samchain/econo-pairs-v1 huggingface dataset:
In our latest assessment this was based on the belief that inflation was somewhat higher than now proves to be the case. But monetary policy does not have such a degree of precision that it can control inflation to a tenth of a degree. And, moreover, inflation in July was high and far above the inflation target even after the downward revision of the figure. In the discussion ahead of the interest rate decision, I and other members of the Executive Board highlighted the weak labour market indicators which uniformly pointed to a weaker development of employment, which is also in line with the Riksbank's forecast. After the decision, the Labour Force Survey for August has been presented. This shows that employment increased by a moderate 0.5 per cent on a 12-month basis, which is marginally lower than the Riksbank's forecast. At our September meeting, we had access to the initial version of the National Accounts for the second quarter. These showed that GDP did not increase at all compared to the previous quarter and increased by only 0.7 per cent on a calendar-adjusted12-month basis. Now that the revised version of the National Accounts has been published, we can see that growth in the first two quarters has been marginally adjusted downwards in both cases. This means that growth in the first quarter was 2 per cent on a 12-month basis and with calendar effects taken into account. The corresponding figure for the second quarter was 0.6 per cent.

And if it were possible there would be no real reason to let the monetary policy decisions be made by a Board with six members. It would be enough to have a single wise decision-maker. In recent decades, however, the trend has been in the opposite direction. All over the world, it has become more and more common to let monetary policy decisions be made by a group of individuals – a committee or board – rather than by a central bank governor alone. Probably the most important explanation for this is that many central banks have become more independent in this period. This has made it seem more natural to delegate the right to make decisions to a group of people rather than to one individual. This development has meant that research on monetary policy decision-making in groups has accelerated. 1 One result that has emerged is that groups tend to make better decisions than individuals. 2 This may be because the members of the group have different backgrounds, knowledge and experience that they can bring to the monetary policy discussion. These differences mark the decisions that the group makes in different ways so that these decisions tend to be better than the decisions that an individual would have made alone – the whole becomes greater than the parts. This applies irrespective of how the decision is made – by voting, as at the Riksbank, or in some other way.
Banking services coverage: international comparison 100 90 80 70 60 50 40 30 20 10 0  Adult population with debit or credit card (percent) 90  Debit  Adult population with savings in financial institutions (percent)  Credit  80 Saving accounts (% of pop > 15 yo)  70 Cards (% of pop > 15 yo)  Accounts in financial institutions (% of pop > 15 yo)  Adult population with any type of account in a financial institution (percent)  60 50 40 30 20 10 0  OECD High Middle Low  LAC  OECD High  Low  Slide 7  50 45 40 35 30 25 20 15 10 5 0 LAC  OECD High  Low  All figures at the end of 2014. Source: SBIF (2016), “Financial Inclusion Report in Chile 2016”. [SLIDE 7] In middle and low-income countries, the proportion of population holding any type of account in a supervised financial institution under supervision amount to 37% and 20%, respectively. These figures are far below the 92% and 90% of OECD countries and high-income countries. The use of bank-intermediated debit and credit cards and savings in financial institutions follows a similar pattern. [SLIDE 8] Insurance services contribute to deepen the financial system due to their long-run investment perspective. Both life and non-life insurance is far less extended in emerging markets compared to high-income OECD countries.

Slide 3  Commercial bank balance sheet Banking sector balance sheet (percent of GDP) ASSETS Loan Portfolio Commercial Consumer Mortgage Comex Cash Other liquid Derivatives  88 48 10 24 5 7 12 5  Other  9  LIABILITIES Demand deposits Time deposits External credit Debt instruments Derivatives Other  22 46 5 23 5 11  EQUITY AND RESERVES 10  All figures as of December 2016, based on individual balance sheet. Source: Central Bank of Chile based on SBIF data. [SLIDE 4] Hence, a key concern of a central bank is risk. Risk from external shocks that may threaten price stability; risk of misjudging the macroeconomic scenario and make wrong policy decisions; risk of changes in the behaviour of banks that may compromise the transmission of monetary policy to market rates; risk of liquidity excess or shortage in the banking sector; risk of bank insolvency; risk  3  Central Bank of Chile 29 June, 2017  of disruptions in the flow of funds at the interbank or retail level; risk of risk misjudgement, and, ultimately, risk of compromising trust. Slide 4  What do central banks worry about?
A regulatory framework is clearly needed only if the present situation, or the outlook, requires it. E-banking is a rather generic term and we need to be clear what we are talking about. In the HKMA, we tend to separate e-banking into two streams: electronic money products, mainly in the form of stored value cards, and electronic delivery channel products. As regards electronic money, I think that it is fair to say that the progress so far has been somewhat disappointing as far as banks are concerned. There are two main stored value card schemes operated by banks, Mondex and Visa Cash. Both have been in the market place for some time now. However, it seems that these products have not yet gained wide acceptance. This is not unique to Hong Kong. In fact, the reaction to these products around the world has been lukewarm so far. It appears that the product is, for the present time at least, ahead of customer demand. This may change when the electronic purse function provided by a stored value card is integrated into a chip card and combined with credit and debit card functions. The other route to success is to link the electronic purse function more specifically to a particular type of purchase which people have to make in their everyday lives. That has been demonstrated in Hong Kong by the success of the Octopus card. As at end-September, 5.6 million Octopus cards have been issued, recording 3.8 million transactions per day.

