samchain/econo-pairs-v1 huggingface dataset:
This is important because, to the extent this argument holds true, the action taken to deal with it, if any, could be different. Another relevant consideration is to what extent it reflects different market valuations of banks’ tangible assets or of their intangible assets, such as goodwill, that are to some extent already and will to a greater extent under Basel III be accorded no value for regulatory capital purposes. Fourth, to what extent are low market values caused by uncertainty among investors about the future regulatory and operating environment for banks? This could be caused by a number of factors, including ringfencing and capital policy as supervisors adjust risk weights. Fifth, by how much further should we adjust risk weights to reflect past inadequacies. And, finally, how rapidly should we make any adjustments, and how should such adjustments fit with both the Basel III implementation timetable and the changes that firms themselves are making? In conclusion, and pulling all of this together, there is a lot of talk about the need for simplicity. I agree. The proliferation of rules is unhelpful and particularly when it extends into making rules on how to supervise, a feature that we see in the EU processes. To return to Kahneman’s point, solid intuition is a part of supervision. But simplicity is not about one-club golf, and it is not about abandoning risk-based regulation. A simple timeline would suggest that Basel I did more to cause the crisis than Basel II.

And, we are now undoing that with the so-called slotting approach, which involves putting loans into risk buckets according to key characteristics. Supervisors have taken, broadly, four actions to correct the failings of Basel I and II. First, to raise sharply the capital requirements for trading book and investment banking activities. In doing so, we are changing the terms of trade for investment banking of this sort, and we are, of course, seeing the consequences. No apologies there I’m afraid. Second, we are, as I have just said, taking some assets out of the models regime because they should not have been there in the first place. Third, where assets are in the models regime, we are moving to create floors to prevent low modelled risk weights driving overall capital requirements down to imprudent levels. There is no doubt that an industry has grown up to arbitrage models and we will not in future let that lead to irresponsible practices. Let me take the case of mortgage risk weights, which has attracted recent attention. Prime mortgages are the sorts of assets that should be susceptible to modelling – there are a lot of them and they have been around for a long time. We still require the models calibration to take account of the early 1990s recession. Specifically, we don’t want models to use the relatively benign loan losses of recent years to reduce capital held. Why?
Annual food inflation, which makes up around 25 percent of the consumption basket, fell to 9.28 percent in June. Similarly, annual inflation in food and catering services posted a significant decline in this period. Also in this period, consumer inflation excluding food and catering services increased by 1 point to 5.82 percent in the inter-reporting period due to these cost pressures (Chart 15). To sum up, food prices pulled inflation down in the second quarter, yet the depreciation in the Turkish lira restricted this decline, inhibiting the desired improvement in the inflation outlook. Owing to the expected partial recovery in food prices accompanied by the cautious monetary policy, we project the deterioration in the inflation outlook to remain limited and inflation to reach the target in the medium term. According to the GDP data of the first quarter of 2015, economic activity proved more robust compared to the outlook presented in the April Inflation Report, and the GDP rose by 1.3 and 2.3 percent on a quarterly and annual basis, respectively (Chart 16). An analysis of national income components on the production side indicates that all sectors excluding construction exhibited increases in the first quarter compared to the previous-quarter averages. In this period, agriculture and net tax items regarding the GDP growth stood out, while industry and BIS central bankers’ speeches  3  services maintained their mild trend of increase (Chart 17). Seasonally-adjusted data on the expenditures side reveal that final domestic demand increased owing to the rise in consumption expenditures in the first quarter.

