samchain/econo-pairs-v1 huggingface dataset:
Of course, I am deeply indebted to His Excellency the President for appointing me as the Governor of the Central Bank of Sri Lanka. I am also indebted to the Hon. Prime Minister and the Hon. Finance Minister for supporting my appointment and I very much hope that I will be able to fulfill the trust they have reposed in me. When I met the President, he just told me one thing, he said “Do your work in a straight way and do not fear anybody in discharging your duties.” Now my intention is to follow his direction. When I met the Honourable Prime Minister, he laid out his vision for where he wants to take this country and there is a big role for the Central Bank. And in many ways, if we are not able to fulfill our functions in the way it should be fulfilled – in-terms of creating a platform for macroeconomic stability with strong macroeconomic fundamentals, having financial sector stability so there is confidence right through the system – nothing else is possible. That is the first step, to get strong macroeconomic fundamentals, to have the financial sector which is the lifeblood of the country stable, and people within the country and outside having confidence in it. So that is our responsibility. And as I said, because I genuinely believe that nothing else will really take off, unless we are able to do our job well, to fulfill our functions well.

And now there are a number of important things that need to be done, which we, once I’ve spoken to the senior management – it is only forty eight hours since I knew about this appointment which was a bit of surprise as well – so I am not as well-prepared as would like to have been before I came before you, but I certainly will be talking to the Deputy Governors, the senior management and eventually to the Monetary Board to work out what we need to do. And then maybe at that point I will speak to you again, to share with you what we have to do in, say, the next three months, next year, the next three – five years, we need to think through, because as I said, the Central Bank has to really set the tone, to set the framework for everything else to happen. I don’t want to go on for too long and I just really want to leave three thoughts with you as to what the Central Bank, in my view, should be imbued with, what its culture should be. One is clearly, integrity. Two is technical excellence and three is professionalism. I would like those three concepts to be the guiding principles for all of us as we go forward.
This is what a responsible government ought to do:  2  BIS central bankers’ speeches  •  to state that the adjustment is for the country’s own good, and not just to please international lenders;  •  to tell the hard truth;  •  to explain what needs to be done;  •  to be clear what the consequences of non-action or of alternative policy choices would be. All this is conducive to public acceptance of the programme and, therefore, its success. And this is also in the enlightened self-interest of the government, as the electoral reward of the Latvian Prime Minister demonstrates. Beyond economic considerations, the adjustment programme has to be put into a broader context. Political factors can also be key justifications for undertaking difficult economic measures. In the case of the Baltics, the ultimate objective of adopting the euro also has a geostrategic dimension, namely completing their firm anchoring in a Union based on freedom, democracy and human rights. In fact, sharing a currency is more than just drawing economic benefits; it means being part of a community with a shared destiny. This project of political integration justifies making short-term sacrifices to join – or stay within – the euro area. To sum up, a speedy fiscal adjustment, a critical mass of structural reforms and a strong national ownership: these were, in my view, the key ingredients of the Baltic recipe for a quick economic rebound.

But let me state very clearly that the euro area is not a closed club. It is open to any EU Member State that fulfils the convergence criteria on a sustainable basis. IV. Conclusion  The Baltic experience demonstrates that euro membership is not just about economics. The economics alone make only for a partial analysis of the failure or success of an adjustment  BIS central bankers’ speeches  3  programme. The political motivations – such as the determination to join the euro area or to safeguard the political capital invested in EMU – have often been underestimated by markets during the crisis. I firmly believe that both economic and political arguments will ultimately also prevail in countries currently in the middle of an adjustment process that is similarly painful to Latvia’s experience. Thank you very much for your attention. 4  BIS central bankers’ speeches
These advantages are an inevitable outcome of the presence of a large number of market participants and the further unfolding of the Financial Services Action Plan, which will enhance the tradability of euro assets in the euro area and beyond. Participation in the single currency area provides scope for further cost savings in the form of lower risk premia resulting from adherence to the EU’s strict macroeconomic policy framework. This aspect is particularly relevant in the Maltese context, as the small size of the country and the prevalence of micro-enterprises make the economy highly susceptible to developments abroad. Foreign banks and suppliers seek to cover this perceived risk by building a higher risk premium into the prices quoted to Maltese businesses. The insurance provided by the discipline of EMU, and the high level of intra-EU integration should reduce this perceived vulnerability and, with that, the risk premium. This is conducive to lower interest rates and to access to financing on more favourable terms. A related advantage is the improved marketability and acceptance of collateral. Maltese lira assets are not considered sufficiently liquid by foreign lenders in view of the thinness of domestic financial markets. Many SMEs are consequently either denied foreign financing altogether, or offered prohibitive rates. This constraint should ease considerably with the adoption of the euro, as the redenomination of domestic assets into euro will improve the marketability of the collateral offered by local businesses.

