samchain/econo-pairs-v1 huggingface dataset:
Page 5/13  Chart 4 shows the development of these surpluses and deficits as a percentage of global GDP over the past 20 years. Positive values represent a current account surplus; negative values a current account deficit. I would like to highlight trends in a few selected economies. Looking first at the countries which have a current account deficit, we see that the US is among them. It is represented by the blue section of the bar. The pink section denotes all the other current account deficits in the world. In 2016, this group comprised 106 countries. Let’s turn now to the countries that have a current account surplus. These are China, shown in red, Germany in orange, and Japan in green. Switzerland is depicted with a very small, dark blue bar. All other current account surpluses are aggregated in the light blue bar. This bar comprised 42 countries in 2016. The chart illustrates three facts. First, due to the small size of our country, the Swiss surplus is relatively insignificant in the global picture of current account balances. Switzerland’s contribution to global current account balances is small and did not play a role in the growth of global current account balances before the financial crisis. Second, the size and evolution of global current account balances is defined by four major economies. China, Germany, Japan and the US today make up almost half of global current account balances. The remaining 150 or so countries together make up the other half.

Underlying price pressures are expected to increase somewhat  Page 7 sur 9 this year, owing to short-term supply constraints and the recovery in domestic demand, although they remain subdued overall, in part reflecting low wage pressures. This assessment is broadly reflected in the baseline scenario of last March ECB staff projections for the Euro Area. It foresees annual inflation at 1.4% in 2023. There is today in the Euro Area no risk of lasting return of inflation. We will continue PEPP net asset purchases “until at least the end of March 2022 and, in any case, until [we] judge that the coronavirus crisis phase is over”. We still have ample time to judge and decide, well beyond our June meeting, as Christine Lagarde said last Friday. Let me today stress one obvious but sometimes overlooked truth: whatever the future decision on PEPP, we will still be able to play and enhance the full “quartet” of our unconventional instruments: asset purchases, negative rates, liquidity provision, and forward guidance. These unconventional instruments are here to stay, beyond Covid and its crisis tools, meaning that our monetary policy can remain as accommodative as necessary, for as long as necessary. And I would like to share some thoughts on each instrument of the quartet. Asset purchases are powerful and we still have room to do more if necessary. Reinvestments under the PEPP will remain significant, and net purchases will continue under the APP, possibly adapted.
The surge in inflation rates has become a major challenge that threatens price stability in many countries. I would like to give you a few examples. Between 2006 and 2008, eighteen developing countries have implemented inflation-targeting regime. In 2006, the end-year inflation was within the target band in twelve of these countries. In 2007, this number dropped to five. By May 2008 only one of these 18 countries (Brazil) has succeeded to keep inflation within the target band. In the remaining 17 countries, including Turkey, inflation is outside the target band. Developed countries are also experiencing a similar problem. By May 2008, only in one of the eight developed countries the inflation rate is still within the band – and that country is Canada, by the way. Average inflation throughout the world has increased one-fold to seven percent over the last 12 months. Inflation in developed countries has reached its highest level of the last eighteen years. For the first time in many years, inflation figures of the developing countries are in two digit levels. In this period central banks have adopted different approaches for fighting inflation. One reason of this divergence is the difference between the objectives of central banks. For example, the Federal Reserve Bank of the United States, with ultimate goals of price stability, financial stability and full employment, lowered interest rates by 325 basis points between September 2007 and June 2008 due to severe problems in the financial system.

