samchain/econo-pairs-v1 huggingface dataset:
Since every country has its own set of idiosyncrasies, I can obviously not speak for all central banks. I will therefore focus on Switzerland and the SNB. As in other areas of the economy, however, developments abroad affect Switzerland and thus the SNB via the global financial markets. This just goes to show how important it is for us that the right direction for central banks is also set abroad. Role of monetary policy largely unchanged I would now like to say a few words about the central banks’ role in monetary policy. In my opinion, the core mandate should remain unchanged. The SNB’s monetary policy is still credible. The SNB must, as an independent central bank, ensure price stability while taking due account of economic developments. The National Bank Act grants us substantial flexibility in implementing this mandate, and this has made a major contribution to retaining our freedom of action, even under extreme conditions. When the zero bound was reached, we were able to use new instruments swiftly and rigorously even though this was associated with considerable balance sheet risks. As a result, we successfully fulfilled our mandate and ensured price stability. How else, for instance, could we have credibly set and enforced the minimum exchange rate, if the law had imposed restrictions on the SNB with regard to its balance sheet? The key importance of price stability was uncontested for a long time. Now, however, the relatively old discussion about the optimal goal of monetary policy has been fuelled by the crisis.

Consequently, it is clear – and well-established historically – that central banks make an important contribution to financial stability. In fact, several central banks were founded specifically for this purpose. The idea was that the central bank should serve as the lender of last resort, thereby protecting the banking system from collapse. In Switzerland, the SNB has always been the lender of last resort. In the revision of the NBA carried out ten years ago, the SNB received for the first time an explicit mandate to contribute to financial stability. The term “contribute” expresses the fact that other state institutions also have an influence on financial stability and that, in addition, this stability can never be absolutely guaranteed. Until recently, the SNB had two options for its contribution to financial stability, in addition to the monetary policy toolkit, which was mainly based on interest rates. The first was to rely on the persuasive power of its sound arguments and hope that banks and other financial market participants would draw the right conclusions from these, so that a crisis did not arise. The most important example for a persuasive approach is our annual Financial Stability Report. Since 2003, this report has conducted an assessment of the stability of the banking industry, highlighted tensions and imbalances, and made recommendations. The second option was for the SNB to provide a bank facing a crisis with emergency liquidity assistance, if this was necessary for the functioning of the financial system.
Let me elaborate on these two themes: why liberalise the financial sector, and why liberalise at a measured pace. In doing so, I will draw partly from Singapore’s experience. Singapore and Myanmar are two very different economies and it would be unwise to apply Singapore’s experience directly to Myanmar. But I think the overall lesson is relevant: It is critical to open up, but open up at a measured pace. Why financial liberalisation is important A well-developed financial sector can be a catalyst to spur and sustain economic growth. It will lead to more effective mobilisation of domestic savings, help to harness foreign savings, and improve the efficiency of investment allocation. And opening up the financial sector to foreign participation can play a critical role in catalysing the sector’s growth and development. A basic purpose of banking is the provision of credit for economic and social development. Large segments of the Myanmese economy and population do not have access to affordable funding. Foreign financial institutions can complement the local banks in effective credit intermediation. It will deepen the financial sector, thereby helping to raise household savings and divert funds away from the shadow financial system. Foreign financial institutions can provide a channel for Myanmar to tap into foreign savings to drive its growth, even as the country ramps up the mobilisation of domestic savings. This is  BIS central bankers’ speeches  1  particularly relevant for financing infrastructure development, which is critical to drive Myanmar’s economic growth.

James D Rogers: Inauguration of the Sierra Leone Stock Exchange – a significant milestone Welcome address by Dr James D Rogers, Governor of the Bank of Sierra Leone, at the inauguration of the Sierra Leone Stock Exchange, Freetown, 27 July 2007. *  *  *  Mr Chairman Your Excellency The President Honourable Vice President Honourable Minister of Finance Honourable Ministers Honourable Members of Parliament Distinguished Ladies and Gentlemen I am extremely delighted to welcome all of you, and in particular His Excellency The President and the Honourable Vice President to this inauguration ceremony the Sierra Leone Stock Exchange, a project pioneered by His Excellency The President and into which much time and resources have been invested by the Bank of Sierra Leone over the past several years. In 2002 the first step was taken with the establishment of the Stock Exchange Technical Committee (SETC) under the Chairmanship of the Deputy Governor of the Bank. I wish to note that the present Deputy Governor is the second Chairman of the Committee, and has professionally steered us to this point. I want to particularly thank His Excellency The President for accepting our invitation to launch this project. During his administration, His Excellency has given support, encouragement and advice to the Bank in every sphere of its activities, and I wish on behalf of the Board and Management to express my thanks and appreciation to him.
In this respect the cause of the current rise in government debt has more in common with the 2008 financial crisis than with what occurs in wartime. And unlike the 1970s and 80s – indeed as a result of that experience – there is now a stable monetary regime in place. As it happens, it would now be significantly harder to “inflate away” the public sector’s liabilities than in the past. Thanks to a combination of indexed gilt issuance and (somewhat ironically) QE, the relevant “tax base” – non-indexed, longer-term debt in the hands of the private sector – is much lower than in the 1970s and  20  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  20  80s. But the most important guarantee of price stability is a stable regime governing monetary policy and macroeconomic policy more generally. For policy to be effective that regime has to be credible. Indeed, without such credibility – without confidence that fiscal outcomes are a matter for fiscal policy, with monetary policy assigned to controlling a nominal objective – it’s not clear that QE would even work in the first place. And that credibility relies in part on the monetary authority being held to account. It’s crucial that the MPC should have to explain why its actions are necessary for meeting the inflation target, and nothing besides, during this episode as in any other.