Accordingly, we envisage inflation to decline until September, and increase slightly in September due to base effects. Then, following a fluctuating course, we project that it will reach 6.9 percent in the year-end. In addition to these forecasts, we discuss alternative scenarios on the inflation outlook and the global economy in the Risks section of the Inflation Report. You can examine the Report for details. While concluding my remarks, I would like to thank all my colleagues who contributed to the Report, primarily those at the Research and Monetary Policy Department as well as the members of the Monetary Policy Committee, and thank every one of you for your participation. BIS central bankers’ speeches  5  6  BIS central bankers’ speeches  BIS central bankers’ speeches  7  8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11
Data on inflation or output simply appeared in information services at certain times. The NBP used to send the data on the balance of payments by fax to those analysts who requested for them. When, as the first financial markets economist in Poland, I launched a weekly macroeconomic service for customers, an analysis, which was one or two pages long, would be put on the pre-programmed fax machine, and it was not until the afternoon that the transmission was accomplished. At present, nearly every bank in Poland has its chief economist supported by a team of analysts who send hundreds or thousands of e-mails every morning, which reach tens of thousands of investors worldwide (banks, investment funds, arbitrage funds, company managements, wealthy private banking customers, decision-makers and central bankers). At present, the management of a large fund may receive hundreds of e-mails daily that contain analyses of listed companies, currencies, or macroeconomic and political developments. Nowadays, the problem does no longer involve access to information, but pertains to the excessive amounts of information and analyses that must be skilfully selected. In response to these – and other – challenges 3 international standards have been elaborated in the recent years. Not only the quantity, but also the quality of information and the comparability of data have been increasingly appreciated. In addition, unification of principles that govern the functioning of individual financial market areas has been a precondition for the development of effective competition in the international financial system.

This is drawn up quarterly, with each forecast having a horizon of three years. The inflation forecast gives us an indication as to whether our current monetary policy stance is appropriate for keeping future inflation within the range consistent with price stability. It is our compass, so to speak, showing us whether we are heading in the right direction. It plays another important role in that it gives the public an indication with regard to the need for monetary policy adjustments going forward. The inflation forecast is based on the assumption that a given interest rate remains unchanged over the entire forecast horizon. To date this has been the three-month Libor, and from now on it will be the SNB policy rate. This brings me to the third element of our monetary policy strategy. This determines how we communicate the level of money market rates we seek to maintain. To date, we have used the target range for the three-month Libor for this purpose. We will now do so by setting the SNB policy rate. In implementing our monetary policy, we will ensure that the secured short-term money market rates are close to the SNB policy rate. In this regard, we are focusing on SARON, the most representative of the short-term Swiss franc rates. SARON is an overnight rate. Given that we are now focusing on an overnight rate rather than a three-month rate, there is no further need for a target range.
Foreigners were allowed to invest in Sweden without a permit, but these investments might not be financed in the Swedish market. Portfolio investment abroad was regarded as more transient than direct investment and it was therefore more difficult for a Swedish company to obtain permission for this in another country. Companies that earned money abroad were obliged to bring it home to Sweden as soon as possible and convert it to Swedish krona. Swedish banks required permits to establish subsidiaries abroad and were on the whole not allowed to open branches abroad. This was because it was easier to control capital movements between parent and subsidiary than between branches, as the latter were not different legal entities. Prior to 1986, foreign banks were not allowed to establish in Sweden. After this, subsidiaries were permitted and later on also branches. Swedes were in general not permitted to purchase shares in companies outside of Sweden. Those who were already in possession of foreign shares were allowed to exchange them for others or to sell their right to own shares to someone else if they sold their holdings. Private persons were not allowed to take unlimited currency out of the country. Amounts above the regulated limit – which was low – required permission from the Riksbank. It was necessary to show evidence that the money would be used for personal aims and not for investment or other financial purposes. Private persons were not allowed to hold accounts abroad.

Whilst in the United States, over the last twenty years, unemployment has declined significantly during the economic cycles as a result of a successful deflationary and stability policy introduced by the Federal Reserve, unemployment in Europe has increased further in the same period. Since the beginning of the year, the rate of unemployment has stabilised at around 10% in the euro area. Those Member States with more flexible employment markets and more restrained wage bargaining generally have much higher levels of employment than the average in the EU. It is still hoped that the current upturn will not be slowed down by excessive demands for higher wages and will be used to make decisive structural policy reforms. Flexibility in the employment and commodity markets would therefore appear to be urgently needed. As you know, at the summit in Cologne the European Council called for an Employment Pact to be created with the aim of achieving a sustained reduction in unemployment. The Pact underlines the need for the implementation of structural reforms in Europe. It is hoped that the Pact will achieve this objective. Together with the national fiscal policymakers, the unions and the European Commission, the Eurosystem will also take part in the macroeconomic dialogue. We shall use this dialogue to make it absolutely clear to the other parties that structural unemployment cannot be reduced without decisive reforms.
While intra-regional trade has been growing fast, a further reduction in trade barriers should help promote deeper regional trade integration and facilitate more efficient resources allocation. A wider use of local currencies in trade settlement and financing would also help diversify sources of trade financing and reduce currency risk and transaction costs. Lastly, regional economies need to deepen financial market reforms and promote greater financial integration within the region to better channel Asia’s surplus savings to meet its own investment needs; to support growing trade integration; and to enhance the absorptive capacity of our financial markets to capital flows. Further liberalisation of the financial sector and improving financial infrastructure such as establishing credit information sharing system and microfinance institutions should also help some regional economies to allocate credits more efficiently. Over the years, ADB has contributed to financial sector development in the region through its own programmes and through supporting regional initiatives such as the Asian Bond Markets Initiative under ASEAN+3, and we welcome the Bank’s continued commitment in this regard going forward. It is noted that a number of the above structural reform areas have been identified as strategic priorities in the Bank’s midterm review of Strategy 2020. With its expertise, we believe ADB has an important role to play in helping the region to tackle the challenges arising from the highly uncertain global environment, and embark on structural reforms to raise its long-term growth potential.

