samchain/econo-pairs-v1 huggingface dataset:
Or it could be that the spare capacity is exerting little downward pressure, because businesses with limited access to credit are unwilling to run the risk of reducing their cash flow by cutting prices in order to boost market share. Moreover, even though pay growth has been muted, unit wage costs have nevertheless risen quite sharply because businesses have held onto skilled labour through the recession, rather than lay it off. So the firmness in underlying prices may just be the flipside of the better-than-expected labour market outturns. Despite these uncertainties, it seems likely that the margin of spare capacity will be sufficient to pull inflation back towards the 2% target from its present elevated level, as the near-term effects of the restoration in VAT and sterling’s past depreciation work through. Our latest projections, contained in the February Inflation Report, are shown in Chart 9. The risks of inflation being above or below the target are roughly balanced by the end of the forecast horizon. It should, I hope, be clear from my remarks that, although a recovery of sorts may have commenced, there are still considerable doubts about its strength and durability and about the accompanying path of inflation. The road ahead is likely to be bumpy and there is still the risk of further adverse shocks.

Most of the time, the best projection of asset prices at that horizon is for them to be broadly flat. Consequently, I suspect that our policy choices would not have been radically different had we been tasked with targeting an inflation measure that included a measure of owneroccupied housing costs. Finally, there is something of a logical error in moving from the indubitably correct observation that successful inflation targeting is insufficient to guarantee either macroeconomic stability or financial stability to the conclusion that monetary policy should in addition, or instead, be focussed on some other objective. There is a real danger in overburdening monetary policy if it is expected to achieve both price stability and financial stability simultaneously. With two objectives, one needs two independent means of achieving them. The assignment of instruments to targets then revolves around which instrument is most effective at achieving which objective. Though loose monetary policy, particularly in the United States during 2001–5, arguably contributed to the build-up of the financial imbalances, it was but one of many causes, including a plethora of failings within financial institutions. These include: inadequate care in the extension of loans to risky individuals, when those loans are then sold on; the inappropriate use of off-balance-sheet vehicles to circumvent capital requirements; reward packages that encouraged an undue focus on short-term returns; excessive complexity and opacity in some asset-backed securities; and distorted incentives facing ratings agencies.
Figure 15 Nominal exchange rate  Copper price (*)  (index, 01/02/2006=100)  (dollars per pound)  140  140  130  130  120  120  110  110  100  100  90  90  80  06 OER  07  08 MER  09  80  10 11 Multilateral dollar  5  5  4  4  3  3  2  2  1  06  07  08  09  10  11  11(f) 12 12(f) 13  1  (*) Red dots indicate average copper price forecast for 2011 and 2012 in December 2010's Monetary Policy Report; green dots indicate the same in March 2011's Report. Sources: Central Bank of Chile and Bloomberg. 14  BIS central bankers’ speeches  Figure 16 Change in nominal exchange rate with respect to 2008 average (*) (percent) 25 20 15 10 5 0 -5 -10  Turkey  U.K.  Poland  Russia  Mexico  Hungary  Eurozone  Czech Republic  Norway  South Korea  Israel  Philippines  Peru  Colombia  Chile  N.Zealand  Canada  Thailand  Brazil  Malaysia  Indonesia  Switzerland  South Africa  Japan  -20  Australia  -15  (*) Above zero value indicates an appreciation of the local currency against the U.S. dollar. Source: Bloomberg.

Likewise, business and consumer confidence surveys show increased concerns about inflation. BIS central bankers’ speeches  3  As usual, there are various risks that could shape a different macroeconomic scenario. On this occasion, the Board believes the risk balance for both inflation and output is biased upward. The main risk to inflation has to do with the size, persistence and propagation of the shock to commodity prices, especially oil. Internationally, as I said, the baseline scenario assumes that the oil price will be high and fairly stable. However, it may happen that the political tensions in some oil-exporting countries continue or intensify, resulting in a steeper upward trend. The global effects of such a setting are clearly inflationary in the immediate future, while further down the line its combined effects on world demand and interest rates may moderate world economic activity (table 3). In the case of foodstuff prices, current aggregate indexes are above their peak of 2007–2008, although the composition of products showing the bigger increases differs. In any case, the velocity of these hikes has been greater than that of the last episode (figure 12). Both futures prices and analysts’ projections assume that the prices of these products will not increase further but will rather tend to normalize. Still, it cannot be ruled out that if supply-side problems in the agricultural sector persist within a context of strong growth in emerging economies, pressures on the prices of foodstuffs may be intensified.
Funds investing in less liquid instruments have grown quickly at the same time as market liquidity has gone in the other direction. Market liquidity, particularly in dealer intermediated markets is lower than in the decade before the crisis. 12  Banks’ risk appetite and business models have changed and regulation has  ensured that they are adequately capitalised for the risks they run as market makers. In 2015 the Bank of England and Financial Conduct Authority conducted a joint information-gathering exercise on 17 asset management firms and 143 of their funds, focusing on those with large holdings of corporate bonds. One key finding was that funds individually were assuming more liquidity than might be available if there was market-wide selling pressure. For example, in the dollar corporate bond market, funds’ individual expectations of what could be liquidated in a day, when aggregated together, was three times daily market turnover. 13  The risk of sharply falling markets triggering large-scale redemptions is exacerbated by the fact that many retail funds offer investors daily liquidity, regardless of the nature of the fund’s investments. Individual funds do of course have a variety of mechanisms – ‘gates’, penalties, discounts, suspensions, etc – to help manage large-scale redemption pressure. But in an episode of severe market stress, it is not at all clear whether activation of such mechanisms by funds under stress would dampen rather than amplify redemption pressure across the market more generally.