Third, and instead, what matters more – not just for inflation itself but the cost of government debt as well – is the prevailing regime for monetary policy. The two can clearly interact: the monetary regime was abandoned in those wars partly because of the pressures from higher spending, and it was that de-linking from gold that allowed prices to rise in the first place. Equally, it was precisely because of the visibility and prominence of that measure, and the belief that it was likely to be temporary, that both the subsequent inflation and the rise in the cost of new government borrowing were contained to the degree they were. Conclusion Aggressive monetary easing by central banks, occurring as it has alongside very large government deficits, has raised fears in some quarters about “monetary finance”. These are misplaced. Certainly there’s nothing about the coincidence of the two in time that, in and of itself, constitutes monetary finance. If the rise in government debt is caused by a weak economy, something that would otherwise depress inflation, easing policy is exactly what an independent, inflation-targeting monetary authority should be doing. Theory tells you that, to stabilise inflation, policy needs to lean against swings in demand and UK history bears that out. It’s true that, if only for a while, easier money policy reduces the real cost of borrowing, for public and private sectors alike. That’s how it’s meant to work. The reduction in the cost of borrowing for the private sector stimulates demand and inflation.
UK inflation performance That brings me to the final area where the UK economy has performed very differently to expectations last summer – headline inflation. The UK has just experienced the second significant upward spike in inflation in the last couple of years. Since the beginning of 2008, when the financial crisis and the ensuing recession might have been expected to push down inflation, consumer price inflation in the UK has averaged 3% – above the 2% target and more than one percentage point higher than average CPI inflation in the pre-recession period of growth. Our inflation rate is clearly influenced by external factors in the world economy, such as a volatile oil price, and these have clearly made the control of inflation more difficult over the last two or three years. But if these global forces were solely to blame for higher inflation, they would be having a similar effect in other major economies. As Chart 6 shows, the US and the euro area have seen lower and more stable inflation over the last couple of years, with inflation averaging around 1¾% since the beginning of 2008. US inflation has recently been pushed up to over 2% by higher petrol prices, but to a much lesser extent than in the UK. 5  According to the Labour Force Survey measure, unemployment peaked at 11.9% in mid-1984 and 10.6% in early 1993. Approximately two years after the start of the recession in both cases, unemployment was 10.2% at end-1981 and 10.4% at end-1992.

According to the Work Foundation, the Reading and Bracknell area is assessed to have the best job growth potential of any UK urban conurbation and Swindon and Oxford also make the top 10 in their league table. 2 When I accepted the invitation to give today’s speech, I had not appreciated that today – 13th July – was a significant date in terms of my career and my position on the Monetary Policy Committee (MPC). Four years ago today, on 13th July 2006, Gordon Brown – who was then Chancellor of the Exchequer – announced my appointment in Parliament, and I joined the Committee just over two months later. The course of monetary policy while I have been on the Committee has been dominated by the effects of the global financial crisis, and the recession which ensued. It has also been a period when the Committee has found it more difficult to keep inflation on target than in the more stable global conditions which prevailed until 2007. In 36 out of the 45 months I have served on the Committee, CPI inflation has been above the 2% target. And it has been more than one percentage point above the target – the threshold which triggers an explanatory letter from the Governor of the Bank of England to the Chancellor – in 15 months, a third of the time that I have been on the Committee. That includes June’s inflation rate which was announced earlier today.
10  BIS Review 143/2009  Figure 24: Contribution to GDP Growth Figure 25: Contribution to GDP Growth from Production from Spending (Percentage Point) 1  (Percentage Point)  0,5  6  0  3,6  4  -1  2  -0,5 -1,3  -2 -3  -2  -2,5 -3,1  -4  0,1  0,2  0 -0,8  -4  -5  -6  -6  -8 -7,0 Agricul. Indust ry Cons tr. Serv ices Net Tax  -6,4 Priv ate Co ns. -7 -8  -3,6  P riv. Inv. -7.0 P ublic Public Sto ck Cons . Invest. Net Exp. GDP  GDP  Source: TURKSTAT. Source: TURKSTAT. Compared to the previous quarter, the primary determinant of growth in the second quarter was private consumption demand that displayed an upswing, mainly owing to the fiscal stimulus package (Figure 26). While assessing whether the pick-up in private consumption demand indicates a lasting recovery trend or not, it would be wise to evaluate trend discrepancies in different sub-components and interpret data pertaining to the third quarter accordingly. Second quarter national accounts data confirm that the pick-up in private consumption demand stemmed mainly from fiscal stimulus-driven advanced demand for certain goods categories. Meanwhile, the demand for goods that were not subject to tax reductions stayed almost constant (Figure 27).

