samchain/econo-pairs-v1 huggingface dataset:
Despite the downturn of the developed world and the deceleration in China, commodity prices have remained high, especially for copper. This has driven today’s terms of trade, despite a drop this year, to be fairly high by historic standards. In fact, other commodity exporting economies, such as Australia, New Zealand or Canada, have seen appreciations in their currencies that are comparable with that of the Chilean peso (figure ii). On the other hand, there is our strong economy, partly related to the effects of the higher copper price on the public sector’s structural income and expenditure, as well as with the greater impulse coming from mining projects and related investments. While the developed world is weak and the main emerging economies are decelerating beyond projections, Chile  2  BIS central bankers’ speeches  is growing more than expected. The differentials between developed countries’ and Chilean interest rates reflect this dissimilar stage in the cycle. It must be noted that the appreciation of the local currency with respect to the dollar is not an exclusive feature of the Chilean economy. This phenomenon is shared by all the exporters that are our competitors in the world markets. This, because it originates primarily in the weak dollar, which in turn originates in the strong monetary expansion carried out by the United States. However, as I said before, this is the result not only of the expansionary monetary policy, but also of weak domestic demand and external imbalances in the U.S.

Conversely, at the height of the crisis, financial conditions tightened sharply even as the Federal Reserve aggressively pushed its federal funds rate target down toward zero. As a result, monetary policymakers need to take the evolution of financial conditions into consideration. For example, when financial conditions tighten sharply, this may mean that monetary policy may need to be tightened by less or even loosened. On the other hand, when financial conditions ease—as has been the case recently—this can provide additional impetus for the decision to continue to remove monetary policy accommodation. While I agree with Hélène in most respects, there are a few points where I am less convinced. While the global financial cycle complicates policymakers’ ability to guide financial conditions in their own economies, I’m not persuaded that the trilemma has been replaced by a dilemma—that is, essentially an “either/or” choice between an independent monetary policy versus an open capital account. While there is no panacea to insulate countries from financial spillovers—particularly when policy in some areas is constrained by the effective lower bound on interest rates—I think a combination of exchange rate flexibility, a credible monetary policy framework, sufficient foreign exchange reserves, and a strong financial system can help mitigate the effects of such spillovers. Moreover, it strikes me that market participants have become more discriminating over time about the circumstances of different countries, rather than painting all EMEs with a similar broad brush.
If I may be allowed a short digression, the very recourse to a VAT-adjusted inflation measure in our analysis and communication came under fire. This is by no means different in nature than the Eurostat’s HICP at constant taxes – just more refined, in the sense that we take into account the fact that the pass-through of a VAT change is below 100% for most CPI items. Coming back to the current economic context, it should be pointed out that behind the “perfect storm” of deflationary exogenous shocks (low energy, food and metal prices, successive VAT rate cuts), demand-side inflationary pressures are looming: a positive output gap is emerging, unit labour cost pressures are building up, fiscal policy is taking a strongly expansionary turn. As such, while medium-term prospects appear to call for a tightening bias of monetary policy, the short-term context of deeply negative inflation makes communication with the public rather challenging. Specifically, we have to contend with the idea that the central bank should lower interest rates in response to VAT rate cuts. It proves more difficult than we thought to make people understand that the current negative readings in inflation are just transitory and reflect neither postponed consumption, nor sluggish wage growth one would associate with  2  BIS central bankers’ speeches  negative inflation expectations – these actually remained anchored to the target. Therefore, none of the ingredients which make for a scary deflationary trap are present.

