samchain/econo-pairs-v1 huggingface dataset:
I shall be returning to these questions in my final section and try to paint a picture of how they will be handled in the European Union in the coming years. Before doing so, however, it may be in place to look in somewhat more detail at the structure for economic policy decisions in EU/EMU. 2. Functions EMU is a historically unique construction, with a common central bank that is to conduct monetary policy across national boundaries. At the same time, however, eleven elected governments are to conduct fiscal policies with eleven different budgets, besides making many other decisions that affect the functioning of their national economies, not least their labour markets. Monetary policy In a monetary union, monetary and exchange rate policy is, by definition, a common concern. The monetary policy objective is price stability; without prejudice to this objective, monetary policy is to support the general economic policies in the Community. The more budget policies focus on stability - and wages stay in line with productivity - the greater will be the room to manoeuvre in monetary policy. BIS Review 50/1998  -3-  The ECB’s basic tasks will be to define and implement the single monetary policy, conduct foreign exchange transactions, hold and manage the official foreign reserves of the Member States, and promote the smooth operation of payment systems. The national central banks (NCBs) will be able to have an active influence on policy, participate in its practical implementation and, perhaps not least, communicate it in their respective countries.

Simultaneously, we have prolonged the maturity span of injecting operations to smooth down the upward slope of interest rate curve and we have expanded the base of eligible collateral to facilitate the access of financial institution in liquid funds. These operations of the Bank of Albania have helped control on interest rate level. Bank of Albania’s intervention has been more effective in controlling the short-term interest rates. The long-term interest rates of Government securities and loans revealed rising tendencies, owing to the Government’s demand for financing and the increased sensitiveness of the banking system towards liquidity indicators. In parallel, the depreciating exchange rate trends have complemented the easier monetary conditions framework, providing advantage to exports and trade deficit improvement. However, as we have constantly underscored in our statements, the Bank of Albania has been attentive to managing the momentary stimulus, aiming above all the achievement of its target for maintaining the macroeconomic stability, by preserving internal and external balances. Annual inflation in the first semester 2009 was 2.0 percent, recording a fall compared to inflation rates of the last year, but remaining within the Bank of Albania’s targeted band. Low inflation rates over the first semester of the current year are due to the weakening of inflationary pressures on the demand and supply side, consequent to raw materials price cut in the international market and the economic activity slowdown at home.
These public investments will partially take  BIS Review 46/2007  5  up the slack in the first half of the year as well as speed up private investment through a crowding-in effect. Of course, there remains the issue of political incidents which can still make things less rosy. This would not be under policymakers’ control; the government, however, is doing its best to take necessary safeguard measures in order to assure people of the state of security. Ladies and gentlemen, being confident of the medium-term outlook does not mean that we will be complacent. After all, we are in an environment of an ever-increasingly competitive global arena, more integrated financial markets, volatile capital flows, more inter-linkages between economies, and increasing trends toward liberalization. For policymakers, this means that the conduct of policy will become more demanding in the periods ahead. This leads to my third and final point. That is, to ensure that growth and stability are sustained in the long run, we need policy tools and persistent reforms going forward. From a long-term perspective, the critical challenge for the Thai economy is how to continuously improve its flexibility, efficiency, and competitiveness. In this respect, a crucial policy effort is a combination of financial and real sector reforms and policies that promote a sound and stable macroeconomic environment. To mention a few, infrastructure building will continue to be strengthened particularly through amendments and introduction of a number of legislation.

