samchain/econo-pairs-v1 huggingface dataset:
Back in 2001 the Governing Council of the ECB, on the basis of a proposal coming from Tommaso Padoa-Schioppa, issued a short paper lining up the arguments for having supervision in a central bank. And if you read that paper, you will see that the set of arguments is heavily tilted towards favouring giving supervision to central banks. So it’s a long-standing position.1 There are many advantages, including one that is not mentioned in the paper: supervision is not just about micro-supervision these days; it now has a macro-financial perspective, for which central banks are much better prepared than any other institution to handle. Central banks monitor developments in all segments of the financial system. From reading your most recent speech, I had the impression that you thought austerity went much too far and the effects have been too drastic. Is that right? 3/8  BIS central bankers' speeches  Yes. And the main example of that is of course the case of Greece. No institution, not the Commission, not the ECB, not the IMF, ever thought possible – let alone planned for – a 25% drop in GDP in Greece. The first and second programmes for Greece were designed with a much more optimistic view on the cost of the adjustment. So the adjustment programme was indeed too harsh. And also perhaps too mechanical, because what the programme didn’t foresee was the total collapse of hope and expectations. Then, at the same time, all countries in the euro area were reducing deficits, consolidating.

The growing complexity of market-based finance and the change in the financial system will make it difficult for central banks to go back completely to the old, comfortable, traditional approach of having very lean balance sheets and just targeting the overnight money market rate. The set of instruments will have to be broadened. Several have been used during the crisis, some of them just for very stressful periods of course, but they are now part of the toolkit. Do you think what you’re saying is shared by other people on the Governing Council? I wouldn’t speculate on that. This view is developing in academia everywhere and has been discussed extensively in [the Kansas City Federal Reserve’s flagship conference in] Jackson Hole in 2016, for instance. So it’s part of the ongoing discussion at the interface between academia and central banking. Do you think the ECB has done enough to justify the impact of its policies on inequality? If we were to do quantitative easing (QE) again, would helicopter money be a better option? Helicopter money has never been a policy option. We are attentive to the question of inequality. I spoke in August last year to the European Economic Association about inequality and monetary policy, and since then further work has been done in the ECB to expand on what I said.
In part, this is due to better prepared health systems and the adaptation of businesses and households, increased testing and tracking capabilities, and the ability to focus on those services more intensive in human interaction. Meanwhile, in the last few weeks, important progress has been made in the development and distribution of Covid-19 vaccines, with several of them in advanced stages and having reported a high degree of effectiveness. In the event of early clinical approval, which is already happening in some countries, laboratories would be able to produce and deliver doses to vaccinate about half of the world’s population by the end of 2021, with several countries achieving herd immunity over the next year. This process will occur at different speeds around the world, depending on laboratory production, government contracts, the effectiveness of international coordination, distribution and delivery capacity, and people’s willingness to be vaccinated. Consequently, the uncertainty regarding the magnitude and speed of the impact that vaccines will have on economic recovery is still significant. This depends on how soon restrictions will be lifted, whether people will adjust their behavior, and whether the confidence of economic agents will recover. Therefore, the impact of the vaccine on activity will be more significant only as from the second half of 2021. In any case, the international financial markets have reacted positively to the news about the vaccine, exhibiting higher asset prices and lower risk indicators. All this is occurring as global economic activity continues to recover from the pandemic’s shock.