Second, our decisions are based on the inflation path over the medium run, not on the latest observed inflation. This requires projecting inflation via different approaches. Recent ECB staff forecasts see inflation averaging 2.3% in 2024. Given this, earlier this month we decided to front-load the normalisation path of our key interest rates, and to announce further rate hikes down the road, in order to ensure the return of medium-term inflation to our 2% target. Third, it is very difficult to know how much further our key rates will need to rise eventually in this hiking cycle, given the huge uncertainty that we face in the current context. But for this very reason, economic models are helpful in providing us central bankers with some guidance. I have provided in this speech some estimates based on models developed by Banco de España staff. Crucially, this is a data-dependent forecast which may change as time goes by and new information comes in. Also, it will depend on our future decisions regarding our asset purchase programmes. I hope that my words have reassured you about our determination to rein in inflation without causing unnecessary suffering to our fellow euro area citizens. We live in difficult times, but we expect to rise to the challenge. Thank you for your attention. 8
Indeed, I believe that it would make sense to seek to standardise the criteria for terms of office and their non-renewability across the various independent bodies in Spain. I wish now to focus on another aspect I consider relevant to strengthening the independence of the Banco de España and, in particular, its supervisory function. As I have just stated, the Banco de España has decision-making capacity over the performance of its functions. However, non-monetary policy acts and decisions (such as those concerning the imposition of supervisory sanctions) may, under the Law of Autonomy of the Banco de España,9 be subject to government review via the lodging of an administrative appeal at the Ministry of Economic Affairs and Digital Transformation. This ministry may thus review — and potentially annul —decisions made by the Banco de España.10 To avoid this possible government interference, it should be established that supervisory decisions by the Banco de España bring administrative proceedings to an end or, in other words, that  8  The average term of office of governors of the Eurosystem national central banks is more than ten years, assuming where this is legally possible that they are renewed once.

- Separation of the supervisory function from the monetary policy function: officials shall respect the separation of the ECB’s specific tasks concerning policies relating to prudential supervision from its tasks relating to monetary policy, as well as other tasks. - Public appearances and public statements: officials shall carry out their duties and responsibilities as, and consider themselves in public appearances to be, representatives of a high-level ECB body. - Relations with interest groups: while maintaining the open, transparent and regular dialogue with representative associations and civil society required by the Treaty on European Union, officials shall at all times, and in particular in their interactions with interest groups, observe their independence and professional secrecy obligations, and the basic principles established in the Code of Conduct. - Declaration of Interests: officials shall on an annual basis submit to the Ethics Committee, for assessment and onward submission to the President, a signed Declaration of Interests which shall include information about the member’s previous occupational activity, private activities, official mandates and financial interests, as well as about the gainful occupational activity of their spouse or partner, that may raise conflict of interest concerns. - Conflicts of interest: officials shall avoid any situation which may raise conflict of interest concerns.
Karolina Ekholm: Macroprudential policy and clear communication contribute to financial stability Speech by Ms Karolina Ekholm, Deputy Governor of the Sveriges Riksbank, to the Swedish Banker’s Association, Stockholm, 30 March 2012. *  *  *  The views expressed in this speech are my own and are not necessarily shared by the other members of the Executive Board of the Riksbank. I would like to thank Mr Johan Molin and Mr Per Sonnerby for all their help with writing this speech. A new policy area has attracted a lot of attention recently – an area that has come to be called macroprudential policy. Macroprudential policy entails focusing on the financial system as a whole instead of on the health of an individual institution, as is the case in traditional supervision. In my view, such a broad approach is an important, and perhaps even a necessary, complement to traditional supervision. However, we must of course be realistic about what macroprudential policy can actually achieve, particularly as monetary policy and fiscal policy are also important to the stability of the financial system. Today I will speak about how I believe macroprudential policy can be used as an element of the work to prevent financial crises. This also gives me the opportunity to mention that we have recently taken a step towards a broader approach to promoting financial stability. We have namely set up a council for cooperation on macroprudential policy together with Finansinspektionen.

Richard W Fisher: “Never let your brains go to your head” (With reference to the Sages of the Ages, Diana Sorensen, John Paul Jones and “Babe” Fisher) Address by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, for the 151st Commencement, Bryant University, Smithfield, Rhode Island, 17 May 2014. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Before I begin my formal remarks, I want the candidates for degrees to think about the fact that over 5,000 people are here today to celebrate your success. These are your parents and grandparents, cousins, uncles and aunts; your brothers and sisters; your friends; your teachers and coaches and counselors. They have been by your side through joyful moments and less-joyful ones. They have encouraged you. They have believed in you. And they have occasionally badgered and hectored you and … driven you nuts. All to good effect. They are here with glad and happy hearts to celebrate your admission to the society of educated men and women. You will be applauded by them many times today. But I want you, the graduating class, to turn the table on them and give them a round of applause. So stand up, turn around, put your hands together and give them a cheer. Thank them for loving you. Now, please be seated.
BIS central bankers’ speeches  7  Exercising care and caution in uncharted macroprudential waters The authorities are sailing in uncharted waters when it comes to macroprudential measures. The complex interrelationships between monetary policy, traditional banking supervision and the macroprudential toolkit are difficult to assess. Consequently, we do not always know exactly how the different measures will work. The need for analysis and research in this field is correspondingly great. However, to be realistic, we will never have all the answers or be able to dispel all uncertainties, as – incidentally – is always the case in monetary policy. But this should not stop us using these instruments when we judge it to be necessary. In doing so, we endeavour to exercise the requisite care and caution. Consequently, we undertake comprehensive investigations, evaluate the results carefully and systematically, and carry out our measures based on criteria which have been specified in advance. As in the case of monetary policy, if decision-making is as free as possible from political influence and manipulation attempts, its quality will be improved. Following these thoughts, I would like to return to my initial question concerning the SNB’s role in financial stability, as a kind of interim conclusion. Central banks have always had an important role in financial stability. However, the crisis has shown that the traditional approach, which relies exclusively on the power of persuasion and the extinguishing of fires, can be very expensive.

