samchain/econo-pairs-v1 huggingface dataset:
Our monetary policy framework can only offer flexibility as long as it remains credible. But our credibility needs to reflect reality. It is important that the unprecedented stability of the past decade does not lead people to believe that central banks can walk on water. They can’t. When that becomes clear – as at some stage it will – I see some risk that people will be excessively disillusioned. So let me end by being very clear about what I regard as reality. The MPC cannot keep inflation exactly on target, at all times and in all circumstances. Large price shocks will sometimes drive us away from target, and we need to be able use our judgement in deciding how to react. But we can and will keep inflation close to target on average. Short run deviations from the target should not leave anyone in any doubt about that. Conclusions The stability of the period since 1992 has been almost as unexpected as the falling of the Berlin Wall, and every bit as welcome. It remains something of a puzzle and we cannot assume it will continue indefinitely. We do not know quite how big a part the MPC has played in achieving this outcome. But it has certainly been shaped by it. Success – however earned – has its price. It may have bred expectations of the MPC and what monetary policy can deliver which are frankly unrealistic – and unsustainable in the longer term.

As regulators, we obviously have a part to play in helping the finance industry adapt. We should strive to reduce uncertainties as much as possible. One source of uncertainty today is the regulatory framework. Nearly ten years after the crisis, our priority must be to stabilise the rules. The main elements of the Basel III package have already been approved in 2010–11 and have largely entered into force. But there are still ongoing discussions regarding the measurement of risk on bank balance sheets. The objective, as you know, is to reduce the unwarranted variability of results between banks and across jurisdictions. And as the German G20 reiterated last week, the completion of reforms must not result in a “significant increase in overall capital requirements”. We have not yet reached an agreement. Thanks to our mobilisation and that of our European partners, we have avoided a bad agreement. For the coming months then, our objective is to reach a good one. Another source of uncertainty is Brexit. With article 50 about to be triggered, we obviously cannot prejudge the outcome of the future negotiations. But it is essential to bear one principle in mind: in the single market, you cannot separate access and rules. In financial services in particular, you can hardly expect to have a European passport if you don’t accept the single market’s rules. Let us be clear: we are saddened by Brexit, and we are not the ones who have decided to have a so-called “clean Brexit".
The most devastating ones have laid fertile land barren, reduced the supply of labour and entailed a loss of knowledge. During the Spanish flu pandemic, more than 50 million lives were lost, many of working age. Once the Covid-19 pandemic is over, we will have been through a long period of restrictions on how we spend money, how we get from place to place and how we work. The Covid-19 pandemic will leave behind scars as well. 4  NORGES BANK  Chart 3 Economic growth has fallen Mainland GDP per capita. Contribution to average annual growth 4  4  Productivity Employment GDP per capita  3  3  2  2  1  1  0  0  1970-79  1980-89  1990-99  2000-09  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  2010-19  Sources: Statistics Norway and Norges Bank  Growth in output per capita has been moving down over several years (Chart 3), and labour input is now growing at a snail’s pace. At the same time, the primary source of growth – productivity – is making a steadily smaller contribution. This is a trend we share with other advanced economies. An underlying driving force – cross-border trade – is showing signs of flattening out. The pandemic could influence these trends. Previously, sharp declines in economic activity have been followed by a persistent rise in unemployment and a lower labour force participation rate.

As you will have so many other matters to discuss, apart from the economy and the euro, you must forgive me for dedicating so much time to my own specific subjects. To conclude, I am sure these present Tertulias will, as in all the previous meetings, be successful, that the participants will enjoy themselves, and that our British friends will have very good memories of this visit to Madrid. Thank you. 2  BIS central bankers’ speeches
After much careful study and  2  BIS central bankers’ speeches  planning for a year, the HKMA launched the Tracker Fund, an open-ended exchange-traded fund, in November 1999 and resold $ billion worth of stocks to 180,000 investors. We continued to recoup over $ billion in the next three years through the same mechanism. Ultimately, our market operation turned in a profit of nearly $ billion at prevailing stock prices at that time. 7. The experience of Hong Kong clearly shows that market failures do occur. In the example I have just outlined, market intervention by the HKMA proved to be bold and effective in securing the safety and soundness of Hong Kong’s monetary and financial system. It was, indeed, undertaken in a life-and-death but smokeless war on the financial front. Hong Kong prides itself on being one of the world’s freest and most open markets. Nevertheless, as a much smaller market compared with our American and European counterparts, Hong Kong could fall prey to global predators, resulting in market failures. If the markets were allowed to plunge in free fall, the entire financial system might face a total meltdown. It was at such a critical moment that the Hong Kong SAR Government was left with no other option than to take unprecedented action. Today, with 17 years behind us, Hong Kong remains a free and open market and an international financial centre as before, and any lingering doubt has vanished. After all, “actions speak louder than words”.

