samchain/econo-pairs-v1 huggingface dataset:
On the contrary, there are many indications that low inflation is a prerequisite for stable and high growth and for favourable employment developments. Therefore, low inflation is the best contribution that monetary policy can make to the fight against unemployment. It is only in the short term that high inflation may lead to lower unemployment. However to utilise such a trade-off has its risks, as the experiences from the 1970s and 1980s that I spoke about earlier indicated. The mere concern that policy will be too expansionary and that inflation may sprint ahead can push up a country’s interest rates and results not in higher but in weaker growth and employment developments. Therefore it is crucial for monetary policy that confidence in the low inflation regime be preserved. The very construction of the inflation objective implies that economic growth is taken into account in a certain way. A weaker growth, which creates excess capacity in the economy, normally means that inflationary pressures from the demand side will decrease. This in turn produces room for a more expansive monetary policy – interest rates will be lowered and demand will be stimulated. Conversely a very high demand signifies that production capacity risks hitting the ceiling. Prices and wages will then be pushed up. In order to prevent such occurrences, monetary policy must be tightened again and interest rates raised. The time horizon over which the Riksbank strives to achieve the inflation target also has an effect on growth and employment in the short term.

BIS Review 14/1998  - 11 -  Inflation Forecast December 1997 CPI and underlying inflation( UND1) 3,5  3,5  3,0  3,0  2,5  2,5  CP I  2,0  2,0  1,5  1,5  1,0  1,0  0,5  0,5  0,0 1995  0,0 1996  1997  1998  1999  3,5  3,5  3,0  3,0  2,5  UND 1  2,5  2,0  2,0  1,5  1,5  1,0  1,0  0,5  0,5  0,0 1995  0,0 1996  1997  1998  1999  Sources: Statisti cs Sweden and the Riksbank  BIS Review 14/1998
Structural reforms of this sort have been decided upon by national governments within the framework of the agreements made in Lisbon and we should not forget that the ultimate objective is to increase the pace of economic growth in order to ensure more prosperity and provide more jobs for everyone, which is fundamental for the weakest and the poorest. Rather than finding a compromise between the various members of our society, between those that have costs and those that reap the benefits, I see it more as a compromise between the present and future. It is a forwardlooking investment and a better future for the weakest part of the population which entails costs at the beginning. And in any case let us not forget that we cannot ask our children and grandchildren to pay our bills! In Europe, the population is shrinking to the point that by 2020, according to different studies, there will be 20 million people available for work. In the United States, it is on the rise. How is this? Perhaps this is because the United States is a population with entire generations of immigrants in which the birth rate is higher. And then there is the cultural aspect, they are more optimistic than us. Why? This involves philosophical and cultural aspects and I am not convinced that they are structural.

It’s 2001: Destiny’s Child is topping the charts, you were marveling over your Motorola flip phone, and I was a young economist at the Board of Governors in Washington, D.C. At the time, I was burning the midnight oil, along with a fellow economist, Thomas Laubach, trying to understand what the burst of productivity growth generated by the tech boom meant for interest rates, both in the short term and in the long run. This led us to develop a model for measuring r-star. I know what’s going through your mind: “What is this r-star that you speak of?” R-star is how economists describe the neutral or natural rate of interest. It’s the rate that we expect to prevail in the long run when interest rates are neither providing a boost to the economy nor trying to cool things down. It’s neither accommodative, nor contractionary. In other words, it’s the “normal” interest rate we expect in “normal” economic times. G-star One of the major factors determining r-star is… you guessed it, g-star! G-star is what economists mean when they describe trend growth, sustainable growth, or potential growth of the economy. The two main drivers of g-star are labor force growth and productivity growth. We started trying to understand where r-star was when productivity growth was very high. During the boom GDP growth averaged over 4 percent per year. Our estimate of r-star for that time was above 3 percent, a full percentage point higher than before the tech boom started.
But if the new currency offers superior user-friendliness without excessive exchange rate fluctuations, such disadvantages may not carry sufficient weight. In the near term, it is perhaps easier to envisage that new currencies may be attractive for certain types of transactions, for instance, cross-border payments. They could of course take market shares from existing payment solutions, but would not entail a fundamental transformation of the financial system. What about credit and saving in a world where the private sector has abandoned the Norwegian krone? If bank money is replaced by a cryptocurrency whose quantity increases through “mining” and remains constant in the long run, no credit institution will be able create money by extending loans. Some consider this a guarantee against instability and crises. Yet, without banks to assume liquidity risk, credit may become more expensive. In order to raise a long-term loan, someone will have to be found who is willing to tie up their savings for just as long. A possible solution is the emergence of new institutions that take on the risk by making long-term loans and raising short-term funding in cryptocurrency. But they will be left standing without the backing of a central bank that can relieve some of the risk and intervene in a crisis. Perhaps the attributes of today’s credit market can be imitated if a cryptocurrency functions as a means of settlement between credit institutions, as central bank reserves do today. In that case, the cryptocurrency will replace the central bank’s settlement system.

