samchain/econo-pairs-v1 huggingface dataset:
Although the bonds were successful, the concept of indexed bonds was set aside until the 20th century. Finland introduced indexed bonds in 1945, Sweden in 1952, Iceland and Israel in 1955. Since then, indexed bonds have usually appeared in countries experiencing very high rates of inflation, such as Brazil in 19642, Chile (1966), Colombia (1967), Argentina (1972) or even the UK in 1975, with the issuance of so-called “granny bonds”, i.e. non-marketable indexed-linked savings retirement certificates. Later on, in 1981, the UK issued a marketable instrument - the index-linked giltin a context of rapidly increasing prices. In all of these cases, the issuance of inflation-indexed debt instruments by the government was aimed at developing long-term capital markets and improving the credibility of anti-inflationary policies. As regards this last point, such a rationale is, however, ambiguous as it can also be argued that debt indexation can fuel the inflationary process by spreading inflation-linking to other contracts, such as wage contracts for instance. Given this historical background, it might appear paradoxical that, since 1980, indexed bonds have largely been issued by industrialised countries, characterised both by low inflation rates and price stability - oriented monetary policies: Australia (1985), Canada (1991), Sweden (1994), New Zealand (1995), The United States (1997), France (1998 and 2001) and recently Italy and Greece (2003). The rationale behind the issuance of these indexed bonds was mainly to reduce the cost of debt and to develop complete financial markets.

Anecdotal evidence suggests that a surge in demand for OATi originated from banks, which tried to hedge against this new regulation. An insufficient outstanding amount of French inflation linkers relative to the overall demand for hedging purposes led to an upward pressure on the prices of other euro area linkers (Greece and Italy). To conclude this point, all these biases are likely to be small, but they add together, potentially in a non-systematic way. They are also likely to vary over time. It is therefore difficult to smooth out all these noises to get a good proxy of inflation expectations over the medium to long-term. Two main lessons may be drawn from the existence of the various premia and biases affecting the break-even inflation rates. First, it may be more informative to focus on the changes in the break-even rates rather than on their levels. This is however at a cost since the level by itself conveys relevant information for the central bank. Second, break-even inflation rate may provide interesting information as regards long-term inflation expectations, although it is necessary to cross-check against other inflation expectations’ measures. This leads me to my third and final point. 3. Other useful indicators of expected inflation  Inflation-indexed bonds are not the sole financial instrument to provide information on long-term expectations of inflation, as similar information can be extracted from inflation-linked swaps. The market for inflation-linked swaps has developed rapidly since 2002 in the euro area.
We started off this year with heightened volatility in the global financial markets, mainly due to concerns over the China’s economic slowdown, declining oil and commodity prices and monetary policy divergence among major central banks. Lately, the global volatility has subsided as the Chinese government has shown a strong commitment to limiting the possibility of hard landing with additional fiscal and credit stimulus while restructuring the economy. Commodity prices have also begun to edge higher. Financial market participants expect monetary policy in major countries to remain highly accommodative, despite an increased possibility of another rate hike by the US Federal Reserve in the next few months. While relative calm has returned to the global financial markets, I must stress that the global financial environment remains fragile. Development on China’s economic restructuring and concerns over its corporate debt, the possibility of Brexit, and major central banks’ policy divergence are among the most significant factors that can trigger new bouts of volatility. Investors’ sensitivity to unexpected news and events could also amplify the volatility. Amid the fragile global financial climate, the Thai financial markets have been relatively resilient compared to those of other emerging markets, thanks to Thailand’s strong external position. Current account position last year registered a surplus of 9 percent of GDP, and is projected to remain at that level in 2016. Our international reserves have been at a healthy level, standing at around three times of the short-term external debt and 1.3 times of the total external debt.

