samchain/econo-pairs-v1 huggingface dataset:
Returning to the U.S. and inflation concerns, Figure 14 shows that the growth rate of employee compensation has generally been declining over the past two decades. With compensation slowing and productivity increasing, many firms have been profitable and able to withstand increases in commodity prices without passing such costs on to final prices. This fits with the observation that higher food and energy prices have not tended to have much of an impact on prices in situations where food and energy are not direct costs of doing business. 4  The Fed’s Large-Scale Asset Purchases have partly, but not completely, substituted for the constraint imposed by the zero lower bound on policy easing. With all the excess capacity – a reflection of our inability to be as accommodative as we might have liked, given the zero bound – it seems unlikely that supply shocks will turn into increased inflation expectations that will affect wages and non-oil, non-food prices. 5  Vice Chair Yellen notes that “a key lesson from the experience of the late 1960s and 1970s is that the stability of longer-run inflation expectations cannot be taken for granted. At that time, the Federal Reserve’s monetary policy framework was opaque, its measures of resource utilization were flawed, and its policy actions generally followed a stop-start pattern that undermined public confidence in the Federal Reserve’s commitment to keep inflation under control.

Frameworks are being established to identify and address the risks posed by global systemically important financial institutions. Make derivatives markets safer. Requirements are being put in place to foster central clearing, margin requirements, and mandatory reporting of OTC derivative trades. Transform shadow banking into resilient market-based finance. Oversight of shadow banking entities is being strengthened. The Financial Stability Board has been working to ensure that these internationally agreed regulatory reforms are implemented in a timely and consistent manner across the major jurisdictions. While gaps remain in some areas, implementation is generally proceeding well. It is time now to begin the important task of evaluating the impact of the reforms. In fact, the FSB is developing a conceptual framework for doing this. The framework aims to answer two questions: have the regulatory reforms been effective – are they achieving their intended outcomes? 1/7  BIS central bankers' speeches  what are the cumulative effects of the reforms – how have the various reforms interacted with one another, are they coherent, what are their larger social benefits and costs? This work is especially important in the current context: As memories of the crisis fade and the burden of regulatory reforms comes into sharper focus, the pressure to unwind the reforms will grow. It is important for the credibility of the reforms that their impact be objectively evaluated. It is also incumbent on us as regulators to be accountable for the substantial changes that we have put in place over the last eight years.
Europe has already made good progress on this with the fifth EU anti-money laundering directive, which obliges providers of cryptocurrencies platforms and wallets to report conspicuous transactions to the authorities. When it comes to the use of new technologies such as blockchain, we need to weigh things up carefully. On the one hand, similar 1/3  BIS central bankers' speeches  activities should be regulated in a similar way, so the requirements for (say) blockchain transactions need to be similarly stringent to those for traditional transfers. On the other hand, we should be careful not to stifle new, innovative technologies. Some central banks are thinking about developing their own cryptocurrencies. The ECB as well? Whether central banks should develop their own digital currencies is a relevant question in countries where people are turning away from cash. There is then a case for offering them a digital alternative safer than commercial money. This is why we are seeing such initiatives in Scandinavia, for example. But in the euro area, cash remains a popular means of payment and the question does not arise. To be clear: the ECB is not developing a crypto currency. That said, as all central banks, we are studying in depth the underlying technologies, such as blockchain. Cyber security is just one of the risks currently facing the economy. Another is the escalating trade dispute. How well prepared is Europe on this front? The euro area economy is proving very robust at the moment. There have been five years of uninterrupted growth.

Benoît Cœuré: Interview in Der Tagesspiegel Interview with Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, in Der Tagesspiegel, conducted by Ms Carla Neuhaus on 19 September 2018 and published on 1 October 2018. * * *  Mr Cœuré, the financial crisis erupted 10 years ago. Is the eurozone now better prepared for a crisis? As central bankers we always need to be prepared for the next crisis. It is our job to make the financial system as resilient as possible. And a lot has been done on that front. The financial system is now much safer than it was 10 years ago. We have better regulation and higher capital and liquidity buffers in banks. Good progress has been made, but we are not there yet. Why not? There are still parts of the financial system that are not nearly as well regulated as we would like them to be. I’m thinking of the shadow banking sector, for example, meaning financial institutions that conduct activities similar to those of banks but don’t have a banking licence. Regulators still don’t have proper instruments to adequately monitor and control risks in these institutions. It would be up to politicians to change that. But are they still ready to do so, 10 years after the start of the crisis? There is indeed a risk of complacency. After all, the economy is doing well, memories of the crisis are fading, and bankers have been trying again and again to soften regulation.
In this context, despite high volatility of consumer prices and exchange rates in trading partners, including the sharp decline in oil prices in the second half of 2008 (one of the main fundamentals in Algeria’s economy), the REER has remained near its equilibrium level and the external financial position remains comfortable. 4  BIS Review 168/2009