At this time, most central banks, I think, have not responded systematically to this aspect of transparency. A number of central banks publish minutes and voting records of their monetary policy meetings with a lag, but the majority still don’t. The main reason is the risk that doing so could undermine the decisionmaking process where frankness and openness are required. Having detailed minutes and voting records might encourage the attending members to read out their statements rather than to get involved in detailed discussions. Because the practices differ, I said earlier there is not yet a clear convergence of the practice. Nonconvergence of practice can be seen clearly from the current practice of the eight major central banks. I want to end my remark today by sharing with you my thought on how to approach transparency in monetary policy. The first is that transparency is not just a fad. It is something that will stay. And as organizations making public policy decisions, transparency is of most importance to central banks as a way of being accountable. Also, transparency is important to central banks for building credibility and for gaining public acceptance of their policy. 2  BIS Review 10/2006  Second, in moving towards greater transparency, an approach based on sequencing or gradualism looks to me to be better and more efficient than a big-bang approach. The sequencing, in my view, should focus initially on building minimum critical components of core transparency, and then moving on to greater transparency in selected areas when ready.
We can choose the combination that minimises financial stability risk. We did it with tiering, or when we excluded the housing sector from our TLTRO lending facilities. For example, when the time comes for a gradual exit strategy, we could calibrate the sequencing depending on the state of financial stability. If, say, corporate debt looked particularly overvalued, and risk premia excessively compressed, and a source of systemic risk, we could choose to reduce the size of our private portfolio quicker and hold more sovereign bonds to manage the run-off of the stock. If the resilience of the banking sector were too affected by the prolongation of low rates, we could modify the tiering parameter. The world we now live in one where the toolkit used by central banks to fulfil their mandate has greatly expanded. As they now have several instruments in their monetary policy toolkit, the old Tinbergen principle may be understood in a new and broader way by incorporating several goals. But how can we then address Benjamin Franklin’s legitimate worry about “trying to please everyone”? Three rules may guide us to avoid excessive expectations. First we, the Eurosystem, must stick closely to our mandate which gives a clear primacy to our price stability mandate, without any change in the Treaty that governs us.

