samchain/econo-pairs-v1 huggingface dataset:
Figure 4  10  CPIEFE inflation (2) (annual change, percentage) 10  10  8  8  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -2  -2  -4  -4  -4  -4  10  CPI inflation (1)(2) (annual change, percentage)  07 08 09 10 11 12 13 14  07 08 09 10 11 12 13 14  MP Report Sep.2012  MP Report Dec.2012  (1) December 2012 figure uses median of monthly inflation forecast in the EES. (2) Gray area, as from the fourth quarter of 2012, shows forecast. Sources: Central Bank of Chile and National Statistics Institute (INE). 10  BIS central bankers’ speeches  Figure 5 MPR and expectations (percentage) 9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0 07  08  09  10  FBS first half December 2012  11  12  13  14  EES December 2012  MPR  Source: Central Bank of Chile.

“Smooth Landing or Crash? Model Based Scenarios of Global Current Account Rebalancing”, NBER Working Paper 11583; O. Blanchard et al. „The U.S. Current Account and the Dollar”, NBER Working Paper 11137 and many others. 4  BIS Review 19/2006  thanks to the intensified scale of those phenomena and thanks to including an increasing number of countries into the international economic processes. Taking into consideration the labour market, it may be observed that the inclusion of the CEE countries as well as the former Soviet Union countries, India, China, and other developing countries resulted in an increase in the global labour supply of 2 billion workers. Thus, we are witnesses to the establishment of the global labour market. Actions of international corporations undertaken to relocate manufacturing or orders to countries with lower manufacturing costs simply make use of the existing comparative advantages. The foreign direct investment (FDI) inflow between 1990 and 2004 increased more than threefold, amounting to ca. USD 648 billion in 2004. In the same period, the FDI inflow to developing countries was six times higher and in 2004 it amounted to USD 233 billion 17 . A significant factor contributing to intensification of the above phenomena is trade liberalisation, which involves reduction or elimination of customs tariff rates and all other non-tariff barriers that increase the costs of trade. Studies undertaken so far 18 point to a significant role of preferential trade agreements, which in the years 1993-1997 involved about 70% of all trade exchange of West European countries.
The draft Directive establishes an array of instruments with which to tackle banking crises in three phases or stages: in the preventive stage, in the case of early intervention and in the case of resolution. In the preventive phase, banks must draw up recovery plans in the event that their situation should significantly worsen. The authorities will, in some cases, be empowered to appoint managers at banks. The principal resolution measures would be the sale of part of the business; the establishment of bridge banks for the temporary transfer of healthy assets to a bank controlled by the public sector; the segregation of assets through the transfer of impaired assets to a management vehicle; and measures that impose losses on shareholders and uninsured creditors, known as a bail-in as opposed to a bail-out, which involves or usually involves the assumption of losses by the public sector. The bail-in tool will allow the resolution authorities to cancel or convert into capital the entitlements of the shareholders and creditors of banks that are insolvent or close to insolvency. Under the decision by Ecofín, the deposits of individuals and of small and medium-sized enterprises, along with liabilities to the European Investment Bank, will have preference over uninsured creditors and over the deposits of large corporations. The Deposit Guarantee Fund will at all times make good any guaranteed deposits, i.e. those of less than € which will have greater seniority or preference over other deposits. In any event, the bail-in will exclude, inter alia, insured deposits, i.e.

Notable examples are the Financial Stability Oversight Council in the United States, the UK Financial Policy Committee and the European Systemic Risk Board (ESRB) in the EU. I shall focus in my address on the proposals by the FSB and the Basel Committee on Banking Supervision, which has worked under its guidelines. I shall refer to four broad issues which I consider to be most important in the new regulatory framework being designed. Firstly, the entry into force of the new capital rules known as Basel III, the basic thrust of which, as we all know, is to strengthen banks’ capital; second, the new treatment of systemic banks and the new banking resolution frameworks. Here, I shall comment on potential reforms to banking business models, which we normally call “structural reforms”. And finally, I shall refer to outstanding accounting issues, with significant consequences for bank balance sheet management, geared to achieving the sought-after convergence between US Financial Accounting Standards Board (FASB) rules and the International Accounting Standards Board (IASB) criteria applied in Europe. The entry into force of the new Basel III capital accord One of the key elements of the new regulatory framework is the amendment of the prudential rules governing the banking sector by means of the agreement we refer to as “Basel III”. The adaptation of this accord to the European arena came about just a few days ago with the approval of the new Capital Requirements Directive.
Ingimundur Fridriksson: Turbulence in Iceland's financial markets in 2006 Keynote address by Mr Ingimundur Fridriksson, Governor of the Central Bank of Iceland, at the UBS conference “Annual Reserve Management Seminar for Sovereign Institutions”, Thun, Switzerland, 4 June 2007. *  *  *  Where is Iceland? What is it? Why do we want to know about it? In the first half of 2006, hardly a day passed without Iceland and Icelandic banks being mentioned in newspapers and financial journals around the world. Although attention is often welcome, this was not necessarily true of all the discussion about Iceland and its banks a year ago. The coverage was highly critical, in some ways rightly so but in other ways not. When I was asked to address this conference, the turbulence in the Icelandic financial markets in the first half of 2006 was doubtless fresh in the organisers’ minds. So I was asked to discuss that episode and how the Central Bank of Iceland monitored it and responded. As well as covering this topic I shall add some comments on recent developments and prevailing conditions. But first a few facts and a brief description of the background are needed. Iceland is an advanced industrial economy with one of the highest national incomes per capita in the world. Through membership of the European Economic Area, Iceland is part of the European single market and has the same financial infrastructure as in the European Union.