In other words, the single currency will expose the performance of Maltese businesses to a much more detailed scrutiny than they are accustomed to. From a broader macroeconomic perspective, it could also be argued that just as the euro will enable domestic operators to reap the full benefits of the Single Market, a higher level of integration with the EU could also make the Maltese economy more susceptible to developments abroad. This applies in particular to the financial sector. Thus, for example, while participation in European financial markets will present unprecedented opportunities for risk diversification, this also carries with it an increased danger of contagion should weaknesses develop in specific segments of the market. Furthermore, the TARGET payment system will facilitate the transmission of financial risks between different institutions operating within Member States, calling for extreme vigilance on the part of the Central Bank of Malta and the MFSA. While most sectors of the Maltese economy have been exposed to international competition for a number of years now, and while the financial sector incorporates adequate safeguard measures, there is clearly no room for complacency.
Although the degree of aggression may have somewhat subsided in the aftermath of this crisis, banks are still extending loans to persons they assess as creditworthy. Outside the banking system, credit availability by non-bank financial institutions has also increased in many forms with annual growth in direct loans disbursed by microfinance institutions and leasing finance institutions showing a significant rise. Chairperson, although these developments are encouraging and commendable, I do not think we should be fully satisfied with them. It is not enough to merely increase the number of financial institutions, nor is it enough to concentrate on building consumer loan portfolios to salaried workers only. In my view, the real gains should arise not only from increased accessibility to financial services by more of our people, but also the cost at which such accessibility is made possible. I am sure you will readily concur with me that access to finance in Zambia is still relatively low at 37.3% as at end July 2009. This is hampered in part by the continued high cost of finance and the limited financing options available to the larger part of the Zambian business sector, particularly the small and medium enterprises (SMEs). One can attribute this state of affairs to several factors which broadly are influenced by the macroeconomic environment as well as micro-structure and practices of our financial system.

Jan F Qvigstad: Seminar on Bayesian Econometrics (ESOBE) – opening remarks Opening remarks by Mr Jan F Qvigstad, Deputy Governor of Norges Bank (Central Bank of Norway), at the fourth annual meeting of the European Seminar on Bayesian Econometrics (ESOBE), Norges Bank, Oslo, 22 August 2013. *  *  *  Good morning everyone! It is a privilege for me to welcome you to this year’s European Seminar on Bayesian Econometrics, which has attracted the interest of such a distinguished group of international scholars. I would like to extend a special welcome to those of you who have traveled far in order to be here today. As a practitioner of economic policy, I have experienced the use of economic models for almost half a century. Back in the late 1970s, the Norwegian Ministry of Finance used a large input-output model to calculate the effects of fiscal policy. Somewhat contrary to common sense – even then – the model suggested that an increase in government spending would reduce inflation. To remedy this obvious mistake, we calibrated a new model – using our priors on critical parameters – to get results that were more consistent with our experience. The lesson I take away from this is the following: To be useful, models need to be consistent with the view of the world that we apply to policy. This consistency principle, in my view, lies at the heart of the progress made possible by Bayesian modeling.
According to the latest IMF projections output will fall this year in no fewer than 10 European economies. And the IMF recently lowered its forecast for growth in the advanced economies next year. Ours may be a sceptred isle, with its own currency and control of monetary policy, but we cannot insulate ourselves from these events. So this precious stone set in the silver sea seems more like a storm-tossed vessel. Despite the probable rise in output in the third quarter, the big picture is that GDP is barely higher than two years ago, and remains some 15% below where steady growth since 2007 would have taken us. Total exports have risen sharply in the wake of sterling’s depreciation, but manufactured exports to Europe are falling. Recovery and rebalancing of our economy remain the main challenges for economic policy. Here in Wales, despite impressive improvements to the infrastructure – not least the remarkable regeneration of Cardiff Bay and the magnificent monument to Welsh culture in this Millennium Centre – your economy too is suffering with total production well below its peak in 2007. In combating the downturn, monetary policy has played its part. Bank Rate has been cut to its lowest level ever and the Bank has purchased £ billion of assets in order to inject money into the economy. Although this unprecedented degree of monetary loosening has prevented a depression, it has caused pain to those dependent on interest income. And we have not been able to avoid a sharp rise in youth unemployment.