By international standards, the Governing Board is a very small decisionmaking body made up of just three people. Also, it traditionally reaches its decisions by a process of consensus. If the minutes of its meetings were to be published, discussions within the body would probably become less candid and open and – ultimately – the quality of decision-making would suffer as a result. Moreover, it is unlikely that publishing the minutes would in fact lead to better public understanding of monetary policy within Switzerland. That is why, in view of these special Swiss features, we have decided not to release the minutes of our meetings. BIS central bankers’ speeches  3  An additional way of increasing the transparency of monetary policy, and thus its effectiveness, could be the provision of information on the future path of reference interest rates. “Forward guidance” of this kind may be useful for many central banks. However, there are pitfalls and this could easily lead to confusion in the market, especially if the guidance is attached to too many conditions. However, I would not want you to misunderstand me. It is absolutely right that central banks should explain to the general public how monetary policy would react to certain developments. This is nothing new. In the case of the SNB, for instance, the conditional inflation forecast – our main interest rate indicator and an important element in our communications – already provides certain information about the future path of interest rates.
Furthermore, banks and supervisors should analyse in far greater depth how the wide range of liquidity risks may crystallise, separately or conjointly, in a stressed market environment. Rigorous stress testing should span individual, group-wide and market-wide scenarios. There is considerable scope for much better consideration of likely system-wide interactions, including the potential impact of “crowded trades” being unwound, the dynamics of liquidity hoarding, and the risks of signalling weakness and thus losing market confidence and funding lines. Stress scenarios should test properly for the outright closure of funding markets, and explore the possibility of several markets being shut concurrently. Finally, testing should consider longer horizons, to cater for the possibility that a liquidity crisis could persist for some time. These are just some of the areas which could be considered in more detail – clearly banks, supervisors and central banks all have much to learn with regards to the design of appropriately demanding and comprehensive stress scenarios. Recent events have also highlighted the need to devise considerably tougher contingency plans. Closer integration with stress tests will help firms develop more reliable and robust responses to future episodes of strain. Experience has highlighted the need to improve resilience to a sharp decline in market liquidity and to demonstrate that firms can survive the closure of one or more funding markets by ensuring that finance can be readily raised from a variety of sources. Consideration should clearly be given to boosting holdings of very high quality liquid assets that can provide reliable reserves under all conditions.

Another relatively low-hanging fruit would be a common stabilisation fund equivalent to 1 to 2% of euro area GDP, which could provide us with a proper macroeconomic stabilisation capacity. I note that this largely converges with the Commission’s proposal to create a macroeconomic stabilisation function for the euro area. This common stabilisation fund would be used under efficient rules – but not conditional to an adjustment program, contrary to the ESM – to support, through loans, Member States’ counter-cyclical policies when they are faced with asymmetric economic shocks. The fund itself would be financed by borrowing. To definitely succeed in this ambition, the euro area will need a common keystone: an institution that fosters confidence. Because, as Tommaso Padoa-Schioppa put it: “ complete and systematic consistency of [national] policies achieved without any institutional infrastructure is a dream"8. This is why the new French President has proposed creating a euro area “finance minister”, which probably requires modifying the existing Treaties. This finance minister would embody and bring to fruition the shared commitment of our Member States. As I also mentioned this idea before9, let me share some personal views on the issue.
None of us at that time could have foreseen that a virus would change the picture completely and lead the Norwegian and the global economy into a deep decline. Chart: A historically deep decline The economic outlook has changed dramatically in a short period of time. Activity in the Norwegian economy has fallen abruptly owing to the coronavirus pandemic. The virus outbreak and the extensive measures taken to contain it have led to production halts and lower activity across a range of businesses. Unemployment has risen to very high levels. Mainland GDP is projected to fall by around 5 percent in 2020. We have not seen a contraction like this since the war years. Chart: An abrupt and deep decline in the global economy The countries around us have also been severely affected. Measures taken to contain the spread of the virus, combined with changes in behaviour and uncertainty about developments ahead, have resulted in substantial declines in output across economies. In early March, we expected moderate economic growth among trading partners. Now a deep decline appears likely this year followed by a gradual rebound. The subsequent path of developments is, however, highly uncertain. The authorities in many countries have implemented powerful fiscal policy measures to alleviate the situation. Central banks have cut policy rates and taken extensive measures to stabilise financial markets. The sharp global downturn amplifies the challenges for a small open economy like Norway.