The second challenge is maintaining high standards of credit underwriting and risk management in the face of more intense competition. It may be tempting for service  2  BIS Review 64/2008  providers to lower underwriting standards in order to compete for market share in the face of greater competitive pressures. In view of the severe consequences of the current global market turmoil that originated from poor underwriting standards in the US subprime market; this temptation should be resisted at all costs. Let me assure you that the Bank of Thailand, as prudential supervisor of banks, will remain vigilant to ensure that similar problems will not happen here. The third challenge is managing security risks associated with the use of new technology. Advances in IT and communications technology have enabled banks to provide faster, cheaper, and safer electronic banking services to an increasingly larger group of customers. However, proliferation of internet banking, mobile banking, and e-payment also increases the risks of IT fraud, network security breach, and identity theft, etc. If these risks are not properly managed, they could have severe financial and reputational consequences for the banks. In this regard, I urge banks to pay close attention to the best-practice guidance on IT and e-banking security risk management that we issued some time ago.
It is clear that, from 2000 to 2010, the growth differential between developed and emerging economies widened significantly, reaching around 5.5% between 2007 and 2010. Hence, the Great Recession did not affect significantly this growth differential, and prospects for the near term also indicate that growth in emerging economies will outpace growth in developed economies, but at a rate (4%–4.5%) not that different from the average between 2003 and 2005. A simple observation of the data therefore suggests that growth differentials are more important in driving capital inflows than interest rate differentials. The latter have remained quite stable for several years, and the main stylized fact of the past decade and a half has been a significant shrinkage of short term interest rates in emerging economies. A more suggestive interpretation of these broad medium-term trends is that high growth in emerging economies attracted capital inflows. Prudent macroeconomic management in emerging economies (especially compared to previous decades), allowed an improvement in external and fiscal solvency, alongside appreciation pressures. These factors helped implement lower interest rates. This different macroeconomic backdrop has also implied that today current account balances in emerging economies do not display the significant deficits observed in the run-up to crises during the 1980s or 1990s (Figure 4). The lack of a significant widening of the current account deficits should also indicate that current concerns about (net) capital flows into emerging economies could be premature, although for specific economies they could be posing more immediate policy challenges.

In the first phase, the crisis generated a significant decline in firms’ revenues relative to fixed costs (such as supplies, rentals, labour costs) that led to an increase in firms’ liquidity needs on top of those derived from the amortisation of pre-existing debt. In turn, this raised the risk that some of these corporates would not be able to meet their payment obligations (liquidity risk) together with a non-negligible probability of negative spillovers to other companies. The decisive and forceful action of economic policies has helped mitigate this risk to a great extent, so that a large proportion of these firms with liquidity needs were able to cover them. Key measures included, for example, furlough schemes that help to alleviate fix costs, and also public guarantees for business financing that have allowed for the liquidity needs to be financed. However, as the crisis unfolds, concern is shifting from liquidity risk to the deterioration of the solvency position of firms, associated with the combination of higher levels of debt as a result of the crisis with still low profitability expectations for the coming quarters, especially in sectors most impacted by the crisis and irrespective of whether these firms are viable in the long term. And this situation leads to the following two related concerns. First, it is obvious that it increases the probability of defaults which could lead to viable firms going out of business, thus making the costs of the crisis deeper and protracted.
BIS central bankers’ speeches  7  GDP growth in the euro area are to some extent counteracted by the good development of the economies in the United States, the United Kingdom and China. In the United States, GDP grew rapidly during the second quarter, and labour market data indicate that developments will remain strong. Prior to the next monetary policy meeting, we will of course continue to monitor developments in Russia and Ukraine, and we will analyse what they may mean for economic prospects abroad. With regard to developments in Sweden, GDP growth was somewhat weaker during the second quarter than we were expecting in July. Household consumption and housing investment remained strong, while exports remained weak. The indicators we have received regarding growth give slightly mixed signals. The business tendency survey, which summarises the situation for the Swedish economy, fell somewhat in July. On the other hand, the purchasing managers’ index for the services sector for the same month increased substantially. One can also note that the outcomes for unemployment received for June and July on the whole have been somewhat lower than the July forecast. The inflation figures for June and July show that both the CPI and the CPIF increased somewhat faster than the forecast in July. As you may note, the information received since the monetary policy in July tends to point in different directions, and it is too early yet to say how monetary policy will be affected.

