samchain/econo-pairs-v1 huggingface dataset:
In that background, it is vital that the country is not pushed into “foreign-grown” solutions of international agencies and others, who unfortunately, sometimes appear to be influenced by certain human rights crusaders, who have been well- known terror activists in the past. It is also worthy to recall that, in its commitment to the principle of restorative justice following the conflict, the Sri Lankan government has already granted amnesty to more than 11,000  2  BIS central bankers’ speeches  former Tamil Tiger terrorists, some of whom have even committed grave crimes. In such circumstances, if the government were to open new investigations as proposed by some, it could turn the clock back and cause great anxiety to those offenders who have been forgiven, and may even lead to some of them reverting back to violence. At the same time, some of the proposed “foreign” interventions that seem to be narrowly focused on the conduct of the Sri Lankan armed forces only, could also be construed as unfair and/or selective treatment towards the Sri Lankan armed forces who defeated terrorism, and could lead to a consequent de-stabilization of the country. Practical wisdom would therefore suggest that reconciliation between communities must be allowed to follow a “home-grown” path in keeping with the time and space as set out by those who suffered the agony of terror, and those who are today responsible for maintaining the peace in the country.

Ajith Nivard Cabraal: Practical, not conventional, wisdom has driven Sri Lanka’s rebuilding and reconciliation Article by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, 3 April 2014. *  *  *  About five years ago, Sri Lanka faced three daunting economic challenges. To deal with those challenges, the Sri Lankan authorities implemented certain pragmatic strategies that challenged conventional wisdom. At the time of defeating terrorism in May 2009, a massive investment was required to restore normalcy in the terror-torn Northern Province. Conventional wisdom suggested that the rebuilding, rehabilitation and restoration should be carried out at a moderate pace, without burdening the economy unduly, and without placing government expenditure under stress. However, even at the risk of experiencing a spike in the fiscal deficit in the years 2009 and 2010, Sri Lanka executed a rapid action plan to de-mine land, re-settle IDPs, and upgrade infrastructure in the war-affected areas. That investment brought quick relief to the hundreds of thousands of people who had suffered during the 30 year war. The cost? A staggering $ 3.2 billion over 4 years, or nearly 6% of GDP! The direct benefit? Rapid clearance of over a million landmines from the Northern Province: speedy resettlement of nearly 300,000 IDPs; early restoration of the infrastructure: considerable progress in agriculture, fisheries and SME activity: significant increase in industrial production and domestic tourism: major transformation in the financial sector; and creation of new entrepreneurs and job opportunities; The overall outcome?
Given this, it is quite natural that the interest rate forecast as indicator of the future repo rate has been devaluated somewhat.13 One idea that I am personally positive to, is to publish not merely an interest rate forecast, but to supplement it with a promise to condition the policy on certain developments in the economy.14 The conditioning that currently appears most relevant is to make clear that the policy rate will be held at zero until inflation has reached a certain level. Usually, central banks begin raising the interest rate before inflation has reached the target – start putting the brakes on in advance, so to speak. But the current situation is different. One problem for the Riksbank and many other central banks over the past decade has been that inflation has tended to undershoot the target. If this were to continue to apply, there is a risk that inflation expectations in the economy would fall, even long-term ones. As I have already described, this could make it more difficult to stimulate the economy using the policy rate. This could, in turn, mean that recessions become deeper, inflation and inflation expectations fall further, and so on in a negative spiral. There is therefore good reason to safeguard the symmetry of the inflation target. Not raising the repo rate before inflation has reached the target is a way of not putting the brakes on in advance.

