samchain/econo-pairs-v1 huggingface dataset:
At the same time, euro area labour markets have been characterised by favourable trends in the last few years. Since 1999 the euro area has witnessed an increase of more than 12 million in the number of people employed and a substantial decline in the unemployment rate from 10% to 7.9% on average in 2006 and 7.2 % in March 2007. Looking forward, it is important that this favourable trend in labour markets continues, so contributing to the diminishing of unemployment as well as a prolonged and robust economic growth. In this respect, the Governing Council of the ECB considers decisive that the social partners continue to meet their responsibilities. Wage agreements should avoid wage developments that would eventually lead to inflationary pressures and harm the purchasing power of all euro area citizens. Beyond this, it is important to point out that particular wage agreements should take into account price competitiveness positions, the still high level of unemployment in many economies and productivity developments across sectors. Wages should be sufficiently differentiated across countries and sectors to reflect these factors. More specifically, moderate wage developments in the euro area as a whole reflect an aggregation of diverse wage developments across euro area countries with important implications for cost competitiveness. Indeed, over longer horizons we observe that euro area countries that have been able to preserve a low level of unit labour cost growth have also experienced significant gains in employment.

Unlike some of its peers, the Turkish banking system did not require any rescue packages or other forms of government support throughout the crisis. The robustness of the Turkish financial system was to a large extent a consequence of the financial reforms implemented in the aftermath of the 2001 financial crisis we experienced in Turkey. Therefore, in contrast to many other countries that have recently revised or put into practice restructuring, supervisory, and regulatory frameworks, many of these were already established in Turkey several years ago. Furthermore, leading into the recent crisis, the Turkish financial system was well capitalized – with capital adequacy ratios exceeding 18 percent – and had relatively low loan-to-deposit and leverage ratios, as well as low levels of foreign exchange rate exposure. Relative strength of the financial sector enabled the implementation of rapid and front loaded rate cuts. No bail out scheme or other forms of public support needed during this period. This has provided room for expansionary fiscal policies. In addition to the sound structure of the financial system, low levels of household indebtedness relative to other emerging economies also contributed to the resilience of the Turkish economy during the crisis. Monetary tightening implemented by the Central Bank between 2006 and 2008 played a critical role in curbing the lending growth and checking the rise in household debt. Prudent and preemptive measures taken by the Banking Regulatory and Supervision Agency in the last 7 years prevented the spread of exchange rate risk among households.
*** The crisis has reaffirmed the benefits of an independent central bank focused on maintaining price stability and safeguarding well-anchored inflation expectations in line with price stability. The focus on price stability yields gains in credibility and allows central bank flexibility as well as the ability to act decisively when needed on other issues. As an example, let me remind you of the decisive provision of liquidity in August 2007 and later in September 2008. Another example is the decisive policy easing in response to the crisis. The risks of deflation were greatly reduced because inflation expectations over the medium term remained wellanchored, in line with our definition of price stability2. The new spike in energy prices, that reminds us of the spectre of stagflation risks, once again reaffirms how important it is to act decisively to ensure that inflation expectations remain well-anchored to preserve stability. *** Another lesson reaffirmed is that monetary policy is not just about setting policy rates. Even though the academic consensus was converging to this view before the crisis, monetary policy is not just about determining current and future overnight interest rates. As both practical experience and also earlier generations of academics have taught us, there is much more to monetary policy. Prior to the crisis, some were concerned about the zero bound on short-term nominal rates.