Page 17 of 19  20 Apr.20  20 Aug.20  Table 1 Domestic scenario (annual change, percent)  2019  GDP Domestic demand Domestic demand (w/o inventory change Gross fixed capital formation Total consumption Goods and services exports Goods and services imports Current account (% of GDP) Gross national savings (% of GDP) Nominal gross fixed capital formation (% of GDP)  2020 (f)  2021 (f)  2022 (f)  Sep.20 Report  Dec.20 Report  -5.5/-4.5 -7.1 -5.6 -10.6 -4.2 -2.2 -9.4 -1.4 18.5 21.0  -6.25/-5.75 4.0-5.0 5.5-6.5 3.0-4.0 -9.1 5.6 9.4 2.7 -7.8 7.0 9.6 2.4 -13.0 8.0 7.3 4.9 -6.3 6.8 10.3 1.7 -1.7 5.0 4.3 4.8 -12.6 8.6 16.0 2.2 0.9 -2.5 -1.5 -1.7 19.7 16.8 17.0 18.2 20.5 21.8 20.6 22.2  1.1 1.0 1.5 4.2 0.8 -2.3 -2.3 -3.9 18.9 22.4  (f) Forecast. Source: Central Bank of Chile. ***  Page 18 of 19  Sep.20 Dec.20 Sep.20 Dec.20 Report Report Report Report 3.0-4.0 2.9 2.5 5.1 1.8 4.8 3.4 -1.8 17.6 21.2
100 Riksbank NIER Consensus Time series model (AR(1)) 80  60  40  20  0 50  60  70  80  90  Sources: Statistics Sweden, the National Institute of Economic Research, Consensus Forecasts and the Riksbank  12  BIS Review 138/2007  Figure 12. Ranking for the CPI following year per cent Note. The Y-axis shows how large a percentage of times analysts have been better than the percentage of analysts as illustrated in the X-axis. In order to see how large a proportion of times the Riksbank has been better than 50 per cent of other analysts, see 50 on the X-axis, then study the red column on the Y-axis. 100  Riksbank NIER Consensus Time series model (AR(1))  80  60  40  20  0 50  60  70  80  90  Sources: Statistics Sweden, the National Institute of Economic Research, Consensus Forecasts and the Riksbank  Figure 13. The CPIX with uncertainty band Annual percentage change 4  4  90% 75% 50% UND1X  3  3  2  2  1  1  0  0  -1 dec-02  -1 dec-03  dec-04  dec-05  dec-06  dec-07  dec-08  dec-09  dec-10  Sources: Statistics Sweden and the Riksbank  BIS Review 138/2007  13  Figure 14.

Forecasting memory, GDP Percentage points 0,5 Riksbank Time series model (AR(1)) Standard deviation 0,4  0,3  0,2  0,1  0,0 1  2  3  4  5  6  7  8  Kvartal  Sources: Statistics Sweden and the Riksbank  BIS Review 138/2007  9  Figure 6. Forecasting memory, employment Percentage points 0,5  0,4  0,3  0,2 Riksbank Time series model (AR(1)) Standard deviation 0,1  0,0 1  2  3  4  5  6  7  8  Kvartal  Sources: Statistics Sweden and the Riksbank  Figure 7. Forecasting memory, productivity Percentage points 0,7  Riksbank Time series model (AR(1)) Standard deviation  0,6  0,5  0,4  0,3  0,2  0,1  0,0 1  2  3  4  5  6  7  8  Kvartal  Sources: Statistics Sweden and the Riksbank  10  BIS Review 138/2007  Figure 8. Forecasting memory for the KPIX Percentage points 0,7  0,6  0,5  0,4  0,3  0,2 Riksbank Time series model (AR(1) with seasonal dummies)  0,1  Standard deviation 0,0 1  2  3  4  5  6  7  Kvartal8  Sources: Statistics Sweden and the Riksbank  Figure 9.
A referendum held in 1919 resulted in a majority vote to ban the import and sale of fortified wines and spirits. However, the ban on fortified wine imports soon had to be lifted. Fortified wine producers in southern Europe were important recipients of Norwegian fish. In the trade war that ensued, Portugal retaliated by imposing high tariffs on Norwegian dried fish. To avoid these tariffs, Norway eventually had to accept the import of large quantities of Port and Madeira wines. Chart: Rise of Norwegian shipping Trade and the cross-border exchange of goods allow countries to exploit their comparative advantages more efficiently. But – as we experienced during the prohibition period – this requires a mutual understanding of the need for open markets. As a small open economy, Norway has always stood to gain from liberal trade regimes. The upswing for Norwegian shipping that began in the mid-1800s is a good example. Shipping had long been an important export industry for Norway, but freight transport mostly comprised goods exports from or imports to Norway. This changed in the mid-1800s. In 1849, England repealed its Navigation Act. Trade with English colonies would no longer be restricted to English ships. Freer world trade led at the same time to higher demand in the shipping freight market. The Norwegian shipping industry made good use of the opportunity: we had good ships, skilled crews and experience of ocean transport. Over the course of the next 25 years, the Norwegian merchant fleet increased four-fold.

