samchain/econo-pairs-v1 huggingface dataset:
I will then discuss the other side of global economic integration, namely the interdependencies between countries and markets. At the end of my remarks, I will offer some thoughts on what is likely to change with regard to monetary policy if global economic integration were to decrease again as a result of the war. Monetary policy in an integrated global economy The world has become increasingly interconnected economically over the past decades. Until a short while ago, we thought these ties would continue to become closer. The US-China trade dispute of recent times had already cast some doubt on the durability of global integration. The coronavirus pandemic has restricted mobility and strained global supply chains. However, the geopolitical confrontation we see today has an entirely different dimension. Russia’s invasion of Ukraine has reopened old rifts in many respects. We therefore have to ask what the consequences would be if the economic fragmentation already caused by the war were to persist, or even increase further? To assess this, I would first like to look briefly at the process of globalisation over the past thirty years or so. At the beginning of the 1990s, the erstwhile closed-off states of the Eastern bloc gradually began to open up, and so too did China and other Asian countries. Since then, economic integration worldwide has been considerable. Today, the value of goods and services traded internationally is three and a half times higher than it was then. Average real per capita income worldwide has increased by two thirds.

Øystein Olsen: The economic outlook Address by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), to invited foreign embassy representatives, Oslo, 29 March 2011. The address is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 16 March, Monetary Policy Report 1/11 and previous speeches. Please note that the text below may differ slightly from the actual presentation. *  *  *  Excellencies, Ladies and Gentlemen, I am happy to continue the tradition of my predecessor by inviting you to Norges Bank to discuss economic developments in Norway. Economic trends During the past few weeks, the world’s attention has been focused on the sufferings caused by the earthquake in Japan, as well as escalating political unrest in Middle East countries. The economic impact of these events is still uncertain. Apart from these, the economic and financial news of the past year has, on balance, been positive. The global recovery has gained strength, even though uncertainties persist. A common feature of the countries that fared well through the financial crisis was that they had kept their house in order. Norway falls into this group, although our abundant natural resource wealth puts us in a unique and favourable position. Against this backdrop, I would like to comment on our experience with implementing the prevailing frameworks for monetary and fiscal policy. Today we can look back at ten years of inflation targeting and the fiscal rule.
Markets worry that the next chapter will be another unfortunate event. I would call this the “slow healing” story. Recoveries from financial busts tend to be slow and painful. Indeed, that is why it is worth doing all that you can – in advance and in good times – to avoid financial crises. The academic literature suggests it takes an average of eight years to recover.2 If in the meantime you are hit by other bad surprises it can take longer. And in this  1  “A Series of Unfortunate Events” is a series of children’s novels written by Daniel Handler (using the pen name of Lemony Snicket). 2  This finding refers to recovery in real per capita GDP to its pre-crisis level rather than to making up lost output relative to precrisis trends. See Reinhart, C.M., and Rogoff, K.S. (2014) “Recovery from financial crises: evidence from 100 episodes”, NBER Working Paper No. 19823. Reinhart and Reinhart (2015) report that ten years after the fifteen worst financial crises of  BIS central bankers’ speeches  1  story most of the events are related. As many commentators have observed, as well as country-specific factors, many of the stresses now seen in emerging markets are knock-on effects, if not from the financial crisis itself, then from the responses to it in the post-crisis recession. One can tell a version of this slow healing and unfortunate events story for the world economy as well as for the UK.

