samchain/econo-pairs-v1 huggingface dataset:
In fact, this episode has already served to show the benefits of some of the key elements recently added to the ECB reaction function. 3.1  An assessment of current inflation dynamics  Let me start by characterising the recent inflation dynamics. In a context in which the euro area economy is continuing to recover and the labour market is improving, headline inflation reached 5.1% in January, with core inflation at 2.3%. The surge in inflation is the result of a combination of factors. Prominent among these are the base effects stemming from the sharp drop in certain prices at the onset of the pandemic, supply bottlenecks, the steep rise in the prices of energy (especially electricity) and of other intermediate goods, and the impact of the recovery in demand on the price of some services. An illustration of the importance of these factors can be obtained by comparing price levels before and after the pandemic. The headline HICP increased by 4.7% between December 2021 and December 2019, while the core HICP increased by only 2.9% in this two-year period. The level of energy and food prices at the end of 2021 was 17.2% and 4.6%, respectively, above that observed in December 2019, while services and non-energy industrial goods increased by 3.1% and 2.3%, respectively. 8  In any case, inflation has surprised us consistently on the upside over the last few quarters, and also in the most recent months.

3  See Banco de España (2019) for a detailed discussion. 4  Andreeva and García-Posada (2019) estimate the impact of TLTROs on banks’ lending policies in the euro area. 4  Even though there is a broad consensus that these non-standard instruments have been effective in easing financing conditions and in supporting euro area inflation, economic growth and employment, their expansionary effects did not prevent inflation from remaining persistently below the ECB’s target for much of the last decade. This led the ECB to review its monetary policy strategy in order to search for ways to better fulfil its price stability mandate. 2 Main elements of the ECB’s new monetary policy strategy  The unanimous adoption in July 2021 of a new monetary policy strategy was an important achievement for the Eurosystem. This new strategy has drawn on an immense collective effort by the staff at the ECB and the Eurosystem national central banks over 18 months. Among the many new developments that this review has brought with it, let me now focus very briefly on three key aspects. For those interested, I provide a more comprehensive description of the new strategy in my article “The European Central Bank’s new monetary policy strategy”, The Euro YearBook 2022. First, the ECB has adopted a new medium-term inflation target of 2%. This target is symmetric in the sense that positive and negative deviations of inflation from the target are considered equally undesirable.
This process is indispensable to clean bank balances from investments that are burdensome and release funds that would be used for new credits. In this context, monitoring of loan quality and behaviour or difficulties that banks face in this process lays at the very centre of the supervisory activity. Second area concerns the cost of banking services for clients. On this issue, the Bank of Albania has conducted necessary analysis, which led to the conclusion that costs for a number of bank products and services, including payments and transfers, debit and credit cards, as well as some other forms of crediting, could be lower. In relation to this issue, we are focused on two aspects: First, promoting transparency in the banking sector on its relations with the clients regarding these services. For this issue, we have implemented requirements for the establishment of methodologies to determine effective crediting costs and clearly define contractual obligations vis-à-vis the clients. Banks are asked to provide all the information and explanations to the interested clients. In addition, following the same logic, we would ask from banks to establish methodologies to define their costs for bank services, mainly related to payments and transfers. 2  BIS central bankers’ speeches  Therefore, it will be easier for clients to compare between a variety of offers by banking institutions and, hence, be able to make their choice according to the most favourable alternative.

