samchain/econo-pairs-v1 huggingface dataset:
With effective reforms, the economy should better withstand shocks and reap more benefits from increasing interconnectedness. It is worth noting that reforms are not complementary, but rather a much needed action to unlock long-overdue potential enhancements, especially on the production side. Additionally, financial reforms and institutional adjustments to new regulations will lay a crucial foundation for efficient management of systemic risks in the financial system. Once our houses are kept in good order, one might hope that the stable global equilibrium could be reached. [This is what Professor Taylor has dubbed as the “Nearly International Cooperative Equilibrium” or NICE.] Nonetheless, with greater interconnections, keeping one’s house in order might only be the near-best equilibrium. It should go along with enhancing cooperation in the international community. Long before this recent crisis, Emerging Market Economies have been in the process of strengthening the cooperation in both regional and global level. “Coordination” is essential and will facilitate policymakers in staying ahead of the crisis. In this light, international coordination, I believe, should provide three key policy elements; Firstly, policy dialogue that would serve as a platform for discussions on developments of risk scenarios, and sharing experiences to counter difficulties among members. Such cooperation includes the Executive’s Meeting of East Asia-Pacific Central Banks (EMEAP), Bank for International Settlements (BIS), and International Monetary Fund (IMF). These platforms have also provided channels for policymakers in the region to communicate their policy conducts, which may also create spillovers to other members, so that one could make the region being more cooperative.

So far the only specific agreement is to talk to each other. Concrete steps to reduce the scale of global imbalances have, to date, been notable by their absence. Smiling family photographs marking the attendance at international gatherings are no substitute for specific actions. Still, the G20 has laid its reputation on the line. It will be damaged if the framework comes to nought. Looking further ahead, the legitimacy and leadership of the G20 would be enhanced if it were seen as representing views of other countries too. That could be achieved if the G20 were to metamorphose into a Governing Council for the IMF, and at the same time acquire a procedure for voting on decisions. The economic message from the crisis is clear: low-saving countries will reduce their net borrowing from abroad and so will no longer be able to play the role of consumer of last resort. To maintain levels of economic activity, high-saving countries must expand domestic demand and allow their trade surpluses to shrink. This is easier said than done. It will require changes in prices and most obviously in real exchange rates – via either nominal exchange rates or domestic price levels. In themselves, proposals such as the creation of a new reserve currency do not solve the inconsistency puzzle unless they alter the desire of highsaving countries to run imbalances that are too high to last.
The other investment component, that linked to construction, has undergone a most significant adjustment in the past decade. This means that, in 2018, following several years 4/7  of recovery, this GDP component was still at around 16% of its pre-crisis level. The downscaling of investment in housing entailed a decline in its weight in GDP to levels close to 5% in 2018, in line with Spain’s peers, compared with 12% pre-crisis. The reduction in housing investment activity came about in parallel with a decline in house prices which, despite the growth observed in recent years, remain in real terms some 32% below the nationwide levels observed in 2007, albeit with some cross-regional dispersion. All these developments better position this sector to support economic growth, as indeed has been the case in 2018. The weight of non-residential construction, for its part, has also diminished considerably, largely reflecting the impact of the reduction in public-sector investment spending. Beyond these improvements, as I stated in my introduction the Spanish economy remains prone to certain vulnerabilities and faces significant challenges, which I shall now set out. First, despite the notable above-mentioned reduction in private debt in recent years, on the latest available data for 2018 Q3 the negative net International Investment Position (IIP) of the Spanish economy stood at 81% of GDP, and that of gross external debt at 168% of GDP, levels that are high in relation to other advanced economies and which mark a factor of vulnerability for the economy as a whole.

