samchain/econo-pairs-v1 huggingface dataset:
[4] In short, key parts of the financial system froze. Liquidity dried up and price discovery was impaired. Given the exceptional nature of the shock, some of these developments may have been unsurprising. But the sharp increase in the yields of the safest global government bonds despite a flight to quality, and their marked dislocations from both interest rate swap rates and spline curves, suggest that more was going on (see slide 5). Dealer balance sheet constraints may have been one factor, especially in the United States. [5] While there are clear and undisputable benefits from having tighter leverage ratios and capital requirements, which should therefore not be watered down, the post-financial crisis architecture has made it more costly for dealers to warehouse large amounts of securities. [6] In the spring, however, the demand for liquidity was unusually high. The investment fund sector alone sold securities worth almost € billion, or 3% of their assets under management, in the first quarter of 2020 (see left chart slide 6). To some extent, this reflects the fast growth of the non-bank sector in previous years: as funds have increased in size, the extent of procyclical outflows in bad times has increased too. High-yield corporate bond funds, in particular, experienced significant cumulative outflows of more than 10% of their assets under management (see right chart slide 6). High asset valuations prior to the shock probably exacerbated the selling pressure. But evidence suggests that investment funds sold significantly more securities than those that endinvestors located in the euro area withdrew.

The opening up of the economy did not only not lead to the disappearance of industry and agriculture; it also raised Spaniards' standard of living significantly. In short, what was apparently a singular system protecting us was leading us down the road to disaster. It was not until an acute crisis hit us hard at the end of the 1950s that we realised  4  BIS Review 18/2009  that what distinguished us from other countries and what we thought was protecting us was actually achieving the opposite. It is now precisely in Spain, where employment protection purports to be in good health thanks to the high unemployment severance packages on top of government benefits, where labour shedding in the face of the current economic crisis is proving fiercer than in other countries. For this reason we should study the experience, for example, of Austria and Denmark, whose labour market reforms can offer us some ideas for reform at home. In Denmark, where the unemployment rate is 4.1%, the authorities opted to improve regular benefit payments and to practically eliminate redundancy payments. In Austria, where the unemployment rate is 3.8%, firms set up an individual fund for each worker which becomes available if workers loses their job, acting as a top-up to government unemployment benefits. When workers find employment in another firm, the unused portion of the fund goes with them and starts growing once again with the new firm’s contributions.
One factor behind the rising CPI is increased indirect taxes, for instance for tobacco, and higher administered prices. Another explanation is that the impact on the CPI from the falling interest rates in 1996-1997 is diminishing. All in all, this means that the CPI is closing in on underlying inflation as measured in various ways by the Riksbank. BIS Review 101/1997  -5-  Still, the CPI outcome for September is somewhat higher than the Riksbank had counted on. Figures for a single month admittedly do not warrant definite conclusions but it is certainly important to pay heightened attention to price movements in the coming months. Normally it is underlying or trend inflation that is primarily of interest for monetary policy. This holds unless transitory price effects influence inflation expectations. In a setting where inflation expectations are firmly anchored to the inflation target, monetary policy has some room for manoeuvre. But if expected inflation starts to rise, we must be on the alert, particularly in that the current monetary stance is stimulatory. The importance of expected inflation for price and wage formation was evident not least in connection with the 1995 round of wage negotiations. At that time, expectations of future inflation seem to have been a bit above 4 per cent, which probably contributed to the excessively high level of the ensuing wage agreements. Now that the Swedish economy is on the threshold of very important wage negotiations, there must be no doubt that the Riksbank is truly serious about the inflation target.