With new knowledge and new solutions, the sea will continue to be a force that carries us forward. Chart: The new banknotes More than a thousand years ago, the Vikings brought home the idea that Norway should have its own monetary system. Olav Tryggvason was to be the first Norwegian king to have his name stamped on Norwegian coins. Our methods of payment have changed since then – from coins via banknotes and plastic cards to online and mobile payments. But banknotes and coins will stay with us. Norges Bank’s responsibility is to ensure that they are safe to use – based on the most advanced modern technology. And they should be beautiful – as beautiful as the sea that surrounds us. Thank you for your attention. 4/4  BIS central bankers' speeches
So the economics of banking do not suggest that bigger need be better. Indeed, if largescale processing of loans risks economising on the collection of information, there might even be diseconomies of scale in banking. The present crisis provides a case study. The desire to make loans a tradable commodity led to a loss of information, as transactions replaced relationships and quantity trumped quality. Within the space of a decade, banks went from monogamy to speed-dating. Evidence from a range of countries paints a revealing picture. There is not a scrap of evidence of economies of scale or scope in banking – of bigger or broader being better – beyond a low size threshold.12 At least during this crisis, big banks have if anything been found to be less stable than their smaller counterparts, requiring on average larger-scale support.13 It could be argued that big business needs big banks to supply their needs. But this is not an argument that big businesses themselves endorse, at least according to a recent survey by the Association of Corporate Treasurers.14 Take Grameen Bank – not a household name in the UK, I realise. This grew out of a microfinance project in Bangladesh which began in 1976.15 Grameen operates as a set of local credit cooperatives, often comprising as few as five members. The bank’s relationship with its borrowers is bound not by legal contract but by trust.

As the banking system has since stabilised, people’s bearings have returned and with them confidence. Trust is an altogether different animal. It is based on beliefs, not observable proofs. It is grounded in perceptions rather than evidence. It is as much a psychological state as a financial one.10 A clean balance sheet might instil confidence, but it need not repair trust. Because it is a moral judgement, repairing trust can be a slow and painstaking business. Moral compasses take rather longer to self-correct than magnetic ones. This has implications for the path of recovery in the period ahead. Historically, credit has tended to lag the recovery in output in the majority of recessions, especially financial recessions. During the previous three major recessions in the UK – in the 1970s, 1980s and 1990s – credit to business recovered slowly and in some cases only several years after the recovery in activity (Charts 8, 9 and 10). This is consistent with trust between financial institutions and their customers being slower to recover than confidence more generally. Moreover, unlike the situation today, earlier recessions in the UK were not primarily the result of financial factors. International evidence suggests that financial recessions have tended on average to be both costlier and lengthier.11 Normal recessions have been associated with a recovery in output to its previous peak after around 3 ½ quarters. Recovery to peak output following financial recessions has on average taken around 5 ½ quarters (Chart 11). Like its predecessors, lack of confidence may have “caused” this time’s recession.
During an economic boom, rising asset prices facilitate increased borrowing through the higher value of collateral in the form of financial assets, houses and apartments. When the situation then turns, most likely associated with a tightening of monetary policy, the value of these assets falls and households’ financial situation deteriorates. If, in addition, the valuations have been over-optimistic, the price falls can be dramatic. The banks will in any case respond to the deterioration of both their own balance sheet and that of their borrowers by contracting their lending. During the following period of consolidation, inflation and economic activity will decrease. In a worst case scenario the banks’ loan losses will be large enough to threaten financial stability. Apart from the risk that expectations have been irrational, however, this kind of credit cycle is considered to be part of a normal adjustment process, which should be a component of forecasters’ informal and formal models. However, as the theory of credit cycles is not especially well-developed in the standard models that are taught in the field of economics, there is reason to suspect that the relationships are underestimated by forecasters. Other economists have pointed out that rises in asset prices that initially are justified by fundamentals, also attract short-term investors who contribute to pushing up prices. The longer the price rises continue, the greater the significance the speculators will have for price developments since investors with a longer investment horizon will no longer buy the assets.