If money such as Bitcoin or Diem become dominant in Norway, we will move closer to a new 4/7  BIS central bankers' speeches  financial system. Let me first point out that a complete eradication of the Norwegian krone requires that the government also uses a different currency for paying salaries and benefits and accepts it as payment for taxes. In the long term, one should be careful to rule out anything completely, but as it stands today, this does not appear very likely. Yet we can imagine an intermediate solution where the government continues to use the krone, while the private sector prefers one or more cryptocurrencies. For this to take place on a large scale, an infrastructure is needed so that the money can be used at more locations than today. Chart: How much does a cup of coffee cost? With many competing currencies in circulation, we will lose the Norwegian krone as a common measurement unit for what goods and services cost. A simple question about how much a cup of coffee costs may have a complicated answer. Prices must be stated in several currencies, and customers and merchants must agree on which currency should be used in the transaction. Wide exchange rate fluctuations can make this particularly demanding. Even with one cryptocurrency in the private sector, those with income in cryptocurrency who pay taxes in Norwegian kroner will incur an exchange rate risk.
As Jean Monnet said, humans take important decisions only in a state of need. Which means in a state of crisis. I expect, nevertheless, that the fiscal backstop for the Single Resolution Fund will be decided, and that there will be some kind of long-term promises about a European Deposit Insurance Scheme. There is also an absence of a macroeconomic tool to automatically stabilise the economy. On fiscal policy, we need two things to address this gap. First, we need coordination of national fiscal policies to become stricter and discussed more from the perspective of the euro area as a whole. This is a very important thing that should have already happened. The second thing is a type of macro stabilisation fund, along the lines of a rainy-day fund, like the IMF has proposed. Let’s see what happens. France has proposed something along these lines. There are also proposals on the table from others. That would be one of my priorities for reform. What about the other side of the coin? Germany and others are calling for risk reduction? First, I would say there has been a huge amount of risk reduction already. The periphery countries have undertaken huge adjustments; they’ve gone from big deficits, both in the budget and the external current account, to complying with EU rules.

Back in 2001 the Governing Council of the ECB, on the basis of a proposal coming from Tommaso Padoa-Schioppa, issued a short paper lining up the arguments for having supervision in a central bank. And if you read that paper, you will see that the set of arguments is heavily tilted towards favouring giving supervision to central banks. So it’s a long-standing position.1 There are many advantages, including one that is not mentioned in the paper: supervision is not just about micro-supervision these days; it now has a macro-financial perspective, for which central banks are much better prepared than any other institution to handle. Central banks monitor developments in all segments of the financial system. From reading your most recent speech, I had the impression that you thought austerity went much too far and the effects have been too drastic. Is that right? 3/8  BIS central bankers' speeches  Yes. And the main example of that is of course the case of Greece. No institution, not the Commission, not the ECB, not the IMF, ever thought possible – let alone planned for – a 25% drop in GDP in Greece. The first and second programmes for Greece were designed with a much more optimistic view on the cost of the adjustment. So the adjustment programme was indeed too harsh. And also perhaps too mechanical, because what the programme didn’t foresee was the total collapse of hope and expectations. Then, at the same time, all countries in the euro area were reducing deficits, consolidating.
In this context, it is encouraging to see that the industry itself is taking forward a set of recommendations, set out in the cross-industry report on the “Vision for Real Estate Finance in the UK”, for reducing risks to financial stability from the CRE market. The  5  For evidence on the link between household indebtedness and the severity of recessions, see Cunliffe (2016) and references therein. 6  Mortgage approvals for house purchase may have been inflated by some borrowers bringing forward purchases ahead of changes to Stamp Duty Land Tax levied on additional properties, which took effect from 1 April 2016. 7  See Benford and Burrows (2013). Other countries also experienced CRE booms in the 1980s, most notably Japan. The case of the Mitsui Real Estate Company gives a sense of the euphoria that surrounds such booms. It paid $ million for the Exxon Building in New York even though the initial asking price had been $ million; Mitsui wanted to get in the Guinness Book of World Records for paying the highest price ever for an office building (Kindleberger and Aliber (2005)). 8  See Bahaj, Foulis and Pinter (forthcoming). 4  BIS central bankers’ speeches  report included, among others, recommendations to build a database of each UK CRE loan and its collateral, as well as using long-term valuation measures for risk management purposes. The Bank is very supportive of these initiatives – and is working with industry to take them forward.