Keeping this inflation objective in mind, allow me to reflect on our current and future monetary policy, and design a reinforcing “equilibrium triangle”: The first corner of this triangle is the flexibility of the PEPP (Pandemic Emergency Purchase Programme). Right from the beginning of the pandemic crisis, the PEPP differed from other asset purchase programs by being more flexible across jurisdictions, asset classes, and monthly volumes. iv Its indicative envelope now reaches EUR 1850 billion. I sometimes hear the suggestion from market analysts to provide a quantitative definition of “favourable financing conditions”, and that we should perhaps even introduce Yield Curve Control on sovereign bonds. I disagree: as we are concerned about financial conditions for all borrowers – not just sovereigns – and different forms of financing – not just market funding, we stick to a multifaceted and holistic assessment. And the assessment of how favourable financing conditions are – while we look both at real and nominal yields – is done in conjunction with the inflation outlook, as explicitly stated in our latest Governing Council. So, we will make informed judgements rather than apply predetermined rules. Not acting automatically does not prevent responding effectively, quite the contrary. Our recent decision to conduct our purchases “at a significantly higher pace” was well noted by markets, and implemented promptly. It limited unwarranted transatlantic spillovers: since the start of the year, 10 year sovereign bond yields have increased by 0,8pp in the US, against 0.2pp in the euro area.
•  Claudio Borio and Zhu Haibin describe the “risk-taking channel” of monetary policy whereby low interest rates boost asset and collateral values, which provides a larger  1  BIS 85th Annual Report (2015)  2  Schularick, M and Taylor, A (2012), “Credit Booms Gone Bust: Monetary Policy, Leverage Cycles, and Financial Crises, 1870–2008,” American Economic Review, 102(2): 1029–61. 3  Borio, C and Disyatat, P (2011), “Global Imbalances and the Financial Crisis: Link or No Link?” BIS Working Papers, No. 346, Bank for International Settlements, May. 2  BIS central bankers’ speeches  incentive for both borrowers and lenders to take more risk. The consequent build-up in leverage leads to financial instability. 4 •  Jeremy Stein puts it succinctly: “monetary policy is fundamentally in the business of altering risk premiums”. Third, since monetary policy affects risk-taking and the credit cycle, which in turn affect financial stability, monetary policy should therefore take account of financial stability. •  Jeremy Stein argues that since economic agents will find ways to circumvent regulatory measures to control risk-taking, it is better to use monetary policy to “get in all of the cracks”. •  Conceptually, this amounts to augmenting the Taylor Rule with an additional term to capture deviations in financial variables from their equilibrium values. •  Monetary policy has a role in “leaning against the wind” of financial stability risks. While the first two propositions are gaining credence and traction among policymakers, the third proposition is heavily contested.

At the global level it has at times been used by the latter as an excuse for delaying adjustment. Global imbalances are the result of a lack of policy coordination. 2  BIS Review 126/2010  It seems to me that we need better economic analysis in order to address this issue. First, we need to understand whether a given level of world growth, if achieved through unsustainable imbalances, is in itself sustainable. In 2003–07 the world economy grew at an unprecedented pace, also owing to the large imbalances financed through the recycling of large capital flows. If these imbalances were not sustainable, the underlying rate of growth of the world economy, and of some of its components – in particular the deficit countries – was probably in itself not sustainable. Accordingly, asking who will provide the demand of last resort if the deficit countries save more might not be the right question to ask, because it is based on the presumption that the unsustainable pre-crisis growth rate represents the postcrisis objective. We certainly need a better understanding about the potential growth of the various economies and its structure, taking due account of how comparative advantages have changed, also as a result of the crisis. My intuition is that such an analysis would suggest that potential growth in the United States is substantially lower than the average growth it experienced over the past decade and requires a shift of resources from the non-tradable to the tradable sector.
Stablecoins broadly comprise a digital financial asset that purports, by one means or another[9], to maintain a stable value, a ledger system, usually a distributed ledger, for recording and transferring ownership. These are supported by exchanges for trading the coins and custody arrangements for storing them. At present, they are issued by a variety of non-bank entities. So far their use has been confined to facilitating trading and other transactions in the world of crypto assets but there are proposals to introduce them for other payment purposes in the economy and for cross border use in competition with money issued by commercial banks and conventional payment systems[10]. Stablecoins offer the possibility of greater efficiency and functionality in payments. But they currently sit outside most of the regulated framework and it is extremely unlikely that any of the current offerings would meet the standards for robustness and uniformity we currently apply both to commercial bank money and to the existing payment systems that transfer commercial bank money between the parties to a transaction. The Financial Services and Markets Bill will give the Bank powers to regulate operators of systemic payment systems and systemic service providers using “digital settlement assets”, including stablecoins that are used, or are likely to be used, for payments, at systemic scale in the UK. It will also give the FCA powers to regulate the issuance and custody of fiatreferenced stablecoins for conduct and market integrity.