According to these theories there is some scope for monetary policy to take account of the output gap without necessarily threatening price stability in the slightly longer term. An important condition for this, however, is that there is considerable confidence in the central bank’s aim to focus on long-term price stability. In the long run, monetary policy cannot determine the real interest rate but in the short term the real interest rate can be influenced and deviate from its long-term equilibrium position. An increasing number of central banks have adopted inflation targets during the 1990s. The introduction of statutory price-stability objectives, independent central banks, transparency and - not least - regulations that give long-term sustainability in the public finances have also been important means for increasing credibility for the ability of economic policy to maintain price stability. 1  2  E.g. Woodford, Claridas  BIS Review 40/2004  In Sweden, the Riksbank adopted an inflation target as early as 1993. According to this target, inflation measured in terms of the change in consumer prices should be 2 per cent per year, with a tolerance for deviations of +/- 1 percentage point. As monetary policy does not have an immediate impact, interest rate decisions are normally governed by forecasts of inflation one to two years ahead. To avoid the economic costs of excessively sharp fluctuations in economic activity, the Riksbank many decide not to take account of price effects that are judged to be temporary.
There are two external advisors who serve on the committee, providing independent thoughts and perspectives. The committee meets every six weeks on a pre-announced schedule. The main responsibilities of MPC comprises of: •  setting the direction of the monetary policy with the objective of maintaining price stability,  •  examining and approving the monetary conditions and policy stance report, and,  •  overseeing the quarterly Inflation Report. Why did we adopt and implement inflation targeting as our new policy anchor? As the fixed exchange rate was abandoned after the crisis, it was then necessary to have a new nominal anchor. At first the Bank of Thailand used monetary aggregates as its policy target under the IMF program. The Bank targeted domestic money supply in order to ensure macroeconomic consistency in order to obtain price stability. However, as in many countries in recent years, using money supply as a target did not work well with the Thai economy as the relationship between monetary aggregates and output became increasingly unstable. This was due to changes in people's spending behavior and the popularity of new money-related innovations, such as credit cards and electronic cash cards. After studies and experimental implementation, the Bank of Thailand formally adopted the inflation-targeting regime starting from May 2000. The new nominal anchor allows the Bank of Thailand to set an explicit target of core inflation in order to stabilize price condition. Since its adoption, a target of core inflation had been set at a range of 0-3.5 percent and remains so.

