samchain/econo-pairs-v1 huggingface dataset:
Macroeconomic balance will be difficult to achieve otherwise. An easing of the monetary stance now would simply be misguided and have unforeseeable consequences. The Central Bank would be failing in its mandatory duties if inflation were temporarily “let loose” to achieve supposed results in other areas. In the following speech I shall present arguments in support of this view. After maintaining a fixed exchange rate regime for more than a decade, Iceland adopted inflation targeting in March 2001 with a joint declaration by the Government and the Central Bank. The target is a twelve-month rate of increase of 2½% in the CPI. For much of the time the fixed exchange rate regime served its purpose, but towards the end, following the full deregulation of cross-border capital movements, more exchange rate flexibility was clearly required than the fixed regime could allow, even after the tolerance bands had progressively been widened from their original 2¼% to 9%, i.e. the króna was permitted to deviate by up to 9% from its central rate when the policy was abandoned. A return to a fixed exchange rate regime is out of the question. Since it could never be credible in practice, it can be ruled out – unless currency restrictions were to be reimposed, which is hardly on anyone’s agenda. Inflation targeting has proved a successful tool of monetary policy in many parts of the world. Well over two dozen central banks now target inflation, including those of various industrial countries such as the UK, Sweden, Norway, Australia and New Zealand.

That end is defined in article 5 of the National Bank Act as pursuing a monetary policy serving the interests of the country as a whole and ensuring price stability, while taking due account of the development of the economy. Article 6 is the basis of our independence. Under this clause, we are explicitly prohibited from seeking or accepting instructions from Federal authorities. In other words, we are obliged to make our own decisions. 1  For instance, a very well-known US congressman – possibly a future presidential candidate – has gone as far as calling for the Fed to be abolished. Cf. Paul, Ron (2009), End the Fed, New York: Hachette Book Group. BIS central bankers’ speeches  1  There are good reasons why Swiss legislators have established our independence so strongly. Theory and practical experience throughout the world are clear on this point. The more independent a central bank, the better it fulfils its mandate. It has much better chances of ensuring price stability and thereby making a contribution to sustained economic developments than a central bank that is not independent.2 I am not planning to overwhelm you now by citing all the relevant literature.3 However, the most important reasons put forward by academic writers on the subject include differences in the legitimation, time horizon and incentives of politicians and central bankers. While politicians are legitimated through popular election, central bankers legitimate themselves by carrying out their legal mandate to the best of their ability.
Households probably need to build up financial buffers and reduce debt, which will in turn weigh down on growth in private consumption ahead. Growth in spending on goods stalled last autumn. There has been a considerable drop in car sales in particular. Norges Bank’s regional network also reports a decline in demand for goods related to moving home, such as white and brown goods and refurbishing equipment. Growth in consumption is expected to be very low for a period ahead, but growth in private consumption may pick up again towards the end of next year. Growth in mainland investment has been strong in recent years, but is now moderating. According to the national accounts, corporate investment was still on the rise in the first half of the year, but there was a considerable decline in housing investment. Falling housing starts, reduced order reserves and assessments from the enterprises in Norges Bank’s  4  BIS Review 143/2008  regional network indicate that housing investment will continue to show a pronounced fall next year. Gross investment is expected to decline by 14 per cent on an annual basis in 2009, remain at a low level in 2010 before picking up in 2011. Even though the krone depreciation is curbing the impact, the global downturn is expected to result in lower growth in Norwegian exports. The high level of petroleum investment was an important driving force during the economic upturn, and petroleum investment is expected to remain high in the years ahead.