Some issues that were taken up at this meeting were tougher capital requirement for Swedish banks and the need for measures to manage households’ high and growing indebtedness.9 Prior to the May meeting, Finansinspektionen published a proposal for how the new European capital adequacy regulations should be applied in Sweden. The measures presented by Finansinspektionen were mostly already known, but the way they are implemented is of course important. This applies in particular to the implementation of a CET 1 capital requirement of 12 per cent for the major Swedish banks, an increase in the risk weight floor for Swedish mortgages to 25 per cent, and the introduction of countercyclical capital buffers. 9  Other macroprudential policy issues discussed include the risks linked to our large and interlinked banking system, which has a high degree of market funding, and various types of measure related to these risks. You can read more about this in the minutes from the meeting in May. See http://www.regeringen.se/sb/d/18209/a/241631. BIS central bankers’ speeches  5  The Council’s meetings are prepared in the drafting committee, which consists of high-level representatives from the various authorities. The drafting committee has held regular meetings during the spring. Each respective authority has worked intensively on various questions, and there has been a substantial exchange of information and analysis between the authorities under the umbrella of the drafting committee. It has been both useful and educational to hear the other authorities’ views on the stability situation and the need for measures.
In fact, adding up the net specific provisions made for loan losses since the beginning of 2008, the general provisions also used to cover impaired assets, and the charges to reserves by savings banks involved in the aforementioned restructuring processes, write-downs in the last three years by the Spanish banking system amount to about € billion, or around 9.5% of GDP. Moreover, in that same period, thanks to FROB resources, but also, especially, to the efforts by banks, the latter have increased the capital held in excess of minimum requirements by approximately € billion, or roughly 5% of GDP. A key factor in the sector restructuring strategy has been the decision to increase the transparency of the Spanish banking system as much as possible. Whenever the general perception is more negative than the reality, the best policy is to present all the data clearly. For that reason the Banco de España announced last June that it would conduct stress tests,  BIS central bankers’ speeches  3  which it was later agreed should be carried out at the European level under the coordination of the CEBS. Although these tests were severely criticised after the collapse of some banks in other countries which had successfully passed them a few months earlier, the rigour and transparency of the exercise carried out by the Spanish supervisor must be emphasised. Demanding criteria were used and, unlike in other countries, all listed banks and savings banks were tested and much more detailed information on their portfolios was offered.