In the medium term, the most important challenge for the Thai economy is how to cope with a slowdown in the world economy and a volatile global financial market. Thailand, like many emerging market economies with a small and shallow financial market, is particularly vulnerable to fast-moving international capital. Such rapid movements of capital flows can cause exchange rate to be vastly out of line with the underlying economic fundamentals and have negative impacts on the export or the import sectors depending on the direction of exchange rate movement. In our case, the recent surge in capital inflows has caused a one-way appreciation of the baht relative to regional currencies to the point that it may have become detrimental to both competitiveness and the ability to adjust of the real sector. Sustaining the growth momentum in such an adverse external environment is not an easy task. The key is to ensure that the baht does not move further ahead of other regional currencies. But this alone will not be enough. We also need help from domestic demand which has been somewhat soft due to a number of domestic and external factors during the past year. Whether we shall see a turnaround in domestic demand will depend on a number of factors. Some of these are fortunately on our side. First of all, oil prices, which hit the economy very hard this past couple years, appear to have settled down around 55 USD.
On the basis of such considerations, we find that it is difficult to make a case for central bank lending and the regulatory and supervisory activities that support it.” See “Financial Deregulation, Monetary Policy, and Central Banking,” Federal Reserve Bank of Richmond Economic Review, May-June 1988. 12  For example, the work prepared by Federal Reserve staff in 2008 to assess possible use of the authority to pay interest on reserves (IOR) did not deal with the fact that some institutions cannot earn IOR, so it did not contemplate that this rate may not serve as a firm floor; see http://www.federalreserve.gov/foia/files/ 20080411.IoR.FOMC.Options.paper.public.pdf. More recent work explicitly considers frictions that limit the effectiveness of IOR to serve as a floor and explores other tools that can support money market interest rates. See, for example, Antoine Martin, James McAndrews, Ali Palida, and David Skeie, “Federal Reserve Tools for Managing Rates and Reserves,” Federal Reserve Bank of New York Staff Reports, no. 642, September 2013. 13  In the case of the United States, more research on the relationship between the Eurodollar rate, the federal funds rate, and the repo rate could provide insights on the functioning of our money markets. 14  See Matthew Osborne, “Monetary Policy and Volatility in the Sterling Money Market,” paper presented at the Bank of England-Federal Reserve Bank of New York conference, “Money Markets and Monetary Policy Implementation,” November 16–17, 2015.

Other concerns could include the burdens and deadweight losses associated with reserve requirements, the implications of the framework for the efficiency and resilience of money markets and government securities markets, and the framework’s ability to help support the efficiency and resilience of payment systems. 20  For example, a large supply of “money-like” assets provided by the official sector could crowd out some shortterm private sector liabilities, reducing the amount of maturity transformation in the financial system and improving financial stability. See, for example, Mark Carlson, Burcu Duygan-Bump, Fabio Natalucci, William R. Nelson, Marcelo Ochoa, Jeremy Stein, and Skander Van den Heuvel, “The Demand for Short-Term, Safe Assets and Financial Stability: Some Evidence and Implications for Central Bank Policies,” Board of Governors of the Federal Reserve System Finance and Economics Discussion Series, no. 2014–102, November 2014. 21  Maintaining a large balance sheet in normal times may be perceived as a “slack” variable that invites policymakers to use it for non-monetary policy objectives. See, for example, https://www.philadelphiafed.org/ publications/speeches/plosser/2010/09–24–10_swiss-national-bank. 22  For a discussion of footprint considerations in the design of the Federal Reserve’s overnight reverse repo operations, see Joshua Frost, Lorie Logan, Antoine Martin, Patrick McCabe, Fabio Natalucci, and Julie Remache, “Overnight RRP Operations as a Monetary Policy Tool: Some Design Considerations,” Federal Reserve Bank of New York Staff Reports, no. 712, February 2015.
Mario Draghi: Risk-reducing and risk-sharing in our Monetary Union Speech by Mr Mario Draghi, President of the European Central Bank, at the European University Institute, Florence, 11 May 2018. * * * It is a great pleasure for me to be invited by the European University Institute, which in many ways mirrors what the European project is for. It was founded to encourage exchange, cooperation and a common European vision. Since then, the university has made countless contributions in the fields of economics, law, political science and history. It has often been the meeting point where academic research helps answer the urgent policy questions of the EU. A decade after the great financial crisis, the euro area looks set to exit more resilient than it entered it. Much of the harm caused by the economic downturn has now been reversed by a consistent period of growth. And some of the institutional and structural factors that exacerbated the crisis have been addressed. But we know that our Monetary Union is not complete. The crisis revealed some specific fragilities in the euro area’s construction that so far have not been resolved. To make our Monetary Union more robust against future challenges, we need to address these fragilities. 1. The history of the crisis in the euro area The crisis took place in five main phases. The first phase was similar across advanced economies.