Concluding, I would like to underline that the Bank of Albania shall always be at the position the public expects it to be, in order to satisfy, at any given time, its legal responsibilities for price level and banking sector stability. In this process, state authorities, in particular the judiciary, would be needed to offer their indispensable cooperation and consider banking system issues a high priority, with the knowledge that a stable economic development of the country depends on it. The Bank of Albania calls on all relevant factors to accelerate their structural reforms on property title and execution of collateral as well as undertake a number of other administrative and bureaucratic regulations which affect banking system costs. Inviting you to openly discuss on these issues, I thank you for your attention! BIS central bankers’ speeches  3
674. Cielenska, O, Joseph, A, Shreyas, U, Tanner, J and Vasios, M (2017), ‘Gauging market dynamics using trade repository data: the case of the Swiss franc de-pegging’, Bank of England Financial Stability Paper, No. 41. Cœuré, B (2017), ‘Policy analysis with big data’, speech at the conference on “Economic and Financial Regulation in the Era of Big Data”. Coyle, D (2014), GDP: A Brief but Affectionate History, Princeton University Press. Duffie, D, Gârleanu, N and Pedersen, L (2005), ‘Over-the-Counter Markets’, Econometrica, Vol. 73, No.6, pp. 1815-1847. Dwoskin, E (2015), ‘New Report Puts Numbers on Data Scientist Trend’, Wall Street Journal, 7 October. Economist (2017), ‘The world’s most valuable resource is no longer oil, but data’, article on 6 May 2017. Ericsson (2017), Ericsson Mobility Report, November 2017. Farrell, D and Wheat, C (2015), ‘Profiles of Local Consumer Commerce’, JPMorgan Chase & Co. Institute. Financial Stability Board (2010), ‘Implementing OTC Derivatives Market Reforms’, Financial Stability Board. Fouquet, R and Broadberry, S (2015), ‘Seven Centuries of European Economic Growth and Decline’, Journal of Economic Perspectives, Vol. 29, No. 4, pp. 227-244. Ginsberg, J, Hohebbi, M, Patel, R, Brammer, L, Smolinski, M and Brilliant, L (2009), ‘Detecting influenza epidemics using search engine data’, Nature, Vol. 457, pp. 1012-1014. Goldsmith-Pinkham, P, Hirtle, B and Lucca, D (2016), ‘Parsing the Content of Bank Supervision’, Federal Reserve Bank of New York Staff Reports, No. 770.

Increasing productivity is the key to securing our welfare and the stability of our social security systems. BIS Review 63/2004  1
We focus on the case of a mark-up shock since this generates the most interesting results; for TFP and financial “panic” shocks the micro-prudential instrument alone generates good outcomes. In this instance, the single policy maker can achieve similar outcomes for the output and capital gaps to that under full commitment (black dotted line) but has to live with a somewhat higher level of inflation. The main difference in the policy setting occurs in the first period because the policy maker cannot manipulate leverage to the same degree through the future reversal of the policy rate and the bank levy that occurs under commitment. For later periods, the paths of the nominal interest rate and the bank levy are close, with higher nominal interest rates moderated by a lower bank levy. Next we consider the potential co-ordination problems when the two instruments are set by different policy makers, where to mimic delegation each is assigned only a part of the social objective function. So the monetary policy maker is given an objective over just the variances of inflation and output, with weights of unity and 0.01, while the macro-prudential policy maker is given one defined over the capital gap and the output gap, also with weights of unity and 0.01. 14 The solid blue line in Chart 9 shows the outcome of the resulting Nash game. Unsurprisingly, the capital gap is considerably narrower than under the single policy maker, because it is so prominent in the objective function of the macro-prudential policy maker.

On the other hand, there are those who reject these arguments and argue that the reduced effectiveness of monetary policy at the ZLB and during a credit crisis makes this the only effective macroeconomic policy weapon at the current juncture. Whatever the resolution of this debate, however, the traditional arguments against activist fiscal policies seem likely to still obtain once normal times return. 2. The choice of monetary instrument. Given the above, monetary policy is likely once more to take on the primary role in short-term aggregate demand management once normal times return. But the apparent effectiveness of asset purchases at altering longer-term yields opens up the possibility that they could become part of the monetary toolkit in normal times. We argued in Section 3 that despite its apparent effectiveness, there were good reasons to return to exclusive reliance on a shortterm policy rate in normal times and after any asset purchases during the crisis have been appropriately unwound. 3. The monetary transmission mechanism. The crisis has brutally exposed the limitations of conventional macroeconomic analysis ignoring the role of financial intermediaries. While the existing literature contained a strand focussing on the role of financial frictions – including those on the broad credit channel – they generally focussed on those that arose from the behaviour of borrowers. The crisis has illustrated the need to take seriously the incentives facing the intermediaries themselves.
Moreover, the originate-to-distribute model was adopted not only by large institutions but also by others, such as Northern Rock, which were not equipped to deal with funding sources considerably more volatile than traditional sources, such as deposits. Recourse to wholesale markets contributed to exacerbating credit pro-cyclicality, with more abundant credit in periods favourable to markets but also greater vulnerability in the case of  GDP ratio, the variations in the long-term interest rate and the house price/equity price gaps can signal asset price busts that are likely to occur in the next two years. 4  Syndicated loans extended to finance LBOs in the euro area reached an annual sum of almost € billion around mid-2007, and in the 2005-07 period loans to finance LBOs constituted around 13% of the total syndicated loan market compared with around 6% both before and after the boom years, based on data from Dealogic. 5  The Tier 1 ratio fluctuated around 8% and the total capital ratio around 11%. See the ECB’s Financial Stability Review, December 2007. 6  See also the box entitled “Developments in MFI loans to non-financial corporations by industry” in the December 2009 issue of the Monthly Bulletin. tighter markets conditions. This problem is not new. The crisis affecting savings and loan undertakings in the United States also originated in the differing maturities of bank assets and liabilities, which gave rise to risky activities in the junk bond and derivatives markets.