Mugur Isărescu: Transition – how to secure a stronger economic future for the constituency? Speech by Mr Mugur Isărescu, Governor of the National Bank of Romania, in the panel on “Transition: How to Secure a Stronger Economic Future for the Constituency?”, during the annual meeting of the IMF and World Bank Constituency, Kyiv, Ukraine, 4 June 2016. *  *  *  Ladies and Gentlemen, In my address I would like to focus on the challenges in conducting monetary policy in a way that will contribute to securing a stronger economic future for countries in our constituency. Obviously, my account is shaped by Romania’s experience, but I hope it will still keep you interested, as it may be relevant for other small to medium-sized emerging economies. 1. Brief account of monetary policy regimes in Romania  At the time when the National Bank of Romania had to choose a strategy for conducting its monetary policy, i.e. in the early nineties, monetary targeting was actually the only feasible option. Not only did the low forex reserves preclude a fixed exchange rate arrangement, but, even if possible, the alternative was not suitable given the widening external imbalance. However, by the end of the decade, monetary targeting had reached its operational limits given the break in the relation between monetary aggregates and inflation, a phenomenon which matched developments elsewhere in the world. At that point, we took into account pegging the exchange rate, but neither the hard nor the soft version was deemed appropriate.
If we plant the financial literacy seed now, we will watch as our children and students grow and bloom into responsible economic citizens. As parents, teachers and educators, we can do this by sharing and talking directly with our children about money matters, teaching them of the things to improve their money management skills, and be role models for them. To the winners of the 2014 Be Money $ poster competition, I offer my heartfelt congratulations! You have done a magnificent job with these posters – your entries were chosen out of 550 entries submitted to us! I only pray that you will exercise some financial literacy with your cash prizes received today!! I would also like to acknowledge the principals and teachers for encouraging your students to participate in the competition and for incorporating financial literacy in your lessons. With the BIS central bankers’ speeches  1  rewards that your individual schools will receive today I hope you are now ever more convinced that financial literacy is worth it and that it $ off! At this point I would like to acknowledge Meilan Meredith and her team at Business System Limited for the wonderful partnership in the poster competition and kindly donating prizes and trophies for our winners today. Your partnership is greatly appreciated and we look forward to another opportunity to work with you in the future. And lastly, a big faamalo to the Financial System Development team for coordinating this year’s poster competition. I wish you all, a very blessed weekend.

Soifua ma ia manuia. 2  BIS central bankers’ speeches
The sample period is relatively short so our conclusions need to be cautious. And forecast accuracy is not the same as policy acumen. Nonetheless, Chart 3 suggests that, in a complex forecasting task, there is little to choose between experts and 37  non-experts. Tetlock’s second key point, which qualifies his first, is that not everyone can be a super-forecaster. A randomly-chosen panel of non-experts cannot by itself be expected to outperform the experts. Chart 3 demonstrates that. Super-forecasting is not simply a law of large numbers. Tetlock shows that non-expert super-forecasters have particular characteristics, including inquisitiveness and independence of mind. Only those with these characteristics consistently outperform the experts. We do not have a clean test of this hypothesis for our inflation forecasts. But just imagine the Bank had been able to identify in advance one “super-forecaster” among the pool of outside forecasters. How much would that have improved its forecasts over the sample period? The gap in two year-ahead forecast errors between the MPC and the best external forecaster in the panel of outside forecasters is around ¼ percentage point. 20/20 hindsight is a wonderful thing, but this gives some measure of the scope for forecast improvement. 38  If we take Tetlock’s points together, they suggest that there is real value in seeking the views of non-experts to help inform difficult decisions. But there are limits to these benefits. It is unrealistic to expect everyone to become a super-forecaster.

For example, “popular narratives” can emerge which shape collective expectations among the public – optimism or pessimism, exuberance or depression – and which can then drive aggregate economic fluctuations. 19  Recent research has demonstrated just how powerful those emergent popular narratives can be, economically and financially. As one example, the work of Nick Bloom and co-authors has constructed various measures of businesses’ degree of uncertainty around key issues, based on the words used in media reporting. 20  These narrative-based measures of uncertainty have been found to be important for  explaining the investment behaviour of companies over time. David Tuckett and co-authors have constructed measures of the popular narratives used by participants in 21  financial markets. They find that these narratives can play an important role in explaining asset price  dynamics, over and above the impact of macro-economic fundamentals. In a similar spirit, the work of Michael Bailey and co-authors has found, using Facebook data, an important role for shared social narratives in explaining behaviour in the housing market. 22  At a macroeconomic level, the work of George Akerlof and Robert Shiller has looked at the popular narratives which emerge during periods of boom and bust. 23  Using words extracted from newspapers, they  find the prevailing popular narratives about the economy have played a significant role in accounting for the heights of the peaks and depths of the troughs during macro-economic booms and busts. Public expectations, embedded in the stories they tell, are a key macro-economic driver.
They think that pushing down the interest rates to near zero and pumping large amounts of money into the banking system will give rise to the following positive chain effects – (a)  the interest expenses of borrowers, including individuals, corporations and governments, will be reduced;  (b)  with lower interest rates and central banks scooping up low-risk sovereign bonds, investors can only resort to equities, properties and other assets in search of higher yields;  (c)  asset prices will rise as a result, creating a positive wealth effect which will spur consumption and investment; and  (d)  consumption and investment will, in turn, stimulate employment. 9. Since the consensus was that in a zero interest rate environment QE was the right prescription, when the recovery proved weaker than expected, the natural diagnosis was that the treatment was too short and the dosage was insufficient, which led to expansion of QE and for a longer period. Indeed, in the case of the European Central Bank, the treatment went as far as introducing negative interest rates. Is QE a panacea with no side effects? 10. While there are benefits, there is a flip side to QE. I share the view of some economists that the effectiveness of QE is partly offset by the adverse side effects of zero interest rates and its prolongation. Here are six side effects that may possibly arise. 11.