Conversely, at the height of the crisis, financial conditions tightened sharply even as the Federal Reserve aggressively pushed its federal funds rate target down toward zero. As a result, monetary policymakers need to take the evolution of financial conditions into consideration. For example, when financial conditions tighten sharply, this may mean that monetary policy may need to be tightened by less or even loosened. On the other hand, when financial conditions ease—as has been the case recently—this can provide additional impetus for the decision to continue to remove monetary policy accommodation. While I agree with Hélène in most respects, there are a few points where I am less convinced. While the global financial cycle complicates policymakers’ ability to guide financial conditions in their own economies, I’m not persuaded that the trilemma has been replaced by a dilemma—that is, essentially an “either/or” choice between an independent monetary policy versus an open capital account. While there is no panacea to insulate countries from financial spillovers—particularly when policy in some areas is constrained by the effective lower bound on interest rates—I think a combination of exchange rate flexibility, a credible monetary policy framework, sufficient foreign exchange reserves, and a strong financial system can help mitigate the effects of such spillovers. Moreover, it strikes me that market participants have become more discriminating over time about the circumstances of different countries, rather than painting all EMEs with a similar broad brush.
If I were going through what many of you are now going through in your individual businesses, I think I would find the prospect of exchange rate certainty overwhelmingly attractive - given of course a reasonable starting point. The potential downside, from a macro-economic standpoint, is that just as now directing monetary policy to lowering the exchange rate would mean losing control over domestic demand, so too, as a member of the euro area we might find that the single euro interest rate was not necessarily appropriate to our domestic situation. We would certainly be facing a build-up of excess BIS Review 3/1998  -4-  demand, and inflationary pressure, now, for example, if we were constrained to German-level interest rates. At other times interest rates that were appropriate in Europe as a whole could impose unnecessary stagnation and rising unemployment in this country. Serious divergence of this kind between the domestic monetary policy needs within the euro-area is not, of course, inevitable. But, if it is to be avoided it is important that the economies of the euro-member countries should have shown at least a minimum degree of sustainable convergence - before the project goes ahead. That was recognised very clearly in the famous convergence criteria written into the Maastricht Treaty. Assessing the extent to which sustainable convergence has in fact been achieved is the unenviable task facing the European Finance Ministers and Heads of Government at their historic meeting at the beginning of May.

As regards fiscal policy, the discussion in the G7 should not just be about increasing spending, it should also be about improving the quality of the budget. The ECB agrees with the idea that “countries that have fiscal space should use it”, but many countries do not have this fiscal space. Reducing unproductive expenditures and cutting taxes or increasing  BIS central bankers’ speeches  1  investment in productive infrastructure, such as education and research, can lead to growth without increasing the deficit. What about foreign exchange policy? The UK pound and Japanese yen have been increasing and volatility is very high. What will the G7 do to reduce volatility? The G20 countries have committed not to use the exchange rate for competitive purposes, as confirmed in recent meetings in Shanghai and Washington. All of us should act in a way consistent with this commitment and which does not add to global uncertainty. Emerging markets are slowing down and advanced countries have very low growth rates. What should the G7 and advanced countries do for the world economy? In a low-growth environment globally, there might be a temptation for some countries to grow at the expense of other partner countries. So it is precisely the role of the G7 or the G20 to resist such temptation. There is no “magic bullet” for increasing growth. For the G7, it is crucial to send the message to support domestic demand and focus on those structural policies that will be most conducive to growth.
Similarly, the technology used to control and manage inventories has changed substantially over the past twenty or thirty years. This may have enabled companies to run down their stocks earlier in this recession than in previous downturns. And indeed there is evidence that firms have already cut back aggressively on their stock levels. A corollary of this sharp correction is that the stock cycle may be shorter lived than in previous recessions. The behaviour of the labour market may also have changed. I have been struck by the number of business people who tell me about the array of measures they have already taken since their orders starting falling sharply last autumn. Wages have been frozen or even cut,  BIS Review 46/2009  3  hours have been reduced, working practices have been adjusted. To the extent that wages and hours are now more flexible, the adjustment in employment may be less. But if it is easier for companies to vary their labour force than in the past, much of this adjustment may come through more quickly than in previous downturns. It is hard to know at this stage how significant these structural changes will be in determining the depth of the recession and the speed of the recovery. But the possibility that there has been a material structural change in our economy highlights a further danger of viewing the current recession through the prism of previous ones.