The element that marks a growing concern with regard to restrictiveness relates to the capital of banks. Clearly, the considerations in respect of the need to replenish capital are starting to exert a strong influence on the decisions of banks to grant new credit. This dynamic is worrying. It indicates that the banking system is interpreting the new regulations restrictively for credit. This approach is undesirable and out of line with the objectives so far followed by the economic policy authorities of supporting the financial system, not as an end in itself but as an essential function of savings intermediation. The outcry surrounding the effects that future capital standards and risk management – the so-called “Basel 3” – will have on credit developments in the short term seems unjustified. The new rules are specifically intended to ensure a more orderly and sustainable flow of credit, not a reduction. Moreover, as I said earlier, a gradual process of adaptation to the new requirements is foreseen. The new capital requirements may be attained in two different ways, although they have opposite effects on banking activities: reduction in banking activities, particularly in credit to firms, on the one hand, and capital increase on the other. The alarm that seems to be widespread in the banking sector concerning the new rules seems to mask the intention of adapting to them via a reduced exposure to the real economy, rather than via a capital increase.
This is true even in countries with highly developed capital markets, especially when it is kept in mind that participants in the capital markets rely heavily on the banking system for their financing facilities. Banks cannot play an effective role in the financial intermediation process unless the public has the utmost confidence in the banking system. This confidence is a key reason why banking institutions and banking instruments are crucial to a country’s economic growth and development. The combination of functions typically provided by commercial banks, however, also carries with it the risk that a loss of confidence in an individual institution can spread to the system as a whole, the so-called systemic risk phenomenon. Instances in which a country experiences a loss of confidence in its financial institutions usually result in major damage to the economy. Given the indispensable role that financial institutions play in the success of a country’s economy, governments clearly have a responsibility to subject financial institutions to some form of regulation or oversight. But here again, there is need for balance. Restrictions placed on banks by the financial oversight apparatus cannot be allowed to discourage risk-taking per se, because risk-taking is an inherent part of banking and finance in market economies. To perform successfully, a commercial banking system requires a delicate balance between risk-taking and maintaining public confidence.

The primary purpose of near-term policy actions should be to set the economy on a long-term, permanent path to price stability and sound economic growth. This orientation puts the focus of policy on inflation expectations over the long term -- the time horizon that is appropriate for most saving and investment decisions. Businesses and households are understandably concerned about the long-term consequences of inflation and price level uncertainty. This is the frame of reference reflected in the conceptual definition of price stability offered by the chairman of the Federal Reserve, Alan Greenspan -- that price stability is achieved when people do not consider inflation a factor in their business and economic decisions. Long-term inflation expectations must be anchored to a transparent and rigorous commitment by the central bank to a well-defined standard of price stability, and unavoidable deviations from the goal of price stability must be explained with reference to that standard. In my view, price stability is a means to an end -- the promotion of sustainable economic growth. Only with long-term price stability can the economy expect to achieve the maximum levels of productivity and living standards. Price stability is both important and desirable because a rising price level, even at moderate rates, imposes substantial economic costs on society.
14  -30 2003  2004  2005  2006  2007  2008  2009  Sources: Bank of England and Dealogic. (a) Rolling three-month flows. (b) Estimated using data on syndicated lending flows. BIS Review 21/2010