2/5  BIS central bankers' speeches  Stage 2: Normalization The second stage of normalization followed lift-off and has involved two processes: 1) raising the federal funds target closer to more normal levels, reflecting the ongoing improvement in the economy, and 2) gradually reducing the Fed’s balance sheet as we work to unwind the asset purchase policies put in place during the crisis. Let’s start with interest rate normalization. Since lift-off, we’ve raised interest rates as the economy moved toward maximum employment and our 2 percent longer-run inflation objective. We continued this process with our most recent rate increase this week.4 Throughout, we’ve repeatedly stressed that we foresaw this to be a process of gradual normalization, reflecting the balancing of risks to reaching our goals. In particular, downside risks to the achievement of our employment and inflation goals amid very low interest rates were compelling arguments for a cautious and relatively predictable approach to policy. This approach proved its worth: The economy continued to expand at a healthy pace even as the Fed raised rates numerous times. I’ll now turn briefly to the normalization of the balance sheet. We began this process about a year ago.
While demand was weak in tandem with confidence, government pump-priming also helped achieve the favorable growth outcome. Going forward, sustainable economic growth can be achieved through several different means. But, among them, the prerequisite is maintaining the healthy growth momentum with the right policy mix. I will elaborate on this point later. For 2008, the growth prospect hinges largely on the recovery of private consumption and investment, supported by increased government spending. This year, the strengths of these three growth engines will be particularly important, since exports – the fourth engine – is expected to moderate in line with the global economic slowdown. Overall, the Monetary Policy Committee expects the Thai economy to grow by 4.8-6 percent. Due to continued high prices of energy and food, headline inflation is expected to be in a range of 4.0-5.0 percent for the whole of 2008. Nevertheless, the MPC expects the core inflation forecast of 1.5-2.5 percent. But, there are important risks to these forecasts. On the growth momentum, data for the first three months of 2008 point to GDP growth close to 6 percent, up from the previous quarter of 5.7 percent. During the first three months of this year, private consumption and investment, which constitute almost 70 percent of total demand, are firming up. Meanwhile, the disbursement rate of central government budget during the first half of fiscal year 2008 was also up from the same period last year.

Gent Sejko: Transparency, communication and the importance of the media partnership Address by Mr Gent Sejko, Governor of the Bank of Albania, at the end-of-year meeting with the media and the Governor’s Award ceremony, Tirana, 13 December 2019. * * * Dear ladies and gentlemen, Welcome to the Bank of Albania, to spend some time together as the year end approaches. Sadly, the atmosphere at the end of this year is different from previous ones, following the devastating earthquake, which hit Albania in late November. In the aftermath, we are all heartbroken by the tragic loss of 51 lives, with hundreds of others injured and many buildings, which have collapsed or have been heavily affected by the strongest quake in decades. Yet, beyond the material consequences and psychological shock, this tragic event foregrounded another – somewhat dormant – dimension of our society: solidarity and unconditional support for each other. We all witnessed an impressive demonstration of voluntary support from fellow citizens to those affected by the devastating earthquake. In this extraordinary situation, the media played a key role in promoting solidarity and alleviating the human pain caused by this natural disaster. In light of this event, and in retrospection of 2019, let me express my sincere thanks and heartfelt gratitude to the media, to those who are present here tonight, and those that were unable to attend, for their invaluable work, reporting news truthfully and in real time.
Johnsen underscored the seriousness of the potential consequences for the Norwegian economy if the Government did not intervene resolutely in the crisis: 9 “The gravity of the situation is simply this: A collapse of the banks will also break the backbone of the Norwegian economy. If we do not implement extensive measures now, a good many ordinary people may lose their savings.” But the Minister of Finance made an important reservation. In the same account, he also stated that the banks’ owners could not expect to escape unscathed: “At the same time, the instruments are designed so that banks themselves will have a principal responsibility for solving their financial problems. They will not simply be able to send the bill for their misjudgements to the government.” That was also the case in practice. The shares in banks that lost all their equity capital were written down to zero, in line with the principles pertaining to the bankruptcy of other enterprises. The capital injections banks received were made on the condition that they restored order to their organisations while cutting unnecessary costs. In other words: we bailed out the financial system, but not the banks’ owners. On the other hand, practically no creditors lost their assets, even in the banks that had lost more than their equity. Creditors were bailed out through the government’s recapitalisation of the failed banks. In the aftermath of the crisis, the Banking Law Commission was tasked with drafting a new law on crisis resolution.

BIS central bankers’ speeches  3  When the government assumes a substantial portion of bank risk in this way, a problem arises that we economists refer to as moral hazard: If there is a widespread perception that the authorities in reality stand behind banks, banks may take insufficient account of the risk of losses when making decisions. In particular, the risk that things can go horribly wrong may be underestimated, because banks do not have to bear the consequences of a crisis. By bailing out banks, we in turn reduce the motivation of banks’ owners and creditors to take full account of the risk associated with their activities. The pricing of risk is easily set too low. Banks may therefore end up taking excessive risk. Now, the authorities that bail out banks will often require that the former owners forfeit their equity. This means that bank owners should, at the outset, have incentives to hedge against the risk of large losses. But owners’ risk is limited. It does not cover losses beyond paid-in capital. Owners’ motivation to avoid risk may therefore be weakened at a bank with little equity. The lower the equity capital is, the more serious the problem of moral hazard becomes. An interesting feature of the financial crisis was precisely banks’ low pre-crisis equity ratios. Many large international banks operated with equity of around three percent of their total portfolios. 8 This means that for every dollar or euro the banks owned they invested thirty.