The UK’s financial sector can be both a global good and a national asset – if it is resilient. It is not for the Bank of England to decide how big the financial sector should be. Our job is to ensure that it is safe. The UK can host a large and expanding financial sector safely, if we implement a reform agenda that extends well beyond domestic banking. That is not to suggest that the focus on reforming domestic banks has been misplaced. Following the crisis, it was imperative to fix first the fault lines at the core of our system, with initiatives ranging from rebuilding the capital of major UK banks and building societies, to changing the structure of compensation and the responsibilities of senior officers. In tandem, some major banks are working to change their cultures.6 But reforms of domestic banking are far from sufficient for a global hub like London. Now is the time for a greater focus on what’s needed for resilient international banking and robust global markets. This will require sustained international engagement. Unlike in the early days of the FT, the UK can no longer dictate standards. Rather than ruling the waves, we must spur collective action through a demonstrated commitment to openness and the promotion of better ideas in Europe and at the G20 via the Financial Stability Board (FSB).
The majority of global consumer transactions still take place through cash. As previous Currency Conferences have affirmed, we expect physical cash to remain necessary and relevant. Digital media has significantly transformed the way we experience the world. However, it has not brought us to the closing pages for physical media – including notes and coins. This may appear strange, if one considers the fact that much of our communication, planning and transportation revolve around the internet. As a recent McKinsey report puts it, mobile devices have become the “digital container” of our daily lives. This marks a profound cultural shift. The smartphone is fast becoming an extension of ourselves. Indeed, this digitalisation is altering the way payments are being made. We are not only spending more time online, we are spending more money through online channels. Our familiarity with and dependence on mobile devices is unprecedented. I believe that this attachment has made us increasingly comfortable with digital payments. They now appear more intuitive, more reliable and more convenient than ever before. This trend is evident in the findings of a recent international survey by ING. Most of the respondents are using less cash now compared to a year ago. A third of Europeans surveyed were even willing to go completely cashless if it were possible. We have seen a similar shift here in Malaysia. When internet banking was first introduced in Malaysia back in 2000, most people were sceptical about its safety and reluctant to learn how to use it.

•  But there are many others in this room who are better placed to judge that. Old wine in new but bigger bottles: macroprudential regulation Even as we re-discover the virtues of microprudential policies, we realise they may not be sufficient in the face of overwhelming exuberance and risk-taking. •  This is where macroprudential policy comes in. •  Macroprudential policy can be more effective than monetary policy in “targeting the cracks” where specific vulnerabilities are concentrated. Macroprudential policy is related to but distinct from microprudential policy. •  Some have called macroprudential policy “old wine in new bottles”. Yes and no. •  Many of the tools are indeed the same: loan-to-value ratios, debt-to-income ratios, debt service ratios, and so on. But there is a difference. When these limits are used for macroprudential purposes, the scope and calibration are much larger. For example: •  A loan-to-value ratio of 80% for property loans, applied through the cycles, as we have in Singapore, is a microprudential tool. •  But when we tightened the loan-to-value ratio to as low as 20% for a third property loan, as we did a couple of years ago, it became a macroprudential tool. •  Macroprudential policy may well be old wine, but it is in much bigger bottles! Macroprudential policy can also come in several different bottles. •  Instead of relying on a single tool (e.g. the interest rate for monetary policy), macroprudential policy is often multi-pronged.
This turnaround in the economy has prompted an active debate about when the Bank’s monetary policy stance should be shifted from back foot to front – in other words, whether and when UK interest rates might rise. Market expectations of future interest rates have already adjusted since the economy began growing. In January 2013, the first rise in UK interest rates was expected in the third quarter of 2015. Now, it is expected by the end of this year. This prospect has sent shivers down some spines. But some context is important here. When the first rate rise does come, it will be because the economy has recovered sufficiently to thrive on smaller doses of monetary medicine. A normalisation of interest rates would signal the economy having returned to the hospital ward, after six years in intensive care. The economy would be switching channels, from ER to Casualty. That is something to welcome, not fear. At the same time, the Bank’s policy guidance was introduced in August last year in part to prevent interest rate expectations getting ahead of themselves and derailing recovery. From our survey evidence, it appears that businesses listened and took heed. Investment rose 8.5% during 2013. This has meant the UK’s recovery has not just been healthy but reasonably balanced, with both households and companies contributing. Today’s uncertainties None of this leaves the job of judging the future path of monetary policy an easy one.