As a result of the Maastricht convergence criteria, the central banks of these countries were increasingly aligning themselves with the Bundesbank. Exchange rates between the affected currencies, as well as exchange rates to the Swiss franc, consequently stabilised. This phase of low exchange rate volatility continued in the years immediately following the launch of the euro. The most recent period of exchange rate volatility against the euro has its roots in the international financial and debt crisis, which rapidly evolved into a euro crisis. Doubts about the viability of some euro area member states’ sovereign debts caused markets to lose confidence in the euro. As in past crises, the mounting uncertainty triggered substantial upward pressure on the Swiss franc. Why Switzerland doesn’t have the euro Considering its close economic ties to the euro area, why didn’t Switzerland ever seriously contemplate joining the single currency? Politically and legally speaking, the answer is simple: a country can only join the Eurosystem if it is already an EU member state. Swiss voters and cantons rejected accession to the European Economic Area in a referendum in 1992, and in 2001 followed this up by voting against a popular initiative favouring a “Yes to Europe”. These decisions settled the question of whether Switzerland should join the EU for the foreseeable future. Quite apart from these political and legal factors, the economic case for joining the euro had always been weaker for Switzerland than for many other European countries.
Enrique Marshall: Central banks’ contribution to financial stability – the experience of Chile Speech by Mr Enrique Marshall, Board Member of the Central Bank of Chile, at the Central Bank of Bolivia’s First Financial Workshop “Macroregulation and Financial Stability”, La Paz, 29 September 2010. *  *  *  I am indebted to Kevin Cowan and Jorge Cayazzo for their valuable comments on an earlier version of this presentation but the opinions expressed here are the exclusive responsibility of the author. 1. Introduction  Financial stability has been a concern for central banks since their very origins. The functions for which they were created – to regulate money and credit markets and to serve as lenders of last resort – have a direct bearing on the objective of financial stability and this relationship has been further reinforced by the fact that many central banks have also undertaken a role in regulating and supervising the banking system. Both the economic literature and historical experience provide sound grounds for this concern for stability, clearly demonstrating that the functioning of the real economy requires an efficient and stable financial system. The hardest lesson of history, however, is that financial crises have occurred time and again, with a very high cost in terms of both their fiscal impact and the associated losses of output. 1 Financial stability has, as a result, emerged as a paramount objective of public policy.

Discussion as to the institutional arrangements that are most appropriate from the point of view of financial stability remains open. One key question is who should be responsible for the tasks of prudential regulation. Another, although perhaps slightly less important, is who should do the supervision. There are arguments in favor of different policy options, but any specific recommendation must take into account the experience and circumstances of each country. Until the crisis, the prevailing trend was for a body different from the central bank to be responsible for regulation and supervision whereas now the wind seems to be blowing in the opposite direction. In this context, one piece of practical advice is not to significantly change something that has worked well. In any case, the decisions that are taken may have significant implications for central banks’ institutional insertion, the scrutiny to which they are subject, and internal organization of their activities. These implications become particularly important if it is decided to give the central bank broad responsibility for financial stability. In this case, it may be advisable to adjust internal governance so as to ensure the necessary separation of the objectives of financial stability and price stability. Under any institutional model, coordination and communication between the different authorities with functions related to financial stability will always be very necessary.
That would, in turn, fuel the negative effects on the capacity for recovery and medium-term economic growth. Thus, March 2021 saw the approval of an aid package for the corporate sector and the self-employed that could be a useful tool. Indeed, this instrument could specifically reduce the risk of the pandemic triggering the closure of those firms and businesses that are particularly stressed as a result of its effects, but which remain viable. In this connection, it is particularly important that the package be implemented swiftly and consistently, and that the allocation mechanisms allow this aid to be targeted specifically at viable firms experiencing solvency problems. Flexibility is also required as regards the volume of earmarked funds. These ought to be adapted in line with how the pandemic unfolds and whether or not the risks materialise. In the case of non-viable firms, winding-up processes would have to be expedited in order to prevent them from consuming resources that could be more beneficial in other activities. As I mentioned earlier, these economic policy measures would help prevent the crisis from taking on a financial crisis complexion that may make it a lot more persistent. Thus, the banking sector could continue to be part of the solution to the crisis, as it has to date, by lending to households and firms and helping reactivate the economy when the pandemic is over. For this, a smoothly functioning credit channel — of such importance in European economies and, of course, in the Spanish economy — will surely be required.

