samchain/econo-pairs-v1 huggingface dataset:
One of the examples of this is the fact that we did not utilise the scope for rate cuts that - according to a stricter interpretation - deregulation and other supply factors had created during the last few years of the 1990s. The clearest example of how we attempted to convey that our inflation targeting policy was flexible rather than strict was the clarification of monetary policy that the Executive Board published in 1999. In that, we explained that it may be appropriate in some situations - e.g. in the event of large shocks and deviations from target - to refrain from bringing inflation back to target too quickly in order to mitigate the adverse consequences for output and employment.1 We expressed this in terms of there being reasons to occasionally depart from our simple policy rule - that the repo rate is normally raised if inflation one to two years ahead is forecast to be above 2 per cent, and vice versa if inflation is forecast to undershoot the target. Explicit framework as basis The strategy that we in Sweden have chosen for dealing with the “flexibility problem” could, in simplified terms, be described as that we, when we have found it necessary, have in various ways modified and adapted a framework - mainly represented by an explicit symmetric target, regular publication of detailed decision-support data including forecasts, and a simple policy rule for how the repo rate is normally adjusted against the background of the forecasts.

Understanding and Trusting Central Banks  Even if the empirical literature is sparse, the great leaps forward in central bank openness over recent years would be expected to have earned them a transparency dividend among the harder-to-reach general public. That dividend might take the form of improved trust in central banks by the public and an improved understanding of their functioning. There is disappointingly little evidence of either. Trust in institutions generally has taken a body-blow over the past few years. The Edelman global survey suggests that public trust in businesses, government, NGOs and the media has fallen sharply. In 2016, only around half of the general public trusted these bodies. In the UK, fewer than 30% of the population trusted these institutions in the latest survey, down from over 40% a few years ago (Chart 10). The source of dwindling trust is itself revealing. It reflects a widening gap between trust in institutions among the elites (which has held firm) and among the general public (where it has fallen). This trust gap between elites and the general public averages 15 percentage points globally, having been around 9 percentage points as recently as 2012. In the UK and US, this gap is around 20 percentage points. 41  What is true of institutions appears to be true too of the economics profession. A recent poll by YouGov in the UK asked the general public how much they trusted various professions.
If so, it is relatively easily rectified. Having identified the different folks, it is then a question of applying different strokes to communicating and engaging with them. One size will not fit all. That probably means the need for engagement policies that are targeted and layered to meet the different needs of different cohorts. This does not mean we should stop communicating with our current audience. Their needs may be well-served by some of the analysis we already produce. But it may call for a particular focus on those cohorts currently out of reach of central banks, such as the young and the less well-off. Both the message and the medium matter here. For the wider public, especially the younger and the less well-off cohorts, Mark Thompson’s synopsis of the changing form of public language – shorter and simpler – may be a good starting point. Over the past year or so, the Bank of England has diversified its stable of publications, with a view to reaching that some of that wider audience. In 2015 the Bank began a staff blog, “Bank Underground”. This was intended to be shorter, simpler and somewhat more opinionated than anything the Bank had previously published. So far, the blogs have received over 700,000 hits. The most popular are amongst the best-read of any Bank publication. That is probably helped by their shorter length (under 1500 words) and greater reach (reading grade scores of 9 mean that they are accessible to up to 30% of the population).