This might involve higher rather than lower interest rates because of a risk premium, plus greater uncertainty. Before moving on from the subject of competitiveness, let me leave you with a couple of thoughts. If Hong Kong has, in some underlying sense, been suffering from severe uncompetitiveness, how does one explain the continuing strength of the trade and current account performance...  … and the fact that the pace of recession in Hong Kong over the last two years has not been significantly different from that in a number of other economies in the region? 6  BIS Review 17/2002  I am drawn to conclude that the criticisms of the peg on competitiveness grounds do not stand up too well under scrutiny. Even if the foregoing analysis and discussion does not prove unequivocally that fixing is superior to floating, it does challenge the contention that perceived problems of competitiveness would dissipate if only we had a floating exchange rate. Living with deflation Let me turn now to the other focus of criticism of the monetary regime that I mentioned earlier, namely deflation. There are four main factors which have been contributing to falling prices in Hong Kong. First, there is the state of the global economy. A combination of recession and remarkable success in taming inflation in recent years have left policy makers in several countries facing the unusual situation of deflation. Hong Kong has not been alone, although the process has perhaps been more prolonged here than in many other places.
The euro area is by far our largest trading partner – accounting for getting on for half our exports – and those direct links are supplemented by close financial ties between our domestic banking system and the continent. So it is hardly surprising that recent Inflation Reports have singled out developments in the euro area as a key risk to the UK outlook. Although the euro area has been in rough current account balance since the introduction of the euro, there have of course been substantial intra-zonal imbalances. In the run up to the crisis, periphery countries ran persistent current account deficits financed in large part by borrowing from core countries, especially Germany. As a result, the net international investment position of Spain has deteriorated by around 60% of (annual) GDP since 2000, while for Greece and Portugal the number rises to around three quarters of GDP (Chart 3). On the other side, Germany’s net international investment position has improved by around 40% of GDP. Initially these imbalances were seen as the benign consequence of an underdeveloped periphery catching up with a richer core. But on top of that were less benign influences. First, perceptions of supply potential in the periphery appear to have been over-optimistic; subsequent revisions to the IMF's estimates of spare capacity bear witness to that (Chart 4).