But to push this further – and perhaps too far – for the Financial Policy Committee’s role in relation to the financial system we need a rather different metaphor. The FPC is more like the safety authority for a race track. Its job is to see that the safety standards for the track and for the cars are high enough. That there are sufficient buffers on the bends if one of the cars comes off the track. And that, if there is a crash, the wreckage can be got off the road and does not cause a multiple pile up. But the track authority’s job is not just about ensuring the track is safe. If, when the race is running it starts to pour with rain and conditions become riskier, the track authority brings the “safety car” onto the track to slow the other cars down. Sometimes a race has to be interrupted because it has become too risky. The FPC sometimes has to do the same. BIS central bankers’ speeches  3  The safest approach of course might be to shut the track altogether. But the economy needs a healthy, thriving financial sector. It needs credit so that it can grow. Savers need to be able to invest. So the FPC needs to consider the impact of its actions on the economy. Adding more safety features or slowing the speed down can have an impact on the economy that has to be factored in to decisions.
My comments reference the experience of East Asia, but reflect lessons that are more broadly applicable. Overview of recent recovery Given the depth of the problem a little more than two years ago, the Asian recovery on the whole is remarkable, and has largely defied initial expectations that the crisis would cast a long shadow over regional growth prospects. The regional recovery exhibits a solid “V” shaped trajectory supported by strong performance in the external accounts, but with more recent improvement in domestic demand. Banking sectors - faced with unprecedented crisis two years ago - have been shored up through substantial capital injections and problem asset carve-outs. Corporate sector conditions also appear to have improved notably with the advent of recovery and debt restructuring efforts. 1  BIS Review 57/2000  At the same time, authorities in a number of Asian countries initiated a wide range of fundamental enhancements to financial system infrastructure, including strengthening prudential regulation and supervision, bolstering bankruptcy and collateral recovery processes, and improving disclosure requirements. With the full implementation of these measures, standards in Asia will closely approximate international norms. Complacency In light of these achievements, there is much to be optimistic about. But we must all guard against complacency and reform fatigue, which represent a significant risk to sustained recovery. Crises entail wrenching change and costly solutions that are difficult to bear over a long period. The desire for a return to “normalcy” is strong.

This has encouraged both individuals and companies to take greater risks to enhance financial returns. Besides, companies have an incentive to rely more on debt than equity because many countries permit the deduction of interest expenses from tax liabilities. These are all causes of the problem of over-leveraging. 4. But there is another cause of this over-leveraging problem that I would like to draw to your attention – it is market failure. By this I mean the market had been sending out wrong signals to the borrowers, be they households, companies or governments, that increased indebtedness was nothing to worry about. A prime example is the experience of Greece. In the 1990s, the Greek Government had to pay on average 1,550 basis points above German bunds for 10-year funding from the capital market. However, after Greece joined the Eurozone, the market supplied funds to Greece at interest rates very close to the triple-A rated Germany. In 2005, 10-year Greek sovereign bonds were traded at only about 20 basis points above German bunds. Because of this extended period of serious market failure, Greek nationals and their government were under the wrong impression that they would be  BIS central bankers’ speeches  1  able to roll over their debts perpetually. Of course, we now know that such an illusion could lead to catastrophic consequences. 5. The ever increasing leverage in the US and Europe eventually came to an end following the burst of the US housing and credit bubbles in 2007, triggering the Global Financial Crisis.
The fourth-quarter figure was slightly higher than estimated in the previous Monetary Policy Report and expected by the market, largely due to the greater contribution of mining. In the last six quarters, the expansion of sectors other than natural resources, that better reflect changes in the use of installed capacity, has continued showing relatively stable rates, around 5.5%, not far above the trend. Domestic demand growth, in contrast, has picked up again. After falling steadily during 2011 and approaching GDP growth rates in early 2012, it rose again in the following quarters, to end the year with a y-o-y expansion that outperformed GDP by 1.5 percentage points. This reacceleration reflects stronger investment and, most recently, also stronger private consumption. On the investment front, the strong momentum of mining and energy projects has persisted, while imports of capital goods have continued to reflect the strong increase in the purchases of transport equipment. Moreover, in the real estate industry, sales have remained strong, particularly for housing in construction stage, and other indicators such as dispatches, sales and imports of materials for this sector have remained high despite some marginal slowdown. The expansion of consumption has found support in rising personal income, which reflects the evolution of employment and real wages. In the fourth quarter of 2012 consumption grew 7.3% in real terms, owing primarily to durable goods. Partial data from the first quarter of this year, such as retail, household items and car sales, signals dynamic private consumption. Domestic financial conditions show no major changes in recent months.