This rising tide of responsibilities is not confined to monetary policy. Around 80% of central banks have some role in setting new macro-prudential tools. 12  The Bank of England is among the over 50% of central  banks fully in charge of doing so. In the US, responsibility is shared across agencies, including the Fed. In the European Union, responsibility is also spread across agencies, including a number of central banks. In the run-up to the financial crisis, micro-prudential policy was increasingly located outside central banks. Since the crisis, however, that trend has reversed (Chart 3). The ECB has assumed responsibility for supervising the euro area’s largest banks. The Federal Reserve’s supervisory responsibilities have been expanded and enhanced. And in the UK, micro-prudential supervision has returned to the Bank. 13  The most recent chapter in central banks’ evolutionary history has been increased openness and transparency about their actions, monetary, macro- and micro-prudential. This shift was a natural  9  Consistent with that, the historical evidence suggests that institutions, such as central banks, are essential elements of statecraft (Acemoglu and Robinson, 2012). 10 See for example, Cukierman et al (1992), Grilli et al (1991), Crowe and Meade (2007), Arnone et al (2006), Dincer and Eichengreen (2014), Bodea and Hicks (2015) and Garriga (2016). 11 The Cukierman et al (1992) index, updated and expanded by Garriga (2016). 12 Claessens et al (2016), discussed in Blinder et al (2017).
My reluctance to go down that route stems from a concern that we would slip towards a degree of individualism where members were no longer listening to each other. It would not be possible for members to polish their statements after the meeting, as they would then be able to tweak their text, ever so slightly of course, in the light of the market reaction to our decision and so on. So highly polished statements would be brought to the meeting, with perhaps even a degree of competition in the depth of the analysis or the beauty of the prose. But the very point of a committee is that we 26 should listen to each other, and then make up our own minds. That includes trying to persuade one’s  unexpired parts of the terms of existing Committee members, but do not include the terms of Howard Davies and David Walton. 25  For example, Weber, A., 2007, “Monetary policy strategy and communication”, speech at the Deutsche Bundesbank/Federal Reserve Bank of Cleveland conference on “Monetary policy strategy: old issues and new challenges”, Frankfurt, May 2007. 26  See section on “Does discussion help?” in Lombardelli, Proudman and Talbot, op. cit., page 199. 6  BIS Review 66/2007  colleagues. Over the years, 27 I have definitely seen occasions where individual members have altered their position during the course of a meeting.

Indeed, apart from the defining characteristic that the internals have full-time executive responsibilities at the Bank, the main distinction to date is that internal members tend to serve for longer; an average of around five and three quarter years, compared with just over three years for the external members. 24  22  Walsh, C. E., 1995, “Optimal contracts for central bankers”, American Economic Review, volume 85, number 1, sets out how a contract between government and the monetary authority can give the latter the incentive to pursue society’s macroeconomic goals in a time-consistent manner. Rogoff’s “conservative central banker” relies on the central bank being more averse to inflation than society as a whole. 23  See Gerlach-Kristen, P., 2003, “Insiders and outsiders at the Bank of England”, Central Banking, volume 24, number 1. 24  To date, the time on the Committee served by externals has ranged from a minimum of 1.4 years to a maximum of 8.9 years. For internals, the corresponding range is from 2.25 years to 11 years. These ranges are calculated by including the  BIS Review 66/2007  5  That seems to me to be consonant with the political economy considerations behind the design of the Committee. The internal members provide a bedrock of accumulated policy expertise and commitment. The externals, coming from outside the Bank and turning over more frequently, keep the debate and the process fresh.
It also enables us to follow how debts develop over time and thus also provides some information on the households’ amortisation behaviour. The Riksbank’s credit data is therefore an important piece of the household-debt puzzle. The Riksbank’s credit data confirms our concern Let me now say something about what our data shows and also in some cases place the data in relation to other results that have been presented to us in various contexts. It is of course not my intention to give the impression that other results are incorrect in some way. It is rather the case that data is used in different ways depending on one’s perspective and focus, and this is reflected in the results. The Riksbank’s particular focus is on the risks that household indebtedness may pose to the real economy and financial stability. The aggregate debt ratio underestimates debts among borrowers As I mentioned earlier, the aggregate debt ratio is 174 per cent. However, as this figure is based on the entire Swedish household sector it also includes individuals who have no debts but have an income. Now that it is possible, it therefore seems more relevant to examine the debt ratio for those who actually have debts, that is almost four million Swedes over the age of 17. If the debt ratio is calculated only for indebted households, the figure arrived at is 263 per cent.