But of late, we have noticed a worrying trend of FA representatives conducting or wanting to conduct other activities alongside providing financial advice. Let me give a few examples.   We have received queries from insurance agents who also want to be real estate agents. They want to be allowed to market and earn commissions from property transactions, often to the same customers they provide financial advice to.   Some FA representatives have even applied to the Casino Regulatory Authority for a junket promoter license!   MAS has received complaints against FA representatives who used their regulatory status to market questionable schemes in gold bullion. Some of these activities are clearly in conflict with FA activities. They risk undermining the interests of consumers. We will review the activities that FA representatives can conduct outside their advisory role, to ensure that representatives continue to put their customers first. Specifically, we will work with the industry on a list of activities that FA representatives should not engage in. To my mind, the activities with clear conflicts include:   money lending;    promoting junkets for casinos;    selling real estate; and    marketing investment products which do not accord safeguards to customers under the Financial Advisers Act. 4  BIS central bankers’ speeches  We will also review other activities that FA representatives engage in that are not in conflict but which may distract representatives from their professional focus.
That survey does not refer to a specific price index, so given that the average wedge between perceived inflation in the survey and actual CPI inflation is 1 percentage point, the proportion refers to the households that expect that inflation will be 3% or higher two years ahead. BIS central bankers’ speeches  9  risk derailing recovery by tightening and being unable then to course-correct. I have considerable sympathy with this risk-management approach. Table 3 provides an illustrative list of countries which have pursued the latter strategy – tightening during a post-crisis recovery and then course-correcting. The most celebrated (if that is the right word) was the Fed’s tightening in 1937. This is felt by many to have sent the US economy back into recession (Friedman and Schwartz (1963)). Almost 80 years on, the scars from that experience have yet to fade. The US experience in the 1930s was special, but not unique. In few of the cases in Table 3 did things go well. In each case the tightening was subsequently unwound. In a number of cases it had to be more than unwound due to its contractionary effects on the economy. Chart 19 shows the average path of output either side of the tightening. Most of these countries experienced several years of robust growth prior to the tightening, suggesting the economy was primed for lift-off. Yet when lift-off came, annual output growth weakened by around 2 percentage points in the following year, in the US by much more.

Several other features of household decision-making over recent years might also plausibly reflect the effects of insecurity: weak transactions in the housing market, which are 20% lower than their pre-crisis average; subdued job-to-job flows in the labour market, which remain below their pre-crisis average; and real wages which remain lower than historical relationships can explain, as workers’ bargaining power has been sapped. Over the past year, this cautious behaviour has been evident in households’ response to the income windfall arising from the fall in oil prices. This has boosted real incomes by perhaps 0.4%. And it appears also to have boosted consumer confidence. What it appears not to have translated into, or at least not yet, is higher consumption: retail spending growth is little different than before the oil price fall (Chart 16). One interpretation is that consumers are simply waiting to see if the fall in oil prices persists. My preferred interpretation is that it reflects instead the asymmetric response of a cautious consumer: good news has been banked, not blown. Consumers are pleased their glass is now less than half empty. But they are no more willing to drink it. This cautious behaviour is, to a degree, also mirrored among companies. This can be seen in the weakness of global investment since the crisis, despite the cost of company borrowing being at its lowest-ever levels (Chart 17). Uncertainty-induced weakness in investment has provided a continuing drag on recovery, globally if not nationally.
Supervision, by contrast, is the dynamic pursuit of the relevant authority’s statutory objectives, through oversight of firms’ activities. To do this effectively, you of course need regulation – but one without the other in financial services would, in my view, be futile. At the PRA, we have committed ourselves to a judgement-based, forward-looking supervisory approach. This means that we proactively take action to meet our objectives and we evolve our methods to reflect emerging developments. It also means that we rely heavily on the judgement of supervisors and get them to unearth and scrutinise the top risks at any given firm. This is delivered by a keen supervisory focus on business models and the prudential health of firms rather than a sole preoccupation with firms’ compliance with regulation, important though that is. And because we rely heavily on judgements, the PRA has a central spine of decision-making committees, with the most important supervisory decisions reserved for the Prudential Regulation Committee (PRC). But where did this approach come from? Most comparisons between the PRA’s current supervision model and those that preceded it focus heavily on the differences between the PRA’s approach and that taken by the FSA before the global financial crisis. But the truth is that the practice of supervision in the U.K. has evolved slowly over time; indeed, the roots of supervision lie much deeper and can be traced back over the past 100 years or so.