Veerathai Santiprabhob: Monetary and financial sector policy – moving forward Speech by Dr Veerathai Santiprabhob, Governor of the Bank of Thailand, at the Foreign Correspondents’ Club of Thailand (FCCT), Bangkok, 1 June 2016. *  *  *  Members of the FCCT Executive Committee, Distinguished guests, Ladies and gentlemen, Good evening to you all, It is my pleasure to be here with you tonight. Although this is my first time speaking at the FCCT, I can feel the vibes of active journalism, which underpins the club’s foundation and its long history in the community of journalists in Thailand. As one of the oldest press clubs in Southeast Asia, I would like to thank you for your continued commitment and contribution to the Thai economy and the Thai society. Public perception and expectation indeed play a large part in establishing credibility and effectiveness of economic policy. As public opinion influencers, journalists greatly contribute to achieving desired policy outcome. As we progress half way through the year, today I would like to share with you the Monetary Policy Committee’s latest economic assessment and monetary policy stance to support the current economic recovery and safeguard stability of the Thai financial system. After that, I will turn to the Bank of Thailand’s financial sector development policy, with a view to facilitating Thailand’s economic transition towards strong, sustainable and inclusive growth. Let me start by talking about recent developments in the global financial markets.
A huge number of diligent and eager employees, who still work for shockingly low wages, are streaming into the labour market and producing goods at a far lower price than would be possible in the West. The importation of these goods has counteracted inflationary pressure in Western nations and kept it within the bounds of manageability. But as a result, this newly awakened world gives rise to a growing number of hopeful consumers who lack all of the things we in the West have so long taken for granted, things we couldn’t live without. They are consumers who, for the first time, have money in their hands. These two groups overlap somewhat, of course, but it is clear that the former group has been instrumental in the battle against inflation in the West. It could well be, however, that the latter group will eventually put its weight on the other end of the scale. Globalisation has undeniably eased the battle against inflation, both in Iceland and elsewhere, so it is doubtless inaccurate to assert that globalisation is the reason we are having trouble conquering inflation. Other factors have been much more troublesome, and most of them are home-made. For example, we haven’t managed to contain public investment during an economic upswing – this is eminently clear to anyone who examines figures on public investment, which increased by more than 20% last year and is still growing this year.

This is correct, of course, to a point: the Bank’s policy influences exchange rate developments to a considerable degree, and the exchange rate is higher than Iceland can tolerate for the long term. But the Central Bank’s high policy rate is not the source of the problem. It is a response to the conditions reigning in our economy: strong excess demand no matter where one looks, large output growth, sharp increases in purchasing power, excess demand for labour, influx of capital … the list goes on. The Central Bank decided to raise the policy rate now because inflation has risen once again, and indicators suggest that it will be higher in 2007 and 2008 than earlier projected. Demand has grown more rapidly than was expected when the Bank  2  BIS Review 131/2007  announced its last interest rate decision. Output growth is greater than estimates allowed for. Private consumption is on the upswing, and indicators imply that consumption growth will accelerate even further. Gross capital formation was greater in 2006 and 2007 than previously estimated. Real estate prices continue to rise rapidly, pushing inflation upwards as well. A shortage of labour, wage drift, growing wage costs, and rapidly rising disposable income are also contributing factors. And it appears as though some people think that, under these circumstances, the best solution is to let an inflation episode flow through the economy, as it were. But inflation wouldn’t merely flow through; it would pass into the economy and settle there.
Secondly, as I recently noted, many countries have experienced problems with large deficits in their public finances. This is a problem that has now become acute, and needs to be dealt with. We in Sweden are all too well aware of the confidence problems that can arise from mismanaged public finances. It is of course easier to make the necessary consolidation if private sector demand is kept up. One could say that many countries therefore need to undergo what could be described as an internal adjustment of demand – from public to private. 2 Thirdly, an external adjustment of demand is also needed. Many countries in the western world, and not least the United States, which was overly dependent on high domestic demand before the crisis, must rely more on exports in the future. Correspondingly, countries which have accumulated large current account surpluses, and in particular China, will have to rely more on domestic demand. Thus, what is needed is a changeover from domestic to foreign demand in some countries and the reverse changeover in other countries. Create new regulatory systems There is currently fairly substantial international unity on the first issue – the need for a better regulatory framework and more effective supervision of the financial sector – even though much of the details remain to be discussed. There has also been some progress in this field. One example is what is known as the Basel III regulations, agreed by central banks and financial supervisory authorities around the world some weeks ago.