The major Swedish banks fund about half of their operations on the capital markets of which a substantial part is in foreign currency. In simple terms this means that more than one of  8  BIS central bankers’ speeches  every two krona that are lent to Swedish households is ultimately governed by conditions that are set by anonymous capital managers in Sweden or elsewhere in the world. Moreover, approximately half of the banks’ funding consists of covered bonds which are partly held by foreign investors and partly by the other major Swedish banks. All in all, this means that developments on the mortgage market in Sweden are not only important to individual banks but also to the banking sector as a whole. If the providers of the banks’ market funding were to lose confidence in the banks, or in the situation on the mortgage market, the price of funding could increase and access to funding decrease. This would entail higher interest rates for households and perhaps also for companies, depending on the ability of the banks to parry such a situation. It is therefore vital that our financial system is resilient and inspires confidence, and that the development of household debt is deemed to be sustainable in the long term. We are in a situation in which the development of debt in Sweden and the Swedish mortgage market are not only matters of importance to us here in Sweden but also to international investors.
As a result of the latter, the balance sheets of all major central banks have increased significantly. One of the major challenges in the years ahead will be the differentiated normalisation of unconventional monetary policies in advanced economies. Many have argued that in this process central banks in advanced economies should be mindful of the spillovers to the rest of the world.6 There have even been calls for a fundamental strengthening of international  4  This has been particularly visible in the rise of the renminbi as an invoicing and settlement currency for China’s international trade: while in 2010 almost none of China’s trade in goods and services was invoiced in renminbi, in 2014 this figure has risen to almost 25%. Similarly, the issuance of renminbi-denominated (“dim sum”) bonds has grown by a factor of about 30, albeit from a very low level. 5  For a discussion of the international role of the renminbi, see Eichengreen, B., and Kawai M. (2014), “Issues for renminbi internationalization: an overview”, Asian Development Bank Institute Working Paper, No 454, January. On recent trends in the IMS, see the latest ECB Report on the International Role of the Euro, Frankfurt am Main, 16 July 2014. 6  See Rajan, R. (2013), “A step in the dark: unconventional monetary policy after the crisis”, Andrew Crockett Memorial Lecture, BIS. 2  BIS central bankers’ speeches  monetary policy coordination. I would like to take this opportunity to elaborate on my views on this discussion.

At the same time, in a highly interlinked global economy consensus-building concerning the transmission of spillovers is crucial for dealing with shocks that affect substantial parts of the global economy. Moreover, the IMS should also provide incentives to foster appropriate preventive action that renders economies more resilient to shocks, and provide the necessary standards and infrastructures to make global markets work better as well as make coordination possible when warranted. This is already a robust policy agenda. 6  BIS central bankers’ speeches
In addition to buying securities in the market, these companies can invest households’ savings in other funds with differing risk profiles. There is thus a larger number of agents involved. The opportunities today to divide cashflow into different types of securities with the liquidity, duration and risk that suit a particular investor are another example. This means, for instance, that the banks which lend money to a customer do not need to retain the credit risk this causes, but can sell the risk on to, say, a pension fund company. They do this by selling the loan to a special company, which then  1  The inspiration for this speech has largely come from a discussion at the Federal Reserve Bank of Kansas City's seminar "Monetary Policy in the Era of Alan Greenspan", based on an article by Raghuram G. Rajan "Has Financial Development Made the World Riskier?". 1/5  issues securities with the loan as collateral. The pension company can then in turn sell the risks to others looking for good investments, such as households or other investors. Derivative products also enable risks to be divided up and priced separately. However, agents in the Swedish markets use both credit derivatives and securitisation relatively sparingly as yet. Internationally, these markets have shown rapid growth. In the year 2004 the value of outstanding contracts for credit derivatives was almost six times higher than it had been in 2001.

If the asset managers are lucky, they will manage to predict the period with a positive yield and the rare loss will not become a reality during the period they are being evaluated. This appears more likely the shorter the evaluation period is. Willingness to take risks can increase in a low interest rate environment. Agents may then wish to take more interest rate risk and perhaps come further out on the yield curve, thus becoming more sensitive to rapid interest rate fluctuations. They may also look for new types of investment. The fact that they are evaluated in comparison with others in the market may also lead to asset managers adopting herd behaviour, even if they have a different opinion of the current developments in the financial markets. It is better to lose in good company than to stand alone with an investment that might provide a good return in the long-run, but which results in short-term losses. The word might is central here, as no one can predict market developments and it is therefore difficult to go against a trend. Herd mentality can thus lead to asset prices deviating from fundamental economic conditions during a relatively long period of time. The contagion effects can also increase when the view of the world changes. Herd behaviour among market agents does not only involve investing in the same assets. There are signs that this also includes researching information.
Rapid growth in lending such as we have witnessed in a number of Asian economies can be a warning sign because it tends to be associated with a lowering of credit standards as banks lend to customers whose creditworthiness is more marginal. Moreover, much of this lending may find its way into the property market and stock market, adding to the upward pressure on asset prices arising from the inflows themselves. Reversal of inflows or a slowing down of the economy, as in Thailand, thus exposes the banks to both credit risk and market risk as asset prices fall. 15. With large capital inflows, banks may also find themselves incurring substantial net foreign currency liabilities. They will thus additionally be exposed to substantial foreign exchange risks if the domestic currency weakens. Financial liberalization and increased competition 16. Associated with, and leading to the global integration of financial markets is the trend of financial liberalization and increased competition. The trend has increasingly freed banks from direct controls on interest rates and on their permitted business activities in many Asian economies. We can see this in banking systems as far apart as those in China where the process of commercialization of the banking sector is now underway and in Japan which is planning its own version of Big Bang in the next few years. This new freedom can bring increased opportunities for the banks and can be a powerful incentive to increased efficiency in 4  International Capital Markets, IMF 1996.