The United States also has substantial structural current account and budget deficits. Sweden has been exposed to a major demand shock with a collapse of exports and a loss of demand in the export sector. Exports are now recovering again. Sweden does not appear to have any structural problems in the finance sector, or in any other sector, and has no structural budget or current account deficits. This being the case, I think one could claim that the development of Sweden’s potential GDP should in fact be better than that of the United States, not worse. The difference in potential GDP underlines the difficulties and the element of arbitrariness in these calculations. Figure 6 compares the Riksbank’s estimates and forecasts for potential GDP from two different points in time, namely September 2008 shortly before the investment bank Lehman Brothers went bankrupt and February 2011. The September 2008 forecast for Sweden’s potential GDP is rather similar to the CBO’s latest forecast for potential GDP in the United States in Figure 5. We can see in Figure 6 that the February 2011 assessment of potential GDP in the longer term is approximately 4 per cent below the corresponding assessment in September 2008. Why should a pure demand shock in the absence of structural problems lead to such a significantly lower potential GDP in the longer term?
As a first step, Parliament has been debating: whose control? As control of the rulebook becomes a stronger reality now that we are moving away from the start-position in which we simply imported all the existing rules from the EU, what are the respective roles of Parliament, the government and regulators in this process? A lot has already been said on this by us and others so I will not repeat it here, but I will point out that we are busy preparing ourselves for whatever new role Parliament allocates to us. Indeed Parliament has already decided this for the latest round of Basel rules, and my colleague Vicky Saporta is leading our efforts to re-tool our policy-making function for this new era. We are also getting on with important reforms while that wider debate unfolds, rather than waiting for it to conclude. This is procedurally complex because the position we inherit from the onshoring of EU rules is one in which the location of rules sprawls rather uncomfortably across different levels of legislation and our rulebook. This messiness was necessary to get the onshoring done on time but it makes it complex and time-consuming to update rules – so I hope that we will be able to move to a more coherent structure through time, as proposed by the government in its Future Regulatory Framework consultation. In the meantime, it means that many of our reform efforts involve decisions not just for the PRA but also for government and Parliament.

These have been complemented with initiatives to deepen the bond and equity markets, resulting in a more diversified financial infrastructure. Another priority area has been the development of the Islamic financial system as a viable component of the financial system. With more than two decades experience in developing Islamic finance, Malaysia today has a comprehensive Islamic financial system with all the core components of banking, takaful and the money and capital markets, and supported by a strong legal and supervisory framework. The assets mobilised by the Islamic banking sector have increased significantly to account for about 10% of the total assets of the banking system. In the Islamic capital market, outstanding Islamic bonds amounted to about 45% of the total outstanding bonds. As our domestic financial system develops and strengthens, Malaysia has gradually moved towards a more deregulated and liberalised environment. In the regulation of the banking institutions, a balance will be made between promoting competition and innovation, and maintaining prudence and stability. Regulations will continuously be reviewed to provide greater operational flexibility for banking institutions without compromising prudential objectives. The introduction of the new interest rate framework reflects the move to promote more efficient pricing in the banking system. As progress is achieved in enhancing the capacity and capability of domestic institutions, the financial sector will continue to be gradually liberalised. Moving forward, further deregulation will be undertaken to simplify and liberalise regulations and administrative rules for businesses.
And today, the credit extended to AIG by the New York Fed remains fully secured. Likewise, the Federal Reserve’s loan to Maiden Lane LLC, which facilitated the Bear Stearns rescue, was and is fully secured. The security is important because it is the taxpayer’s  6  Ben S. Bernanke, Chairman, Board of Governors of the Federal Reserve System, Federal Reserve Policies to Ease Credit and Their Implications for the Fed's Balance Sheet, National Press Club Luncheon, National Press Club, Washington, D.C., February 18, 2009 (emphasis added). 7  See EESA, §102(c)(4), “Adjustment to purchase authority” (“The purchase authority limit in section 115 shall be reduced by an amount equal to the difference between the total of the outstanding guaranteed obligations and the balance in the Troubled Assets Insurance Financing Fund.”)  BIS Review 112/2010  5  protection in the event of a default. There is no similar protection to the issuer of a naked guarantee; if the obligor of the guaranteed obligation fails to perform, the guarantor is liable. On Sunday, September 14, with an acquisition of Lehman no longer possible, a working group of market participants focused on the best way to mitigate the effects of a Lehman bankruptcy. They concluded that a contingency plan developed by the SEC, the Treasury, and the New York Fed was the best option. Under this plan, Lehman’s parent would file a Chapter 11 petition, but the broker-dealer subsidiary would continue to operate.

