samchain/econo-pairs-v1 huggingface dataset:
For example, Charts 8A and 8B focus on the topic of the “labour market” in the MPC’s minutes. They suggest the fraction of time spent discussing this topic picked up in 2013, the year that the MPC issued forward guidance linked to the unemployment rate. 37  Charts 9A and 9B do the same for the FOMC’s deliberations, focussing on groups of words from FOMC transcripts related to “recession”. With individual FOMC transcripts, we can also track how much time each individual FOMC member devoted to this topic, shown in the range. The median FOMC member started talking more about recessions at the point the US downturn took hold, although there was a significant variation in the time different FOMC members devoted to this topic. Taking this literature together, it suggests the great strides forward in central bank transparency over recent years have delivered some significant stabilisation benefits, most notably for financial markets, inflation expectations, macro-economic forecasts and, to some degree, media reporting. So what the missing links when assessing the potential benefits of central bank communications? Three stand out. First, the vast majority of studies have focussed on the ex-ante informational benefits of central bank transparency. There is far less evidence assessing whether openness initiatives have affected central bank legitimacy – the ex-post accountability benefits. In other words, empirical evidence has focussed on the role of central bank transparency in fostering understanding rather than trust.

The issue of measuring price stability However, this raises another issue, especially in the current context of muted inflationary pressures but ample fluctuations in asset prices: are we measuring inflation accurately? Is price stability being ensured, in the context of large movements in asset prices? Shouldn’t asset prices be taken into account when defining price stability? Up to now, this debate has focused on the role asset prices may play as leading indicators of inflation: one rationale behind this thinking may be that asset valuation is computed in a forward looking manner, and therefore asset prices embed expectations about future economic growth and future inflationary pressures. Empirical evidence gathered on such an issue tend to support the idea that some asset prices, housing prices in particular, may actually play such a role. However, this theory has to be qualified by the fact that, as I mentioned earlier, wealth effects are difficult to establish in a definitive manner. This is probably less true for the US, although this is debatable and could be discussed in this conference, but this is more likely to be true for the euro area. Moreover, there might be a danger that asset prices diverge from the CPI, as this was observed over the last few years. There might be an internal conflict here if the objective of price stability is defined by aggregating the changes in the CPI and the changes in asset prices, and this is a crucial issue since the nature of both types of prices is fairly different.
Even the watchmaking industry – which, as a producer of luxury goods, suffered a massive drop in demand during the crisis – has seen a strong recovery in the last year thanks to the global turnaround. Accordingly, exports of watches are now only slightly below their pre-crisis level. 3. Conclusion  In closing, let me recap. The geographical orientation, the focus on products less sensitive to the business cycle, and the specialisation in top quality goods are the three factors likely to have mitigated the negative impact of the most recent financial and economic crisis on Swiss exports. On the whole, the Swiss export industry seems to be well positioned to compete successfully on a global level. Such a conclusion is reassuring, because major challenges still lie ahead. 17  For example, Credit Suisse (2006): Quality – The Export Industry’s Only Chance? BIS Review 157/2010  7  For instance, Switzerland’s increased focus on the Asian market also has its risks. A significant slowdown in Asia’s economic recovery – particularly in China – would undoubtedly impair Swiss export prospects. Needless to say, however, a renewed downturn in Europe – still Switzerland’s most important trading partner by far – would impact Swiss exports to a far greater extent. Furthermore, current exchange rate developments pose a major challenge for Swiss exporters. Since the onset of the financial crisis, the Swiss franc has appreciated in real terms by around 15%.