To put this into perspective, the percentage of employment accounted for by firms under high financial pressure2 would rise by 1.6% following the interest rate increase, from 9.1% before the hike. Household income is primarily being supported by labour market developments – given the year-on-year increase of 3.6% in the number of persons employed and of 5.1% in hours worked – and, to a lesser extent, by the government policy support measures. However, high inflation is driving a significant decline in real disposable income. Indeed, in 2022 H1 households’ disposable income increased by 4.2% year-on-year in nominal terms, which transforms into a 3.1% fall once developments in the private consumption deflator are taken into account. Bank lending to households has held stable in recent months. However, a distinction can be drawn between the performance of mortgage lending (growing consistently at rates of just over 1%) and that of consumer lending (shrinking at rates of around 4%). Unlike firms, in 2022 households are not accelerating the growth of their bank deposits, which have been on a sustained growth path (above 5%) since 2021. Together with cash, they account for 40% of households’ total financial assets. Simulations have also been carried out on the potential impact on household income of the rise in energy prices and interest rates, which is notably uneven across income percentiles. The upturn already observed in energy prices would generate an increase in the median household's energy expenditure as a proportion of its budget from 10% to more than 12.5%.
They have reduced their budget deficits, pushed down their inflation rates to less than 2%, and brought their growth rates close to 3%. Favourable global economic conditions made it possible to create an environment suitable for the proper functioning of the system. Meanwhile, the European Monetary Institute completed the necessary preparations for launching the ECB, and transferred its responsibilities to that Bank at the beginning of July 1998. At its founding, there was a broad consensus that the ECB should be independent. There were continuing discussions about its main target, however, and even though this question seems to be resolved, sometimes it still appears on the agenda. The main point being discussed is that while price stability is specifically mentioned in the constitutional agreement as an objective of the ECB, the role of the growth and economic stability objectives is less clear. It is generally agreed that the primary task of central banks should be price stability, but some still argue that the price stability objective should not conflict but should cooperate with the growth and stability objectives. Others insist that since the existence of price stability brings about high employment and sustainable growth in the medium and long term, there is no conflict between the growth and price stability objectives. I believe that the ECB’s present policies, based on all these discussions, aim at price stability as its primary task, with sustainable growth and low unemployment as major objectives.

Other questions follow. Will the mechanisms of monetary policy transmission still work efficiently? Can monetary policy moves made as they are in Germany today, using monetary aggregates as intermediate targets, succeed in the euro area as well? Which monetary aggregates will be used? What of the money demand function? Will there be a real and reliable database obtained by collecting and harmonising data from within the euro area? Targeting inflation and conducting monetary policy in light of the target has been the normal procedure for many countries. Nonetheless BIS Review 1/1999  –3–  there are lingering suspicions in some quarters about the credibility and reliability of this system, and since there is a good chance that a loss of credibility will follow a failure to meet an inflation target, the ECB will not announce such a target. I should also mention that some member countries’ central banks have reservations about conducting monetary policy with inflation targeting. People who accept monetary aggregates as good intermediate targets say that in accordance with the principles of continuity and flexibility, which are the basis for central bank credibility, it is more realistic to target monetary indicators and use these targets to attain price stability. For myself, I believe that central banks can control these monetary indicators and are responsible for them. If a central bank is assigned a task, it must have control over its instruments and operations and enjoy independence in the conduct of monetary policy to perform efficiently.
Purchase of foreign currency The aim of our buying foreign currency is to prevent an appreciation of the Swiss franc against the euro. This is the key component of our unconventional monetary policy. It is important to emphasise that we do not engage in foreign exchange interventions in order to  BIS Review 77/2009  1  bring about a depreciation of the Swiss franc, but to prevent any further appreciation of the franc in its role as a safe haven currency. Therefore, the reproach we occasionally hear that the SNB’s policy is encouraging an international depreciation race is unjustified. A look at exchange rate movements shows a clear appreciation of the Swiss franc during the course of the financial market crisis (cf. chart 1). So there can be no question of the SNB conducting a beggar-thy-neighbour policy. We give ourselves a great deal of latitude with regard to our foreign exchange interventions. There is no fixed threshold beyond which we become active; we simply decide in accordance with the situation at hand. And markets should not become used to a certain level of intervention. We feel that this approach promises the highest possible impact, which in turn will allow us to phase out the strategy more easily when the time comes. Furthermore, we do not comment on the volume of our foreign currency purchases. The purchases of foreign currency have fulfilled their purpose – and with these I am referring to our first unilateral interventions in the foreign exchange market since 1992.

