samchain/econo-pairs-v1 huggingface dataset:
However, interest rate derivatives have experienced stronger growth given the sensitivity to interest rate changes and the need to manage exposure to fixed and floating rate financial assets. BIS Review 11/2004  1  In the international financial markets, the growth in OTC derivatives has been phenomenal in recent years. The statistics compiled by the Bank for International Settlements indicate that as of the end of June 2003 the total outstanding OTC derivatives in notional amounts was 169 trillion US dollars. This total figure includes 22 trillion US dollars of foreign exchange contracts, 121 trillion US dollars of interest rate contracts, principally swaps, 2.7 trillion US dollars of equity-linked contracts, almost 1 trillion US dollars of commodity contracts and 18 trillion US dollars classified as Others. The fact that growth in financial derivatives has far surpassed the growth in the underlying real economies that generated the original transactions and risks for diversification is a matter of concern to regulators. It seems that speculators appear to have embraced derivatives as another form of investment for short-term capital gains. If financial derivatives take on a life of their own due to excessive speculative activity, the utility for risk diversification may prove illusory from a systemic point of view because the new risks introduced by derivatives may well overshadow the risks posed to the financial system by the underlying more risky financial assets.

Thus, it is useful to complement this measure with expectations extracted from inflation derivatives. In particular, inflation-linked swap rates provide a measure of the expected inflation rates at short horizons (one and two years ahead, for example). 8 One-year inflation swap rates fell sharply in the second half of 2008 (slide 13), following the decline in oil prices and the worsened macroeconomic outlook, and remained between 0.0% and 0.5% until recently. However, they have returned to levels above 1% since early April 2009. The chart also displays market uncertainty about the future inflation outcomes in the euro area, represented by the coloured areas. Unsurprisingly, uncertainty has increased since October 2008. Furthermore, in line with developments in point expectations, the probability associated with negative inflation readings within a 12-month horizon increased in the months following October 2008, as indicated by the shaded areas below the zero line, but has declined somewhat in recent months. The evolution of the term structure of inflation expectations suggests a similar pattern of gradual adjustment at slightly longer horizons (slide 14). Two-year-ahead inflation expectations have moved in tandem with shorter inflation expectations. Yet, the fact that they have never become negative, and that they are now back at levels ‘close to, but below, 2%’ – which is the ECB’s definition of price stability – offers further ‘comfort’ for monetary policy. It should be kept in mind that the liquidity of shorter-term inflation swaps is somewhat inferior to longer-horizon contracts, and the readings should thus be interpreted with appropriate care.
5  1  An additional element has been exchange rate targeting which was based on an external anchor. Effectively, this represents an intermediate objective if domestic credibility of the central bank may be weak. 2  See Greenspan (2002), Blinder (2005), Mishkin (2007) and Bean, Paustian, Penalver, and Taylor (2010), “Monetary Policy after the Fall”, Federal Reserve Bank of Kansas City Annual Conference, Jackson Hole, Wyoming, August. 3  See the discussion in Christiano, Ilut, Motto, and Rostagno (2010) on “Monetary policy and Stock Market Booms.”  4  See “A Monetary Policy Strategy in Good and Bad Times: Lessons from the Recent Past” Fahr, Motto, Rostagno, Smets and Tristani, ECB Working Paper Series No. 1336, May 2011. 5  See the evidence in Fischer, Lenza, Pill and Reichlin (2008): “Money and monetary policy – the ECB experience 1999–2006” and Trichet (2008): “Risk and the Macro-economy”, Keynote address at the conference “The ECB and its watchers X”. 2  BIS central bankers’ speeches  Nonetheless, I think it is fair to say that nobody – including central bankers – has expected a crisis of the dimension that we have been experiencing since five years. 6 The overall favourable macroeconomic constellation from the Great Moderation, with low volatility and robust growth, has certainly induced some benign neglect – also on the policy side.