The fallout has been particularly pronounced in the US, but European interest rates have also risen sharply. The flow of dollars among banks has seized up at times. Other than central bank measures to supply liquidity to banking systems, the authorities in the US and Europe first approached the financial crisis as a succession of problems at individual institutions. In the US, a general package was adopted by Congress on Friday 3 October. USD 700 billion was allocated for purchasing illiquid assets from financial institutions. On 8 October, the UK government announced a number of measures to stabilise financial markets, but with emphasis on providing risk capital. Euro area countries followed suit and on 12 October agreed to take similar action. On 12 November, the strategy for the  BIS Review 143/2008  1  US crisis package of USD 700 billion was changed to provide the authorities with the scope to inject capital into banks and other financial institutions. There is unusually high uncertainty surrounding economic developments ahead. This is reflected in equity markets among other things. Since spring, stock indices have plummeted both abroad and on the Oslo Stock Exchange. The Oslo Stock Exchange has declined by more than 50 per cent since the peak in May. On 8 October, the central banks in the US, the UK, Canada, the euro area, Switzerland and Sweden implemented coordinated interest rate cuts. The central bank of China also reduced its key rate.
  Euro area countries have taken rapid and significant steps to bring their public finances back into balance and going forward to restore the competitiveness of their economies. This is clearly the case for countries whose debt markets have been the most affected over the past months.   Yet, in May, financial markets started to seize up again, admittedly in a slightly different way than that seen in 2008, but with the same potentially disastrous consequences, that is to say a drying up of financing for the economy. In 2008, the financial system was badly impacted by the subprime crisis and the failure of Lehman Brothers that brought transactions to a standstill as market participants realised that any bank, no matter how big, can fail especially since the exact amount of exposure to subprime risk of all institutions were not fully known. In the May 2010 episode, the same dynamics were at work: the different investors started to believe that euro area countries could default on their debt, and therefore stopped lending to these countries or their banks, or to any banks with possible exposure to these countries and, finally, as a precaution, ceased all lending activity. This situation called for rapid and decisive action by the ECB because:   We cannot implement monetary policy in dislocated markets that do not effectively allocate the liquidity that we inject or that radically modify the effects of our monetary policy by offering interest rates that are inconsistent with our key rates.

Zeti Akhtar Aziz: Regional integration and global integration – is there a conflict? Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Official Monetary and Financial Institutions Forum Kuala Lumpur Debate, Kuala Lumpur, 20 March 2015. *  *  *  It is my great pleasure to welcome you to the inaugural Kuala Lumpur Debates, which is being held on the side of the 19th ASEAN Finance Ministers and Central Bank Governors Meetings. It is envisaged for this to be the first in a series of KL Debates intended to serve as a strategic forum for policy makers, industry players as well as members of the public to constructively discuss the key issues confronting the economies of our region and thus to facilitate greater understanding as we work towards building stronger foundations for sustainable growth. The motion that is put forward for debate today is “Regional integration and global integration: is there a conflict”. The debate format is chosen to allow both points of view to be heard, thereby ensuring a balanced discussion and evaluation of the issues. This topic is highly relevant to ASEAN as there have been various views on ASEAN integration and what it means for the rest of the world.
Faced with a world that is changing faster than any of us could have imagined, we need to be both focused on our goal and robust in our strategy to achieve it. 1. Lagarde, C. (2022), “Monetary policy in a high inflation environment: commitment and clarity”, lecture organised by Eesti Pank and dedicated to Professor Ragnar Nurkse, Tallinn, 4 November. 2. This is visible, for example, if one compares the persistent and common component of inflation (PCCI) and the PCCI excluding energy. The former has been declining strongly since the summer of last year, whereas the PCCI excluding energy has only stabilised. 3. For an explanation on different measures of underlying inflation, see Ehrmann, M., Ferrucci, G., Lenza, M. and O’Brien, D. (2018), “Measures of underlying inflation for the euro area”, Economic Bulletin, Issue 4, ECB and ECB (2021), “Inflation measurement and its assessment in the ECB’s monetary policy strategy review” Occasional Paper Series, No 265, September. 4. Germany, France, Italy, Spain, the Netherlands, Austria and Greece. 5. Defined as those items in the core inflation basket for which wages account for more than 40% of input costs. 6. According to the labour force survey, the labour force has increased by 2.2 million since the start of last year and remains well above pre-pandemic levels, due to the rising participation of foreign workers (+1.3 million), women and older workers. 7. Employment growth in the public sector has accounted for about half of total employment growth since the end of 2019. 8.