Collaboration between the two countries could be in many forms; for instance Turkish investors and financial institutions could use Malaysia as a gateway to the Asean region. Malaysian financial community could use Turkey as a base to Central Asian region and Europe. In the area of Islamic finance, Malaysia is committed to be a partner with Turkey to further promote the business prospect in this country. Malaysia being an Islamic financial hub in Asia is willing to share with Turkey our 30 years of experience in developing its Islamic  2  BIS central bankers’ speeches  financial industry and our knowledge and insights in operating an Islamic financial system that runs parallel with its conventional counterpart. Potential Turkey-Malaysia partnership in Islamic finance There are vast opportunities for Turkey-Malaysia bilateral cooperation, however let me mention five key areas of possible cooperation that could increase cross-border activities between our two countries. These are in the area of sukuk issuance, promoting cross-border activities, Islamic fund management, partnership in innovation and in education and research. Firstly, in the area of sukuk issuance, we welcome Turkish financial and business community to use Malaysia’s comprehensive and tested infrastructure with its extensive investors network as a platform to raise funds such as sukuk and Islamic syndication financing. The multi-currency sukuk market in Malaysia is well developed and active with over 60% of the outstanding sukuk in the world originating from Malaysia.
As the Times reported 20 years ago, “the pound’s firmer tone, and softer German money market rates, could tempt the Chancellor to shave half a point off base rates to coincide with the Prime Minister’s speech at Brighton today”. The party conference season is no longer a time for speculation about changes in interest rates. No doubt we shall learn a great deal about the appropriate allocation of responsibilities to monetary policy, on  32  10  Bernanke (2011). BIS central bankers’ speeches  the one hand, and macro-prudential policy, on the other, over the next twenty years. But we should not throw out the baby with the bathwater. Low and stable inflation is a pre-requisite for economic success. Much of what I have said is, I hope, a call to arms for economists, and especially younger economists, to rethink the foundations of our macroeconomic theories. Not to abandon rigorous modelling – after all, in the words of last year’s Nobel Prize winner Tom Sargent “it takes a model to beat a model” – but to recognise that in our present models the way we think of human behaviour in the face of irreducible uncertainty is seriously incomplete. Ideas matter far more than is usually recognised in the public discussion of monetary policy which concentrates too much on personalities. Keynes and Stamp both knew that.

The additional net asset purchases in particular will help to counter the self-reinforcing dynamics on the bond markets. We are helped by the operational flexibility of the asset purchase programme, which we are already using to its full extent. So did the ECB communicate poorly? The key message of the programme should be clear. The ECB stands ready to do everything within its mandate to counter market disruptions that impair the transmission of its monetary policy, because monetary policy cannot otherwise be effective. This is the unanimous decision of the Governing Council. Is it perhaps the case that central banks are simply powerless in this crisis? No, but monetary policy cannot resolve this crisis on its own. We also need a strong fiscal response, ideally at European level. Most economists agree that fiscal policy is currently the most important instrument with which to counter the crisis. Why? The ECB can provide banks with liquidity, but that doesn’t necessarily mean that the banks will actually lend to companies that are struggling because of the virus. That’s where the government comes in. It can support the economy by issuing credit guarantees, for example. The package of measures adopted by the German government on Friday contained guarantees of that kind. Other Member States have agreed on similar measures. The fiscal response at the international level hardly looks coordinated. Is that a problem? Absolutely. We need a strong, joint fiscal policy response in Europe. This crisis is not limited to individual Member States.
For one thing, I’ve focussed on a sector in which the UK looks already to have had a comparative disadvantage in the 1970s. If you start as net importer of a particular good, the benefits of lower prices will 4  necessarily outweigh the costs . More generally it’s very difficult to construct a scenario in which free trade is not a net benefit, certainly for a relatively small economy like the UK. But the position is less clear than in  4  If you produce Y of some consumption good and consume C of it, the net income effect of a price change ΔP is ΔP(Y-C). The difference between domestic production and consumption, Y-C, is the trade balance. So if you happen to be a net importer of the good (Y<C) a drop in international prices makes you better off: all else equal, it boosts your “terms of trade”. 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Chart 7 if a country already open to trade is faced with a fall in prices in a sector where it has a comparative 5  advantage . Second, you might well object to such a crude, utilitarian comparison anyway. The gains are distributed across lots of people, the losses – such as they are – visited on only a few. Even if aggregate employment seems unperturbed by those sectoral job losses, and even when there are big net income gains in aggregate, that doesn’t mean no individual will have lost out.