In a macroeconomic context of weak demand, these rates, so far from 2%, not only endanger the current anchoring of medium-term inflation expectations, but also heighten the risks to price stability and hamper the economic recovery of the area as a whole. Economic recovery is even more difficult for countries that are in the process of correcting imbalances that built up in the past, and in particular for those, such as Spain, that have suffered competitiveness losses and need their prices and costs to fall relative to the euro area as a whole. To address these risks the ECB has in recent months taken further measures to make its highly expansionary monetary policy even more expansionary. BIS central bankers’ speeches  1  As regards standard measures, the ECB has reduced the interest rate on its main refinancing operations to 0.05%, which is technically the lower bound for this rate. Also, the interest rate on the deposit facility, which is the rate at which the cash surpluses that credit institutions hold in their Eurosystem accounts are remunerated, stands at negative levels (–0.20%), which discourages the accumulation of such balances and stimulates lending. Recent actions also include non-standard measures: a new long-term financing facility specifically aimed at promoting greater lending to the private sector; and two asset purchase programmes, one for asset-backed securities and the other for different types of covered bonds. Finally, on 22 January, the ECB announced new monetary stimulus measures.
This is probably partially because, over time, there are smaller variations in wage growth than there are in inflation, and partially because wage agreements provide important information on future  2  See J. Johansson, S. Palmqvist and C. Selander, “The CPI will increase more rapidly than the CPIF over the next few years”, Economic Commentary no. 5, 2011, Sveriges Riksbank. 3  Hourly wage costs are estimated to increase above hourly wages by 0.2 per cent per year. For the sake of simplicity, I have chosen to disregard this difference. 6  BIS central bankers’ speeches  wage growth. Over the last 14 years, the Riksbank has had an average forecast error of 0.4 percentage points in its spring forecasts of the next year’s wages. However, the error has been significantly larger in certain years. Wage increases in the years ahead will ultimately be determined both by the final agreements and by economic developments. There is a risk that the rapid improvement of the labour market will push up wage increases faster than we have calculated. This applies to both agreed wages and wages over and above agreement. There are signs that matching on the labour market may have deteriorated. Labour market shortages are increasing rapidly, even though unemployment is still relatively high (see Figure 12). The Beveridge curve, which shows the connection between unemployment and vacancies, also indicates impaired matching. On previous occasions when the vacancy rate has been at the current high level, unemployment has been just below 6 per cent.

The full impact of these developments are only likely to be clear some years from now. This is indeed a most unfortunate situation. When factions exacerbate fractions, it damages even the most established forms of international cooperation. Third, the exponential speed of technological change has altered the global economic landscape and requires us to adapt fast. The proliferation of providers offer services that challenge the status quo. The dynamism of digital financial services redefines the nature of product delivery. It adds to the complexity of regulations and presents new challenges for economies, with broad consequences. Unattended, these challenges create risks that can stunt innovation, cause dislocation of labour and destabilise financial systems. Look at how ransomware attacks such as WannaCry and NotPetya have rattled internet users around the world. These virtual intruders infiltrated our synthetic selves, blocked access to our personal and professional files, and held us ransom by demanding payments to unlock them. These malwares infested computers operating on outdated and susceptible systems. For the financial sector, these recent attacks reinforce the lesson that, if we take a neutral stance to the IT revolution, we open ourselves up to weaknesses that can be extremely costly. For policymakers, these costs can have significant externalities that we must be concerned about. During World War II, Alan Turing and a team of experts took six months to crack the Enigma code. In contrast, today, Google can detect a virus in mere minutes through its algorithms.