(Chart 12: Norges Bank’s key policy rate) In order to prevent inflation from becoming too low and to dampen the impact of weaker developments abroad on the Norwegian economy, the key policy rate was reduced to 1.75 percent in December 2011. With high money market premiums and elevated credit premiums, low key rates are not passing through fully to banks’ lending rates. The difference between various lending rates is unusually wide at present. Many households pay a mortgage interest rate of around 4 percent, and rates on corporate loans are between 5 and 6 percent. Monetary policy is the first line of defence in demand management. Norges Bank still has room for manoeuvre in interest rate setting – in both directions. The question nonetheless remains of whether it is desirable to use monetary policy to accelerate the pace of inflation when the countries around us are in a recession. Even if the krone depreciates somewhat, relatively high cost growth in Norway that could quicken the pace of inflation might lead to a further deterioration in competitiveness. This cannot be the way to go. Moreover, low interest rates over a prolonged period tend to amplify an upward spiral in house prices and lending. Imbalances that build up in credit and property markets  6  BIS central bankers’ speeches  can have severe ripple effects further ahead, with a substantial impact on output and employment. Many Americans and Europeans have recently experienced this, as Norwegians did 20 years ago.
Since September we have seen considerable strength in the interest-sensitive sectors of the economy, including housing, autos and durable goods, in spite of the uncertainty and drag from fiscal policy. Improvement in these sectors suggests that monetary policy may be gaining additional traction. This is important because it suggests that the benefit from a given amount of asset purchases has increased. On the cost side, I conclude that costs specific to balance sheet expansion have turned out to be no greater than I had anticipated and, because we have less uncertainty about those costs, they are lower than I would have expected in a risk-adjusted sense. Let me start with three commonly cited potential costs – impairment of market functioning, the unanchoring of inflation expectations, and threats to financial stability. We carefully monitor financial markets for signs that market functioning has been impaired, looking at metrics such as trading volumes, bid-offer spreads, failures to deliver securities and our own ability to execute transactions. On some of these metrics, market functioning has actually improved in recent months. Of course, we will need to continue to monitor this, particularly if a rise in interest rates leads to less MBS issuance. But so far, so good. In terms of inflation expectations, a wide range of measures remain well anchored. For example, the 5-year, 5-year forward measure of inflation expectations calculated from Treasury TIPs versus nominal yields is well within the historical range of recent years (Exhibit 12).

First, consistent with the September statement, the FOMC began a new purchase program of $ billion long-dated Treasuries per month. Second, the FOMC shifted to economic thresholds from calendar-based rate guidance. The FOMC committed to keep the federal funds rate at its current level of zero to 25 basis points at least as long as unemployment remains above 6.5 percent, projected inflation on a one to two year horizon is below 2.5 percent and inflation expectations stay well anchored. Both elements of the policy stance were reaffirmed at last week’s FOMC meeting. So why did we make these changes? The additional asset purchases provide further monetary stimulus. This is appropriate given that we were falling short of our objectives.6 Moving to an outcome-based purchase program also has other advantages. In particular, expectations of the ultimate amount of purchases should change as the economic outlook evolves. This acts as an automatic stabilizing mechanism. In particular, the FOMC’s statement that purchases will continue until the labor market outlook improves substantially provides additional support for the recovery by reducing downside tail risk. The shift to rate guidance based on economic thresholds was not intended to provide additional accommodation at the time it was implemented.7 But, the adoption of thresholds does support the recovery by changing the risk profile in a different way. The thresholds  4  In addition to reinvestment of maturing MBS.
An essential component of these standards is the so-called “use test” that requires a system of internal ratings to be an integral part of a bank’s risk management and own assessment of capital adequacy. The internal reliance on these risk ratings will not only help supervisors gain confidence in the accuracy of a bank’s ratings system, but will also provide a key link to the proposed second pillar of the Accord, supervisory review. Other work on minimum capital requirements While the focus of my remarks has been on the internal ratings-based approach, the Committee also is working on other key aspects of the new framework, including revising the standardized approach, developing an expanded treatment of credit risk mitigation techniques and assessing a capital charge for operational risk. BIS Review 75/2000  8  Standardized approach The Basel Committee remains dedicated to revising the standardized approach as banks and supervisors in some countries may not yet have the necessary resources to implement an internal ratings-based method. To improve the risk sensitivity of the standardized approach, the Committee sought to establish capital requirements that recognized some differences in the probability of default between borrowers. At the same time, the Committee sought to be attentive to the views of many bankers and supervisors who wanted the standardized approach to remain simple so that banks of all sizes and levels of sophistication could implement it.