Michael Gondwe: Supervision of non-banks and microfinance institutions Remarks by Dr Michael Gondwe, Governor of the Bank of Zambia, at the opening ceremony of the Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) regional workshop on “Supervision of non-banks and microfinance institutions”, Lusaka, 8 April 2013. *  *  *  The MEFMI Programme Officer, Distinguished Resource Persons, MEFMI Staff, Participants, Ladies and gentlemen, It gives me great pleasure to officiate at this workshop on Supervision of Non-Bank Financial Institutions and Microfinance organised by the Financial Sector Management Programme of MEFMI. May I take this opportunity, on behalf of MEFMI and on my own behalf, to welcome you all to this important workshop and, in particular, to welcome you to Lusaka. I urge you to make some time to visit and sample some of the beautiful spots that our city and country has to offer. I also wish to welcome and thank our distinguished resource persons Mr. Japheth Katto from Capital Markets Authority of Uganda, Mr. Nkosilathi Moyo from World Vision here in Zambia, Mrs. Rachel Mushosho from the Reserve Bank of Zimbabwe and Mr. Kagisanyo Kelobang from the African Development Bank (AfDB) in Tunis for accepting invitations to present at this workshop and hope that their participation will enrich the deliberations of this workshop as well as increase the knowledge of the participants.
Previous prudent fiscal policies have allowed an expansionary stance to support the growth while low inflation and excess capacity has allowed for the monetary stimulus. Third, favourable demographic factors The Asian region accounts for more than half of the world’s population and continues to grow at a relatively high and stable rate. Of importance is that the region has a relatively young demographic structure with rising education, which augurs well for securing a large and dynamic labour force going into the future. These favourable demographic prospects of the region increase the potential for creating a consumer group with high purchasing power, thus providing an increased potential for growth in domestic demand. 2  BIS Review 43/2003  Four, rising middle-income consumers Rising income and urban migration in Asia has produced a large and vibrant middle-income group, creating a pivotal change in the pattern of consumption to deliver the positive benefits in domestic demand growth. The cumulative effects of policies that have been implemented previously have resulted in increasing income and living standards and established the foundations to accentuate the transformation of domestic demand in the region. China’s domestic market with a population of more than 1.2 billion, is already the world’s largest market for mobile phones and is poised to be the world’s largest market for personal computers. By 2005, it is estimated that 15% of China’s population would consist of about 200 million middle-income consumers equipped with a high propensity to consume.

This therefore, not only includes providing greater access to financing but the complete financial services solution to the small- and medium-sized enterprises. In addition, monitoring loan performance during the lifetime of the loan rather than only during the approval process will allow for early remedial action to be taken well before difficulties emerge. 4  BIS Review 43/2003  A further important contribution in emerging market economies is to enhance consumer literacy through consumer and investor education to increase the potential for well-informed financial decisions. Another area that is important is the investment in human capital to create a workforce that is skilled and competent, as this will bring substantial long-term benefits. Finally, foreign institutions that have a presence in the region need to recognise the meaningful role that can be realised in the region not only in meeting the requirements of the domestic environment but also to promote investment and business opportunities from their established networks in other parts of the world. The Asian Financial Crisis not only presented the opportunity to improve the region’s resilience to external shocks, but also underscored the importance of breadth in the financial sector, in particular, the development of alternative avenues of financing. Historically, bank loans, as well as funds raised through equity markets have assumed significant roles in Asia as the main sources of financing.
Hence, real sector agents, particularly firms operating in ailing sectors of the economy, are facing surmounting short-term financing difficulties and have lost sight of their future objectives. The process of restructuring in these firms has to find ways for their business to change and become efficient, in order to survive and restart growth. Finance and knowhow is particularly important during such restructuring phase. What role has the financial system in this process? We have to be clear on two issues: (1) we have constructed a financial system and pursued a financial integration strategy based on banks. In fact, they comprise more than 90% of the financial system throughout the region. We think this model is successful and with some minor revisions should serve our economies  BIS central bankers’ speeches  3  in the future. For one, foreign banks bring expertise and mostly stability to the financial system. But, recent experience has softened this argument. (2) Banks should be the main vehicle of financial inflow. As converging economies SEE is expected to run current account deficits. As such, it is a capital hungry region which international banks should intermediate. A new business model relying purely on domestically generated deposits is a wrong answer to the previous extreme of huge capital inflows. A more happy medium should be sought, one based on careful and sustainable inflow of funds. How is the Single Supervisory Mechanism going to affect the work of the central banks in the region?