There Ought to Be a Law Another uncertainty is the possibility of legislation in United States, the United Kingdom, or the European Union to ease the transition. In the U.S., the ARRC has proposed that New York State should, by the force of law, substitute a rate based on the Secured Overnight Financing Rate for LIBOR in contracts that would otherwise have no workable fallback when LIBOR ceases.8But again, this solution is aimed at contracts that don’t specify another fallback and can’t be amended to do so—primarily floating-rate bonds. We can hope that the New York legislature will take up this proposal in its next session, but obviously it has a lot of other pressing business these days, and no one can guarantee that there will be a legislative Hail Mary. And even if there is, it would not displace non-LIBOR fallbacks that are written into existing contracts, which may not be the alternative you’d prefer. The lesson here is that for every exposure you have to LIBOR, do everything you can right now to make sure it provides for the end of LIBOR in clear terms. Do not wait for the state cavalry to ride to your rescue. In the UK, the government has said it will give the FCA new powers to smooth the transition,9 and there has been speculation about what the FCA will do with those powers. The UK legislation takes a very different approach from the proposed New York law.
Sweden moving towards stability A broad consensus has been established - in the world in general as well as in Sweden - about the objectives and institutional arrangements that are appropriate for economic policy, as well as the importance of international economic cooperation. The inflation economy that prevailed earlier caused major problems. An expansionary economic policy with subsequent devaluations does not generate any lasting positive effects in the real economy. It is liable to result in high inflation that erodes the short-run gains in terms of costs. The longer the period of inflation, moreover, the more painful will be the readjustment to a more sustainable economic development based on low inflation. BIS Review 35/1998  ˝  -3-  Developments in Sweden have been moving in the right direction for a number of years. Inflation is low and growth favourable. Earlier imbalances, in the government budget as well as in foreign transactions, have been turned into surpluses. Whether the adjustments in the labour market are sufficient to permit a sustained and more extensive increase in employment in the coming years remains to be seen. FLEXIBLE EXCHANGE RATE WITH PRICE STABILITY TARGET Sweden is in its sixth year with a flexible exchange rate regime and the fourth year with a specific price stability target. Insights into the new regime have been gained step by step, both in the Riksbank and in the Swedish community in general.

But the National Institute is one of the forecasters with the largest resources and it usually “sets the trend” for other forecasters. Last November the Institute counted on annual rates of CPI inflation of 2.0 per cent for 1998 and 2.5 per cent for 1999. In other words, inflation would move gradually upwards from the price stability target. In keeping with this, the Institute also counted on an monetary policy realignment, with an expected increase in the repo rate from 4.10 to 5.5 per cent, that is, by 140 basis points. This March - only four months later - the National Institute’s prediction of inflation had changed considerably, to annual rates of 1.1 and 1.5 per cent for 1998 and 1999, respectively. The Institute’s most recent assessment is that during 1998 and 1999 there is no need for any change from the present level of the repo rate. What has happened to forecasters’ perception of inflation? Increased element of transitory price effects Basically, nothing has happened in the appraisal of the upward cyclical phase. The National Institute, like most other observers, counts on good growth in the coming years. The strength of the upswing may vary but the overall picture is that demand growth will be somewhat above the long-term trend, which implies rising resource utilisation. But besides expectations of lower wage increases, there have been a number of favourable price shocks on the supply side. Falling international crude oil prices have already led to price reductions for energy-related goods.
Second, the circumstances in which the regime would be triggered should be spelt out as clearly as possible. It is unrealistic to imagine that entry to the regime could be triggered by reference to quantitative triggers alone. Some discretion will be necessary. But the triggers should contain some quantifiable measures for both capital and liquidity, and there should be transparency in advance about their formulation to constrain the authorities’ discretion. Moreover, looking ahead, although the regulator should have the leading role in triggering the regime, no regulator, however effectively managed, can ever fully insulate itself against the risk of forbearance which might delay a necessary resolution. That is why the Bank believes that the resolution authority, wherever it is located, should have a powerful voice in decisions on the use of the trigger. Moreover, any resolution authority will have a natural interest in the timing of a decision to place a bank under its control. Third, a clear framework for accountability should be established to give confidence that decisions relating to the resolution regime are exercised in line with the objectives for the regime set out in legislation. 2  BIS Review 75/2008  Turning to deposit insurance, I understand the concerns that many of you have voiced about the reforms discussed in the tripartite Consultation Document. I know that you accept that to avoid bank runs there will need to be 100% insurance of deposits – up to a limit. That limit should not be too high.

That is why requiring financial institutions to hold more capital to act as a shock absorber, while reducing the procyclical nature of existing capital requirements, may offer a balance between excessively burdensome regulation and excessive risk-taking. 4  BIS Review 75/2008  The proposals in the Banking Bill, and the other changes I have discussed today, will take us an important step forward in the creation of a framework for financial stability. But they will not be the final answer to a difficult, at times seemingly intractable, problem of how to change the incentives of both private and public actors to reduce the frequency and cost of financial crises. For that we will all need to do a lot more thinking. It is important that we do find the right solution. An efficient and thriving banking sector which can intermediate saving and investment, both domestically and internationally, is essential to our economic prosperity. BIS Review 75/2008  5