At the same time, our expectation for a moderate recovery in 2015 and 2016 remains in place. Demand should be supported by a number of factors. Among them are our monetary policy measures and progress made in fiscal consolidation and structural reforms in some countries. At the same time, high unemployment, sizeable unutilised capacity, and the still ongoing and necessary balance sheet adjustments are likely to dampen the recovery. Risks to the economic outlook continue to be on the downside. In particular, the weakening in the euro area’s growth momentum, alongside heightened geopolitical risks, could dampen confidence and, in particular, private investment. In addition, insufficient progress in structural reforms in euro area countries constitutes a key downward risk to the economic outlook. Inflation in the euro area remains very low. In October, it stood at 0.4%. We expect it to remain at around current low levels over the coming months, before increasing gradually during 2015 and 2016. Looking forward, we closely monitor risks to price developments. The latest monetary data point to subdued underlying growth in broad money. Its annual growth rate has increased moderately over recent months. It appears that the turning point in credit growth is now behind us, and credit growth rates, while remaining negative, are gradually improving. Monetary policy and financial fragmentation Let me turn to financial fragmentation, the first topic you suggested for today’s hearing.
Without bold actions, economic as well as political ones, the potential for Europe to be swept into a downward spiral of collapsing confidence and stagnant growth looms large. This grim possibility will remain a drag on the global economic backdrop and hence a key risk factor for the Thai economy in the foreseeable future. BIS central bankers’ speeches  1  While the potential impact on Thailand through financial channel appears limited due to low direct exposure of the Thai financial institutions to the European financial system, the impact through trade could be significant. This reflects Thailand’s strong trade tie with Europe, which accounts for around 10 percent of our total exports. Fortunately, any such slowdown in Thai exports can be cushioned to some degree. A key reason is Thailand’s shift towards more intra-regional trade within Asia, as well as our success in diversifying into alternative export markets more generally. Against this backdrop of continuing headwinds from abroad, I believe that Thailand is poised for a sustained upward growth trend. Despite the floods, our long-term growth trajectory remains intact. We project that economic growth will rebound to 5.7 percent in 2012 driven mainly by strong domestic demand. Fiscal spending through flood-relief and stimulus measures will play a supportive role. The latest economic data show private consumption already recovering swiftly. Business confidence has also rebounded strongly and investment is projected to regain a firm footing by the third quarter of this year.

For purposes of comparison, the (dash-dotted) green curve shows the conditional inflation forecast published in March, which was also based on the assumption of a three-month Libor of 0.25%. Until the beginning of 2012, the path of the SNB’s new conditional inflation forecast lies above that of the previous quarter’s forecast. This is attributable to the assumption of higher oil prices compared to the previous quarter and somewhat higher import prices. The significant increase in the third quarter of 2011 is due to a base effect, because inflation in the corresponding quarter of 2010 was comparatively low. In addition, a one-off statistical effect can be expected in the third quarter of 2011. This is attributable to more frequent data collection in the case of prices for clothing and shoes; it also accounted for an increase in inflation in the first quarter. During the course of 2012, the path of the new forecast falls below that of March, due to the slowdown in inflation attributable to the latest appreciation in the Swiss franc. Towards the end of the forecast period, inflation rises briskly and exceeds the upper bound of 2%. This shows that the current expansionary monetary policy cannot be maintained over the entire forecast horizon without compromising price stability in the long term. Due to the risks mentioned previously, the conditional inflation forecast is, however, associated with a high level of uncertainty.
As a consequence, interest rates in Sweden  19  For a theoretical discussion about the consequences of financial imbalances on flexible inflation targeting, see Woodford (2012). 20  See Giavazzi and Mishkin (2006), Goodhart and Rochet (2011) and Goodfriend and King (2016). See also Bryant, Henderson and Becker (2012). 21  See Mitelman (2013), Schück (2015), Sydsvenskan (2015) and Dagens Industri (2015). 10  BIS central bankers’ speeches  would remain at today’s extremely low levels for even longer to come. 22 For reasons I will shortly outline, it would, however, be more difficult to counteract economic recessions in the future, if inflation, inflation expectations and the average nominal interest rate were to remain permanently at very low levels. The international debate has not concerned itself too much with globalisation and digitalisation having lastingly held back inflation. Instead, it has been argued that central bank inflation targets should be increased. 23 One reason for this is that real, long-term interest rates have fallen by about 4.5 percentage points around the world over the past 30 years. 24 One consequence of interest rates being much lower than twenty years ago is that it has severely restricted the scope for central banks to cut their policy rates when the economy has been weak or inflation has undershot the target. One way of dealing with this is to raise the inflation target.

I said at the outset that a nation needs an efficient and secure payment system. If it does not function, that nation’s currency will lose its place in the monetary system. And therefore, for every central bank that issues a currency, it is important to govern and control developments in the payment system. This is the core issue: Only Norges Bank can provide final and secure settlement in Norwegian kroner. This will be the fundamental tenet for ensuring that the payment system in Norway continues to be efficient and up-to-date. 5/5  BIS central bankers' speeches