The Malaysia International Islamic Financial Centre, or MIFC, initiative, launched in August 2006, has taken Malaysia's liberalisation strategies to a new level with the aim of positioning Malaysia strategically in this new growth area. Islamic banking institutions are allowed to undertake a broader array of Islamic financial activities that include commercial banking, consumer banking, investment banking as well as international currency business under the MIFC initiative. Financial institutions need to consider their own competitive positioning in this area and to have the appropriate strategies to participate in this dynamic growth sector. Finally, the regulatory and supervisory paradigm will also continue to evolve. Indeed, we have over the recent decade witnessed significant global shifts in the approaches to regulation and supervision across many countries. These have ranged from radical policy responses in some countries that led to the introduction of costly regulatory systems to address the problems have emerged, to bold deregulatory measures pursued in other countries, especially during times of exuberance and strong market conditions. A convergence towards the middle ground between these two extremes now seems to be emerging. Two dimensions of regulatory change will be relevant to the context of the new environment. First, the emphasis on creating a strong risk management culture that is fundamental to sound banking operations will become significantly more pronounced. T he transition to Basel II and the implementation of the risk-based supervisory regime are important elements of this change.
6 The effects of the Federal Reserve’s actions in establishing these facilities on credit markets are discussed in  Nina Boyarchenko, Richard Crump, and Anna Kovner, The Commercial Paper Funding Facility, Federal Reserve Bank of New York Liberty Street Economics, May 15, 2020 ; Antoine Martin and Susan McLaughlin, The Primary Dealer Credit Facility, Federal Reserve Bank of New York Liberty Street Economics, May 19, 2020; Nina Boyarchenko, Richard Crump, Anna Kovner, Or Shachar, and Peter Van Tassel, The Primary and Secondary Market Corporate Credit Facilities, Federal Reserve Bank of New York Liberty Street Economics, May 26, 2020; and Marco Cipriani, Andrew Haughwout, Ben Hyman, Anna Kovner, Gabriele La Spada, Matthew Lieber, and Shawn Nee, Municipal Debt Markets and the COVID-19 Pandemic, Federal Reserve Bank of New York Liberty 3/4  BIS central bankers' speeches  Street Economics, June 29, 2020. 7  Jerome H. Powell, Current Economic Issues, Speech at the Peterson Institute for International Economics, Washington, D.C. (via webcast) (May 13, 2020). 4/4  BIS central bankers' speeches

11  Jun.22  Figure 3 Inflation Expectations (annual change, percent) Surveys to analysts (1) (2)  Surveys to firms (1) FTS two years out EES two years out FTS one year out EES one year out  10  8  PDES two years out (4) PDES one year out (4) IMCE one year out (3)  10  8  6  6  4  4  2  2  0  0 17  18  19  20  21  22  17  18  19  20  21  22  (1) Response medians are shown. (2) FTS considers the survey for the first two weeks of each month through January 2018. From February 2018 onwards, it considers the last survey published in the month, including the one prior to the June 2022 Meeting. In months in which the survey is not published, the latest available survey is considered. (3) Average of trade and manufacturing medians. (4) Price determinants and expectations Survey carried out on companies by the Central Bank of Chile. Sources: UAI/Icare and Central Bank of Chile.
The precise details of the model are not important for tonight. Many of the mechanisms and channels that I will discuss are embodied within standard pricing models. 1 More importantly, my experience of speaking to businesses since the financial crisis began suggests that this type of framework captures the key factors that have been important in determining their pricing decisions. In particular, this type of pricing model emphasises the role of four types of factors. First, the marginal cost of producing an additional unit of output, which is likely to depend on the degree of spare capacity. Spare capacity within firms – since it tends to be cheaper for a company to increase output if some of its employees and capital are not fully utilised. And spare capacity in the wider economy – as slack in the labour market will tend to limit wage growth and thus the cost pressures faced by companies. But many companies face other cost pressures that are not related to their own capacity constraints or the ease with which they can hire staff. These “other” costs are the second factor. Some of these costs relate to inputs that are imported, such as energy and other commodities, and so depend on movements in world prices and in the sterling exchange rate. Others stem from domestic factors, including – importantly in the current context – changes in indirect taxes.

8  See the box on page 5 of the July 2010 Agents’ summary of business conditions, available at: http://www.bankofengland.co.uk/publications/agentssummary/agsum10jul.pdf  BIS Review 122/2010  5  But it may also reflect the nature of this recession. Speak to almost any businessperson and they will tell you the same story: to be successful, businesses need healthy cash flow. Cash is king. That has always been the case. But one consequence of the financial crisis – as the availability of bank financed tightened and trade credit dried up – is that the importance placed on maintaining cash flows increased. Companies were less able to trade-off lower selling prices today for future gains in market share. 9 Inflation expectations The final factor emphasised by the pricing model is inflation expectations. The importance of inflation expectations is well understood. If wage and price setters expect the MPC to keep inflation close to target for much of the time, this will be reflected in their behaviour which, in turn, will help keep inflation close to target. Successful policy and anchored inflation expectations are self-reinforcing. A significant risk associated with the recent period of above-target inflation is that it causes inflation expectations to become less well anchored. The dangerous talk may start to be believed. If so, temporary deviations in inflation would tend to be given greater weight in wage and price setting and so become more persistent. And the task of monetary policy would become substantially harder.