I’d like to begin by addressing the profound impact of today’s technology on banking and the financial markets, then move on to the implications of that impact for effective supervision in the twenty-first century. On the subject of official supervision, I will discuss the Basel Committee’s Core Principles for Effective Supervision, and then conclude with an update on the Committee’s major initiative to revise and refine the 1988 Capital Accord. 1  BIS Review 75/2000  Technology changing the world, banking and supervision It’s been said that information is power. Whoever said that surely never had to deal with the flood of e-mail most of us receive each day. Indeed, with increasing frequency, the complaint nowadays is about “information overload.” With wireless communications enabling us to conduct business anytime, anywhere, I sometimes feel, as I’m sure many of you do, that no matter where I am in the world, I’m expected to be awake and working. For those who occasionally feel overwhelmed by technology’s marvels, it’s worth remembering that there was a time, and not so long ago, when reliable market information was decidedly scarce and concentrated in the hands of a privileged few. The Rothschilds built an international banking empire on the wings of carrier pigeons, whose messages enabled the brothers to buy and sell on information about investment opportunities or financial disasters in distant places long before their competitors heard the news.
Andrew Gracie: Ending too big to fail – getting the job done Speech by Mr Andrew Gracie, Executive Director of Resolution of the Bank of England, at Deloitte, London, 26 May 2016. *  *  *  When G20 Leaders were putting together the post-crisis financial reform agenda in 2009 in London and Pittsburgh, the imperative to find a solution to too big to fail (TBTF) was clear. Feelings were rightly raw given the scale of public support provided to banks and the damage to the global economy. But there was scepticism that resolution - managing the failure of systemically important financial institutions without taxpayer support and without crashing the financial system - would ever work. Naysayers thought that bail-outs would always be necessary for larger banks, especially those operating cross-border. The work that has been done since has met this challenge. With the publication of the final Total Lossabsorbing Capacity (TLAC) Standard 1 in November last year a major milestone was passed. We have come a long way to making G-SIB resolution feasible and credible, and with implementation of the measures already agreed, and the tying of loose ends, the task will be complete. Today I want to review what we have done and what remains to be done to make G-SIBs resolvable.

Muhammad bin Ibrahim: Charting new frontiers – financial advisers the future Keynote address by Mr Muhammad bin Ibrahim, Deputy Governor of the Central Bank of Malaysia, at the Inaugural Conference of the Association of Financial Advisers “Charting new frontiers – financial advisers the future”, Kuala Lumpur, 31 October 2012. *  *  *  I would like to congratulate the Association and its members for your commitment, which has resulted in the successful formation of the AFA to champion and promote the interests of all licensed financial advisers in Malaysia. The formation of AFA is most timely, and marks a significant milestone in the progressive maturing of the financial advisory industry. Since the introduction of FAs in 2005, we have seen commendable growth within the industry, with the number of licensed FAs rising from 2 to 17, and the number of licensed FA representatives increasing from 17 to 229 today. The formation of the AFA is timely as it provides a platform to encourage greater collaboration among FAs to instill greater professionalism among its members and I expect the AFA to play an important role in coming up with clear strategies to propel the financial advisory sector towards greater progress and growth. Developments in the insurance and takaful sectors There are some broad developments within the economy and the financial sector that will expand the opportunity for growth in the provision of independent financial advisory services.
Finally, we have to do our best to ensure that market discipline is exercised in a relatively benign and gradual way – graded differentiation of spreads on debt for example, rather than sudden refusal by the market to rollover debt at any price. This means we need to think hard about the frequency as well as detail of disclosures, and specifically the trade-off between the two. Too frequent disclosure might not only be too onerous but also add to the volatility of company ratings. Too long and the potential for large step changes in an institution's risk profile will increase market uncertainty and volatility. Of course, there may be times when this cannot be avoided – the sudden emergence of fraud for example – which is where crisis management by the bank concerned and by the authorities comes into play. But we should not overemphasise the relevance of these new disclosure initiatives in this particular sort of situation: publicly owned banks are after all already required to disclose any information which could significantly affect their share price. BIS Review 43/2001  3  Impact of the New Basel Accord Turning to the Basel proposals on minimum capital, their aim is to align regulatory capital much more closely with risk. This should have financial efficiency benefits, as I explained just now. To the extent that seriously undercapitalised risk taking by banks will in the future be more difficult, there are also clear financial stability benefits.