3. Of course, CRAs cannot be blamed for every market failure. Let’s turn to the European sovereign debt crisis, the epicenter of which has been Greece. When Greece joined the eurozone in 2001, its sovereign debt rating was a mere A-. The market yield of its sovereign debts denominated in the Greek drachma in 1995 was about 17%. In 2003 after its accession to the eurozone, Greece had its credit rating upgraded slightly to A+, still not a very high rating. Yet, in the ensuing nine years or so, market players were particularly exuberant on the country’s prospect and piled into Greek sovereign bonds without really taking into account its economic fundamentals, fiscal positions and sovereign rating. At one stage in 2005, the Greek sovereign bonds were traded at a spread of as low as eight basis points above the triple-A rated German Bunds. Looking back, this was essentially blind chasing of high risk investments by tens of thousands of market players and investors impervious to objective economic analysis and credit ratings. In the end, they suffered great losses. Furthermore, the capital market failed to price in a reasonable risk premium for the Greek sovereign debts, suppressing Greece’s borrowing costs for a prolonged period of time. BIS central bankers’ speeches  1  This effectively encouraged a borrowing binge by Greece that ended up in the plight today.
Some reporting and disclosure requirements were extended, reducing the operational burden on banks; and some market risk-based capital requirements that were deemed to have moved excessively during the episode were offset.1 At the same time, fiscal authorities began to provide support to economies entering lockdown. In the UK, that included government guarantees for lending to the corporate sector as well as income support schemes for employees furloughed as businesses shut or scaled back their activities. The size of the policy response was huge. Across the US, Euro Area, UK and Japan, central bank assets increased by around $ trillion in 2020, more than twice their increase in the year following the collapse of Lehman Brothers. And, according to the IMF, by mid-March 2021, global pandemic-related fiscal support measures totalled $ trillion (around 19% of world GDP).2 This is at least twice as large as the fiscal response observed during the Global Financial Crisis. In 2020 alone, average overall fiscal deficits reached 11.7% of GDP for advanced economies, the largest measure the IMF has recorded since they began gathering data. As a result of all of these interventions, conditions stabilised. There was no credit crunch: credit provision to businesses increased by more than 10% during 2020.

For this reason, the Bank of Albania draws the attention on the increasing exposure of debt servicing cost and level against exchange rate volatilities. This implies the need for added attention to external borrowing, in particular to the one in commercial terms, which should be considered as the last option in the list of possible financing resources. 4.3 Further rationalisation of the selection process of public investments The selection process of public investments has improved considerably over the last years. This is realised, amid others, through the rationalisation of non-budgeted public commitments, the disciplining of several-years-long projects, and the improvement of selection mechanisms. Nevertheless, the Bank of Albania deems that there is still room for improvement. The application of a formal cost-profit analysis for public investments in certain fields, such as health and education, culture, defence or various social programmes may be difficult from the economic standpoint, even problematic from the ethic one. Nevertheless, the selection process of other public investments, in particular those in infrastructure, may be further improved, through the formalisation of the process and the standardisation of assessment techniques for the economic profitability provided by alternative projects. This would be another positive step to increase the efficiency of the Albanian public finances and support the stable and long-term growth of our economy. 4 .4 Budget implementation pattern throughout the year The uneven distribution of expenditures and public borrowing has been and remains a problem in 4/5  BIS central bankers' speeches  the Albanian public finances.
The OECD1 estimates that global investments of USD 6.9 trillion every year are required until 2030. And that is just to keep us on track to limit global warming to 2 degrees Celsius above pre-industrial levels. Investment will need to be considerably higher than this USD 6.9 trillion figure if we are to live up to our commitment under the Paris Agreement of limiting the increase in global temperatures to 1.5 degrees. To put this number into perspective: we are talking somewhere around 8% percent of global GDP each year. Europe’s financial system is largely bank-based, so banks are playing a pivotal role in greening the economy. But what is the supervisor’s role in this process? The ECB aims to ensure the safety and soundness of the banks we supervise. Climate change creates material risks for banks, so it is our job to ensure that the banks under our supervision address these risks adequately and proactively. Regarding the risks emanating from climate change, our sole aim is to live up to our mandate. There is a knock-on effect of doing so, however, but it is a welcome one. By compelling banks to adequately assess and manage climate-related risks, we are, in effect, safeguarding the financing of the transition to a low-carbon economy as well. If banks proactively manage climaterelated risks, they will not be blindsided by stranded assets, meaning that capital will be preserved and can be used to finance investments in the low-carbon transformation.