What we will have to monitor carefully in the weeks and months to come is whether there is a further strengthening of this pass-through. If, for example, banks start to apply a larger “intermediation wedge” – meaning that at any level of the base rate they demand a higher compensation for the perceived risk they are taking on when lending – then pass-through will become stronger. So, we will be paying close attention to a range of indicators of credit availability and credit pricing, such as the monthly data on money and credit flows, our bank lending survey and our survey on access to finance for small and medium-sized enterprises. While more restrictive credit conditions are part of the mechanism by which our tightening ultimately reins in excess price pressures and brings inflation back to target, we will make sure that the process will be orderly throughout. Conclusion Let me conclude. Voltaire said “Uncertainty is an uncomfortable position. But certainty is an absurd one.” Faced with new and overlapping shocks, we have no choice today but to deal with uncertainty. But the public can be certain about one thing: we will deliver price stability, and bringing inflation back to 2% over the medium term is non-negotiable. We will do so by following a robust strategy that is data-dependent and embeds a readiness to act, but that does not entertain trade-offs around our primary objective.
I will then describe how the injection of long-term liquidity has helped to avoid a sudden curtailment of financing to the private sector by alleviating funding pressures on the banking system. I will go on to consider some of the challenges the Eurosystem is likely to face in the near future. Credit developments to households, non-financial corporations and small and medium-sized enterprises (SMEs) During the last quarter of 2011, monetary and credit developments to the private sector were exceptionally weak. The annual growth rate of monetary aggregates declined significantly in December, and it was mirrored by similar developments in lending to the private sector, especially loans to households and non-financial corporations. Clearly, as the sovereign crisis intensified it impeded banks’ support for the real economy. The annual growth rate of banks’ credit to the private sector decreased in the last quarter of 2011, reflecting monthly negative outflows and reaching troughs comparable with those prevailing in 2008–2009. In particular, the rate of growth of loans to households declined, reflecting both demand-side factors (such as a deterioration in the prospects for the economy, and notably the housing market) and supply-side factors (such as increasing funding difficulties for banks) (Slide 1). Incidentally, these developments masked significant cross-country heterogeneity, as some countries saw an increase in flows supported by government measures aimed at the housing market. The annual growth rate of loans to non-financial corporations declined as well, reflecting particularly weak quarterly flows (Slide 2).

In addition, the ECB has the right to issue debt certificates, and, if necessary, we could also decide to increase banks’ reserve requirements again. Reverting to the 2% reserve requirement ratio that prevailed until December 2011 would reduce excess reserves by approximately 100 billion euros. So, we are well equipped to cope with any issues arising from excess liquidity. There is a third concern which I would like to touch upon, and which I consider to be a serious one: the risk of moral hazard behaviour triggered by the non-standard measures. The large liquidity injections have avoided so far a disorderly deleveraging of the banking sector in the euro area as well as a dangerous credit crunch, but they have not removed the underlying causes of the turmoil. If governments and banks would stop or slow down their consolidation efforts and structural reforms, this would undermine the positive effects of the liquidity operations. Following the signs of improvement in the financial environment, it is therefore essential for banks to strengthen their resilience further, even by retaining earnings. The soundness of banks’ balance sheets will be a key factor in facilitating an appropriate provision of credit to the economy. Very low interest rates and ample liquidity conditions may be disincentives for banks to avoid recognising the loss by rolling over loans extended to borrowers who are unable to pay back the principal (the so-called “evergreening” of loans).
The engagement of private investors is thus essential for the resolution of payment imbalances in crises… the official sector needs to avoid creating expectations that private creditors and investors will be protected from losses or that official resources would be used to finance large, sustained capital outflows. … We underscore the need for further progress". The opponents of this approach raise two important questions. First, is it possible to define limits on IMF lending? Second, is it acceptable for the official sector to countenance default by a sovereign borrower when the consequences for both the country and the international financial system could be devastating? I shall try to provide answers to both of these questions. It is true that recent crises have been the result of developments in the capital account rather than the current account. As capital flows have grown, so too have the potential demands on the official community as they attempt to fill capital account financing gaps. That is why so many more programmes have involved "exceptional" access in relation to quota. So perhaps, in a world of capital account crises, exceptional access should become the norm? This argument is superficially quite attractive. But its implications need to be assessed carefully. It would mean that IMF resources would need to increase in line with private capital flows even for the IMF to maintain its current role. And since 1970, capital flows have grown around four times as fast as world incomes.