While the mandate on macro-prudential policy and its tools must be clear, one has to recognize that it can have wider effects in financial system and the real economy. For this reason, discussions on macro-prudential policy and measures must involve other authorities, including the fiscal one. Many countries have now established an inter-institutional entity with soft or hard powers in designing and implementing macro-prudential policy to mitigate systemic risk. The role of the central bank in these inter-institutional entities will reflect their legislation and tradition, and independence objective. Although central banks may not always chair such entities, central banks play a critical role in underpinning their functioning given the information and expertise they provide. How have such policies developed in the South Eastern Europe (SEE) region? In spite of solid growth in the run up to it, the global crisis found SEE in a vulnerable position. To a large extent, its growth model was based on encouraging domestic absorption which in turn was partly financed through external borrowing. Financial inflows were channeled in SEE economies largely through EU bank subsidiaries. In SEE, they encouraged investment in real estate and services sectors and were reflected in large current account deficits. External competitiveness and structural reforms slipped gradually through the policymaker’s agenda, while fiscal positions were allowed to deteriorate and financial safety nets were weak. 2  BIS central bankers’ speeches  As a result, when the crisis hit SEE faced both a structural and a cyclical problem.
“How synchronized are central and east European economies with the euro area? Evidence from a structural factor model”, Discussion Paper 20/2005, Deutsche Bundesbank Estrada, A., López-Salido, D. 2001. “Understanding Spanish Dual Inflation”, Documento de Trabajo n.º 0205 Banco de España Fidrmuc J., Korhonen I. 2001 “Similarity of Supply and Demand Shocks between the Euro Area and the CEECs”, BOFIT Discussion Paper No. 14. Financial Times “EU’s grim climate change”, 6 January 2007. Gourinchas, P.O., Valdes, R., Landerretche, O. 2001. “Lending Booms: Latin America and the World”, NBER Working Paper 8249. Kenen, Peter B. (2002) “Currency Unions and Trade: Variations on Themes by Rose and Persson” Reserve Bank of New Zealand Discussion Paper 2002/08. Kiss, G., Nagy, M., Vonnák, B. 2006. “Credit Growth in Central and Eastern Europe: Convergence or Boom?”, WP 2006/10, Magyar Nemzeti Bank. Micco, A., Stein, E., Ordonez, O. 2003. “The Currency Union Effect on Trade: Early Evidence From EMU”, Economic Policy, 316-356. NBP 2004. “A Report on the Costs and Benefits of Poland’s Adoption of the Euro”, ed. J.Borowski, National Bank of Poland Persson, Torsten (2001) “Currency Unions and Trade: How Large is the Treatment Effect?”, Economic Policy 33, 435-448. Rose A.K. (2000): One Money, One Market? The Effect of Common Currencies on International Trade, „Economic Policy” No. 30, pp. 449-461. Rose A.K., van Wincoop E. (2001): National Money as a Barrier to International Trade: the Real Case for Currency Union, „American Economic Review” Vol. 91, No. 2, s. 386-390. Mundell R. (1961): A Theory of Optimum Currency Areas, „American Economic Review” Vol.

An inflation target was adopted and the krona was allowed to float free. In Norway, the situation was somewhat different. The Norwegian krone had not depreciated as much when Norway left the exchange rate mechanism. Norway therefore returned to a fixed exchange rate regime, although this regime gradually changed and in 2001 Norges Bank also formally adopted an inflation target and a new fiscal framework was introduced. So our two countries have had a similar strategy for monetary policy based on an inflation target and a floating exchange rate since 2001. During this period there have been frequent and deep contacts between our staff, and I am thankful for all that we at Sveriges Riksbank have learned from these exchanges of methodologies and other experiences. However, the emergence of Norway as an oil nation has made Norges Bank unique in many respects, not least in managing a sovereign wealth fund. Norges Bank is one of very few central banks charged with such a task. In fact, this fund is one of the largest investors on the Swedish stock exchange. When Norway became an oil nation in the 1970s, the country started its journey to become one of the richest nations in the world. We Swedes have some-times been a little envious of this, and perhaps even thought it was a shame we no longer have the union! Huge oil revenues also create major challenges, and many countries have not managed so well. But Norway has.