Political processes are often protracted, but once a decision has been taken, results should be rapidly visible. to be available as soon as possible. By contrast, central bankers are able to take decisions very quickly, but the results of these decisions – whether good or bad – may not be evident until years later. It is precisely because this lag is often so long that the credibility of central bankers is essential. If central bankers are credible, economic entities will trust them. As a result, monetary policy is more effective. For instance, if inflation rises due to increasing commodity prices, employees will not immediately ask for higher wages because they are confident that the increase in inflation is only temporary. Thus independence is a necessary prerequisite for a central bank, in order to develop the credibility it requires for carrying out monetary policy. Mind you, independence is a necessary – but not a sufficient – prerequisite for successful monetary policy. Central bank independence in monetary policy is not a specifically Swiss achievement. In many countries it has helped to firmly establish inflation expectations in the long term. Consequently, monetary policy can react to shocks in the short-term, when necessary. However, with a view to certain characteristics of the Swiss economy, the independence of the SNB appears particularly valuable. Allow me to explain this briefly, using our experiences during the financial crisis as my example. When the extreme shock of the great financial crisis occurred in 2008–09, monetary policy was in a position to act rapidly.
In work at the Riksbank on monitoring prices in the Swedish economy, we could not fail to notice some positive changes in competitive conditions and pricing in recent years, as well as some more negative patterns that seem to be persisting. BIS Review 47/1998  -4Let me take the positive aspects first. One is the favourable price trend for imported goods in recent years. This is particularly notable in that for much of this period the exchange rate has been comparatively weak, which by itself should push import prices up. A favourable price trend has also been observed for food products, for example; this seems to be a consequence, at least in part, of Sweden’s membership of the European Union. Today, moreover, there are many indications that the combination of European monetary union and increased IT-based trade, for instance, will make competition even stronger. There is a general difference between the development of administered prices and market prices for goods and services. The administered prices have risen faster. This may be a result of increased fee setting in the public sector in recent years, both in connection with structural moves away from tax financing and to fill existing “holes” in public finances. Then there is the classic explanation that it is not so easy to raise productivity growth in some parts of the services sector. This no doubt applies in particular to a number of the services that are mainly provided under public auspices, such as medical care and care of the aged.

A consistent implementation of this policy, with an inflation target, clarifies the rules of the game for wage formation. High wage increases are liable to boost inflation, which necessitates higher interest rates. The inflationary consequences of the wage increases can be modified if productivity growth is good, as has been the case in recent years. But at least a part of this productivity growth is achieved at the expense of jobs; this is one aspect of the process whereby higher labour costs generate stronger rationalisation and maybe also an increased capital input. In this way, too, and not just because the higher interest rates directly affect demand and employment, a rapid wage rise is liable to endanger jobs. Against this background, the outcome of the latest wage negotiations is better than in earlier years. Agreements for the next three years have been concluded at levels around 3 per cent a year. It has been said that this takes wage drift into account but that is probably not entirely the case. Instead one should no doubt count on wage drift averaging around 1 per cent. The average annual wage outcome in the period 1998–2000 would then be 3.5 to 4 per cent. This does still represent some downward shift in the rate of wage increases, which in turn assists the Riksbank’s task of ensuring low inflation. All else equal, we can allow ourselves a somewhat lower level of interest rates and a somewhat stronger growth of demand.
Switzerland as an independent monetary zone  As is the case in most countries today, the Swiss National Bank pursues a monetary policy that is independent of the political authorities. We regard this independence as a key prerequisite for a successful policy. Our main goal is to maintain price stability. Thereby we create the basis for rational investment and expenditure decisions, and we contribute to a balanced economic growth. Price stability has been the traditional objective of our policy for decades, but our monetary strategy had to be adapted to changing circumstances. Following the transition to floating exchange rates some 30 years ago, monetary policy was based on the control of the monetary aggregates. We had to fight against inflation by far exceeding today’s levels. Inflation could be sustainably reduced in the second half of the 1990s, although the monetary aggregates became increasingly unreliable as monetary indicators. Monetary policy needed to be redesigned. In 1999, we adopted a new strategy based on three elements: ·  The first element is an explicit definition of price stability: price stability is achieved when inflation, as measured by the consumer price index, is less than 2%. We want to achieve this objective over the medium term since controlling inflation on a short-term basis would translate into high costs to the national economy. A monetary policy geared to medium-term price stability also helps to smooth out cyclical fluctuations.