Nevertheless, in the case of Thailand after the crisis, the banking system has not yet been fully functioned and this, to a certain extent, undermined the effectiveness of the monetary policy. The macro-model gives a range of core inflations with probability distribution being described into a fanchart. This fanchart takes into account the related uncertainties and gives some flexibility in a range of forecasts. Based on the most likely outcome, the MPC will announce the expected rate of inflation for this year and next year. According to the most recent assessment, the core inflation will be 0.5-1 percent in 2002 and 0.5-1.5 percent in 2003, providing growth of between 3-4 percent in 2002 and 2003. Finally to enhance transparency of the process, Inflation Report is published on the quarterly basis providing forecasts of inflation and economic growth for the next eight quarters along with the quarterly press release. For the final part of my talk, I would like to dwell on the issues of Central Bank Independence. The first issue is whether a Central Bank can have too much independence in the sense that it can be harmful. To this, I incline to say yes, but only in a rare circumstance. Bad decisions relating to monetary or financial institutions operations can be damaging with wide impact. To prevent this from happening, a mechanism should be installed such as a Monetary Policy Committee or a Financial Institutions Policy Committee comprising of qualified external directors so that important policy measures are made through group decisions.
Norman T L Chan: HKMA Fintech Day Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at HKMA Fintech Day, Hong Kong, 11 November 2016. * * * MY, George, Julia, Frank, Herman, Albert, distinguished guests, ladies and gentlemen, 1. It gives me great pleasure to welcome you all to this HKMA Fintech Day, which is part of the Fintech week. Today we have a great gathering with speakers and participants from diverse background of the financial and technology sectors, including banks, stored value facility (SVF) operators, fintech firms, fintech investors, regulators and many others. I am sure the discussions today both on and off the stage will be extremely interesting. 2. The event today is organized by the Fintech Facilitation Office (FFO) of the HKMA together with our three strategic partners: the Applied Science and Technology Research Institute (ASTRI), Cyberport and the Hong Kong Science and Technology Parks (the Science Park). As you are aware, we set up the FFO in March this year with the mission to facilitate the development of fintech in Hong Kong. 3. In the last few months, the FFO has organized many activities to bring together users and solution providers of fintech, so as to build an ecosystem to promote the adoption of new technologies in the banking sector. The FFO will continue to develop this collaborative platform together with ASTRI, Cyberport and the Science Park.

Some legal issues have yet to be thoroughly examined, such as the application and enforceability of laws for the crossborder DLT models, mechanisms for handling liability and dispute resolution if there is no centralised party administrating the DLT platform, and compliance with personal data protection principles in relation to data sharing and perpetual storage. Also, traditional cybersecurity issues still apply to DLT, including denial of access attacks and other cyber attacks. 7. The next stage of ASTRI’s study will deliver more detailed findings from a number of the proof-of-concept trials, along with assessment on whether some of this work can be put into action. It will also address the regulatory implications of DLT, and the general control principles for DLT for the banking and payment industry. We plan to deliver the next set of results in the form of another white paper in the second half of 2017. 8. Third, as I announced in September, we are setting up the HKMA-ASTRI Fintech Innovation Hub. I am now pleased to say that, following intensive preparation, the Hub is ready for use as from today. The Hub is equipped with high-powered computing resources and supported by the experts at ASTRI to allow banks, payment service providers, fintech firms and the HKMA to brainstorm innovative ideas, try out and evaluate new fintech solutions in a safe and efficient manner. All in all, the Hub will cater for the big and small institutions alike in supporting their research and adoption of fintech. 9.
On the other hand, one can use a measure of underlying inflation, the CPIF, which excludes the direct effects of the repo rate on mortgage rates. Measured in terms of the CPIF, we expect inflation to be much more stable and to be close to 2 per cent for most of the forecast period. Figure 5. Inflation measured in terms of the CPI and the CPIF, annual percentage change 5  5 CPI  4  4  CPIF  3  3  2  2  1  1  0  0  -1  -1  -2  -2 00  01  02  03  04  05  06  07  08  09  10  11  12  Sources: Statistics Sweden and the Riksbank  There is still considerable uncertainty surrounding future developments (Figure 3). It is possible that the improved situation in the financial markets will contribute to a faster recovery in the world economy than we are expecting in the main scenario of the Monetary Policy Report. On the other hand, the recovery may be slower than expected when the fiscal policy stimulation packages around the world are gradually phased out. There are many potential risks along the way. But our forecast is that if we hold the repo rate low up to autumn 2010 and then begin raising it, this together with other measures will contribute to a stable recovery and mean we attain the inflation target of 2 per cent.

Creating the right conditions for this is a difficult but important task. It involves the work on both financial stability and monetary policy. It involves extensive reforms and cooperation between central banks and other authorities around the world. We must tackle this task not only at a national level, but also from a global perspective. The work has already begun, and we are in a phase of the crisis where there are good prospects for achieving change. It is now that we have the chance to really create something that will last and will work better. We must not miss this opportunity! 12  BIS Review 138/2009