This successive increase in resource utilisation is already evident in some indicators. A growing proportion of firms are reporting, for example, that output is being restricted by productive factors rather than by demand. The gap between total demand and total resources for production is an important but elusive indicator of inflationary pressure. The Riksbank considers that the output gap, which is an attempt to measure the degree of unutilised resources in the total economy, is 2 per cent of GDP. With the GDP forecast from the inflation report, this means that the gap will narrow by degrees and close some time during 1999, in any event towards the end of that year. In the light of the assessments of resource utilisation and other factors, in the inflation report the Riksbank forecast that the annual increase in the CPI will be around 1 per cent in 1997 and around 2 per cent in both 1998 and 1999, with some upward tendency in the latter two years. This is our main scenario. BIS Review 101/1997  -4-  Like most other forecasts, however, inflation assessments are subject to uncertainty. Our forecasts as a foundation for monetary policy therefore do not consist of single point estimates of future inflation. In practice we construct a number of alternative outcomes and assess their probabilities. Normally there is one main scenario and two alternatives. Economic activity could be stronger than we have envisaged, so that inflation is somewhat higher; but it could also be weaker, giving lower inflation.
In addition, in the most recent period, corporate indebtedness has decreased after being driven by loans related to foreign direct investment. Likewise, currency mismatches have continued to decline. Among households, in Chile, consumer debt is made up of close to 75% of term bank loans, 18% credit cards and 7% credit lines. Virtually all consumer loans bear a fixed interest rate, with an average maturity of between 4 and 5 years. In turn, mortgage loans account for most of the increase in household debt in the last six years. As is well known, mortgages are issued almost entirely at fixed rates (adjusted for inflation), long maturities, and a prudent housing loan-to-value ratio. Together, these elements reduce the potential impact of an increase in interest rates on the financial burden of households. Regarding the government sector, the mitigation of interest rate risk depends also on the behavior of the economy’s investor base. This makes the way in which the demand for and supply of bonds behave in stressful times particularly relevant. The importance of the participation of pension funds and mutual funds in sovereign bond holdings and the fact that in the face of external shocks, the less risky funds—and with a greater share of sovereign bonds—become more attractive, also offers a cushion to the effects international interest rate shocks. Even so, this is an especially important moment to strengthen potentially vulnerable flanks in emerging economies. As I have said before, it is important to restore the slack that has helped sustain Chile's macroeconomic policy framework.

We continue to estimate that the economic recovery is grounded on a favorable external scenario, a clearly expansionary monetary policy, the completion of the adjustment of mining and housing investment and the absence of important macroeconomic imbalances. As a working assumption, we assume that in 2018 the economy will receive a fiscal impulse consistent with the current budget, including the adjustments announced by the Administration. Going forward, we assume that expenditure will follow the path of gradual fiscal consolidation defined in the fiscal policy decree just issued by the authority. With these figures, on average our economy will grow above potential in the period 2018-2020, closing the activity gap during the policy horizon, as we projected in the March Report. Also, our estimate for the economy’s potential growth continues to lie between 2.5% and 3% and it will gradually approach trend growth—between 3% and 3.5%—to the extent that the rate of investment recovers, short-term constraints disappear, and resources are reallocated to more productive activities. Come September, as has been the case for some years, we will reassess these estimates. The projected evolution of activity considers an external impulse slightly lower than that estimated in March, due to less favorable financial conditions and lower terms of trade associated to the oil price hike. Activity and inflation data of recent months have consolidated the differences between the cyclical position of the United States and the other developed economies.
The economy has also faced significant cost shocks in the past couple of years, this time in a negative direction. Commodity prices have fallen sharply, sterling’s exchange rate has risen. The combined impact has been enough to push CPI inflation down to zero. We don’t face the same trade-offs as during the 2009-12 period, as output now looks much closer to potential. Equally, there is a good argument for “looking through” some of the effects of these cost shocks. Faced with the same situation, Committee A would probably choose to loosen policy now in order to get inflation back to target as rapidly as possible. But, with the output gap projected to narrow further anyway, and because the effects of lower commodity and import prices are likely to fade over time, it would probably then face the prospect of having to re-tighten policy thereafter, as inflation threatened to move above the target. There was a very slight flavour of this in the MPC’s latest projections. The Committee has said it wants to get inflation back to target in “around two years and [keep] it there in the absence of further shocks”. Given all the other underlying assumptions in the forecast, the yield curve we faced at the time broadly does the first part of that job. But the central forecast rises a touch above target at two years and then drifts a little higher. For what it’s worth, and if only at the margin, that yield curve was thought likely to over-achieve.