Even for the natural sciences, dealing with physical constants and fixed laws of motion, the voyage of discovery can sometimes be a lengthy one. It took a century before estimates of the speed of light had converged to its true value. For much of this period, not only were best-estimates biased but the estimated confidence intervals around them often did not encompass the true value.6 Modelling complex, adaptive, socio-economic systems would make these estimation problems pale by significance. It is for these reasons that the Bank is also investing in its research capacity. For example, in our quarterly Inflation Report the Bank now shows alternative scenarios for inflation and output under different assumptions about how the world works. Alongside this, the Bank is putting greater effort into developing a pluralist set of approaches to model-building, drawing on other disciplines. Operating in the corridor In time, these investments in data and research will narrow the corridor of uncertainty. But for now, the key public policy question is what to do when operating in it? Rocket-scientists, of the real rather than metaphorical kind, have a clear answer to this question: avoid really bad outcomes.7 This is sometimes called a “minimax” strategy – the aim being to minimise the chances of the maximum possible loss. It is the policymakers’ equivalent of the Hippocratic oath – “do no harm”. So what, then, are these avoidable-at-all-cost scenarios? Let me consider three from a potentially long list.
Indirect data suggest that aggregate demand has carried forward positive growth rates, but growth remains significantly below the potential of the Albanian economy. Macroeconomic factors determining private consumption and investments, and a prudent fiscal policy sustain the assessment for contained growth of the domestic demand in the first quarter of the year. Moreover, in the absence of complete data and in real terms on developments in the external sector of the economy, assessments suggest that the contribution of foreign demand to economic growth will be lower than in the past year. Fiscal policy was subject to a consolidation nature over the first quarter of 2012, in line with its objectives to keep budget deficit and public debt in check. The contained fiscal approach has been reflected in minimum public expenditure in the first quarter of the year, with an annualised rate of 0.7%. Furthermore, low growth rates of fiscal revenues continued their trend, settling at 1.2% in this quarter. The budget deficit was ALL 11.5 billion, or about 2.5% down compared with the first quarter of a year earlier. Developments in foreign trade over the first two-month period of the year point to contracted trade exchange in annual terms. Value of exports in these two months dipped by 20.5% against the corresponding period of a year earlier, reflecting the moderation of foreign demand and price developments in global markets. On the imports side, their growth rates were significantly decelerated, reaching a nominal annual growth of 1.8% during this period.