In fact, on 10 July, 2009, I was privileged to participate at the “Foundation Stone Laying” ceremony for the multi-billion Stanbic Bank Zambia Limited new Head Office building. I therefore, commend the bank for its relentless effort in trying to modernise its facilities and expand its network. Allow me to conclude by appealing to all banks and other financial institutions to explore ways of enhancing the efficiency in service delivery. By enhancing efficiency, banks will be capable of offering more affordable banking services. This has the potential of drawing a larger number of Zambians to the financial system resulting in an expanded banking clientele for the benefit of both the banks and the economy. This will go a long way in complementing the Government and the Bank of Zambia’s efforts in addressing the various weaknesses in the financial sector as well as to guide efforts for realising the vision of a stable, sound and market based financial system that would support the efficient mobilisation and allocation of resources necessary for economic diversification and sustainable growth. In the recent past, the Government has adopted prudent fiscal policies that enabled the private sector to access more credit from the financial system. In line with this, the yields on Government securities have drastically reduced with the 91 days Treasury bill rate dropping to 7.88% in the latest auction while inflation has also trended downwards to 12.3% in October. Some players have responded positively to these market movements by reducing their lending base rates.
Deposit withdrawal from the banking system was withstood, thanks to liquid assets adequacy, capital availability and Bank of Albania’s intervention to supply the market with liquidity, aiming at maintaining its stability and mitigating any expected contraction of the banking system’s intermediary role. To this end, the Bank of Albania has supported the demand of the banking system for liquidity through open market operations. After cutting interest rate by 0.5 percentage point in January 2009 and mitigating inflationary pressures at home, the monetary policy paid special attention to financial stability, keeping base interest rate unchanged for the whole period. Thus, it was aimed to support the demand for financial assets denominated in the national currency in the short run. At the same time, the Bank of Albania carried out with a strong supervisory regime on banking sector developments. Such a stance supported the efficient management of liquidity situation of the banking sector, oriented credit towards national currency and influenced the maintaining of financial stability parameters and capitalization of activity. The situation entered into a qualitative improvement stage, following the re-starting of the process of public deposit growth in the banking sector. This process, which took place gradually and steadily in the second quarter of 2009, continued at satisfactory paces. During this period, banks acted with due prudence and accountability. Therefore, I would like to avail myself of the opportunity to thank you, the staff you manage, as well as the shareholders of your institutions, for their commitment and cooperation during this period.

This forum, which was held on the eve of global turmoil outburst, indicated that the Albanian banking system had significantly increased its resilience. It addressed important matters related to: •  Transparency and customer services,  •  Risks related to foreign currency credit and consumer credit, as well as  •  Interbank market functions and monetary policy transmission in the economy. Today’s forum takes place in an important moment of the banking and financial system. After a hard year, it seems that the situation is becoming eventually normal. Therefore, I am confident that, figuratively, the third forum will have the consolidation of public confidence in the Albanian banking system as the main motif. Achievements in this regard are not lacking. Statistics show that deposit level is approaching steadily to its prior-crisis level, while ALL credit livening-up is continuing. Dear participants, Today’s meeting is held after some important financial and economic events dictated by the global crisis. Now that the situation has cleared up and has entered into an improvement stage, a thorough analysis is being made about its causes, about public authorities’ reaction and about actions to be taken, in order to raise the global financial system’s resilience. Now, allow me to deal briefly with the main features of this unmatched crisis, and then continue with some arguments on the functioning of the Albanian financial system and some necessary regulations for its further perfection.
When energy prices rise faster than other prices, the numerator (CPIF) increases faster than the denominator (the CPIF excluding energy) and the ratio rises. Energy prices rose more slowly than other prices during the period 2012-2016. Since 2016, on the other hand, energy prices have risen faster than other prices in the CPIF. Which properties are desirable for measures of underlying inflation? Which properties are then desirable for measures of underlying inflation? Here are some of those most often discussed in academic literature: 15 The measure of underlying inflation should have the same average as the actual inflation rate. The average for the measure of the underlying inflation should agree with the average of the actual inflation rate. In other words, it is desirable that 15 See, for instance, Clark (2001) for a discussion of this. 8 [19]  measures of underlying inflation neither underestimate nor overestimate the long-term development of inflation, the measure should have the same average as inflation. Policy-makers should thus not be guided by an indicator that can be misleading and can lead to conducting a too tight or too expansionary monetary policy. If the average is the same as for the target variable, it makes communication easier. The measure of underlying inflation should covary with the trend in actual inflation and should have lower volatility. The underlying measure should covary with long-term movements in the target variable.