Through these functions, a meeting place is formed by the financial system (and particularly the banks) for the economic activities of households and companies. Perhaps it could be likened to a motorway junction for the economy. In the financial sector, the income and expenditure of households and companies meet like traffic flowing from all directions. A robust construction is needed to make this interaction proceed smoothly. When a lot of traffic is moving at high speed, the construction must also have a clear focus on safety. The higher the speed limit, the greater the safety margins must be. Financial crises have major macroeconomic costs Just like driving on a motorway, the financial system entails risks. On the roads, these risks do not just affect the driver’s own vehicle, but the entire flow of traffic. In the same way, the economic costs of a financial crisis are significant. Nobody could have missed this in recent years. We know that financial crises have permanent effects on growth. It is often not possible to recover from the major fall in GDP that is the consequence of a deep financial crisis in the period following such a crisis. Normally, we see a downwards shift in GDP level trend even if good times may then mean a return to the same rate of growth. The economic costs are significant. Of course, any estimate would vary depending on the crisis and assumptions, but a mainstream assessment would be just over 60 per cent of precrisis GDP.
Third, banks have many ways they can adjust their business models to meet the new standards as they are phased in. Many of these changes can occur without any risk of disruption to the flow of credit to households and business. For instance, banks can sell nonstrategic assets to investors and can modify their minority investments in non-consolidated interests. Low-quality legacy assets, such as subprime mortgage loans and second mortgages, will mature and run off. Risk-weighted assets will tend to fall as the economy recovers. Moreover, as banks book profits, deferred tax assets will shrink, reducing the magnitude of these future deductions from common equity. Finally, it is important to note the significant potential earnings power of large U.S. banks, which have historically tended to have higher rates of return on their average assets relative to many of their foreign counterparts. Banks that currently are short of the 2019 standard could retain these future earnings to build up their capital ratios. Equity analysts project that the 20 largest U.S. banks will earn more than $ billion in 2010, and consensus estimates expect that figure will increase to around $ billion in 2011. Of course, because these estimates are dependent on an economy that continues to recover, we need to be cautious about relying entirely on as-yet-unrealized earnings as the primary means to meet the higher capital standards. So what about the long-run consequences?

Productivity has also been weak and this has led to rising production costs. The weak productivity appears to be persisting and leads to continued high cost pressures. Resource utilisation measured in terms of the number of hours worked is still slightly higher than normal. However, we expect it to decline. Expectations of inflation have been high, both in the short and long term. At the time of the September meeting they were still above the inflation target. Expectations are an indication of confidence in monetary policy. Both interest rate increases and falling energy and food prices may have contributed to the slight fall. But it is important to remember that inflation expectations are still too high. There is considerable uncertainty regarding commodity prices and global developments and as I see it we cannot sound the all clear yet. To meet the inflation target it is important to conduct a monetary policy that contributes to long-term inflation expectations being close to 2 per cent. My assessment was that a further increase was required to achieve this. When I looked ahead I considered that both inflation and inflation expectations must be closer to the target before expansionary monetary policy can be reconciled with bringing inflation back to 2 per cent within a couple of years. Weaker economic activity is no guarantee that inflation will “automatically” fall. This is connected to, for instance, the risk of contagion effects and the fact that inflation can become entrenched,  6  BIS Review 115/2008  as I mentioned earlier.
The Producer Prices Index, which is calculated by excluding tax, indicates that manufacturing industry prices, comprising a significant part of the index, have become more susceptible to raw material prices and exchange rate developments compared to previous years (Graph 7). BIS Review 67/2006  5  Graph 7. Manufacturing Industry Prices and Exchange Rate Basket (0,5 USD + 0,5 Euro) (Annual Percentage Change)  Manufacturing Industry Prices  20  Exchange Rate Basket  10 0 -10  Mar-06  Jan-06  Nov-05  Sep-05  Jul-05  May-05  Mar-05  Jan-05  Nov-04  Sep-04  Jul-04  May-04  Mar-04  Jan-04  -20  Source: TURKSTAT, CBRT. The sector, in which the said effect is clearly perceived within the PPI, is the petroleum products sector that is subject to high taxes. Excluding the said effect, the annual rate of increase in manufacturing industry prices is maintaining its low-level trend, albeit its slight upward tendency (Graph 8). Graph 8. PPI and Manufacturing Industry Prices Excluding Petroleum Products (Annual Percentage Change) 12  Manufacturing Industry Prices Excluding Petroleum PPI  9  6  3  Mar-06  Feb-06  Jan-06  Dec-05  Nov-05  Oct-05  Sep-05  Aug-05  Jul-05  Jun-05  May-05  Apr-05  Mar-05  Feb-05  Jan-05  0  Source: TURKSTAT, CBRT. Distinguished Guests, Inflation expectations are determinant on inflation realizations in view of being the basis for both pricing behavior and wage adjustments.