The SNB will continue to monitor developments on the mortgage and real estate markets closely, and to assess whether further measures are necessary to mitigate the risks to financial stability. Page 3/3
Ardian Fullani: Recent economic and financial developments in Albania Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the Monetary Policy Statement for the second half of 2008, Tirana, 29 February 2009. *  *  *  World economy and the financial system in particular were severely hit in the second half of 2008. The crisis which struck the heart of the global financial system was progressively and relentlessly transmitted to the economic activity of advanced economies leading some of the latter into recession. The Albanian economy has been resilient amid this hitting wave. According to the available official data and judging upon a number of indirect indicators, the Bank of Albania notes that the economic activity throughout the year has by and large performed in line with the early 2008 projections both in terms of economic growth and preservation of macroeconomic balances. The Bank of Albania in particular has met its primary objective mandated by law, contributing to the maintenance of price stability. Average annual inflation rate marked 3.4 percent, which is close to the central bank’s objective. The recent global-scale developments attest to the further economic downturn. Despite the slackening of inflationary pressures as a result of the reduced demand and the slump in basic commodity prices, the tightening of lending standards and the fall in consumption and investment have led to uncertainties related to the duration and intensity of this troublesome situation.

The preservation of financial stability remains crucial for the long-term economic development and under constant consideration in the Bank of Albania decision-making process. In this context, confidence in the banking system and in its balance sheets would be the most rational behaviour of any individual, business or other agent in the Albanian economy. Global experience shows that the mutual interaction between the real economy and the banking system in terms of savings, use of payment infrastructure and expertise in the area of financial counselling and support with funds is a key feature of economies that have managed to progress and leave behind the transition countries’ level. BIS Review 29/2009  3  In conclusion, I would like to assure the public that the Bank of Albania remains committed to creating the proper premises which boost economic activity at home, without infringing the objective of price stability. In addition it will keep working on firming up financial stability in the country. The Bank of Albania decisions will be a direct contribution to smoothing out the negative effects deriving from the international crisis and they will help to ensure the further maintenance of economic and financial balances at home. 4  BIS Review 29/2009
There are several factors that are usually highlighted as explanations for this structural problem: high costs for land and construction, the current legislation on planning, construction and the environment that makes strict demands regarding the type of housing that can be built, and rent regulations. I do not intend to go into this in depth now, but would like to note that structural measures are required in the housing market, which will contribute to an increase in housing and reduce the lock-in effect. However, such measures are beyond the mandate of the Riksbank. We should perhaps also reflect on the banks’ funding of mortgages, to create a better balance in funding sources and thus better stability. The banks’ issues of covered bonds to fund housing have been successful and led to good access to funding and lower funding costs, and ultimately to lower mortgage rates. But one should also be aware that as covered bonds have become so common, we have also built vulnerabilities into the banking system: the dependence on the market for covered bonds functioning properly and the risk that the banks’ balance sheets are too highly mortgaged limits the scope to take action in a crisis situation. An excessive share of encumbered assets risks putting the banks’ other investors BIS central bankers’ speeches  7  at a disadvantage, which can mean they become more volatile in times of financial stress.

