samchain/econo-pairs-v1 huggingface dataset:
Underlying inflation is now estimated to be between 2 percent and 2½ percent, which is one percentage point higher than one year earlier. Chart 9: Norges Bank’s key policy rate projections Saving, investment and spending decisions are influenced by expectations concerning future interest rates. Communication on the future course of monetary policy, including the publication of key policy forecasts, therefore plays an important role. Even though the key policy rate has been kept unchanged, Norges Bank’s forecasts for the key policy rate ahead were revised down through 2013. The downward revision of the key policy rate forecasts primarily reflects lower growth forecasts for the Norwegian economy. There are also prospects that wage growth will be somewhat lower than envisaged earlier. Growth among our trading partners and interest rates abroad have been somewhat lower than projected one year earlier. At the same time, banks’ lending margins are somewhat higher than expected. Chart 10: Inflation and capacity utilisation The analyses in the latest Monetary Policy Report published in March suggested that the key policy rate should be held at today’s level in the period to summer 2015, followed by a  2  BIS central bankers’ speeches  gradual increase. With such a path for the key policy rate, there are prospects that inflation will be slightly below, but close to 2.5 percent throughout the projection period. Capacity utilisation may edge down over the next year and thereafter move up to close to a normal level.

The common thread of geopolitical tensions is that while they’re difficult to predict, they’re also impossible to ignore. On a backdrop of low r-star and slowing global growth, they drive businesses to be more cautious, more vigilant, and more conservative in their approach. Data Dependent, Not Data-Point Dependent The long-term factors driving low r-star and slowing global growth, as well as the more near-term geopolitical tensions, are afflictions from which we all suffer. So what’s the solution? Where do we as policymakers, researchers, and regulators go from here? At press conferences I’m often asked: if growth slows by X percent, or unemployment increases by Y percent, will that mean that the FOMC is going to do Z at its next meeting? If the Fed had a motto, it would probably be “data dependent.” When asked about this, it’s important to clarify that while I’m data dependent, I’m not data-point dependent. It’s not about being guided by one single data point—GDP or job growth—but by all of the data and information that tell us where the economy is, and where the economy is heading. Importantly, it’s not about looking at things merely as they are—it’s about trying to read how the economy is likely to evolve over the next couple of years, and what risks lie ahead, based on a broad range of evidence. Monetary policy is a long game. The policy decisions we’ve made this year will continue to have a ripple effect years into the future.
Operational systems and controls, including mechanism to protect consumers’ interest and prevent criminal activity, can vary considerably between entities and jurisdictions. With typically hundreds or more money services entities in most countries, such diversity presents a unique set of challenges for money services businesses and regulators seeking to put in place the necessary frameworks to manage and mitigate risks associated with the business. In the more recent period, money services businesses have been confronted with increased challenges from heightened global concerns with crimes committed cross-border and  BIS central bankers’ speeches  1  transnational money laundering. The cash-based nature of MSB transactions, global reach of remittance networks, and customer verification processes, if not properly managed would render MSBs susceptible to money laundering threats. Heightened regulatory scrutiny over money laundering controls and heavy penalties meted out by regulators might prompt banks to review their relationships with MSB companies. Some banks have withdrawn banking facilities provided to MSB companies, creating significant difficulties for large numbers of MSB companies that are doing legitimate business. On the other hand, as the bar is raised for MSBs to strengthen AML procedures, there is a concern over the unintended consequences that this might exclude certain segments of society from access to the formal financial system. Worse, it pushes more transactions to the informal or illegal channels. I raise these observations to highlight two points which I thought are relevant to this Conference.

