samchain/econo-pairs-v1 huggingface dataset:
With the ultimate goal of adopting the euro in mind, the new Member States will, once they have achieved a sufficent degree of convergence, be expected to participate in ERM II. Following this, when the Maastricht criteria are met, the new Member States can then be expected to exchange their national currencies for the euro and become full participants in Economic and Monetary Union. Our role as central bankers is heavily influenced by the external economic and political environment. Moreover, it is essential that we remain aware of the changes taking place and that we seek to play an active and constructive role. This must certainly be the case as far as EU enlargement is concerned. As a result of this process, the competencies of the Eurosystem, namely monetary policy, exchange rate policy, the smooth functioning of payment systems and financial stability, will become directly relevant as soon as the applicant countries join the EU. Thus, if the challenge of EU enlargement and the subsequent enlargement of the euro area is to be successfully met, it is essential that we are prepared for it when the time comes. BIS Review 113/1999  4  For this reason the Eurosystem is already closely monitoring developments in accession countries which are directly related to its areas of competence. Naturally this is being done in cooperation with the accession countries themselves.

Of course, the world has changed a great deal since the Treaty of Paris, and with it the political motives driving the integration process. Nevertheless, if one draws a parallel between the world of 50 years ago and the world of today, one cannot deny that the current enlargement process is driven, at least in part, by the desire to ensure a future of peace and stability for the whole of Europe, and not just for the 15 nations which currently comprise the European Union. Of perhaps even greater significance in today’s globalising world are the “economic” forces driving European integration. This is not to say that they were not already important in the early years of the process. Indeed, just as it became apparent 50 years ago that Europe needed to break free from the ghost of nationalism, so too it became clear that the protectionism of the inter-war period also had to be abandoned. This was an essential prerequisite for restoring economic growth and improving social conditions in post-war Europe. And so it is for the accession countries today, which no doubt see their integration into the EU as a way of ensuring that the necessary conditions are created for the sustainable, long-term growth of their economies. Of course, these political and economic forces to which I refer are very closely linked. So much so, that it is hard to imagine one without the other.
Chart 8 Major UK banks’ unguaranteed term issuance in public markets(a)  Source: Thomson Reuters DataStream  Chart 9 Aggregate SLS repayment profiles  Sources: Bank of England, Dealogic and Bank calculations. (a) 2011 Q2 is up to and including 15 June 2011. Term issuance refers here to securities with original contractual maturity or earliest call date of at least 18 months. This excludes debt issued under HM Treasury’s Credit Guarantee Scheme. (b) It includes subordinated lower Tier 2 and Tier 3 capital instruments with debt features. Despite a number of shocks along the way, markets have been increasing in their resilience over the past two years. For example, UK banks have been able to continue to issue debt in  BIS central bankers’ speeches  5  both public and private markets during 2011, in spite of renewed sovereign debt concerns, the natural disasters in Japan and civil unrest in the Middle East and North Africa.6 Moreover, that issuance has been spread across an increasingly diverse range of instruments including, more recently, UK RMBS (Chart 8). This has helped the UK banks alleviate concerns about the “funding cliff” of official sector refinancing at the end of 2011. For example, it has facilitated the remarkable pre-emptive reduction in the amount outstanding under the Bank’s Special Liquidity Scheme (SLS), from around £ at end-February to just £ at the end of May (Chart 9). Chart 10 Credit Default Swap premia(a)(b)  Sources: Bloomberg, Markit Group Limited and Bank calculations. (a) Five-year senior CDS premia.