Priority actions should, therefore, focus on addressing the underlying issues, and efforts at further expanding the already established toolkit come next. This would require bold steps at both the EU and national levels to regain confidence in the future of EU integration. At the EU level, there are institutional issues to be addressed concerning the future of the integration process. The five scenarios recently proposed by Commission President JeanClaude Juncker shed light on the possible patterns of integration between the EU members. However, there remains a potential conflict between the prospects of “multiple-speed” developments and advancing real convergence between the euro area and the rest of the EU. The EU needs to move promptly on this issue, in order to address uncertainties. The national authorities, at their end, should promote financial stability and fiscal solvency, and address structural weaknesses and bottlenecks. The experience of Bulgaria may be indicative of what can be done by an EU member state that is not yet member of the euro area. From the central bank perspective this involves: (i) a sound banking sector; (ii) fiscal consolidation; and (iii) structural reforms. Good progress has been made in Bulgaria with regard to the first two areas. A comprehensive asset quality review in 2016 helped restore confidence in the banking sector. Bank lending is recovering, the overall profit is near historical highs and a process of market-based consolidation in the sector is underway, including a recent deal with a strategic investor from the euro area.
Jürgen Stark: Structural reforms in Europe Bullet points by Mr Jürgen Stark, Member of the Executive Board of the European Central Bank, for a speech delivered at the OECD-IMF Conference on Structural Reforms in Europe, Paris, 17 March 2008. * * * •  It is well established that the lack of structural reforms is the main factor behind the relatively disappointing economic performance of some euro area countries over the last few decades. Despite the acceleration in economic growth of the last three years, the gap in GDP per capita between the euro area and the United States remains substantial, reflecting lower levels of both productivity and labour utilisation. Overcoming these constraints to growth is essential in the current environment, where the European economy is facing a number of important challenges, including rapid technological change, accelerating globalisation and ageing populations. •  The EMU is a catalyst for structural reforms in Europe. Within the monetary union, regional monetary and exchange rate policies are no longer viable options. Flexible and integrated labour and product markets are therefore a prerequisite for the smooth functioning of the euro area, including countries’ ability to absorb shocks and fully benefit from EMU. This is why a price-stability orientated monetary environment in principle provides more, not fewer, incentives for national governments to implement structural reforms. •  The performance of the euro area policy framework, however, has been mixed.

But if one compares it with the rigorous institutional framework that encompasses monetary policy, it is difficult to rid oneself of the thought that the “arm" which would mark the distance from present party politics would be on the short side. I believe that there are some worrying signs here. It appears as though there is a tendency, from a political point of view, to see stabilisation policy, or more precisely the repo rate, as the main solution to the problems we are currently seeing in the Swedish labour market. As I see it, there is an evident risk that this type of view would also colour the discretionary fiscal policy with an increased stabilisation policy responsibility. However, before I round off, allow me to say that it is possible that situations might arise that are so serious from a stabilisation policy point of view that discretionary fiscal policy measures could be warranted. Here I am mainly thinking of situations with a severe fall in demand in the nature of a depression, where both fiscal policy and monetary policy would be forced to make substantial departures from the normal principles. These would be extremely unusual circumstances, however, and do not provide any argument for setting up a permanent stabilisation policy committee. So, my answer to the question on whether monetary and fiscal policy should be developed is yes, but not in the direction LO appears to have in mind.
But one day you find out that you have diabetes. If you continue to eat the same amount of cakes, your health will be at risk in the near future. If you want to continue eating cakes, the solution is simply to get a direct medicine that lowers the sugar level in your blood. But what if the effect of the medicine takes a long time to become effective? For his survival, the patient has no option but to reduce the amount of cakes intake. This is exactly what the monetary policy is doing. It is a demand management tool to augment supply measures that take time to make an impact. If the effect of supply-side policy, the direct medicine for supply shock, is limited and rising inflation is a threat to the health of the economy, one must forego the happiness today for a better future tomorrow. Ladies and Gentlemen, You may then ask where the evidence of the demand pressure is. Looking around, everywhere people seem to be tightening their belts and saving for the rainy days. Here, I would like to highlight the readily accessible indicators on capacity utilization and unemployment. Partly due to strong demand for Thai products abroad, the average capacity utilization rate for the first five months of this year was the highest since the 1997 crisis. Meanwhile, despite the unofficial figure of 2-2.5 million labour immigrants, the unemployment rate has been hovering around 1.5% during the past four months.