As supervisors on the Basel Committee have developed standards for the disclosure of components of capital, for loans, and for other topics of mutual concern, we have sought out the views of representatives of the accounting profession. This dialogue will continue. I should add that we are currently seeking new opportunities for discussion on issues of mutual concern with accounting standards-setting bodies and private sector accounting professionals. Conclusion By the end of this conference, I think that we will all have a better sense of our many worthy accomplishments to date in refining the measures and management of credit exposures. At the same time, we will no doubt develop a better understanding of the significant work ahead – in terms of developing more sensitive capital requirements, but also in terms of advancing our ability to control the risks we face. With regard to the New Accord itself, the issues and themes you will discuss at this conference suggest that we’ve moved beyond a discussion of the principles behind the rules to a focus on preparing for their implementation. This seems appropriate, since we expect that, given the very good progress that we have noted in banks preparing to adopt the New Accord, supervisors and the industry will be ready to implement the new rules by the end of 2006. Indeed, banks that wish to be among the first to adopt an advanced approach to credit risk should already have begun to gather and process the data that is key to the IRB approach.
During the crisis 2008–2009, GDP fell from a peak prior to the crisis in the fourth quarter of 2007 to a trough in the first quarter of 2009 by around 7.5 per cent. These falls are thus in the same magnitude as the insurance premium. If the premium and the damage are about the same size, is it a sensible insurance policy? It is actually possible that in certain special situations effects may arise from relatively small increases in the interest rate, when combined with words of warning from the central bank and financial supervisory authorities. As Charles Bean, deputy governor of the Bank of England, said in his paper presented at the Jackson Hole conference in 2010: ”[T]here may be times when a mixture of words and modest interest rate action can be effective in cooling excessive market exuberance[. ]”7 However, as far as I know, no such effect from limited interest rate increases has been actually proved. Moreover, there is hardly anyone who would claim that the Swedish housing and mortgage market is characterised by “excessive market exuberance”. As far as I know, no one has referred to any indicators of exaggerated and unrealistic optimism regarding current developments in housing prices. In his paper, Bean reaches the same conclusion that is supported today by extensive research and practical experience: “[G]enerally speaking, monetary policy seems too weak an instrument reliably to moderate a credit/asset–price boom without inflicting unacceptable collateral damage on activity.

25  By the long-run sustainable rate of unemployment, also known as the long-run equilibrium rate of unemployment, I refer to the rate of unemployment in steady state, where the economy is in a state of what is known as balanced growth, the effect of all shocks has waned and expectations are fulfilled. This should not be confused with other more short-run equilibrium concepts. According to Rogerson (1997), this is the only equilibrium concept for unemployment that is well-defined. The Ministry of Finance’s (2011) assessment from April 2011 entails a long-run sustainable rate of unemployment of 5 per cent. The National Institute of Economic Research’s (2011) assessment from December 2011 entails a long-run sustainable rate of unemployment of 5.8 per cent. The Riksbank's (2012b) assessment from July 2012 lies in an interval with a midpoint of 6.25 per cent. My own assessment is that the Riksbank’s midpoint is an overestimate of around 0.75 percentage points and that long-run sustainable rate of unemployment is thus around 5.5 per cent (Sveriges Riksbank 2012a, appendix). 26  In Svensson (2011b) I note that the forecasts for inflation and unemployment looked similar for Sweden and the United States in summer 2010 and that in this situation the Federal Reserve held its policy rate close to zero and began to prepare QE2, the second round of its quantitative easing, while the Riksbank began to raise its policy rate. 12  BIS central bankers’ speeches  How high is the cost of the current policy?
There are serious political choices here, and they are not for the central bank to make. I have set out in this talk many of the things that a central bank can do with its balance sheet. It can create central bank money, and does so in implementing monetary policy. It can also support financial stability. The Bank can use its operations to distribute money around the banking system when the inter-bank market is not operating properly. And it can provide emergency short-term liquidity support for the system or individual banks under operational and market stress by changing the size, the maturity and the type of collateral taken in its operations. And can even supply foreign currency in extremis. But, being without access to private sector savings, the Bank can not provide sustained, medium-term funding for banks, nor lend directly in size to the non-financial sector on a sustained basis. 16  More information is available at http://www.fsa.gov.uk/pubs/international/uk_rcb.pdf. BIS Review 126/2010  7  Credit supply and syndicated loans Finally, and especially given the nature of this conference, I want to touch on the supply of credit more generally. Despite various forms of support from the Bank of England and from Government, it is clear that the lending capacity of the banking system, in the UK and elsewhere, is impaired and will take some years yet to recover. Some banks need to continue de-risking and de-leveraging. Others, including new banks, are likely to grow.