These developments could have significant implications, including for financial stability, national security interests, and international cooperation. In my role as manager of the Federal Reserve’s System Open Market Account, I am looking at these issues from the vantage point of monetary policy implementation. And in my remarks today, I will discuss some key issues that digital innovation in money and payments raises for policy implementation. In particular, I will examine how digital currencies might impact interest rate control and central bank balance sheets. In the spirit of this workshop, I won’t speak to the U.S. context specifically, but rather intend to discuss conceptual issues for policy implementation across jurisdictions. And, I won’t take a position on regulation, design choices, or a preference for a private or public solution. As always, the views I express today are my own, and do not necessarily reflect those of the Federal Reserve Bank of New York or the Federal Reserve System.1 Private and Public Innovation I would like to start by describing two types of monetary instruments that could, in the future, be significant for policy implementation. In the private sector, a broad range of digital assets are emerging.
Since 15 January, we have repeatedly and thoroughly explained our reasons for discontinuing the minimum exchange rate and introducing negative interest on sight deposits at the SNB. Upholding the minimum exchange rate was no longer sustainable given the changes taking place in the international arena and the sharply diverging monetary policy stances of the world’s major currency blocks. In formulating our monetary policy, we are confronted with an exceptionally complex situation on international financial markets. What is more, the global economy is still grappling with the after-effects of the financial and economic crisis, not least in the form of high levels of uncertainty. These are the realities that the SNB – and the Swiss economy – are facing. Turning a blind eye is not an option. In this environment, we were aware that the discontinuation of the minimum exchange rate would cause Switzerland’s economy to slow. While the data from the first quarter confirm that this slowing process is now underway, the country’s economic development since 15 January has been broadly in line with our expectations. Our monetary policy is geared towards this challenging set of circumstances and is currently guided by our willingness to take an active role in the foreign exchange market and apply negative interest rates. This two-pronged approach is designed to weaken the Swiss franc. The SNB’s interventions in the foreign exchange market, which feed more liquidity into the banking system, reinforce the effect of both of these measures.

7  Recent research indicates that a discount rate of 4 per cent may be somewhat high for investments with a very long horizon, see Kåre P. Hagen and Karl R. Pedersen’s newspaper article “Lønnsom infrastruktur (Profitable infrastructure)” in Dagens Næringsliv, 3 June 2010. 4  BIS Review 78/2010  Let me conclude. The adventures of Askeladden are often tales of success. Askeladden embraces every challenge and always comes out ahead. It is too early to draw conclusions as to how successful Norway has been in managing its oil wealth. In ten years or so, when petroleum production falls markedly and the oil fund is no longer increasing in size, the cost level in Norway will have to be reduced relative to other countries. This process may be painful, even though Norway has its own currency and a floating exchange rate. Our welfare state may also have become too large and the adjustment required here may also prove to be very demanding. Nonetheless, there are aspects of our oil wealth management that have served us well. Thank you for your attention. BIS Review 78/2010  5  6  BIS Review 78/2010  BIS Review 78/2010  7
John C Williams: Inflation targeting - securing the anchor Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Bank of England Research Workshop on "The Future of Inflation Targeting", London, 9 January 2020. * * * As prepared for delivery  Introduction Good afternoon, and happy new year. Monetary policy frameworks are complex, technical, and rarely make it into the public consciousness. But they are of vital importance to economic prosperity. And as we stand on the brink of a new decade, it is critically important that we understand how the frameworks central banks choose influence economic outcomes, both today and in the future. When Andy Haldane invited me to be on the panel, he posed the provocative question: What will monetary policy frameworks look like 30 years from now? As a policymaker, I try to avoid making predictions for the future. But given that I will assuredly be an ex-central banker in the year 2050, I think I’m safe to have free rein! That said, I should still give the standard Fed disclaimer that the views I express today are mine alone and do not necessarily reflect those of the Federal Open Market Committee (FOMC) or others in the Federal Reserve System. In my remarks today, I’ll discuss how the monetary policy landscape has evolved, and what that means for inflation targeting in 2020, 2050, and beyond.

2 John C. Williams, Inflation Targeting and the Global Financial Crisis: Successes and Challenges, Essay  presentation to the South African Reserve Bank Conference on Fourteen Years of Inflation Targeting in South Africa and the Challenge of a Changing Mandate, Pretoria, South Africa, October 31, 2014. 3 Federal Reserve Bank of New York, Measuring the Natural Rate of Interest. 4 Federal Reserve Bank of New York, Measuring the Natural Rate of Interest. 5 John C. Williams, Living Life Near the ZLB, Remarks at 2019 Annual Meeting of the Central Bank Research  Association (CEBRA), New York, July 18, 2019. 6 John C. Williams, Monetary Policy in a Low R-Star World, Federal Reserve Bank of San Francisco, FRBSF  Economic Letter, August 15, 2016. 7 This statement is based on ongoing research with New York Fed Research staff using Survey of Consumer  Expectations data and a version of the Malmendier-Nagel (2016) model of expectations formation (Ulrike Malmendier and Stefan Nagel . “Learning from Inflation Experiences,” The Quarterly Journal of Economics, Vol. 3/4  BIS central bankers' speeches  121, No. 1, 53 – 87 [gated version].). As such, it differs from the median measures of 1-year and 3-year inflation expectations released monthly by the New York Fed. 4/4  BIS central bankers' speeches