Market intelligence is crucial here, in that it can provide us with near real-time information about whether and where these risks might be building (or eventually crystallising). So far, there is little evidence of excessive risk-taking on a generalised basis across the financial system. But the intelligence we have gathered during 2011, notwithstanding the recent pull-back in June, has flagged a number of pockets of increasing risk appetite and a few specific markets which have been showing signs of excess. That tendency seems to have been most prevalent in the United States, where the financial and real economy recoveries appear somewhat more established than in the UK and the euro area (Chart 12). But during recent discussions, some market participants have noted that this tendency has begun to spread to Europe as well. One example comes from the high-yield corporate bond markets, where demand has been very strong and where issuance, which reached record levels in 2010, has continued apace in 2011 (Chart 13). That is likely to reflect the generalised disintermediation of stricken banking systems – for those that are able to tap capital markets, bond issuance poses a useful alternative to bank lending. Moreover the extent of high-yield issuance may reflect the fact that it is smaller businesses, which are likely to be sub-investment grade, who are finding it hardest to secure affordable bank finance.9 Given oligopolistic banking systems like those in the UK, a deeper and more liquid capital market might help improve the supply of credit to UK businesses.
However, when it comes to the size of financial markets, there are a couple of caveats that I wish to add. First, a larger and deeper financial system may attract increased capital flows, and consequently, lead to increased volatility of the exchange rate. Such volatility can be mitigated if the foreign exchange markets are also deep enough to absorb the variations in the demand and supply of foreign exchange. Exchange rate flexibility is necessary and having a healthy level of foreign exchange rate reserves is also helpful in times when there is significant volatility of capital flows. During the Asian Financial Crisis of 1997–98, net portfolio outflows were RM31 billion. During the 2008–09 financial crisis in the AEs, we experienced almost three times that much outflows without any significant disruption of domestic financial intermediation. The second caveat has to do with the question of whether a financial system can become too big whereby it becomes a drag on the economy. Based on research at the BIS and the IMF, this may indeed be the case. In July 2012, Stephen Cecchetti and Enisse Kharroubi of the BIS published a paper, where based on a study of 50 advanced and emerging countries from 1980–2009, they found that beyond a certain point, further growth of the financial system can actually reduce real growth by reducing productivity growth. Furthermore, a fast growing financial sector can also drag down productivity growth by pulling away scarce resources from the rest of the economy.

Bwalya K E Ng’andu: Improving the investment climate in Zambia Opening remarks by Dr Bwalya K E Ng’andu, Deputy Governor (Operations) of the Bank of Zambia, at the Foreign Private Investment & Investor Perception Survey 2011 Dissemination Workshop, Lusaka, 22 December 2011. *  *  *  Permanent Secretaries; Chief Executive Officers; Distinguished Participants; Ladies and Gentlemen. I would like to welcome you all, on behalf of the Bank of Zambia, the Zambia Development Agency and the Central Statistical Office, to this Foreign Private Investment and Investor Perceptions 2011 Survey Dissemination Workshop. I want also to take this opportunity to thank the companies that participated in the Survey which was conducted by the three institutions in the third quarter of 2011. The insights and the various valuable revelations on the investment climate in Zambia contained in the survey report were only made possible by their co-operation and support to the process. We want to thank them most sincerely. This dissemination workshop is built around two objectives. The first one is to give representatives of respondent companies the chance to comment on the contents of the report. In this sense, this can be considered as a validation workshop from which inputs into the final version of the report will be received. The second objective is to give the three institutions that commissioned the survey the opportunity to receive feedback on what the community of investors considers to be the main issues in investment.
If we ignored the fact that vacuum cleaners were a rare luxury item in 1910 and applied today’s quantities to calculate the 1910 consumption basket, we would greatly understate the increase in the average cost of living. And, of course, Harrods today is not exactly the typical place to go shopping - there was not much talk in 1910 of suburban shopping centres, or of Internet shopping. Ignoring developments in retail practice introduces an outlet bias. Had the bias remained constant over the years, this would have been less of an issue for measuring retail price inflation, but it clearly has not. Quality change bias, new product bias, substitution bias and outlet bias - these are some of the issues 7 that the Boskin Commission discussed in their report on measuring inflation in the United States. The finding of the report, which generated wide national and international interest, was that the US CPI might have overstated changes in the cost of living by between 0.8 and 1.6 percentage points per year. The examples I have given show how difficult it is to measure changes in the price level over time. Precision is not to be had. According to the official retail prices index, the general level of retail prices rose by a factor of 52 between 1910 and 2002. But changes in the nature of the goods and services available, and the nature of retail selling, make such comparisons treacherous. Does this matter for price stability? Probably not.