Another development arising out of electronic clearing was the establishment of an electronic funds transfer system called Direct Debits and Credits Clearing (DDACC) in October 2001. The DDACC system provides unparalleled convenience to both payer and payee for processing bulk and small value regular payments such as salaries and utility bills. Owing to its fully electronic nature, funds are cleared within 24 hours. In a further development, in June 2004, the Bank of Zambia launched the Real Time Gross Settlement (RTGS) system. This system facilitates real time settlement of large value and time critical payments. This is a significant step towards easing the payments side of economic activities in our country. The above accomplishments not withstanding, challenges still remain and we in the Bank of Zambia are set to drive the payment system towards one that will be secure, efficient, cost effective and accessible to the majority of Zambians. The rural population and the unbanked majority will have a prominent focus in our reform process. The Bank has also been instrumental in other reforms in the financial sector which include preparation of the Financial Sector Development Plan (FSDP) whose overall objective is to increase financial intermediation and promote efficiency of the financial system. Madam Chairperson, the theme “40 years of Central Banking: Facing the Challenges of the 21st Century” during this anniversary is meant to make us reflect on the achievements that the Bank has made so far and then focus our attention to the challenges that lie ahead.

Malaysia is also a leader in the development of sukuks and its pioneering efforts have seen the introduction of innovative structures such as the exchangeable sukuk musharakah, exchangeable sukuk as well as sukuk based on istisna' and ijarah. This is reinforced by the diversified tenures of the issues. Malaysia's strong financial links to the traditional and nontraditional markets such as in the Middle East also allows issuers to diversify their investor base. Malaysia therefore continues to remain an important destination for international financial flows that are traded on the New Silk Road. In concluding my remarks, I wish to congratulate all those involved in crystallizing the Electronic Trading Platform that is being launched today. This is a further step to create a more vibrant bond market. The growing role of the bond market in mobilizing and allocating funds not only in the domestic financial system but also across borders, to and from other parts of the world, has demonstrated the maturity of the Malaysian bond market. This has not only strengthened international financial inter-linkages but has increased the potential for greater economic integration and shared prosperity. 2  BIS Review 53/2008
Barbro Wickman-Parak: Monetary policy and unemployment – a constantly topical debate Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, to the Swedish Trade Union Confederation (LO), Stockholm, 24 January 2012. *  *  *  I would like to thank Maria Sjödin and Magnus Wiberg, at the Monetary Policy Department of the Riksbank, for their help with writing this speech. High unemployment implies the failure of the welfare state. In Sweden, unemployment increased strongly in conjunction with the crisis of the 1990s, following which it has never fallen below 6 per cent. In this situation, it is important to use every means to improve conditions on the labour market and also to debate the role that could be played by monetary policy in the fight against unemployment. But it is equally important that this debate is realistic. From time to time, we have to remind ourselves that the possibilities monetary policy has in this area have their limits. This is primarily a matter of influencing the more short-term area of unemployment, which depends on economic activity, via effects on total demand in the economy. The area of unemployment that also exists in balanced economic cycles is harder to deal with. This unemployment is usually called long-term unemployment or equilibrium unemployment. The degree of equilibrium unemployment is highly dependent on how well the labour market is functioning, which is affected by policy areas other than monetary policy.

Calculating equilibrium unemployment after the fact is difficult and requires a number of assumptions. Serious attempts have been made, but as shown, they have had varying results. At the same time, monetary policy is forward-looking and is thus guided by forecasts of economic development. However, assessing the level of equilibrium unemployment in several years is even more complicated. And, as I mentioned earlier, even if we could know what the level of equilibrium unemployment would be further ahead, this would give us no guidance for monetary policy in the here and now. The economy is regularly subjected to structural changes affecting equilibrium unemployment. And we have limited knowledge of how the adjustment from one equilibrium rate to another occurs, or how long it takes. This means that using equilibrium unemployment in practical monetary policy is not uncomplicated. It is therefore important to closely monitor all of the statistics that reflect conditions on the labour market, which we already do. Monetary policy can primarily affect unemployment in the short term, via aggregate demand. Here I can mention that several debaters have previously claimed that an incorrect balance in monetary policy has made a significant contribution to the negative developments in the labour market. Naturally, we should not conduct a monetary policy that leads to demand being unnecessarily low and to unemployment becoming higher than it would have been because we single-mindedly react to the risk of inflation rising.