I would like to draw your attention to the following issues: í  first, the euro area will have to face up a number of challenges to confirm its initial success;  í  second, the success of the euro will make a contribution towards encouraging a balanced international monetary situation. I believe that in the current overall economic situation, the success of the euro will help not only Europe but also the rest of the world which will benefit from European prosperity and growth as part of a healthy world economy. This would help facilitate the current accounts adjustments of the countries affected by the crisis. The success of the euro will be complete if a number of challenges are taken up A few years ago, it was necessary to convince a great deal of sceptic people that the euro was a viable project. Many of them pointed to its presumed contradictions and its alleged inconsistencies: for example, the impossibility of achieving an efficient policy mix without a political federation; the impossibility of avoiding some “asymmetric shocks”; the lack of sufficient flexibility of the economy and real mobility of the labour force in the European countries, etc. The result was that the euro would never exist! BIS Review 81/1999  4  These criticisms proved wrong as to the introduction of the euro. But they are useful to help answer the question of what are the conditions for ensuring that the euro is a complete success.
The people can rightly expect the central bank to have an important role in this: giving them the good life. But they do not stop here. People also want the good life to continue, avoiding the excessive boom and bust cycles and, of course, avoiding unnecessary crises. They invariably want more and more of better goods and services. This requires the economy to not only simply produce at a high level, but also to make adequate capital formation to generate a high growth rate. There are many factors other than investment that affect growth - things like productivity, innovation and education. But they are outside the realm of central banking. Within the area of central banking, however, the general public can rightly expect the central bank to provide them with an environment conducive to growth, without the excessive boom and bust cycles and avoiding crisis whenever possible. What else do the people expect? People also expect a fair distribution of opportunity and income. Central banks generally do not have a direct hand in providing equal distribution of income, much less opportunity. This responsibility generally lies with the overall machinery of government. Nevertheless, high inflation, if it exists, does have an adverse effect on real individuals’ income, especially those in the lower brackets who are less able to renegotiate their pay.

It is the product of three decades’ work in building strong foundations for the sector to thrive and grow. In reflecting on our journey of developing a vibrant Islamic financial system, imperatives in three areas stand out – Infrastructure; Players; and Talent. Allow me to briefly elaborate on these three areas. First, infrastructure. Similar to developing a conventional financial system, having a robust regulatory and supervisory regime is critical for the development of a strong, resilient and inclusive Islamic financial system. What is unique about Islamic finance is the need for a clear Shariah governance framework to ensure Shariah compliance. In Malaysia, the Islamic Financial Services Act 2013 sets out a regulatory framework for end-to-end Shariah compliance. Bank Negara Malaysia is vested with comprehensive legal powers under this Act to regulate and supervise the Islamic financial system. Complementary to this is the role of the Shariah Advisory Council in ensuring greater certainty in Shariah. While our Shariah Governance Framework has met its intended objectives, we are now in the midst of reviewing and strengthening the framework in response to the evolvement of the industry. The Securities Commission Malaysia and the Labuan Financial Services Authority are also vested with similar powers, and are equally committed to building a robust and comprehensive framework for Islamic finance in Malaysia. Our policies also strive to be forward looking and responsive to the needs of the world.
This may mean, for instance, the willingness to take progressively tougher measures where the situation warrants. This in essence is what the MAS and other agencies in Singapore have done recently on the property cooling measures. Let me add that these measures are not a substitute for banks’ own risk assessment processes. Banks should continue to maintain prudent lending practices. This includes taking into account potentially higher interest rates in their credit assessments, and not assuming that current low interest rates will last indefinitely. MAS will continue to monitor banks’ activities and practices closely. Understanding Asia 12. Asia’s growth prospects have attracted global interest and a surge of capital inflows. Asia is now the second highest contributor to global trade, and is expected to overtake Europe in a few years. China, India and Indonesia are growing rapidly, registering GDP growths more than four times that of US and Europe. The prospect of greater Asian currency appreciation has drawn greater fund flows into the region. In 2010, inflows into Asian local bond markets reached record levels. 13. However, investing in Asia is not without risks. The huge capital inflows, if left unchecked, have the potential to increase inflationary pressures and fuel asset-price bubbles. In an informal survey by MAS of 30 major fund managers, almost half cited the possibility of a hard landing of major emerging economies in Asia as a key risk. While inflows have been swift, we must be prepared for a rapid outflow as well.

I would like to start this part by stressing the importance of the dialogue with market participants. The constructive discussions with bank managers serve two purposes. The commercial bankers know and  2  BIS Review 63/2001  in their own way understand both the market situation and the prevailing trends in the so-called "real economy". Thus, these regular discussions are most welcome complement to the economic analysis by central bank experts. But the regular contacts provide also a unique channel for moral suasion, for explaining central bank's concerns and in some occasions, possibilities to put pressure on managerial choices. Obviously, these contacts are easy to arrange in a small country like Estonia. We have made use of that opportunity and established dialogue with our financial sector on financial as well as on general economic issues, both on regular as well as on ad hoc basis. What we should do more is to have more in-depth contacts with the main strategic partners of our banks. The other essential, albeit specific element for crisis prevention is the pre-emptive involvement of the private sector in crisis resolution. I would like to point out two simple but effective principles that we have relied upon. Firstly, the completely free movement of capital, both long and short term, has increased the credibility of our financial policy and, thus, encouraged strategic partners to take much longer term approach to their investments. That has by now resulted in a full integration of our banks into Scandinavian markets.