At that point, Iceland was already on its way into a recession after an unsustainable boom and serious overheating during 2005–2007 and a currency crisis in the first half of 2008. The banking collapse and the associated wealth loss and further currency depreciation only made the recession worse. Over the course of that autumn, two separate but interrelated sub-stories of the recent Icelandic saga were converging in a tragic grand finale. These are: 1. Iceland’s boom-bust cycle and problems with macroeconomic management in small, open, and financially integrated economies. 2. The rise and fall of three cross-border banks operating on the basis of EU legislation (the European “passport”). Let us look a little bit closer at the second story. In just five years’ time, the Icelandic banking system expanded from a combined balance sheet of under 2 times GDP at the end of 2003 to almost 10 times GDP in mid-2008. Most of this expansion was cross-border, and a great deal of it had very little to do with Iceland, as both financing and investment took place abroad. There were indeed important domestic factors behind this expansion. One was the privatisation of the Icelandic banking system in the early 2000s, which was carried out in a manner that placed the country’s largest banks into the hands of risk-loving investment bankers and the ill-founded promotion of “financial centre Iceland”.
5  On this occasion, the Board considers that situations of this type are mainly of domestic origin. In particular, in the dynamics of inflation and its determinants. The upper bound is defined by events in which local inflation is more persistent than expected. In this aspect, the information provided by domestic expenditure and CPI prints will be key. The Board will evaluate the inflationary implications of these events, as they could mean that the process of reducing the MPR would be slower. Upward inflation surprises in developed economies could require higher international monetary policy rates, which would contribute to a depreciation of emerging currencies, the peso included. This would increase local inflation in the short term, although its impact on the MPR would be mitigated to the extent that it implies a greater contraction in activity and spending. The lower bound of the MPR corridor shows a scenario where the adjustment of the Chilean economy is faster than expected, leading to an earlier convergence of inflation. Different indicators of capacity gaps suggest that inflationary pressures have been gradually contained. A scenario where such gaps become more negative than expected would lead to a more accelerated reduction in the MPR. Such could be the case if a sharper deterioration occurs in the labor market and private consumption (figure 20). As for risks, these emanate mainly from the global macro-financial situation. A further deterioration could trigger episodes of high volatility, reduce liquidity and encourage capital outflows away from the emerging world.

Jean-Pierre Roth: The euro – a stabilising factor in the international currency system Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Fondation Jean Monnet pour l'Europe, Lausanne, 21 September 2007. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  The euro is undoubtedly a success story. It has contributed to stabilising the international currency system. In Europe, the former monetary disorder has been replaced by a new monetary order. The European payment system has become more transparent and price stability is guaranteed. Switzerland, too, is benefiting from European currency stability. The Swiss franc is taking advantage of a monetary environment that is considerably calmer than previously. The euro and the franc are coexisting very successfully. Nevertheless, it would be wrong to claim that all the effects of European currency integration have already worked their way through to the real economy. In spurring on competition and promoting transparency, the euro is having an integrating effect. However, there are still considerable obstacles standing in the way of this integration process. BIS Review 103/2007  1
Legislation on resolution The second major reform I would like to comment on refers to rules on the resolution of nonviable institutions. Traditionally, the principle of constructive ambiguity has prevailed when action is taken by authorities in the face of problems of bank solvency. Under this approach, financial institutions’ liabilities – except for guaranteed deposits – do not formally qualify for specific legal treatment, aside from the seniority established in the case of bankruptcy in accordance with conventional commercial law. However, the authorities have used discretionary power to protect the holders of banks’ debt instruments – through capital injections which have prevented the winding up of such banks – when they have considered that their bankruptcy could entail undesired systemic effects. In the recent past, it has become evident that the systemic effects of banking crises can be very marked, even when they affect institutions of no great size. Consequently, constructive ambiguity has resulted, at least in the first stage of the crisis, in widespread public action to assist ailing institutions. This has confirmed the existence of an implicit public guarantee of bank liabilities which, when activated, has generated considerable costs for the public finances of the countries most affected. Constructive ambiguity generates an incentives system which makes it difficult for institutions and their creditors to manage risk appropriately. Thus, the restoration of an effective incentives system needs to limit confidence in public support schemes being activated across the board.

