also vary from country to country. A bank that is active on several markets will therefore need to calculate its capital requirement on the basis of the geographical distribution of its exposures. Like the capital conservation buffer, the counter-cyclical capital buffer is linked to sanctions on dividends. The counter-cyclical capital buffer is good for several reasons. First, it can be used to counteract the procyclical effects that a risk-weighted capital requirement automatically entails and that result in an unwanted high expansion of credit in upturns and cutbacks in downturns. Second, it can be used to limit the build-up of systemic risks. The reason for this is that the buffer is based on the risks in the economy as a whole rather than in each individual bank. In times of high credit growth, when systemic risks usually develop, the buffer can be activated, thereby increasing the capital requirement for all of the banks at the same time even if the actions of the individual banks do not constitute a risk in themselves.

I intend to devote today’s speech to describing what the new regulations entail, explaining the effects we can expect them to have in Sweden and presenting my view of the regulations. This means that several parts of the speech will be rather technical, but a thorough review is necessary to clarify what the new regulations actually entail. 2 Before I begin I would like to point out that although there has been a great focus on drawing up regulations that promote a more stable financial sector it is important to remember that the sector must be effective so that it can continue to manage deposits, provide loans and conduct payments. Finding a good balance between stability and effectiveness is always an important task. In my view, we have managed to achieve this balance. Why we must develop Basel II Capital inadequate in terms of quantity and quality A basic problem with the current regulations is that they allow the banks to hold far too little risk-bearing capital, and in many cases capital that is of far too poor quality. According to the Basel II regulations the capital base consists of two parts: Tier 1 (or primary) capital and Tier 2 (or supplementary) capital. Together, these should correspond to at least eight per cent of the banks’ risk-weighted assets, of which Tier 1 capital must constitute at least four per cent.
But our approach to those forecasts has evolved as we have gradually oriented ourselves in the new economic territory we have found ourselves in. In our first Monetary Policy Report (MPR) following the outbreak of the pandemic, published in May 2020 (shown in orange), the impact of Covid was still so uncertain that we felt unable to publish a single central forecast. Instead what we published was a “plausible illustrative economic scenario”, together with estimates of the sensitivity of the economy to some key variables. The scenario and accompanying estimates were nothing like our usual detailed map of the outlook. But they served as an initial outline of what a future map might look like. As time passed, and as Figure 1 illustrates, we began to fill in the picture. By August 2020 (shown in grey) we felt able to publish a forecast once more; but it was a forecast that came with a higher-than-usual degree of uncertainty and a larger-than-usual downside skew, as captured in our published fan charts. By November (yellow) some of those downside risks had crystallised, in the form of a new rise in Covid cases and an associated increase in restrictions. And while by February 2021 (dark blue) the vaccination programme had begun, it was too early to be certain about how successful it would be, and the risks remained to the downside.

In Switzerland, responsibility for benchmarks lies, in principle, with the private sector and these benchmarks are not regulated. Nevertheless, the SNB is particularly interested that benchmarks for interest rates and exchange rates should be credible, since they are important for well-functioning financial markets and for the implementation of monetary policy. That is why the SNB has supported reform efforts in the area of benchmarks by taking part in various national and international working groups. I have reported here on these efforts on several occasions. The FSB has published two final reports since our last media news conference, so this provides me with a good opportunity to draw some initial conclusions. Benchmarks for interest rates As regards benchmark interest rates, the final report recommends pursuing two main approaches in the future. First, existing interest rate benchmarks should be further improved. Second, efforts should be made to develop alternative benchmark interest rates. Thus the two-pronged approach for the future envisages, alongside improved Libor interest rates which would still be based on unsecured money market transactions, the emergence of more benchmark interest rates related to repo transactions or other near risk-free transactions. The FSB’s final report states that significant progress has already been achieved with the Libor rates. However, not all of the requirements set by the securities regulators (IOSCO standards)1 have so far been met. In particular, it still remains unclear whether the markets upon which the interest rates are based are sufficiently liquid. A certain level of liquidity is needed to ensure robust benchmark rates, i.e.
And although the downward pressure on inflation from movements in energy prices and the exchange rate are proving persistent, they will not have a permanent effect on inflation. But, there is residual uncertainty about the relationship between the real economy and inflation – something economists refer to as “model uncertainty” – which in this instance augurs for caution in setting monetary policy. 4 The most likely outcome is that wage growth will soon resume its recovery, but there are alternative states of the world in which it takes longer for that to happen. So I judge it prudent to tread carefully, and refrain from voting for an increase in Bank Rate until I am convinced that wage growth will be sustained at a level consistent with inflation returning to target. 4  The effect of uncertainty in the setting of monetary policy is much discussed. Brainard (1967) shows that when policymakers are uncertain about the effects of their actions on the economy, it is appropriate to move more cautiously than if the impact of policy is certain – a strategy known as gradualism. Data uncertainty is another reason why policymakers may adopt a gradualist approach. One common finding is that when data are noisier, a less aggressive response is desirable (Rudebusch, 2001; Orphanides, 2003). In addition, more recently, Evans et al (2015) have argued for delaying lift-off in the face of uncertainty about the strength of the recovery, given a view that there are asymmetric costs associated with the zero lower bound.

It is more important to ensure that the goods markets also adjust and the inflated price level drops - this can be achieved by systematically promoting competition and by reducing state regulations. The eastward enlargement of the EU inevitably begs the question as to whether the rocky bilateral road on which Switzerland has set out will also be a fit for the challenges of the future. Accession to the EU is currently not an issue, however. Reasons for the scepticism of the Swiss people in this regard are manifold. For instance, Switzerland would have to give up the Swiss franc if it joined. This in turn would mean a higher interest rate level and an end to our autonomous monetary policy. 2  BIS Review 69/2004  It was precisely in the past three difficult years, that the possibility of conducting an independent monetary policy proved advantageous. At the beginning of 2001, the Swiss National Bank relaxed its monetary policy before the European Central Bank and, in the following months, also cut its short-term interest rates more drastically than the ECB. In March 2003, we lowered our key rate, the three-month Libor rate, to almost zero. This was in reaction to the deflationary risk in the wake of the strong appreciation of the Swiss franc. We have, in the meantime, pushed our interest rates back up slightly.