The fact that the current crisis – a public health and economic one – has not escalated into a financial crisis is because, since 2009, our prudential framework has strengthened banks’ resilience. And so, yes, France and Europe must remain committed to ensuring that the implementation of the Basel III Accord is fair, reasonable and definitive. It would be foolish to claim that Basel III will prevent lending to SMEs, when outstanding loans to SMEs in fact increased by 20% at end-November. We shall also use other tools to safeguard financial stability: the HCSF’s adjusted recommendation on real estate loans will be published this month, following our balanced and efficient decision in December. Our first “pilot exercises” or climate stress tests will be published in April. In insurance, the Solvency II normative framework has demonstrated that it is sufficiently flexible to deal with periods of tension. The review of this framework has already made progress, which needs to be continued, on two improvements that are in our view essential: i/ removing obstacles that are unjustified from a prudential point of view and that could penalise long-term investment; ii/ strengthening the countercyclical tools to better withstand a protracted low rate environment. Page 4 of 4  4/ That leaves the South, and the hope that its light inspires leads me to conclude by wishing our financial industry robust economic health. Given that it provides work for more than a million people, a strong financial industry is vital for employment.
Inflation has declined and contributed to a fall in nominal interest rates. A more stable inflation environment also results in lower real interest rates when investors become more certain about returns. Furthermore, it would appear that high saving in some parts of the world is pushing down long-term interest rates. Saving is high both in oil-producing countries, China and other Asian countries. Long-term interest rates in Norway largely shadow external interest rates because like other countries Norway is keeping inflation in check. Norwegian households primarily finance house purchases by means of floating-rate loans. Long-term interest rates are still of considerable importance because they provide information about the future path of short-term interest rates that borrowers can expect over time. Unusually low short-term interest rates have probably also boosted the rate of increase in house prices in recent years, but this effect will be reversed when the interest rate is raised to a more normal level. Short-term interest rates have influenced the path for house prices over the past 15 years, but periods of low interest rates are followed by periods of higher interest rates. Norges Bank’s key policy rate is therefore of limited importance for house price inflation over a period of 15 to 20 years. The housing stock in Norway, which numbers a good 2.2 million dwellings, shows little change from one year to the next. As a result, higher demand for housing will primarily translate into higher prices in the short term.

14 [18]  weight to “green assets”34 or perhaps avoid “brown” assets? If climate change is seen as a threat to financial stability, it may seem unreasonable that central banks themselves should hold bonds, the market pricing of which does not take into account the climate-related risk that the company contributes to. An alternative to the purchase of green bonds could be to refrain from buying bonds from companies that create carbon emissions over a certain level. I do not have an answer to the question of what action the Riksbank will take in this issue if we are faced with a scenario where we need to decide whether to extend and broaden our bond purchases. My message today is that we are participating in the ongoing international work to analyse and draft recommendations on an appropriate way forward. These questions are extremely complex. They require analysis of legal frameworks, of how green and brown assets are defined, any potential side-effects, how effective the measures would be compared with other types of measures, and the effects of policy tightening, i.e. selling assets if the economic cycle turns.35  Central banks are taking the climate issue seriously The Riksbank constantly faces new challenges that affect price stability and financial stability. Climate adaptation is one of many changes currently affecting the Swedish and the global economy. Digitalisation, a greying population, trade conflicts and, most recently, the coronavirus are other important issues that also create new challenges for us and for other central banks.