Internationally, a number of empirical studies have been conducted on the effectiveness of exchange market interventions. The studies of interventions in the 1990s find that they were more effective than 5 studies conducted in the 1980s. This may be due to shifts in monetary policy regimes and greater emphasis on transparency. It is probably easier to win credibility when market participants know that interventions are anchored in stabilisation policy considerations rather than a short-term exchange rate objective. However, this presupposes market confidence in the ability of economic policy in general and monetary policy in particular to deliver nominal stability. It is first and foremost the signal effects of interventions that have been found to be effective and particularly when interventions are made publicly known and justified by the central bank. 4  Lars E. O. Svensson. ”Independent Review of the Operation of Monetary Policy: Report to the Minister of Finance”, February 2001. 5  L. Sarno and M.P. Taylor. ”Official Intervention in the Foreign Exchange Market: Is it Effective, and if so, How does it Work”, Discussion Paper No. 2690, February 2001, Center for Economic Policy Research. BIS Review 74/2001  7  For Norges Bank, it may be appropriate in special situations to intervene to a limited extent to stabilise inflation, should the krone move to a level that we do not consider reasonable on the basis of fundamentals, and if this could contribute to stabilising inflation. However, Norges Bank will not act in a way that prompts unilateral bets against the krone.
Mr. Duisenberg reports at a press conference on the outcome of the meeting of the Governing Council of the ECB. Introductory statement by the President of the European Central Bank, Mr. Wim Duisenberg, in Frankfurt on 8 April 1999. __________________________________________________________________________________ Ladies and gentlemen, the Vice-President and I are here today to report on the outcome of today’s meeting of the Governing Council. Let me start with the Governing Council’s discussion of recent economic developments and the decisions that the Governing Council has taken today in the field of monetary policy. After an indepth review of recent monetary, financial and economic developments, the Governing Council decided that the interest rate for the ECB’s main refinancing operations will, from next week on, be set at 2.50%. In addition, the interest rate on the marginal lending facility will be lowered to 3.50% and the interest rate on the deposit facility to 1.50% with effect from tomorrow. Let me report in some more detail on the reasons for which the Governing Council, in the context of the ECB’s monetary policy strategy, deemed it appropriate to lower interest rates. As regards monetary developments in the euro area, the acceleration of monetary aggregates seen in January 1999 was partly reversed in February. The 12-month growth rate of M3 declined from 5.6% in January to 5.2% in February.

In the first part of my talk, I will detail how the Banque de France, in acting as an institution with a strong regional presence, has tailored its services over time to fulfil its three main policy objectives, which are to guarantee monetary stability, preserve financial stability and provide services to the economy. In part two, I will turn to today’s economic and monetary situation and show with our current measures taken to preserve monetary stability, how the fulfilment of each objective is never a given but the result from the committed action by the central bank. **** Today, just as it has always done, the Banque de France offers two main types of nationwide services: first, it guarantees monetary and financial stability, because no economy can work without a stable currency and a stable banking and financial system; second, it supports local economies through its regional presence, serving households and companies, especially the most vulnerable, and supporting the environmental and digital transitions. Let me describe each of these aspects, explaining in each case how the Bank of France has adapted over the years to meet the needs of the day. The first broad set of services provided to the regions are focused on delivering monetary and financial stability. This means conducting a monetary policy that guarantees price stability in the medium term, but also supervising the payment system and ensuring the stability of financial intermediaries.
So it is very helpful that the EMI Council decided with our encouragement in September to ‘welcome and support’ harmonised market conventions on the basis proposed by the market associations. We also welcome the EMI Council’s decision in September to prepare for the computation by the ESCB of an effective overnight reference rate for the euro area. There remains however a good deal to be done everywhere -- in co-ordinating price sources, for example, as methods of redenomination. But in all of these respects London is well up with the game. Conclusion Mr. Chairman, it is sometimes suggested that a perceived threat to its activity if we were “out” will cause the City to press for early UK membership of EMU, and that this will be an important factor in the Government’s decision. I am bound to say that I see very little sign of this. Certainly there are those in the City who advocate our early participation, but there are equally those who are more hesitant -- just as opinions are divided elsewhere within the country. But for the most part, my impression is that City attitudes to EMU, whether for or against, reflect a broader assessment of the respective pros and cons for the country as a whole rather than strong views about the implications for the City in particular. On the whole I find that City opinion is relatively optimistic about its future prospects, “in” or “out”.