Holston, K., T. Laubach and J. Williams (2016), “Measuring the Natural Rate of Interest: International Trends and Determinants”, Federal Reserve Bank of San Francisco Working Paper No. 2016–11. Joyce, M., D. Miles, A. Scott, and D. Vayanos (2012), “Quantitative Easing and Unconventional Monetary Policy – an Introduction”, Economic Journal, 122(564), F271–82. Landau, B. and F. Skudelny (2009), “Pass-through of external shocks along the pricing chain: A panel estimation approach for the euro area”, ECB Working paper No 1104. Meltzer, A.H. (1999), “The Transmission Process”, Working Paper, Carnegie Mellon University. Modigliani, F. (1963), “The Monetary Mechanism and Its Phenomena”, Review of Economics and Statistics, 45(1), 79–107. Interaction  with  Real  Modigliani, F. (1971), “Monetary Policy and Consumption”, in Consumer Spending and Monetary Policy: The Linkages. Boston: Federal Reserve Bank of Boston, 9-84. Osbat, C. and M. Wagner (2006), “Sectoral exchange rate pass-through in the euro area”, ECB. Praet, P. (2017), “Calibrating unconventional monetary policy”, speech at The ECB and Its Watchers XVIII Conference, 6 April. Smets, F. and R. Wouters (2007), “Shocks and Frictions in US Business Cycles: A Bayesian DSGE Approach”, American Economic Review, Vol. 97, No 3, 586–606. Stracca, L. (2017), “The Euler equation around the world”, The B.E. Journal of Macroeconomics, Vol. 17, Issue 2. Svensson, L. (2000), “Open-Economy Inflation Targeting”, Journal of International Economics, 50, 155–183. Taylor, J.B. (2000), “Low inflation, pass-through, and the pricing power of firms”, European Economic Review, Vol. 44, Issue 7, 1389–1408.

4 / 14  BIS central bankers' speeches  The first one relates to the sharp depreciation of the euro in the run-up to the announcement of the APP. As you can see on slide 4, a simple model-based analysis suggests that a large fraction of the decline in the euro’s external value reflected the worsening economic outlook, to which we ultimately reacted. It is likely that exporters to the euro area, faced with falling euro area demand, absorbed part of the exchange rate movement in their mark-ups to protect their market shares, thereby mitigating the upward pressure on prices stemming from a weaker currency. The second example relates to the current situation. Slide 4 shows that there are three forces, of roughly equal strength, that help to explain the euro’s marked appreciation in recent months: improved euro area growth prospects, an exogenous component and a tightening in the relative monetary policy stance vis-à-vis the United States. 5 / 14  BIS central bankers' speeches  Slide 5 illustrates the implications of this shock decomposition for the assessment of the exchange rate pass-through. The black line, which is the net effect, suggests relatively mild downward pressure on core inflation, much below what the rule of thumb would tend to suggest, despite the sizeable appreciation. The reason is simple. The current solid economic expansion in the euro area allows firms that export to the euro area to increase prices in their currency without losing market share, thereby mitigating, once again, the pass-through.
29  This was not the first time Norwegian authorities established a silver standard. In accordance with the regulation of King Haakon V of 1314, silver was to have a standard of purity of 13 ½ lødig, which is equivalent to .844 silver according to the modern method for calculating fineness (Halén, Widar (2009): “Arvesølvet og Peter Wessel Zapffes sølvgave” [The family silver and Peter Wessel Zapffe’s gift of silver]. Lecture at the Norwegian Academy of Science and Letters. 30  The speciedaler became legal tender shortly after Norges Bank was established. 31  Adam Posen, a former member of the Bank of England Monetary Policy Committee, compares central banks to pharmacists: “[W]ith a limited medicine cabinet, and restricted by law from exceeding certain bounds, both must make sense of scrawled prescriptions from differing specialists, decide what side effects to take into account, and then ultimately dispense the proper dosage of medicine to their customers, all without knowing or controlling everything else the patient is consuming.” See Foreign Affairs: http://www.foreignaffairs.com/ articles/139465/adam-s-posen/the-myth-of-the-omnipotent-central-banker. 32  Karl Bomhoff was appointed as the first Governor of Norges Bank in 1893. When Norges Bank’s head office was moved to Oslo, Bomhoff also moved to the head office, where there was more extensive expertise than earlier. This facilitated Norges Bank’s role as bankers’ bank. The theme of my speech is institutions. It might seem paradoxical to refer to physical persons, such as Bomhoff, and not decision-making bodies.