It is well known that the cause of Turkey’s inflation is fiscal in nature. The last year in which Turkey had a budget surplus was 1970. The budget deficit increased steadily throughout the last decade, finally reaching double-digits in 1999. The fiscal imbalances have also caused difficulties in financing the deficit. Over the last couple of years the amount of external financing available for the budget deficit has declined, causing increased pressure on the domestic financial sector and an increase in the domestic debt. The ratio of cash domestic debt to GNP grew rapidly during the 1990s, finally reaching 24% of GNP in 1999. The increases in the deficit and in the level of domestic debt during recent years are mirrored in the levels of domestic interest rates. The increasing pressure on domestic borrowing has kept real interest rates at high levels, hovering around the mid-20s during the 1990s and rising to over 50% at frequent intervals. I think this brief recital of facts should be more than sufficient to explain why it is high time to face the predicament of the Turkish economy. A radical program is urgently needed to address Turkey’s deep-rooted problems, and it is my wish today to convince you that the program we have delivered to deal with them is well prepared and comprehensive. Let me summarise our goals and the overall strategy by which this program aims to achieve them.
SPEECH DATE:  3 December 2019  SPEAKER:  Deputy Governor Per Jansson  VENUE:  Danske Bank, Stockholm  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11) Tel +46 8 787 00 00 Fax +46 8 21 05 31 registratorn@riksbank.se www.riksbank.se  Contemplations of an interest-rate dove and inflation hawk* Those who follow the media reporting on monetary policy have probably noted that I have been considered the most dovish member of the Riksbank’s Executive Board for some time. By this, I mean that I am considered to be the one who, at least for the time being, is inclined to conduct the most expansionary policy. For anyone unfamiliar with the terminology, the opposite of a dove is a hawk, someone who instead advocates a tighter monetary policy. An alternative terminology that is common in theoretical models is that a hawkish policy instead attaches considerable importance to the inflation target and gives less weight to other things. 1 So actually, as I think it is justified to prioritise the inflation target and confidence in it, I could also be considered a hawk. More precisely, I could be described as a combination of an inflation hawk and an interest-rate dove. Describing the orientation of monetary policy-makers in ornithological terms is rather practical. Apparently, however, it is not entirely uncomplicated and misses some subtle differences. I would therefore like to start by elaborating on my view of current monetary policy and my reasoning at the most recent monetary policy meetings.

The substantial pressure on the krone towards the end of October hardly reflected economic fundamentals in Norway. 8) Interventions Exchange-market interventions are an important instrument of monetary and exchange rate policy. Norges Bank intervened to support the krone for the equivalent of NOK 29 billion in the period from mid-October to mid-December. Unrest in international financial markets in the wake of the financial crisis in Russia intensified the speculative pressure on the krone. It is the Bank’s view that this speculation was not justified by economic fundamentals in Norway. It was therefore necessary to defend the krone through interventions in order to prevent a selfreinforcing and unnecessary weakening of the krone. Norges Bank will continue to consider using interventions if market conditions so warrant. For example, a central bank may have to intervene directly in order to stabilise the market, particularly if international turbulence leads to panic-like market reactions. From a somewhat longer-term perspective, the experience of large-scale and persistent interventions is mixed. When the central bank intervenes heavily to defend the krone, market participants may easily move into a game situation and perceive central bank intervention as an interesting opportunity to make a profit. Market operators know that a situation in which the krone is perceived as “artificially strong” because Norges Bank is buying kroner cannot persist. It is then tempting to take reverse positions in the foreign exchange market in relation to the central bank.
QE as an economic policy tool - what does it do and how should we use it? Speech given by Dave Ramsden, Deputy Governor for Markets and Banking  Peter Sinclair Town Hall lecture, University of Birmingham 17th February 2021  With thanks to Tom Smith, Amy Lee and Jon Bridges for their assistance in preparing these remarks, and to Bank colleagues including Andrew Hauser, Maggie Illingworth, Mike Joyce, Nick McLaren, Rhys Phillips, and Beth Blowers for their many helpful comments and suggestions. 1  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  Introduction It’s a pleasure to be speaking today at the University of Birmingham, and an honour to be doing so at the third Peter Sinclair Town Hall lecture. My focus today is on quantitative easing – QE for short – and its use as an economic policy tool. The Bank of England’s internal Independent Evaluation Office (IEO) published its own evaluation of QE earlier this year, where it noted that “there remain open debates about how QE works in different states of the world, its broader interlinkages and its potential limitations”.1 What I want to use my lecture for today is to set out my own views on QE as a policy tool, as well as contribute some thoughts to some of those debates. Before I do that, though, I want to start with my own recollections of Peter.

His 2017 NIESR paper with Bill Allen examined the shift from the “old normal” of pre-financial crisis monetary policy to the “new normal” of QE and forward guidance, as well as engaging seriously with what a “future normal” for monetary policy might look like.5 That is a framing I will use for this lecture in setting out my own views of QE as a monetary policy tool, and then focusing on two other policy debates highlighted by the IEO review, the links between QE and government financing, an issue Peter also considered6, and the links between QE and climate change. The Bank of England and its balance sheet I’ll come on to the details of what exactly QE is and what uses it has as a policy tool, including over the last 11 months in response to the Covid pandemic. But I want to start by considering a more general question, which is the question of what central banks are actually for. That’s because I don’t think you can answer the question of how to use a tool without first knowing what you want the tool to do.