In recognition of continuing stresses in financial markets, the Bank announced in January 2009 that, for an additional fee of 25 basis points, it would temporarily permit drawings from the Discount Window with a maximum term of 364 days. 12  Because covered bonds and master trust RMBS are based on revolving pools of mortgages, an exception was made to accommodate them, but with a strictly declining limit over the three year life of the Scheme. 13  But it did require Treasury agreement for the Debt Management Office to create and lend the additional Treasury bills, and for the Treasury to underwrite the Scheme should there be any losses. BIS Review 126/2010  5  Access to the Discount Window is only permitted for firms that are considered by the Bank to be solvent and viable. Nevertheless, large scale borrowing from the central bank can generate credit risk concerns in the minds of market counterparties. To avoid this “stigma”, the Bank releases information on the use of the Facility averaged over counterparties and over a three-month period, released with a further quarter’s lag. Following a market consultation, the Bank has recently announced that, as of early next year, it will extend the range of collateral it is willing to take in the Discount Window to include diverse portfolios of “raw” loans. 14 This extension has a number of advantages. Securitising loans into asset backed securities – such RMBS – is expensive and only available to firms large enough to have a securitisation programme.
the interest terms at which  BIS Review 95/2001  1  financial institutions can borrow short-term capital from them, central banks can influence the volume and price of liquidity in the financial system. Central Bank interest rate decisions have an impact on short- and long-term interest rates, financial system liquidity, money in circulation and bank lending, exchange rates of currencies, other asset prices and, last but not least, market participants’ expectations about the future development of all these factors. All this, in turn, influences consumption and investment decisions of individuals and businesses, and thereby aggregate demand. The impact in individual areas can vary greatly from one time to the next. The new Central Bank Act The previous Central Bank Act dated from 1986 and was drafted over the period 1981 to 1984. It was a product of its time and did not reflect the perspectives that later established themselves. In the early 1990s the then Minister of Commerce appointed a committee to review the Central Bank Act, chaired by Professor Ágúst Einarsson, the current Dean of the Faculty of Economics and Business Administration. Following the committee’s work the Minister of Commerce proposed a bill to parliament for a new Central Bank Act which entailed sweeping changes from the 1986 Act, including what are now considered to be many of the necessary elements of central bank legislation. However, the bill was not adopted by parliament.

The policy rate is the rate of interest applying to the Central Bank’s repo transactions with credit institutions, i.e. interest on liquid funds that they borrow from the Bank. Monetary policy has been the subject of lively debate in recent weeks and months and the Bank has been under steady pressure to cut interest rates. As the Central Bank has repeatedly underlined, its viewpoint has been that lowering interest rates entails a greater risk than waiting for a while for tangible signs that the assumptions behind the August inflation forecast will hold good. It is crucial to bring inflation down swiftly, since it goes without saying that inflation is the worst enemy of both households and businesses. A tight monetary stance inevitably has consequences which are sometimes painful for households and businesses. There is nothing to be done about that. Households and businesses alike must accept the consequences of their actions and it is obvious that many of them have simply gone to excesses in their consumption, investments and borrowing in recent years. They will need to reduce their spending, cut costs and put their finances in order. That cannot be avoided. BIS Review 95/2001  3  I also point out that the current account deficit is very large. Even though it has shrunk rapidly this year and will foreseeably continue to decrease substantially next year, it is still very large both in a historical and an international context. In order to achieve acceptable macroeconomic balance, a contraction in national income is unavoidable.