This is in line with the growth in the activities of the two existing cross border PvP links recorded by us. Since 2010, the combined average daily turnover of the links with Malaysia and Indonesia has doubled, reaching a new record of $ billion last month. This is equivalent to an annual growth of about 23%. Other economies in the region, especially those with significant FX transactions, can similarly be benefited from a reduction in settlement risk and increase in efficiency in the settlement of FX transactions by establishing a PvP link with the USD RTGS system in Hong Kong. 9. The HKMA will continue to watch out for opportunities to collaborate with Asian neighbours to develop infrastructural solutions to meet growing regional demand for more efficient and robust settlement solutions. 10. Lastly, I would like to thank BOT again for the Bank’s commitment and professionalism leading to the successful launch of the PvP link. Based on the solid foundation laid through this project, I keenly look forward to working with BOT in other areas of central bank cooperation to contribute further to regional financial stability and prosperity. 11. Thank you. 2  BIS central bankers’ speeches
But the shock also leads to a large fall in the return on capital and in its price. Left unaddressed, this would lead to a sharp drop in bank profits, a decline in bank capital and a reduction in credit supply. If the leverage ratio were constant, that would reduce the amount of investment, capital and output. That effect is, however, moderated by expectations of a future recovery in the price of capital, which raises future returns on capital, thus allowing higher leverage, 13 higher bank profits and a degree of “self-healing” in the banking sector. When monetary policy is the sole instrument available (dashed red line), the nominal interest rate is cut briefly but returned to its steady-state value quickly. As described above, monetary policy is acting on aggregate demand and credit supply simultaneously. This supports output and capital but at the expense of a brief burst of inflation. The cut in the nominal interest rate helps boost the future loan-deposit spread but cannot prevent a fall in bank capital. Note also that the increase in the future loan-deposit spread pushes up the leverage ratio. The response is, though, quite different when the policy maker can deploy the macroprudential tool too (solid blue line). Now, the policy maker uses the bank levy/subsidy to prevent the sharp fall in bank capital. Monetary policy is then set to maintain output at its new, lower, efficient level with prices unchanged; that requires only a minimal change to the policy rate.

Vestin, David (2006). “Price-Level versus Inflation Targeting”, Journal of Monetary Economics, 53(7), 1361–1376. White, William R. (2006). “Is Price Stability Enough?”, Bank for International Settlements Working Paper 205. White, William R. (2009). “Should Monetary Policy ‘Lean or Clean’?”, Federal Reserve Bank of Dallas Globalisation and Monetary Policy Institute Working Paper 34. Williams, John C. (2009). “Heeding Daedalus: Optimal Inflation and the Zero Lower Bound”, Brookings Papers on Economic Activity, 2, 1–50. Woodford, Michael (2003). Interest and Prices: Foundations of a Theory of Monetary Policy. Princeton University Press: Princeton, NJ. BIS Review 111/2010  45
Measured against the OECD’s top three performers, the euro area is lagging far behind in both product and labour market efficiency, with no euro area country in the top three and with the largest euro area countries often underperforming the euro area average[17]. 2  BIS central bankers’ speeches  In recent years we have seen a number of important reforms, particularly in those countries that carried out economic adjustment programmes. The main focus has been on reforms in the labour market. The nominal and real labour market rigidities that we have traditionally lived with in Europe have resulted in what is being called the “European unemployment disease”: persistently high unemployment rates and a limited ability to adjust to economic shocks. You get a very telling picture if you plot the unemployment rate in the euro area and in the US over several decades – say, from the 1970s. Every time there is a downturn in economic activity, the unemployment rate goes up in both regions. However, whereas the US quickly readjusts when the economy picks up, the euro area takes much longer to do so and once the unemployment rate actually starts falling it almost never seems to return to that previous low. The end result is that euro area unemployment has risen steadily for 40 years. [18] That said, there is solid theoretical and empirical evidence showing that greater flexibility results in much lower equilibrium unemployment rates[19].

In terms of downside risks, these include the risk that growth abroad disappoints and the risk of further disruptions to the supply of oil and higher oil prices. On the inflation front, the overall rate of increase of consumer prices, as measured by the 12-month change of the price index for personal consumption expenditures, slowed to 2.3 percent in February from a recent peak of 2.9 percent last September. Even though the recent rise of gasoline prices mentioned above could interrupt this pattern, we expect this moderation of overall inflation to resume later this year. While the underlying core inflation rate, that strips out volatile food and energy prices, has been somewhat higher than expected a few months back, it appears that the annual rate of core inflation1 has peaked and we expect it to begin to decline later this year.2 Finally, inflation expectations, which play an important role in the inflation process, remain well anchored. By this I mean that people expect that the rate of inflation will continue to be relatively low for some time to come. Regional Economic Conditions So how is the recovery proceeding in the state and the region? As I mentioned, the New York Fed produces indexes that help us track economic activity in the region. Based on these measures, the economic recovery that began in New York State in late 2009 has continued through early 2012, and even gained some momentum.