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The version of the SRM that has been agreed among European governments at the end of last year is not ideal, notably because it requires a long transition period which could fuel uncertainties. But what matters most is that we have clear and common set of rules concerning banks resolution. For the mechanism in itself, Europe has proven in the past that, confronted to acute crisis, it was able to accelerate the processes and deepen its solidarity. Ladies and gentlemen, I hope I have managed to give you a clear and up-to-date picture of the advance towards banking union. I would like to conclude by stressing just how crucial this development is in order to strengthen our economic and monetary union. I think that the ECB proved, in the darkest moments of the crisis, that it was completely committed to the euro. Our actions were driven by a profound belief that the single currency is our most valuable shared asset and that it brings enormous economic benefits. Today, with the construction of a banking union, we aim to demonstrate that this is a long-term commitment. Thank you for your attention. BIS central bankers’ speeches  3

How can the government (the central bank) generate a higher output level? By surprising economic agents with a higher than expected inflation rate. The inflationary surprise increases aggregate demand and output. However the public fully understands this situation, so the final result will be higher inflation and output at the same level as it would have reached without the inflationary surprise. Inflation cannot generate permanent increases in output. In other words, more inflation is created but not more activity, which reduces welfare. Granting autonomy to the monetary authority has been a way to establish a credible commitment with price stability while, at the same time, allowing it to implement a monetary policy that helps to smooth the business cycle. To the extent that the central bank is independent of the government’s financing needs, the inflationary bias that is attributable to financing a recurring public deficit will be eliminated. In addition, increasing the horizon of a central bank, which is related to greater independence, reduces the dynamic inconsistency problem because its interaction with economic agents is repeated over time. Within this context, the central bank’s reputation acts as a self-regulating mechanism for its behavior. Therefore, the longer the planning horizon of the central bank, the greater the probability of it implementing efficient policies. This significantly strengthens the capacity of the central bank to deal with external shocks. For an open economy like Chile, the credibility of its central bank can have important effects on competitiveness.
Instead, the key judgement for the MPC was that this uncertainty would itself weigh on demand and investment spending in particular. So I’ll say something about why, in general, longer-term capital spending is particularly sensitive to uncertainty; why consumption (and faster-depreciating types of capital) are less affected; and why housing might, in this respect, be something of a grey area. The second issue is the interaction between monetary policy, bond yields and the financial position of pension funds. Not for the first time, the MPC’s decision to ease policy has been criticised by some for raising the deficits of defined-benefit (DB) pension funds. The liabilities of these funds – fixed future payouts to the pension beneficiaries – are discounted by a longer-term bond yield. So all else equal, a fall in that yield raises the present-value cost of funding these payouts. But the key phrase is “all else equal”. The overall impact of monetary easing on DB schemes – and on the companies who run them – depends on what it does to the prices of their assets, not just their liabilities; what it does to the wider economy; and the composition of other parts of the companies’ balance sheets. Much of this has been pointed out before, including in a speech in 2012 by my predecessor Charlie Bean.

The biggest risks are a global economic downturn, a  Page 2/4  Zurich, 22 September 2022 Thomas Jordan  News conference  worsening of the gas shortage in Europe and a power shortage in Switzerland. Furthermore, a resurgence of the coronavirus pandemic cannot be ruled out. Monetary policy tightening  Ladies and gentlemen, allow me to return to our monetary policy. I would like to explain today’s decision. Last quarter, our conditional inflation forecast indicated that, without a further tightening of monetary policy, inflation would be above the range consistent with price stability at the end of the forecast horizon. This meant that further interest rate increases might be needed to stabilise inflation in the range consistent with price stability over the medium term. This has turned out to be the case. While Switzerland’s inflation rate of 3.5% is low by international comparison, it is significantly above the 0% to 2% range we equate with price stability. There are also growing signs that higher prices are increasingly spreading to goods and services that are not directly affected by the war in Ukraine or the consequences of the pandemic. Information from our delegates for regional economic relations suggests that companies can more easily transfer higher costs to their sales prices. In addition, energy prices have continued to rise overall and are increasing inflationary pressure in many sectors. This heightens the risk of second-round effects. We have therefore concluded that a significant increase in the SNB policy rate is appropriate.