This is why the  7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  UK Financial Policy Committee has said that where stablecoins are used in systemic payment chains as money-like instruments, they must meet standards equivalent to commercial bank money in terms of stability of value, robustness of legal claim and the ability to redeem at par in fiat. Stablecoins’ borderless nature of course also means that international regulators’ coordination is necessary and work is indeed underway. A Financial Stability Board consultation is ongoing with supervisory recommendations for global stablecoins, aligned with the Bank’s view on same risk – same regulation. Is there a role for central banks (public money strikes back)? The changes in how we pay I described at the beginning of this presentation have not just involved a switch from physical cash to electronic payment. It has also necessarily involved a switch from public, central-bankissued money to private money. This is because central bank money is currently only available in physical banknotes or in reserves, which certain regulated financial institutions hold in accounts at the central bank. For the public and most businesses, the only current option to hold money backed by the central bank is in the form of physical banknotes. I’ve assumed in the story so far that the cash decline and the rise of online continues the march towards the dominance of private money in our transactions. But is this right?
At the heart of such thinking must be the view that the banking system exists to provide financial intermediation in support of the larger economy: it cannot be some abstracted, disembodied realm of activity in which intermediaries compete with each other to dream up ever more complicated ways of making a fast profit. But such thinking should not rule out innovation, as long as the objectives are clear: and the main objectives should be to serve activities in the greater economy, to increase the efficiency of the financial system without sacrificing its safety. This leads to my fourth and final observation. We have many examples of such innovation in Hong Kong to draw upon, but there is one that is particularly appropriate on this evening of reminiscences. I refer to the introduction of renminbi business into banks in Hong Kong – a development which seemed revolutionary at the time, but which now seems a very normal activity. It had small beginnings and is a gradual, cautious process: there is, of course, scope for much further growth and development. This innovation has clear practical uses in facilitating economic relations between Hong Kong and the Mainland, in reinforcing Hong Kong's role as an international financial centre, and in supporting the liberalisation of China's financial system. How many of us here, I wonder, recall that the idea of developing renminbi business in Hong Kong was first broached in 2001, during one of the Annual HKAB visits to the Mainland which I had the privilege of joining?

Quite apart from our own Hong Kong-specific initiatives, there are movements for reform at the international level, resulting from a very different experience in the more developed economies, which we cannot ignore. This point brings me to my second observation: the need to move with the times. The past year has seen a plethora of ideas and proposals for reforming financial regulations, and interventions by government that were unprecedented in their nature and scale. Even in economies less deeply affected by the latest crisis, including Hong Kong, it has been necessary to deepen government involvement, for example in more extensive deposit guarantees or in more intense supervision of banks' risk management – although it is gratifying that so many of the tools that we have been able to rely on, including the apparatus and contingency arrangements for ensuring liquidity, have been developed in a pre-emptive rather than a reactive way. On the various emergency measures, I am quite sure that in the fullness of time, these will either be turned into standing arrangements or withdrawn, hopefully through smooth exit strategies. But, current sentiment is clearly demanding much closer regulation and supervision of banks over the longer term. Quite what form this will take remains to be agreed on in international forums, although the thinking already seems to be towards improvements in the level and quality of banks' capital; new global standards for measuring, managing and supervising liquidity risk; and macro-prudential supervision to reduce the pro-cyclical dynamics of financial markets.
There has been a limited pass-through of the peso depreciation in to final prices, but no spillovers in medium-term inflation expectations or nominal wages. Given the recent slowdown of output, we expect some increase in the amount of slack in the  BIS central bankers’ speeches  3  economy that should help to contain second round effects of this transitory inflation shock but we remain vigilant. Monetary policy has turned toward a more expansionary instance. The monetary policy rate (MPR) has been lowered by 100 basis points in recent months to 4%, and the Bank has pointed out in its latest communication that it will assess the possibility of introducing additional cuts according to the evolution of domestic and external macroeconomic conditions and their implications for the inflation outlook. This response of the Chilean economy to the changes in terms of trade and external financial conditions accurately reflects the operation of our policy regime. Over the years, the Central Bank has shown its commitment to take action to safeguard price stability. We have been consistent over time and we have built a credibility record that gives us room to use monetary policy in a counter-cyclical fashion when it is advisable. Our policy framework allows for timely adjustments of the real exchange rate and the interest rate, which provide the right signals to keep the domestic economy growing around potential, smooth the adjustment of the capital account, while inflation and inflationary expectations remains anchored. This makes a difference with our economic history.