Even though the EU – with an export share of over 60% – remains its most important trading partner by far, 4 there are other more dynamic regions that – measured by their contributions to export growth – are becoming increasingly important for Swiss foreign trade. This is particularly true for China. Since 2001 alone, when it joined the World Trade Organization, the value of Swiss exports to China has increased more than threefold. But also exports to Brazil, Russia and India have grown at an above-average rate. 5 Countries of the Middle East, whose earnings have soared in recent years as a result of high oil prices, are also becoming increasingly important markets for Switzerland. And finally, the share of exports to Central and Eastern Europe has also increased, though only slightly. Overall, the share of Swiss goods exports to developing and emerging economies has risen from around  3  The other fundamental determinant of exports besides the real exchange rate is foreign demand. Yet, how changes in foreign demand and the exchange rate ultimately translate into changes in demand for Swiss products also depends on other, more structural factors. These will be discussed in the remainder of this speech. 4  In terms of imports, the EU is even more important for Switzerland, with a share of almost 80%. Consequently, Switzerland runs a trade deficit with the EU. 5  Last year around 7% of Swiss goods exports went to the BRIC countries.
The combination has served to amplify the implications of reduced risk warehousing capacity of the intermediary sector relative to the provision of liquidity from market makers during times of market stress relative to the past. That said, I would hesitate in drawing too much of a comparison between the market liquidity of today and that of pre-crisis. You don’t need a long memory to recall the impact of underpricing liquidity risk on the highly leveraged market makers. Returning to such a situation would be a misplaced aspiration. The second theme I want to draw out is the evolution of market micro-structure. Electronic platforms are now increasingly used across the various FICC markets. In some cases regulation has been the cause but in others, such as foreign exchange markets, firms have over a number of years increasingly embraced electronic forms of trading. This includes using “request-for-quote” platforms to automate processes previously carried out by phone. Electronic platforms are effective in pooling liquidity in “normal” times but may have the potential, at least as currently calibrated and given today’s level of competition, to contribute to discontinuous pricing in periods of stress if circuit-breakers result in platforms shutting down. There has been much commentary about the temporary unavailability of a number of electronic trading platforms in the immediate aftermath of the removal of the Swiss franc peg. A contrarian view, which I do not ascribe to, would be that no explanation is required.

One tool available to all central bankers to address such concerns is to raise awareness, so that traders appropriately price risk. And that is why it is only fit and proper for me to finish on a cautionary note: market participants take heed. 4  BIS central bankers’ speeches  Appendix Chart 1 Option-implied volatilities across selected asset classes Pre-crisis: 01 Jan 2003 - 08 Aug 2007 Crisis: 09 Aug 2007 - 31 Dec 2009 Jun 2014 FSR: 26 Jun 2014 11 Mar 2015  USDGBP Gold 1.5 Oil EM FX  Japan long rates  0.0 -1.5 -3.0  Japan short rates US long rates US short rates  JPYUSD USDEUR FTSE 100 S&P 500 Nikkei 225  UK short rates UK long rates  Sources: Bank of England, Barclays Live, Bloomberg and Bank calculations. (a) Number of standard deviations from historical mean of three-month implied volatilities. Historical means calculated over the period since 2003.
At times when there is a broad consensus this may not be a problem but if there is a difference of views the reports do not always clearly convey the extent of this difference and how many people are in the various camps”. Such comments reflect the inherent difficulty of communications by a committee with individual voting. It is important that everyone understands the distinction between those forms of communication which focus on individual views, such as the minutes, and those which present a collective viewpoint explaining decisions of the Committee as a whole, such as the Inflation Report. As I said in my lecture to this Society five years ago, “it should be clear that there are both benefits and costs to a group decision-making process. The transparency and accountability of individual views helps to make better decisions. But it also complicates the communication of the decision to a wider audience, whose expectations of inflation matter for economic behaviour. The avoidance of confusion requires some forbearance by individual members of the Committee, and a clear understanding of which forms of communication are appropriate to explain individual views and which forms are suitable for explaining the reasons for a collective decision”. Or, as Alan Blinder has put it in a discussion of individualistic policy-making committees, “a central bank that speaks with a cacophony of voices may in effect have no voice at all”. The results of the survey are broadly consistent with the propositions I put forward in my Mansion House speech last year.

BIS central bankers’ speeches  5
The concern six months ago was that a soft patch – amid an environment with little room for conventional monetary policy – could be particularly risky. However, growth picked up in the third quarter to an estimated 2.6 percent, and as 2010 came to an end, economists were revising upward their growth forecast for 2011. The risk that the economy will enter a double-dip recession now seems quite low. The increased optimism reflects in part the compromise on the extension of the Bush tax rates, the Federal Open Market Committee’s decision to purchase up to $ billion in Treasury securities, and stronger retail sales during the holiday season. While there are many factors that will affect the shape of the recovery in 2011, a key factor will be the degree of improvement in the labor market. From its peak in December of 2007, employment is down by 7.4 million jobs and remains below its level in January 2000. That is, the “Great Recession” eliminated an entire decade’s worth of job growth (Chart 2). Improved job growth is essential to generating the increase in disposable income that will support continued consumption growth which is so important for overall economic growth. Leading indicators for the labor market are pointing to a likely pickup in the pace of employment gains over the course of this year. Many new hires are preceded by firms posting job openings. According to the Labor Department, at the end of October, there were 3.4 million job openings, up from 2.3 million a year earlier.