Under British Chairmanship, efforts have been made to increase the effectiveness of the meetings of the IMFC which represents all countries around one table. Private finance and public funds The second main area in which further progress is required is the resolution of crises. The problem would be easier to solve were it possible to distinguish between two rather different sources of crises – a liquidity-based problem caused by a currency or maturity mismatch in a country's national balance sheet despite a sustainable macroeconomic and debt position; and a fundamentals-based problem which means that the debt burden is unsustainable or the exchange rate or other key macroeconomic policies need to be altered. In the former case, the provision of liquidity support by the international community might help to bridge to a position in which the country could re-engage with its private creditors. In the latter case, the main requirement is not liquidity support but a change in macroeconomic or debt management policies. Recent crises have seen examples of both types of problem. Liquidity runs typically occur because of a co-ordination failure among creditors. There are two solutions to this co-ordination problem. The first is a lender of last resort that is able to provide liquidity support quickly and on a large – indeed, potentially unlimited – scale for a short period to enable the affected country to meet its obligations.
•  The AFLP will be administered jointly by Temasek Management Services and Singapore Management University, with the first intake of AFLP participants slated for November this year. Conclusion 46. Singapore’s financial sector has thrived on constant adaptation: the development of new capabilities and instruments, a willingness to take risks, and at every stage the evolution of regulation and risk-management practices so that we can mitigate the downsides inherent in the business. 47. We are now embarked on our next phase of development as a financial centre. It will be driven by deeper collaboration between MAS and the industry, a collective effort to leverage on new technologies, and by staking a position as a leading global centre of financial skills and expertise. The exciting thing is that we can actually achieve this. 6  BIS central bankers’ speeches

As you know, regarding interest rates, the Governing Council early December decided to lower the key ECB interest rates by 25 basis points, following a 25 basis point decrease on 3 November 2011. As regards the short-term growth outlook for the euro area, the intensified financial market tensions are continuing to dampen economic activity in the euro area and the outlook remains subject to high uncertainty. Euro area economic activity should recover, albeit very gradually, in the course of 2012, as also projected by Eurosystem staff in early December. Substantial downside risks to this economic outlook nevertheless remain. With regard to price developments, inflation was 3.0% in November. Inflation is likely to stay above 2% for several months to come, before declining to below 2%, which view is also broadly confirmed in the December staff projections. Given the environment of weaker growth in the euro area and globally, underlying cost, wage and price pressures in the euro area should also remain modest. Risks to the medium-term outlook for price developments remain broadly balanced. The latest monetary data reflect the heightened uncertainty in financial markets. Looking beyond short-term volatility, the monetary analysis indicates that the underlying pace of monetary expansion remains moderate. The Governing Council of the ECB is determined to ensure that inflation expectations continue to be firmly anchored in line with our aim of keeping inflation rates below, but close to, 2% over the medium term. BIS central bankers’ speeches  1  Let me now turn to the latest non-standard measures.
William C Dudley: Opening remarks for the Transatlantic Economic Interdependence and Policy Challenges Conference Opening remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York and Chairman of the Committee on the Global Financial System (CGFS), at the Transatlantic Economic Interdependence and Policy Challenges Conference, Federal Reserve Bank of New York, New York City, 22 April 2013. *  *  *  It is my pleasure to welcome you to today’s conference on transatlantic economic interdependence and policy challenges. We have a great program today with many distinguished speakers from academia, and the private and public sectors. In particular, I would highlight the keynote speech following lunch by Olli Rehn, the vice president of the European Commission. We live in a global economy with a global financial system, yet macroeconomic policy and regulation and supervision have a decidedly national orientation. This creates a challenge for all of us as we seek to balance our domestic needs against the benefits from having a harmonized and integrated global system. We can do better through international cooperation and coordination both on macro policy and on regulation and supervision, rather than trying to “go it alone.” As the two largest economies in the world, the United States and the European Union have a shared stake in the vitality of the global economy. Without growth in both our regions, the global economy will not prosper and we will not be able to satisfy the aspirations of our citizens.

But, a common resolution authority and integrated deposit insurance framework that is both credible and consistent with good incentives are likely to be required, as well. The task at hand will likely require each country to give up a small amount of sovereignty with respect to banking oversight so that the outcome is viewed as fully credible. In my view, this is a critical next step in the “one money, one market” project underlying the EU agenda. I’d now like to introduce Ambassador Vale de Almeida as our next speaker. The ambassador has been here in his current role since August 2010. Prior to his current appointment, he worked as a director general at the European Commission (EC) and has had a long and distinguished career at the EC dating back to 1982. So he is extraordinarily well-versed to speak on the issues of interdependence and the policy challenges we face. Welcome Ambassador Vale de Almeida. BIS central bankers’ speeches  3