The deposit rate forms the floor for the shortest money market rates. Transparency about intentions, strategies and the implementation of monetary policy makes it easier for economic agents to assess monetary policy. If monetary policy is predictable, an important source of uncertainty is reduced, and – other things equal – the interest rate required to achieve the inflation target will be lower. If economic agents are to have confidence in monetary policy, transparency regarding the central bank’s response pattern is probably a precondition. The interest rate affects inflation through a number of channels. An increase in the interest rate will normally contribute to reducing inflation by curbing demand for goods and services and by strengthening the krone exchange rate against other currencies. An interest rate reduction has the opposite effect. Monetary policy influences the economy with considerable and variable lags. Our analyses indicate that a substantial share of the effects of an interest rate change occurs within two years. Two years is therefore a reasonable time horizon for achieving the inflation target of 2½ per cent. Interest rates are set with a view to achieving an inflation rate of 2½ per cent two years ahead. Norges Bank’s views on the inflation outlook are presented three times a year in the Inflation Report. Our projection for inflation in the period ahead is presented as well as our assessment of the balance of risks surrounding this projection. The Executive Board’s updated assessments are presented in connection with the monetary policy meetings every six weeks.
Banks severely limited the maturity, the scale and the number of counterparties to whom they would lend. This liquidity freeze further deteriorated after the bankruptcy of Lehman in September 2008. Central banks intervened massively in order to tame the liquidity crisis and prevent its spill over to the real economy. This intervention took various forms across countries, reflecting the specificity local financial markets. In the Euro area financial intermediation occurs mainly through the banking system. Most of our actions, therefore, aimed at providing banks with sufficient liquidity through repo operations to ensure that the flow of credit to the economy would not be severely disrupted. We have been fortunate to enter the crisis with a very appropriate set of tools. From the outset, our operational framework was based on a very broad list of eligible counterparties and collateral. So, we could adjust to the shocks in money and credit markets without creating new facilities, with the small exceptions of the covered bonds and, more recently, government bonds purchases. Doing so, we have been able to maintain a clear separation between monetary policy and liquidity provision. A major step was taken in October 2008 when we moved to a regime called in our jargon “full allotment fixed rate”, which basically means that banks were given unlimited access to liquidity at the prevailing policy rate. Over the course of the crisis, we made several downward adjustments to that policy rate. But we never committed to any specific path or trend.

The development of securitisation has spurred the demand for new types of instruments. This demand led the financial system to generate new assets even at the cost of extending credit to ever riskier sub-prime borrowers. This, for a time, helped sustain a rapid increase of real estate prices which in turn stimulated the growth of mortgages. BIS Review 76/2010  1  The main causes of the crisis therefore lie in the growing “real” imbalances and the uncontrolled development of financial innovations. Overall, these combined evolutions led to a generalized increase in leverage and financial fragility. Against this background, it is quite unlikely that too accommodative monetary policies played a central role in the crisis. Some analysts have pointed out to what they see as an “asymmetric response” by monetary authorities to asset price increases: Central Banks would not lean against asset price bubbles, but were prepared to clean the consequences after they burst. However, we need to ask ourselves whether the unusually rapid credit growth in the years preceding the crisis should not rather have called for complementary policy actions on the supervision side. Some attempts were made in the Eurosystem. In particular, the Bank of Spain enforced dynamic provisioning to curb domestic credit expansion. But the crisis hit globally nevertheless and it raises several challenges for authorities in charge of macroeconomic policies. II –Managing the crisis Starting in august 2007, Central Banks were confronted with major and unprecedented tensions. Increasing uncertainty led to liquidity hoarding by financial institutions.