However, the protracted process of resolving the overhang of negative equity resulting from the overvaluation of housing during the boom will remain a headwind restraining economic growth for several years to come. Let me conclude with an observation regarding the housing outlook for Connecticut as compared with the nation. Connecticut home prices grew less than the nation during the housing boom and subsequently declined less during the housing downturn (Chart 7). As a  1  This number is the reported number of newly initiated foreclosures (383,000) adjusted to reflect the coverage of the survey (64 percent of the total market). 2  BIS central bankers’ speeches  result, the cumulative change in Connecticut house prices since January 2000 is now very similar to the nation as a whole. BIS central bankers’ speeches  3  4  BIS central bankers’ speeches  BIS central bankers’ speeches  5  6  BIS central bankers’ speeches
The issue here is not only the financial effort involved, but also the difficulty, from a political perspective, to explain to the public the need for a financial contribution to mechanisms benefiting wealthier countries for the time being. A case in point is the fall of the Radičová cabinet in Slovakia in 2011. Euro adoption – a conclusion In my view, euro adoption is in the best interest of EU Member States in the long run – given the high degree of business cycle correlation and market integration –, but several essential preconditions, added to the nominal criteria, need to be cumulatively fulfilled in order to make the most of these benefits. I have been on this job long enough to remember a time when the dominant view was that fulfilling nominal convergence criteria was enough for successful euro area membership. The paradigm appears to have shifted. First, the emphasis falls now on the sustainability of nominal criteria fulfilment. Second, achievement of a relatively high degree of income per capita convergence, prior to joining the euro area, is considered increasingly important, since too much catching-up in terms of real convergence poses the risk of more intricate economic cycle management in the absence of independent monetary policy. Third, another essential prerequisite is that the new institutional framework of the euro area has to prove its efficacy in preventing and addressing the imbalances menacing economic activity.

It is also important to increase the banks’ transparency with regard to information on fair value valuation methods and how they are used to produce income statements. * ** As you can see, the challenges related to the implementation of Basel II are numerous. Whether these are long-recognised or recent, such as those that have appeared since the financial turmoil this summer, they must be addressed. To use what is I believe Governor Laksaci’s expression, the “challenge is a feasible one” and over the coming period, banking supervisors will have to continue to work towards the robust and sound implementation of the new framework. This implementation will bring about significant improvements with regard to risk assessment and management, as has been confirmed by the initial feedback by authorities that have already switched to Basel II. I will conclude my contribution by citing a formulation used by the General Secretariat of the Basel Committee, which, it seems to me, sums up perfectly the spirit in which the reform should be introduced in each country: “Basel II is not a destination but a journey”. Thank you for your attention. 6  BIS Review 11/2008
These aggregate improvements mask substantial differences across countries and a number of areas of lingering vulnerability. Let me highlight some, and then suggest some implications for how the Fund might better position itself to deal with the challenges they present. •  Some of the most daunting challenges are in the fiscal and public debt area, where a number of emerging market economies across different regions face very high, and in some cases still growing public sector debt levels. Average public debt burdens in the emerging world have risen to about 70 percent of GDP, and among countries rated single B and below, the mean rises above 80 percent. •  The challenge of managing debt burdens of this size is magnified by the fact that the debt structures in a number of countries are still quite vulnerable to foreign currency, liquidity, and interest rate risk. The substantial share of public debt denominated in foreign currency - 70 percent on average for the lowest rated group of borrowers - and the relatively short maturity of the debt stock mean that a relatively modest shock can produce a substantial increase in debt burdens, raising the amount of fiscal effort needed to keep the debt stock on a stable or declining path, and increasing the economy’s vulnerability to a crisis. •  In some countries, the fiscal trajectory is too weak to place the debt-to-GDP ratio on a sustainable path.