As far as the decline of cash is concerned, the immediate response is to make sure cash will remain available to any and all that want to use it. The Bank has made clear that we will continue  Page 5  to produce it and the Government is taking powers under the Financial Services and Markets Bill to give the Bank of England and FCA new powers to ensure the future effectiveness, resilience, and sustainability of the cash ecosystem[6]. However, we cannot ignore the fact that the safest form of money, ‘public’ money, that it is to say money issued by the state for general use, will become increasingly less useful and useable and of shrinking relevance to a large part of the population. Nor can we ignore the likelihood that we will see the emergence of new forms of money, offering new possibilities and issued by new as well as established players. This raises, particularly for the Bank of England, the question of how we can continue to ensure that all of the types of money used in the UK are denominated in Sterling, remain safe and that each is interchangeable on demand and to all of the other types of money without loss of value, including publicly issued, Bank of England money. We ensure trust in money at present by regulation of the commercial banks that issue money, by requiring banks to settle amongst themselves in Bank of England money (i.e.
Australia has had an inflation target of between 2 and 3 per cent for CPI inflation over the cycle since 1993, and its average inflation rate in the period 1996–2011 was 2.7 per cent. 13  11  An older method of calculating the rate of inflation with an unchanged consumer basket was used in real-time data prior to 2005. Using the current method of calculating the inflation rate as the percentage change in the CPI, average inflation was 1.3 per cent during the period 1997–2011, but real-time data are more relevant when evaluating monetary policy. See Sveriges Riksbank (2004). 12  In the period 1992-1996 the target was expressed as 2.5 per cent or lower in terms of the RPIX. RPIX = Retail Price Index. In the United Kingdom the CPI corresponds to the HICP price index. Since 1993 the average HICP inflation rate has been 0.75 percentage points lower than average RPIX inflation. 13  New Zealand has had an inflation target since 1990, but its target has been adjusted upwards twice and thus one cannot say that it has had a fixed inflation target. 10  BIS central bankers’ speeches  How have things turned out for the large economies, the euro area and the United States? The euro area has had a target for inflation, although during a shorter period than the countries mentioned earlier. The target is that inflation should be below but close to 2 per cent.

This is thus an example of a situation where raising the policy rate will if anything increase the risks to financial stability. 10 Using policy rate to influence housing prices is costly There are also many references to developments in housing prices in the monetary policy debate. Monetary policy would appear to have very little effect on housing prices. If one nevertheless uses the policy rate to influence housing prices (and thereby mortgage growth) this will lead to large costs to the real economy. A study by Claussen, Jonsson and Lagerwall (2011), which is included in the Riksbank’s inquiry into the risks in the Swedish housing market shows, for instance, that it would have been very costly in terms of both production and inflation to try to prevent the upswing in housing prices from 2004 onwards using monetary policy. Keeping housing prices at a long-run trend level in 2004–2010 would have required repo-rate increases over several years of up to 5 percentage points in both 2006 and 2007. GDP growth would then have been on average almost 2 percentage points lower up to 2010, which corresponds to an accumulated GDP loss of around 12 per cent. CPIF inflation would have been on average 3 percentage points lower during the same period. The study confirms for Sweden what several other international studies have concluded, such as Assenmascher-Wesche and Gerlach (2010).