This is no easy task considering that the stakeholders often pursue differing interests. In addition, there are various potential conflicts, for example between the objective of exploiting economies of scale as much as possible – which might only be possible through cross-border cooperation – and the objective of maintaining independence. BIS Review 123/2006  3
Recent surveys of professional forecasters suggest they believe, unanimously, that the next rise in UK rates is likely to be upwards. 19  For example, a simple approximation to the assumption that policymakers care about the risks to the inflation outlook is the use of a “quadratic loss function” to characterise preferences over alternative outcomes. One implication of that approximation is that policymakers should care about the mean path of inflation (see Svensson (2002)). Policymakers who take into account the risks associated with uncertainty over the structure of the economy (such as those discussed earlier in this speech) should care about the entire distribution of inflation (Svensson and Williams (2005)). 16  BIS central bankers’ speeches  But financial market participants have a more nuanced view. They currently assign a roughly 15% probability to UK interest rates being cut over the next 12 months, versus a 40% probability of a rise (Chart 28). The most likely outcome, in their view, is that rates will not change over the next year. I do not currently see an immediate case for a policy change in either direction. If one were required, given the asymmetry of inflation risks, I think the chances of a rate rise or cut are broadly evenly balanced. In other words, my view would be that policy may need to move off either foot in the immediate period ahead, depending on which way risks break.

Chart 12 10-year euro area GDP-weighted sovereign bond spread versus euro OIS rate  https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp200519~e5203d3520.en.html  8/14  5/19/2020  Pandemic central banking: the monetary stance, market stabilisation and liquidity  (percentages per annum)  Sources: Refinitiv and ECB calculations. Notes: Daily data. The latest observations are for 14 May 2020. This tightening of financial conditions represented a further headwind for the effectiveness of monetary policy. There was an evident risk of adverse liquidity spirals and an overshooting of asset price corrections in many markets, impeding the transmission of monetary policy and endangering financial stability. In the context of a monetary union, the absence of currency risk means that flight-to-safety dynamics have an intrinsic cross-border element, which primarily takes the form of reallocations across sovereign bond markets. In view of the central role of sovereign yields as benchmarks in pricing assets and setting lending rates, non-fundamental volatility in sovereign spreads impairs the transmission of monetary policy. In this context, the PEPP announcement acted as a stabilising force. The announcement of the PEPP has successfully halted the tightening in financial conditions and contributed to a partial reversal in the trend. The embedded flexibility of the PEPP, which allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions, has been a crucial element in fostering its effective market stabilisation function.
That weighs with me both as a matter of principle, and because minds have been concentrated by the planned transfer to the Bank of responsibility for micro prudential supervision of banks. A system in which our bank supervisors were the next line of  7  Adrian, Tobias, and Hyun Song Shin (2010), “The Changing Nature of Financial Intermediation and the Financial Crisis of 2007–09”, Annual Review of Economics 2: 603–18. 8  Gorton G B and A Metrick (2009), “Securitized banking and the run on repo”, NBER Working Paper 15223. See also Shleifer’s comments on Gorton and Metrick “Regulating the Shadow Banking System” BPEA, Fall 2010. 4  BIS central bankers’ speeches  defence after management would be badly designed. We need to set rules of the game that harness boards, shareholders, auditors and, in today’s context, crucially bondholders to the cause of preserving the safety and soundness of the firms they run, monitor and finance. Adair airs some questions about reliance on resolution. Namely, (i) the incidence of failure amongst the largest and most complex firms is so rare that, over time, participants in financial markets will forget it can happen; and (ii) that when such a firm does fail, the spillovers will be so great that the market will expect it to be bailed out, validating the myopia. Those arguments seriously underestimate the determination of policymakers in this area.