Rather than the classic staircase pattern of disbursements, the Fund should consider, in some cases, providing a larger up front tranche that floats and is available if stress materializes and policy is responding appropriately. •  The Fund should stand ready to support countries in pursuing reasonable restructuring proposals when warranted by the circumstances. Official financial resources in that context can be helpful in meeting some targeted needs. •  And finally, the Fund needs a more credible capacity to withstand arrears, so that it does not face the reality or the perception that is can be induced to accept weak programs only to allow it to refinance its exposure. Conclusion These are modest proposals. They only cover a small piece of the world of the Fund, much less the broader Bretton Woods institutions. They would not fundamentally change the balance established by the Fund’s articles between the rights and obligations of its members. But they would help position the Fund to deal with future financial pressure in emerging markets. And given the scale of the economic costs imposed by recent crises, that is an important goal. Thank you. 6  BIS Review 37/2004
It was probably similar considerations that motivated the measures taken in Germany to save IKB and Sachsen Landesbank. Now one has seen that it was not so easy for the British authorities to manage the problems in Northern Rock. The existing regulations and arrangements did not prove particularly effective. Despite the measures taken, they did not manage to avoid a bank run. This has led to the authorities in Great Britain drawing up, in an impressively short time, proposals for a number of improvements in the regulatory framework for managing institutions in distress. In February the British finance minister announced that they had decided to nationalise Northern Rock, as there was otherwise a risk that the cost to the taxpayers would be too high. 6  BIS Review 30/2008  The regulations for managing institutions in distress are inadequate As partially responsible for the stability of the financial system, I ask myself, how are things in Sweden? Do we have the regulatory framework required to manage possible future problems? Unfortunately, the answer to that question must probably be no, at least at present. During the Swedish bank crisis at the beginning of the 1990s a number of extraordinary measures were taken. These included issuing the bank deposit guarantee. This was a general declaration that the banks’ creditors would be protected. In addition, a special crisis management authority was established, the Swedish Bank Support Authority.

Monetary policy decision  I come now to our monetary policy decision. We have decided to tighten our monetary policy further and to raise the SNB policy rate by 0.5 percentage points to 1.5%. In doing so, we are countering the renewed increase in inflationary pressure. It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term. Page 2/6  Zurich, 23 March 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  To provide appropriate monetary conditions, we also remain willing to be active in the foreign exchange market as necessary. For some quarters now, the focus has been on selling foreign currency. The SNB policy rate change applies from tomorrow, 24 March 2023. Banks’ sight deposits held at the SNB will be remunerated at the SNB policy rate of 1.5% up to a certain threshold. Sight deposits above this threshold will be remunerated at an interest rate of 1.0%, and thus still at a discount of 0.5 percentage points relative to the SNB policy rate. Inflation forecast  I would now like to address the current development of inflation. Inflation has risen again since the beginning of the year, and stood at 3.4% in February. It is therefore still clearly above the range the SNB equates with price stability. The latest rise in inflation is principally due to higher prices for electricity, tourism services and food. However, price increases are now also broad-based.
BIS Review 66/2004  7  Meanwhile, even with a clear intention to do so, the practice of lending, and the pricing of lending, in accordance with state policy and not the credit worthiness of the borrower takes time to get rid of. Although it does not take long for the credit officer to learn to look at the balance sheet and the profit and loss account of the borrower, the security of the job requires an unspoken recognition of the authority of those in a position of power in the government bureaucracy. A further complication is the fact that commercial bankers are part of the government bureaucracy. In such a system, it is difficult for the bureaucratic position of the individual to be aligned with the commercial interest of the bank, which is to make profit. There is an interesting description of the stance of such an individual: where you stand (on an issue) depends on where you sit (in the bureaucracy). Consequently, it will take some time before the process of credit allocation becomes entirely market-based and the banks subject to the market disciplines that we are familiar with. One implication of this is that the high NPL and low capital adequacy ratios will continue to be a feature, with ebbs and flows, as capital injections get rid of the stock of NPL while the flow of NPL continues, but hopefully at a reduced pace as corporate governance improves. Professionalism cannot be acquired overnight.

If, as I argued, financial market fragmentation in Asia leads to individual vulnerability to financial instability, and through contagion regional vulnerability, then one intuitive solution is to integrate the fragmented markets through some form of monetary union. Admittedly, a monetary union does not remove all sources of financial instability in the region, which could arise from volatile business cycles, for example, boom and bust induced by inappropriate policies, and moral hazard induced, for example, by implicit government-guarantee of bad credit. But it does take care of financial instability associated with volatile capital flows and the associated large swings in real exchange rates. But, as of now, this is still not an item on the agenda of Asian monetary co-operation, at least in any official forum that I am aware of. As far as I can recall, there have only been some limited efforts of mutual assistance: •  The first is the collection of EMEAP bilateral swap facilities that provide US dollar liquidity secured against US Treasury securities that were put together in November 1995, which have not been used;  •  The second is the idea originating from Japan in 1997 for an Asian Monetary Fund, which did not go beyond being an idea; and  •  The third is the collection of ASEAN+3 bilateral swap arrangements (between the US dollar and domestic currencies) under the Chiang Mai Initiative, which involve the assumption of credit risks. There is, in fact, continued scepticism towards any form of monetary union in Asia.