Chile’s economic outlook for 2014 Nevertheless, the changes we have seen in the world macroeconomic scenario have had an impact that exceeded our forecasts of some months ago. Our new projections for 2014 will be released in our upcoming March Monetary Policy Report, but it should come as no surprise that our growth outlook for this year has been corrected downward from December. Private forecasts have already internalized this change. What are the factors behind this? First and foremost, there has been a slowdown in domestic investment, caused by both the abatement of global mining investment cycle and other specific developments. The slowdown in consumption has been more gradual, in line with fundamentals that, although they ceased to improve, are still good. As I said, investment is the one component of expenditure that has endured the biggest adjustments in the past few quarters. One explanation is the deceleration of emerging economies, China mostly, and the impact it has had on commodity prices, particularly metals. The price of our main export – copper – is around $ dollars per pound, compared with a little over $ a year ago and nearly $ in early 2012. In addition, the outlook for future prices has also been revised downward, triggering a postponement of mining investments whose effects spread to other economic sectors. At any rate, what is happening in Chile has been mirrored in other metal exporters, but maybe with a different timing.
It would naturally require commitment of substantial capital and human resources from both the banks and the regulators. We should all work together, therefore, to achieve these goals. This should not only be the objective of the Central Bank as we are all guardians of financial stability – I trust this conference will provide an adequate forum for open discussion. Thank you. 2/2

And we have the tightening of provisioning arrangements, which has entailed stricter requirements in respect of asset valuation criteria. I would also like to highlight the efforts to reinforce transparency, through the disclosure of exhaustive information on all Spanish institutions’ exposure to assets considered doubtful. The latest measure of significance was the approval in Parliament of a Royal Decree-Law (RDL), whose aim was to dispel doubts about our banking system. These doubts emerged essentially as a result of the contagion of the mistrust stemming from the sovereign debt crisis in certain euro area countries. Three months later, this RDL may be said to have contributed significantly to allaying fears about the soundness of our banking sector and to substantially speeding through the restructuring of our savings banks. The RDL reinforces the solvency of all Spanish institutions, requiring of them a core capital ratio of at least 8%, with a further 2% required for unlisted banks and those more reliant on wholesale markets, which are those in which the main doubts were concentrated. The RDL also stipulates that institutions receiving public aid should pursue their financial activity through a bank, which will better enable them to obtain funds on markets and will contribute to enhancing their transparency in the face of investors. The process laid down in the RDL is unfolding as scheduled.
This not only created a dynamic towards further integration, but also resulted in a growing realisation that a truly single European market could not be created while currency fluctuations and the exchange rate risk continued to create de facto barriers to trade. Then, in 1989, the collapse of the communist regimes in Eastern Europe and the fall of the Berlin Wall provided Europe’s leaders with an opportunity to shape the Europe of the future in ways that had been unimaginable before. If the completion of the single market project and the fall of the Berlin Wall created the necessary dynamics, the changing economic environment and, with it, the growing economic policy consensus removed, at the same time, many of the obstacles that had previously stood in the way of European Monetary Union. Increased international capital flows and the removal of restrictions on cross-border capital movements made it virtually impossible for individual Member States to pursue truly independent monetary policies without this resulting in destabilising capital flows and, ultimately, a reversal of policy. Moreover, it had, in any case, come to be universally accepted that monetary policy could not be used successfully to stimulate economic growth, but should instead focus on maintaining stable prices, thereby also creating an appropriate climate for sustainable growth. Since it was now considered neither possible nor desirable for individual countries to pursue significantly diverging monetary policies, both the real and the perceived losses that might result from relinquishing monetary policy sovereignty and adopting a single currency had been significantly reduced.

This has not only created, regardless of existing differences at the state level, a common legal environment, but also led to harmonised or similar policies in most other areas and not least fostered the development of a common ground of behaviour in economic life. By contrast, the history of the 11 Member States of the euro area was different. Notwithstanding my earlier reference to the integration process over the last decades and the EU institutional set-up for the coordination of economic policies, Europe is still a more heterogeneous area than the United States. The Treaty establishing the European Community does not state how price stability is to be maintained. In other words, it does not define what is called a monetary policy strategy. Therefore, the Eurosystem has designed its own stability-oriented strategy. Apart from the quantitative definition of price stability, it consists of two pillars. The first pillar is a prominent role for a broad monetary aggregate, M3. This is based on the view that inflation is ultimately a monetary phenomenon. A reference value of 4½% for annual M3 growth has been defined. Deviations of actual monetary growth from the reference value will not be corrected mechanically, but will always be analysed with regard to the signals they provide with regard to future price developments. The reason for being cautious is that the introduction of the euro may have changed the behaviour of economic subjects, also their demand for money.
Barbro Wickman-Parak: What can monetary policy achieve? Speech by Ms Barbro Wickman-Parak, Deputy Governor of the Sveriges Riksbank, at a meeting, Karlstad, 27 March 2009. *  *  *  Economic policy can be divided up into two areas: fiscal policy and monetary policy. In Sweden and all other countries with independent central banks, there is as we all know a distinct difference between these two policy areas. The Government is responsible for fiscal policy and the central bank for monetary policy. The central bank is not allowed to receive instructions from any other party when carrying out its monetary policy tasks – it is to conduct its monetary policy in an independent manner. So what is the range of the policy area delegated to an independent central bank; that is, what can we expect a central bank to be able to achieve? This question is the theme of my speech today. Economic policy ultimately concerns creating the best possible conditions for long-term growth and thereby a high level of welfare for the population. The given limit for growth is set by developments in the labour force and in productivity. To attain long-term growth the policies must be aimed at, for instance, educating the labour force, creating an incentive structure that stimulates people to work, creating a good innovation climate that promotes technological developments and so on. This is all common knowledge, but may be worth saying sometimes.