Perhaps the first point to make is that Lehman was allowed to fail, even though no one can seriously have been in much doubt about the severity of the consequences. In a democracy, interventions are sometimes severely constrained. It would be myopic for market participants to set aside the probability of that happening again. In fact, I doubt markets will forget for a long time. And arguably one can see awareness of this risk in bank debt spreads today and in the movements following policy consultations in Europe and the US on “bailin” and resolution reforms. But, secondly, the idea of not equipping ourselves with better tools for the “last chance saloon”, when all else had failed, would be a counsel of despair. Adair must be right, though, that we will need to build credibility for our commitment to resolve rather than bailout. That means building institutions to underpin that commitment. Idiosyncratic failures do occur. We can – and where appropriate should – prospectively apply the same resolution tools to the failure of medium-sized firms as we are developing for the largest global firms, demonstrating our willingness to use them. Living wills – or, as they are now called, Recovery and Resolution Plans – will help, provided they have teeth. Which means ensuring that firms are organised and structured to permit effective resolution of different kinds of business line. And a prompt-intervention supervisory action regime can be designed to limit the scope for regulatory forbearance.
Georgsson, M., A. Vredin and P. Åsberg Sommar (2015), ”The modern central bank's mandate and the discussion following the financial crisis” Economic Review No. 1, Sveriges Riksbank. Haldane, A. (2020), ”What has central bank independence ever done for us?”, speech on 28 November, available at What has central bank independence ever done for us? - speech by Andy Haldane (bankofengland.co.uk). Heikensten, L. (2005), “The role of academics in monetary policy,” speech at Umeå University on 28 October, Sveriges Riksbank. 13 [20]  Ingves, S. (2015), “The central bank’s objectives and means throughout history – a perspective on today’s monetary policy”, speech to Swedish Economics Association, Stockholm School of Economics, 6 May, Sveriges Riksbank. Jonung, L. (ed.) (2003), “På jakt efter ett nytt ankare. Från fast kronkurs till inflationsmål” (Hunting for a new anchor. From fixed exchange rate to inflation target), SNS förlag. Kydland, F. and E. Prescott (1977), ”Rules Rather Than Discretion: The Inconsistency of Optimal Plans,” Journal of Political Economy. Melander, O. (2021), “Effects on financial markets of the Riksbank’s government bond purchases 2015–2017”, Economic Review No. 1, Sveriges Riksbank. Norges Bank (2021), “Central Bank Independence. Lessons from History”, Nicolai Rygg virtual panel debate, 8 April, available at Central Bank Independence. Lessons from History (norges-bank.no). Rogoff, K. (1985), “The Optimal Degree of Commitment to an Intermediate Monetary Target”, The Quarterly Journal of Economics. Skingsley, C. (2016), “Developing the central bank mandate”, speech at the Austrian central bank, 13 September, Sveriges Riksbank, available at Skingsley: Developing the central bank mandate.

I would also like to thank the faculty and administrative staff for their sterling work, and to congratulate the students of the class of 2023 of the Master in Economics and Finance, for whom I wish the very brightest of futures. Thank you very much. 2/2  BIS - Central bankers' speeches
In relation to this, the association should leverage on its nationwide network to increase awareness among the public of their responsibility to deal only with authorised money services. Part of this should also include explaining the relevant regulatory requirements to the public, such as the need to produce identification documents for large transactions. Over the last 4 months, I am encouraged by the numerous initiatives undertaken by the Association and the fruitful engagements and consultations with the Bank. I understand that the Association has embarked on a series of nationwide training to help its members implement effective corporate governance practices, develop internal policies and procedures and put in place AML/CFT compliance programmes. It has also helped to resolve a number of industry issues, including assisting members to obtain business insurance coverage at reasonable rates, and liaising with system vendors to ensure the provision of suitable and reliable management information systems. These are admirable progress and demonstrate the tremendous value that the association can bring to its membership. On this note, let me take the opportunity to congratulate the Council members and the industry on this official launch. Bank Negara Malaysia fully supports the Malaysian Association of Money Services Business in its important endeavour, and we are confident of the significant impact that this Association can make in taking the money services business industry to the next level of development. It now gives me great pleasure to officiate the launch of the Malaysian Association of Money Services Business. BIS central bankers’ speeches  3

To be even more explicit; when we formulate our policy we have on several occasions deliberately chosen to allow deviations from the inflation target for short or long periods of time. When the consequences of the deviations have been lower interest rates than would have been the case with a stricter interpretation, there has been practically no criticism. However, it has been rather different with regard to deviations in the other direction. Neither the Riksbank nor any other central bank using inflation targeting can be described as an “inflation nutter”, to borrow a famous phrase from Mervyn King, now Governor of the Bank of England. That is, we do not focus solely on stabilising inflation; we also take into consideration the real economy – conducting what is usually termed flexible rather than strict inflation targeting policy. This is also entirely in line with our task as laid down in law. There are also other types of consideration that need to be made in monetary policy. One that is immediately apparent is how financial stability will be affected by the interest rate decisions. Over the past year, and also on a few earlier occasions, there has been extensive discussion of developments in the credit market at our monetary policy meetings. We have relatively short experience of how credit cycles affect the economy; up until the 1980s the financial markets were strictly regulated. Our knowledge of the risks entailed in a rapid increase in indebtedness and asset prices is thus limited.