Tharman Shanmugaratnam: Credit Counselling Singapore – ten years of helping individuals recover from debt problems Address by Mr Tharman Shanmugaratnam, Chairman of the Monetary Authority of Singapore, at Credit Counselling Singapore 10th Anniversary, Singapore, 28 October 2014. *  *  *  Mr Kuo How Nam, President of Credit Counselling Singapore, Pioneers of CCS, Distinguished Guests, Ladies and Gentlemen, 1 Good afternoon. I am very happy to be part of CCS’ 10th anniversary celebrations today. I commend CCS and its pioneers for your contributions in helping distressed borrowers over the past 10 years. 2 CCS has come a long way from its modest beginnings in 2004. It has grown in strength, winning the confidence and trust of the people it has counselled as well as the banking industry. This is the result of the dedication of CCS’ leaders, staff and volunteers. 3 I would like especially to thank Mr Kuo How Nam, who as CCS President led and inspired the CCS team, and worked doggedly to establish partnerships with banks and other organisations. He has shaped the CCS of today – a credible source of inputs to Government on matters to do with individual credit, and a valuable partner for the financial and social services sectors.
In such circumstances, we expect the board to provide leadership, guidance and oversight in ensuring that the needs and rights of all parties are adequately and appropriately managed. Thirdly, the implementation of global regulatory reforms will pose further challenges for the industry. While the reforms are well-intended, the complexity and impact of the reforms to business should not be underestimated. Increasingly, there seems to be a trend on the “extraterritorial” application of laws and regulatory requirements, which have implications on other jurisdictions. The extraterritorial effect of such laws may require changes to existing practices and may involve substantial costs in terms of system change and improving monitoring capabilities. At the board and senior management levels, an adequate understanding of the potential impact of these trends and regulatory changes is critical to help the organisation in setting business priorities while ensuring full compliance with emerging regulatory requirements. With much at stake, board members must take seriously their responsibility to drive the corporate governance agenda forward. One important lesson we ought to learn is that weak governance causes the failure of financial institutions. The costs of salvaging a failed institution far outweigh the costs incurred to prevent such a failure. Over the long term, the failure of institutions would also cause businesses and households that depend on financial institutions for funding to be in a difficult position, erode public trust that would take many years to restore and consequently result in more intrusive and prescriptive regulation of the industry.

Urban Bäckström: The business cycle and interest rate policy Speech by Speech by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements,.at the Euroforum’s Conference, Örebro, 10 October 2001. *  *  *  First a word of thanks for the invitation to discuss matters to do with the business cycle and interest rate policy here with you in Örebro. We are living at present in turbulent times. Political events on the world stage have considerable economic and other repercussions in Sweden. Today I shall be saying something about my view of the business cycle’s current phase and also try in some measure to look into the future. Weaker activity in the rest of the world Global economic growth slackened appreciably in the first half of this year. The downward phase has lasted longer and become deeper than many observers had counted on at the beginning of the year. For the first time in over a decade we are experiencing a synchronous slowdown in all the leading economies. The terrorist attacks on 11 September have accentuated the risk of the downward phase being more pronounced and protracted. At the same time it should be underscored that the attacks can hardly be expected to disrupt the conditions for growth in the longer run, either in the industrialised countries or in what are commonly referred to as the emerging markets.