In that financial utopia, the interests of accountants, investors and regulators would be perfectly aligned. Accountants would have a verifiable valuation yardstick; investors a true and fair view of their true worth; and regulators an objective means of evaluating solvency. Fair value would serve treble duty. In practice, the fair value debate is contentious and has been for at least a century. Through history, accountants, investors and regulators have not always sung in tune. Today, accountants are singing opera Pacioli-style, regulators are rapping at 300 words a minute, while investors are left to whistle. In part this discord has been blamed on failures of EMH, “the precarious yardstick of current market quotations”. It should come as no surprise that fair value principles have faced their stiffest tests at times of crisis – the Great Depression during the previous century, the Great Recession during this. For it is at crisis time that EMH itself faces its stiffest test, perhaps none greater than recently. The heterodox British economist George Shackle observed: “Valuation is expectation and expectation is imagination”. 9 Imagination, and thus valuation, is apt to run wild at the peak of the boom and trough of the bust. These episodes of over-active imagination, or deviations from EMH, can be grouped roughly three ways.
Consequently, Malaysia’s cheque usage had fallen from 6.6 per capita in 2013 to 5.8 per capita in 2014. This is indeed an encouraging development. 1  Australia, the United Kingdom, Sweden and Norway. 2  Norway, Sweden, Denmark and Finland. BIS central bankers’ speeches  1  To reduce the country’s reliance on cash usage, the Bank has issued the Payment Card Reform Framework (Framework) which took effect in stages beginning 2 January 2015. The Framework aims to ensure that the cost of accepting payment cards is fair and reasonable, whilst creating an enabling environment for the wider acceptance of payment cards, especially by smaller merchants. Over the next six years till 2020, together with the banking industry we plan to expand the payment card acceptance network from about 240,000 terminals to 800,000 terminals and further accelerate the use of debit cards. These measures, if implemented successfully, will lessen the need for cash payments. While this target seems ambitious, we can achieve this milestone with collective efforts by all. Cash and cheques are still the main modes for bill payments in Malaysia Whilst efforts are being made to facilitate the wider acceptance of payment cards, bill payments in Malaysia are still predominantly made with either cash or cheques. In Malaysia, bill payments made via electronic channels 3 are still relatively low at 2.4 transactions per capita 4 in 2014 compared to more than 10 transactions per capita 5 in countries with successful electronic bill payment platforms such as Australia.

There are no easy or quick answers to the problems we are facing - and I'm tempted to say that if anyone thinks that there are then they probably don't understand the questions! But I am confident that persisting in our parallel attempts to maintain macroeconomic stability in our respective currency areas provides the best way forward for the world economy as a whole. But it may be a somewhat bumpy road. BIS Review 76/2001  5
Therefore their quality, impartiality and timeliness are crucial for successful functioning of the economy of any country. In addition, the statistical indicators are also a basis for the comparative analyses with the economies of other countries and are essentially relevant for positioning of the economy, worldwide. Statistics in the National Bank The National Bank of the Republic of Macedonia is largely focused on the design and the development of the statistics. Two years ago, in the process of reorganization of the National Bank operations, a separate Statistics Department was formed that unites all macroeconomic statistics, previously processed in several departments. Its establishment constitutes a centralized organization of the macroeconomic statistics maintained by the National Bank. It ensures larger coordination, methodological conformity and consistence between each type of statistics. The National Bank of the Republic of Macedonia, together with the State Statistical Office are main institutions that prepare statistical data in the country.

It is clear from this economic integration that the fear of the region’s borders considerably compromising economic development cannot be confirmed. Rather, the diminishing, relative importance of intra-regional foreign trade and intra-regional cross-border direct investment is due more to globalisation and the ensuing increase in the influence of Eastern European and Asian economies than to weakening ties within the Upper Rhine region. Thirdly, the most notable aspect of the relationship between the region’s two currencies since the introduction of the euro in 1999 is its stability. That does not mean, however, that the issue of Switzerland’s ascension to the EU is of no consequence. Having its own currency allows Switzerland to conduct an independent monetary policy that is tailored to suit its needs. Finally, the economic policy can help the region thrive further by removing remaining hurdles, such as those in the labour market and in the exchange of goods and services (Cassis de Dijon principle). A well-integrated economic region is the key to a prosperous future. “Three nations, two currencies, one economic area” - the title of the paper - not only describes the reality, it also maps out the way forward. BIS Review 45/2005  1