Another effect of financial innovation is thus to create asymmetries in the reaction of the economy to monetary policy: for example, the slow build-up of bubbles during periods of monetary easing followed by an abrupt retrenchment when monetary policy tightens. Note that there is currently a debate as to whether this inherent procyclicality of financial systems is amplified by our accounting and prudential regimes. Fourth, it may be that modern financial innovation creates new discontinuities in the financial system and dynamics. When conditions are less benign than usual, the transmission process along the interest rate curve becomes non-linear: a striking feature of this summer’s events was the surge in the short-term money market. Wider and variable spreads between term funding rates (of which many bank loans are priced off) and policy rates may reduce the efficiency of interest rate adjustments when needed. Innovation also reinforces the mechanism of the "financial accelerator", through which the level of asset prices influences credit distribution (through collateral values and, now, its impact on banks tier one ratio), then the real economy; and, in return, the real economy impacts asset prices and values. This spiral can go upwards, or, as we see now, downwards. Overall, I believe that central banks have coped well with these challenges over the past ten months. The monetary policy response has differed across industrialised countries, as warranted by the differences in economic situations and outlooks.
Earlier today, we published criteria for money market mutual funds to become eligible to participate in reverse repo operations, which was a first and important step in that direction. We are currently working with other types of firms to assess their potential participation in the program, as well. Our expectation is to have arrangements in place and to be ready to transact with some non-dealer firms by the end of the second quarter. This expansion of counterparties is important for boosting the capacity of the program. 4  BIS Review 39/2010  The bottom line is that the preparation of both facilities is advancing very effectively. Looking across the two programs, we will have established the capacity to drain a significant portion of excess reserves by the second half of the year. Of course, achieving this capacity does not say anything about how and when the FOMC will decide to actually drain reserves. The actual timing and size of draining operations, and their relation to changes in the interest rate paid on reserves, will depend on how market and economic conditions evolve. Chairman Bernanke discussed one possible sequence in his February 10 testimony. He suggested that operations to drain reserves could be run on a limited basis well ahead of policy tightening, in order to give market participants time to become familiar with them, and then could be scaled up to more significant volume as we approach the time for policy tightening.

Ensuring adequate provision of a means of payment that is credit-risk free and fully and efficiently available and accessible to any potential user group is extremely important. To date, cash has been the only asset that enjoys legal tender status and has played this role. Yet, the way cash is fathomed and embraced nowadays is heavily influenced by the increasing digitalisation of society, and by technological change more generally. For example, the behaviour, preferences and expectations of users are changing rapidly, as their experience with digital technologies grows. Novel payment alternatives, provided  1  either by private players (both traditional and non-traditional ones) or by public authorities in various jurisdictions, may also surface and/or expand, presenting greater appeal than traditional banknotes and coins. Moreover, new features of existing payment instruments or services, such as programmability, are now becoming possible thanks to emerging technologies. Therefore, besides ensuring the availability of cash, we also need to consider new ways of improving the efficiency of retail payments by leveraging digital technology more extensively. All of this could signal the need to broaden the approach and explore new opportunities, aiming to better address modern society’s unmet demands. In this process, the notion of a universally accessible CBDC stands out, that is, a new type of central bank digital liability that could be made widely available.