16  14 12 10 8 6 4 2 0 -2 -4  50 55 60 65 70 75 80 85 90 95 00 05 10 15  Source: Bureau of Labor Statistics  In November 1974, when the rate of inflation according to the consumer price index amounted to more than 12 per cent in the United States, Milton Friedman wrote the following in Newsweek: 5 That monetary expansion on the average could be expected to produce an inflation of something like 6 per cent a year, not of 12 per cent. The difference is attributable to nonmonetary factors, mostly transitory, and so constitutes something of a bubble on the underlying inflation trend. In the past, when such bubbles have broken, the rate of inflation has declined precipitously. For example, in the Korean War bubble, the rate of inflation of consumer prices fell from 10 per cent to 2 per cent in nine months. One now began to use different filtered measures in the econometric research literature. Gordon (1975b) calculates an equation where the aggregate selling prices exclude energy and food prices. He motivated his choice by saying that variations in food and energy prices, particularly in the beginning of the 1970s, were due to other factors than domestic supply and demand. 6 7  5 See Newsweek, 4 November 1974, p. 84. 6 See Gordon (1975b), s 622 “But the magnitude and timing of the 1973-74 explosion in energy prices can only be regarded as noneconomic and exogenous”.
In addition to the complications that follow on from an institution being established in several countries, supervision and risk management are made more difficult by the banking group sometimes choosing to manage the risks on a functional basis and not in accordance with the bank’s forma organisation. For example, a bank with operations in several countries can choose to locate all of its credit management to one country and its liquidity management to another country. In general, this development strengthens financial stability. The capacity to identify, manage and reduce risks has increased. The institutions’ cross-border operations make them less dependent on how the economy of an individual country develops. However, at the same time a number of new possible problems arise, which must be prevented and managed by institutions and authorities. Risks and vulnerabilities may fall between different authorities’ or countries’ fields of responsibility and thereby may go unnoticed. Or, if they are noticed, territorial conflicts may arise, making it more difficult to implement the measures needed. It may also be unclear where the risks will end up. Bank supervision can ensure that the banks have sold certain risks, but it is not clear whether the buyers have the knowledge and financial strength to manage these risks. In the worst case scenario, the risk will return to the bank in a loss situation. The development I have described must be met with increased harmonisation of regulations and supervision, both between sectors and between countries.

The sub-prime mortgages in the United States are an example of how certain risks can be underestimated if they are sold on to others, perhaps with opaque contracts. The loss of trust in certain kinds of financial contract, in particular in relation to their liquidity, has reduced the incentive to finance such operations, giving rise to chain reactions in all the markets. In this case too, the alarm was raised some time ago. I recall, for instance, a Financial Times article at the end of January 2007, six months before the start of the turbulence, which quoted a comment made by the President of the ECB at Davos, namely that international markets were underestimating risks and had to prepare for a substantial adjustment in the prices of financial assets. The response of the market operators to these warnings, in particular from the other side of the Atlantic, was: “We’ll keep dancing until the music stops”. One should not interfere with the market mechanism or lean against asset prices. Financial innovation, also in mortgage  BIS Review 61/2008  1  markets, was a positive development as it allowed households, also the less well-off, to finance consumption and investment. Not everybody shared this position. As early as February 2005, Paul Volcker, former Chairman of the Federal Reserve had drawn attention to the imbalances in the US economy, ranging from the balance of payments deficit and the possible bubble in house prices to the excessive household indebtedness. In his view, a correction of these imbalances was inevitable.
As in the rest of the world, the upturn in Sweden in the period ahead will partly be driven by temporary factors such as highly expansionary fiscal and monetary policies and an inventory cycle. The forecast assumes that the world market will grow strongly, that private consumption will increase at a good rate despite the fact that the development of household incomes will be weak, that public consumption will increase and that investments will increase despite a low level of capacity utilisation and weak profitability. Naturally, there also exists the possibility that GDP growth will be stronger than we have estimated. However, even with a higher rate of GDP growth, resource utilisation will be low – and it is resource utilisation that is significant for inflation, not GDP growth. Resource utilisation can be measured in different ways, but I will not address this issue today. I will restrict myself to stating that resource utilisation can be measured by the GDP gap – that is to say, the difference between the GDP level and what can be considered a normal level. Even with a higher rate of GDP growth, the GDP gap will be negative and resource utilisation low for an extended period (Figure 17). The low resource utilisation does not only signify that inflationary pressures are low, but is also a reason in itself to conduct a looser monetary policy.

Since the beginning of the recovery, the number of people employed in the euro area has risen by 9.2 million. Euro area unemployment declined to 8.1% in August, its lowest level in almost ten years. Consumer spending is being driven by steady growth in households’ real disposable income. Strong labour markets – with increasing job creation and rising wages – boost household income and, in turn, consumer spending. The investment outlook remains solid on the back of robust demand, improving profitability and favourable financing conditions. Since the end of 2014, bank lending rates in the euro area have declined significantly, by around 130 basis points for non-financial corporations and by around 110 basis points for households. Lending rates on very small loans, which can be used as a proxy for loans to small and medium-sized enterprises (SMEs), have fallen by more than 210 basis points. This is encouraging, as SMEs provide two-thirds of total private sector employment in the euro area. Overall, the underlying strength of domestic activity in the euro area continues to support a sustained adjustment in inflation. According to the flash estimates, HICP inflation increased to 2.1% in September, from 2.0% in August. On the basis of the latest oil futures prices, headline inflation is expected to hover around the current level for the rest of the year. Our most recent projections foresee annual headline inflation at 1.7% in 2018 and in each of the two subsequent years.