If the Riksbank waits to adjust the repo rate until inflation expectations and inflation have already increased, there is a risk that the delay will be too great. In this type of situation larger interest rate adjustments may be required than if the Riksbank had acted at an earlier stage. This brings me to the current economic situation. However, first I would like to take a brief look back at the events that occurred in connection with the acts of terrorism in September. The Riksbank’s actions following the terrorist attacks on 11 September 2001 After the terrorist attacks in the USA, the entire world was shocked to realise that something so dreadful could happen. The Executive Board made an assessment that the uncertainty caused by the acts of terrorism risked further subduing demand internationally, mainly through the effects on companies’ and households’ confidence in the future, which could result in a more profound and prolonged economic downturn. This was why the Riksbank lowered its interest rate, together with the central banks in the USA, the rest of Europe and several other countries. BIS Review 13/2002  3  Prior to the terrorist attacks in the USA on 11 September, new statistics indicated that the global economic downturn could reach its lowest level at the end of 2001. However the picture was not clearcut. As a result of the terrorist attacks, uncertainty increased even further regarding the time scale for a recovery.
This has been the focus of considerable discussion, particularly in Finland, as there they have chosen to continue their practice of rounding-off and to round off cash payments to the nearest five cents, something we would probably also do in Sweden if we adopt the euro. Eurostat's euro indicator for January 2002 shows that the price level in the euro countries rose by 0.5 per cent between December 2001 and January 2002. However, this is not considered to be caused primarily by the cash changeover - the effect of this is estimated to be somewhere in the interval of  2  BIS Review 23/2002  0.0-0.16 per cent. The Bank of Finland has not yet made a complete analysis of how large an effect the cash changeover has had on prices, but the figures for the month of January give no indication of inflationary pressure from the price rounding-off. However, there have been reports from the Netherlands of some effects on inflation. In a number of other countries (e.g. Greece, France and Ireland) the authorities have been keeping a very close watch on price increases and are working to counteract them. Naturally, there are a large number of other experiences from the introduction of the euro that could be mentioned in this context, and the Riksbank is working on a compilation of the information we have received from other central banks in the euro area. This compilation will be presented in the next progress report from the SIFS group (no.

Eva Srejber: Experiences from the cash changeover in the euro area Speech by Ms Eva Srejber, Second Deputy Governor of Sveriges Riksbank, at a meeting of the Swedish Federation of Trade, Stockholm, 9 April 2002. *  *  *  Let me begin by thanking you for the invitation to come to the Swedish Federation of Trade's meeting to speak about the cash changeover that has taken place in the twelve countries now participating fully in the third stage of EMU. The changeover from national banknotes and coins to euro has gone much more quickly and been more problem-free than expected and now the euro is an established currency in the countries concerned. The cash changeover was a major challenge for these countries, as the volumes were so extensive and the time period for the changeover was relatively short. Almost 15 billion euro banknotes and 50 billion euro coins were to be distributed, and at the same time all of the national banknotes and coins were to be withdrawn to the central banks. The logistics and security for the changeover therefore had to be specially designed and extra capacity was required. However, the most important factor in making the changeover a success was the enthusiasm of the general public and the naturalness demonstrated by banks, the retail trade and other institutions handling cash when carrying out their work.
Against this background, we at the Bank of Thailand see the global recovery continuing firmly in the short term despite the higher oil prices. This year, Thailand’s export market - as measured by GDP growth of our major trading partners - is expected to grow by about 5 percent. This growth will be the key factor supporting our exports this year. At the same time, Thailand’s exports to China continues to expand, though at a lower rate compared to last year’s. Hence, the effect of the slowing Chinese economy on our exports is a factor that should be monitored closely. For the first half of this year, I am happy to report that Thailand’s exports to Australia grew by 16.6 percent while imports from Australia grew by 38 percent. Australia is now Thailand’s 11th and 12th largest trading partner on exports and imports, respectively, claiming a share of 2.3 percent of Thailand’s total trade. And with the recent conclusion of the bilateral free trade agreement between our two countries, trade between our two economies is likely to grow and grow. As for the global financial markets, let me just say briefly that this year global financial markets have been dominated by the changing expectations about the pace and the timing of monetary policy tightening in the US. And this has led to a global repricing of financial assets and some reversal of international capital fows, especially away from emerging markets.

Basel II principles require all banks to address all risks, such as credit risks, market risks, operational risks and others. The principles envisage that banks should have in place systems that would help identify, measure, monitor and make provisions for such risks. The domestic banks are aware of the importance that the application of the new standard should coincide with concentration on risk management in keeping with the best global practices by using the best technological solutions. Reviewing the topics of this Symposium and the quality of its speakers, I see that it broadly covers aspects and all types of applications of banking risk management as Basel II principles seek to highlight and address. In conclusion, I express my deep thanks to the audience and the organizers of this symposium, and we look forward to having positive contributions and outstanding papers, wishing you all success. Al Salumu Alaikum Warahmatu Allahi Wabarakatuh. IS Review 125/2006  1