François Villeroy de Galhau: Productivity - a collective enigma? Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at the Bank of France - France Stratégie Conference, Paris, 1 February 2017. * * * Welcome to all of you. It gives me great pleasure to be able to open this conference on French productivity, organised in conjunction with France Stratégie. The subject is one that is both topical and of great importance to central banks: productivity is one of the principal drivers of growth, and its dynamics are a strong determinant of potential growth, that which is compatible with price stability. As you can see [ slide], after the major wave of expansion witnessed during Les Trente Glorieuses, which was particularly marked in the case of France, productivity growth in advanced countries has slowed in successive stages since the 1970s. Today, it has fallen back to a pace that is historically weak. What are the common factors behind this slowdown in productivity? And is there anything specific to France? I don’t believe so: if there is one thing that is specific to France, it is the high level of hourly productivity – one of the highest in the world, alongside that of the United States and Germany. So, rather than being a French enigma, the enigma we are looking at this morning seems to me to be more of a collective phenomenon.
This, however, is only the “first sight” scenario. European unemployment is largely structural, meaning that although there is a demand for labor on the part of the firms, this demand is not necessarily matched by the supply on the labor market. Under these circumstances, the labor market could constitute a bottleneck for growth and lead to inflationary pressure. To prevent inflation from rising, the European Central Bank would have to further increase interest rates. Clearly, structural adjustments are of the essence in Europe. In the absence of flexibility, the unemployment rate cannot be lowered significantly and doubts exist about the actual room of maneuver of the monetary authorities. Expected growth for Switzerland, on the other hand, looks quite moderate by international standards. Thus, one might think that there is little danger of inflation and that the Swiss National Bank should further support the seemingly fragile economic upturn. A look at the labor market, however, shows another picture. Unemployment has fallen steadily since the summer of 1997 to a low rate of 2.3% only. Its recent increase to 2.6% is due to seasonal factors. Moreover, there are already clear signs of a shortage on the labor market. Stronger growth could thus fuel the well-known wage-price spiral. Under these circumstances, a further tightening of monetary policy is a realistic hypothesis. To make things even more difficult, there is a high degree of uncertainty concerning the development of labor productivity in both Europe and Switzerland.

For the first time in its history, Switzerland is surrounded by countries all sharing the same currency. Even without being a member of the Union, it is affected by this new monetary situation. De facto, our trade with Europe is already taking place in one currency only - the euro - because the parities of the former national currencies have been definitively locked. That means that our foreign trade is less diversified by currencies than earlier and that fluctuations of the SF/euro exchange rate have an even stronger impact on the Swiss economy than the former SF/DM or SF/FF exchange rates. At the same time, a common monetary policy for Europe is likely to lead - over time - to a stronger synchronization of business activity in the EMU member states. This, in turn, means that the impact of the European business cycle on the Swiss economy will become more even and thus also stronger. More than ever, Switzerland’s economic destiny will be linked to that of Europe. Today, Switzerland benefits already from the technical simplification induced by the substitution of ten different currencies by a single one. Monetary unification brings advantages to internationally oriented firms as it simplifies their foreign currency management and their accounting procedures. From the year 2002 onward, when the euro will exist in the form of cash, the single currency will make things even easier for a broad public, not only for the Europeans, but also for every Swiss travelling through the euro-zone.
And that kind of investment tends to go to countries with sound economic fundamentals, including a budget that is balanced over the course of the business cycle. More immediately, if we renege on the Convergence Programme targets, there would be a real risk of a drop in investor confidence. This is confirmed by recent developments in interest rates and in bond markets in central Europe, where markets have started to punish countries who risk delaying euro  2  BIS Review 16/2006  adoption. It is indeed relevant to point out that Malta’s current ‘A’ rating is predicated upon the continued pursuit of fiscal consolidation. There is an additional short-term gain from staying on course. As I have mentioned, fiscal restraint also helps to reduce the country’s external imbalance, and this, in turn, could allow a cut in the interest premium that investors require in order to hold Maltese lira assets. This would mean lower interest rates. On balance, therefore, the outcome of a u-turn on fiscal policy is unlikely to be positive. 4. Last year’s entry in ERM II has been described as hasty and premature. Why the rush to join the euro? Does it not rule out any possible adjustments to the value of the lira? One of the arguments made in support of this view is that our euro adoption calendar does not allow government to run a higher deficit and thus promote faster growth. I have just explained why I am not convinced by this argument.

Major banks and dealers at the core of these markets generate both short- and longer-term credit and market risk exposures from a number of sources and activities, including trading positions, loan commitments that support securities issuance, and warehousing positions in advance of packaging and distributing them. Retained interests associated with securitization transactions are substantial relative to capital of the largest firms. And the importance of securitization for the firms-both from a funding and revenue generation standpoint-provides an incentive for them to support investors in these products in ways that may go beyond contractual obligations. •  The post-trade processing and settlement infrastructure, particularly in credit derivatives, is still quite weak relative to the significance of these markets, although the major dealers and buy-side investors are making a substantial effort to address these problems. The total stock of unconfirmed trades is large and until recently was growing considerably faster than the total volume of new trades. The time between trade and confirmation is still quite long for a large share of the transactions. The share of trades done on the available automated platforms is still substantially short of what is possible. Until the adoption of a new protocol last fall, firms were typically assigning trades without the knowledge or consent of the original counterparties. Nostro breaks, which are errors in payments discovered by counterparties at the time of the quarterly flows, rose to a significant share of total trades. Efforts to standardize documentation and provide automated confirmation services has lagged behind product development and growth in volume.