To summarize, we face low level of risk in the external and the banking sector, low to moderate level of risk in the public sector, the Denar exchange rate is stable, the inflation is lower than in the euro area, and the economic activity decelerates. What would be more suitable in a situation like this than to send signal that there are conditions for enhanced banking activity without jeopardizing the stability? This is exactly the goal of our measures. It is not our intention just to conclude that the credit growth does not develop as expected, and to revise the rate downward all over again. We consider that the credit growth could range around 7–8% without jeopardizing price and financial stability, and we clearly signalize this. BIS central bankers’ speeches  1  The question is whether the banks will follow our signal? The promptness and intensity of banks’ response depend on the power of monetary policy transmission. The recent researches conducted by my coworkers show that the power of monetary policy transmission in our banking system is limited. This was yet another reason to redesign the monetary policy instruments. We hope that the new monetary framework will improve the monetary transmission. Otherwise, we will keep on advancing the monetary instruments setup. CB bills are the National Bank basic instrument used to absorb excess liquidity by banks. CB bills are not investment vehicles. In many countries there are no CB bills.
Turning to the data, indeed a sluggishness in households’ time deposit rates has been observed in some countries.22 This can be explained by banks’ specific characteristics, by the structure of the banking sector and the competitive environment. Specifically, banks with larger liquidity buffers react to a lesser extent to increases in market interest rates.23 And we have seen a significant shift of funds from overnight deposits to other less liquid but better remunerated instruments (mainly time deposits), thus reducing the liquidity available for economic transactions. In fact, M1 annual growth turned negative in January 2023 for the first time since the creation of the monetary union. In addition, the increase in bank lending rates in the euro area has been very significant, mainly reflecting the faster pace of policy rate hikes, and has been accompanied by a tightening of credit supply standards. In particular, in the ECB’s latest euro area bank lending survey (BLS), banks reported a substantial further tightening of credit standards 20  Total debt is defined as the sum of the outstanding amount of credit from euro area banks and fixed income securities. 21  See the ESRB report "Vulnerabilities in the residential real estate sectors of the EEA countries”. 22  The smallest increases in households’ time deposit rates are observed in Spain, Ireland and Portugal, while Germany, Italy and France have recorded the largest increases.

In the OECD countries, especially in the US, there is solid growth with low inflation, BIS Review 112/1997  -4-  while we are seeing signs of broad-based recovery in Europe. Only in Asia have we seen a slowing of growth, but the growth rates have still been high by world standard and last year Japan grew by 3.6%, the fastest since the late 1980s. 15. Second, because of high global liquidity and low inflation, asset markets around the world are at record levels. Capital flows have increased with globalization, and added to record high stock and bond prices. The fact that Europe has recently raised interest rates, and the Fed is considering whether to pre-emptively raise rates to prevent wage-push inflation, has made the financial markets much more nervous despite the growth environment. This explains why the financial volatility in Asia has become global in nature. It is very flattering to know that Hong Kong can move even the mighty US and European markets, as much as the other way around. 16. Third, Asian fundamentals, and especially Hong Kong fundamentals, are strong. But there have been different degrees of strength in Asia with respect to the fundamentals. The adjustments in exchange rates of currencies in this region reflect partly the market perception of fundamentals. But as I said recently at the Per Jacobsson lecture, there is no perfect exchange rate regime.
The delegation of monetary policy decisions to a central bank is underpinned by the need to create stable expectations concerning economic developments and by the favourable experiences of countries such as the US and Germany and the less favourable experiences of countries where interest rate changes have been decided on the basis of more short-term considerations. Delegation to a central bank promotes credibility, confidence and consistency because the central bank must adhere to the mandate laid down by the political authorities. Democratic governance is safeguarded by the government authorities, who define the mandate and assess the results. The mandate provides for professional judgment in a defined area. A year and a half ago, the Government and the Storting adopted new guidelines for economic policy, which stipulate annual spending of petroleum revenues over the central government budget equivalent to the expected real return on the Government Petroleum Fund. One of the aims is to answer the question of when petroleum revenues should be used. The uncertainty and the speculation surrounding central government spending of these revenues, which could have adverse effects on the mainland economy, can thereby be reduced. At the same time, the Government issued a new operational mandate for monetary policy. Norges Bank shall set the key rate with a view to maintaining low and stable inflation.

Svein Gjedrem: Monetary policy in an open economy Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Confederation of Higher Education Unions, Kongsberg, 13 November 2002. The address is based on the assessments presented at Norges Bank's press conference following the Executive Board's monetary policy meeting on 30 October and on previous speeches. Please note that the text below may differ slightly from the actual presentation. Charts in pdf for this speech can be found on Norges Bank’s website. *  *  *  The long-term task of monetary policy is to provide the economy with what we call a nominal anchor, in other words low and stable inflation. Price stability is the best contribution monetary policy can make to economic growth and prosperity. Low and stable inflation is also Norges Bank’s operational objective. We have had four periods of very high inflation over the past 100 years; during the two world wars, the Korean War and a 15-year period from the first half of the 1970s to the second half of the 1980s. In Norway, very high inflation is a wartime phenomenon and a 1970s and 1980s phenomenon. The fourth period of high inflation was unlike the three previous periods. In the 1970s and 1980s, inflation accelerated gradually. It was not as high as during the two world wars, but it took a long time for the level to fall. The fixed exchange rate system of the post-war period, the Bretton Woods system, broke down in 1971.