To keep things simple, we can assume that the labour and capital shares are constant in the longer run and concentrate on how the return to capital is affected by changes in total factor productivity (the overall efficiency with which labour and capital are utilised in production). A higher return to capital should imply a higher rate of increase in corporate earnings. Conversely, an accelerating growth of corporate earnings should show up as a rising return to capital at the macro level. 5  BIS Review 137/1999  Conclusions From what I have said this evening it is possible to draw two conclusions that at first sight may seem to be somewhat contradictory. On the one hand we have noted that stock market values are historically high and that in the past this has normally been followed by some form of correction. On the other hand, there may be some grounds for arguing that changes have occurred in expected stock market returns and/or the economy’s potential growth rate which could justify a stock market valuation above the historical level. In the United States there are at least signs that point in this direction. For Sweden, however, figures at macro level have not yet been discerned that would confirm such a change. But these two conclusions are not necessarily contradictory. Present stock market prices could mirror a combination of “irrational exuberance” and a change in the fundamental picture of the global economy. The impact of the new information technology may be leading to higher productivity growth.
The G20 summit in Brisbane will, I hope, mark the end of a major phase in this work with proposals to help end “too big to fail”, including ensuring that banks hold debt that can absorb losses – i.e. be “bailed in” – if the bank fails, and a private sector agreement to provide for stays on derivative contracts during resolutions of failed banks. This stronger international framework has not been an accident. The crisis brutally underlined the degree to which countries were connected to each other through the operation of a global capital market and banking system – and the dangers of regulatory arbitrage between jurisdictions. The FSB and the international standards that have been developed are, it is true, only “soft law”. They are not legally binding. They constrain neither the powers of national regulators to set the rules for their jurisdictions nor the accountability of national regulators to national legislatures. But this soft law is powerful because it is grounded in the recognition by the major jurisdictions that we can only have a globally integrated capital market – and the benefits that brings – if we can agree and implement key common minimum standards. That impulse to work together, internationally, to provide stronger governance of the global financial sector will inevitably wane somewhat the further in time we get from the crisis in which this was born. I don’t think the more powerful, more comprehensive international machinery that has been built since the crisis will disappear. But the challenges will change.

The second big change for the industry is the reduction and I hope removal of the implicit taxpayer subsidy that came from the perception – and as it proved, the reality – that the largest banks were too big to be allowed to fail. New powers to bail-in banks’ creditors, living wills, international standards on the debt that can be bailed in – all of these mean that we are getting closer to be able to say “no bank is too big to fail”. This will change banks’ costs. Being too big to fail, the implicit taxpayer subsidy, reduced large banks’ borrowing costs in relation to their smaller brethren. As we make it more and more possible for a big bank to fail – like any other company – without having to be bailed out by the taxpayer, creditors are realising that they bear more risks than before. The cost of insuring £ UK banks’ senior debt against default was just 8 pence before the crisis. Today that cost has increased by almost a factor of 10, driving up banks’ cost of funds. This is part of the reason why the spread over the risk-free rate on banks’ lending is higher now than before the crisis and is likely to remain so. Put simply, credit was mispriced before the crisis, in part due to the implicit insurance of taxpayer bailouts. Taken together, lower levels of leverage, higher liquidity and the removal of the implicit taxpayer subsidy will mean changes to banks’ business models.