samchain/econo-pairs-v1 huggingface dataset:
Table 2 Economic growth and current account (annual change, percent) 2010  2011  2012  2013 (f)  GDP  5.8  5.9  5.6  4.5-5.5  4.0-5.0  Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Goods and services exports Goods and services imports  13.6 10.3 12.2 9.7 2.3 25.9  9.1 9.4 14.7 7.9 5.2 14.5  7.1 7.3 12.3 5.8 1.0 4.9  6.1 6.1 7.2 5.7 3.1 5.9  4.9 5.1 5.5 5.0 3.8 5.0  Current account (% of GDP)  1.5  -1.3  -3.5  -4.4  -4.7  Mar.13 Report  Jun.13 Report  (f) Forecast. Source: Central Bank of Chile. BIS central bankers’ speeches  9  Figure 4  CPI inflation (*) (annual change, percent)  CPIEFE inflation (*) (annual change, percent)  10  10  10  10  8  8  8  8  6  6  6  6  4  4  4  4  2  2  2  2  0  0  0  0  -2  -2  -2  -2  -4  -4  -4  -4  07  09  11  13  15  07  Mar.2013 Report  09  11  13  15  Jun.2013 Report  (*) Gray area, as from second quarter of 2013, shows forecast. Sources: Central Bank of Chile and National Statistics Institute (INE).

These two forces have created uncertainty and triggered a readjustment of portfolios to accommodate falling prices of financial assets and commodities, higher risk premiums and a generalized depreciation of emerging market currencies against the dollar. Overall, all these factors combined may have exacerbated the process of market adjustments, making it difficult to distinguish whether these are temporary or permanent in nature (figure 2). Although the aforesaid adjustments in the world are good news in the sense that they signal a transition towards a more balanced configuration of the global economy, for this year and next a less favorable international scenario for the Chilean economy is being configured. Accordingly, our growth projections for our trading partners are revised downwards, with higher credit costs and lower terms of trade than previously expected. The baseline scenario incorporates prices of $ and $ per pound for 2013 and 2014, respectively. This is quite lower than what we anticipated just a few months ago, when we projected prices of $ and $ per pound for those years. These elements add to the normalization that is being observed in domestic demand. Our economy is on a good standing to face the transition to this new configuration of the external scenario. The recent depreciation of the real exchange rate facilitates the adjustment of the Chilean economy, and monetary policy is available to make adjustments if required.
A view is sometimes expressed in the monetary policy debate that monetary policy should give consideration to the risks of imbalances resulting from low real interest rates over a long period of time. There is a lot of talk about a low policy rate entailing risks for rapid credit growth that will lead to high leverage and greater risk in the financial sector. However, I consider that there is no theoretical or empirical support for a low policy rate in itself leading, for instance, to excessively high leverage in the Swedish financial system. This is because the Swedish system is dominated by a few major banks and does not have a large difficultto-regulate shadow-banking system of financial intermediaries and broker-dealers. Experiences from different crises indicate that it is not low policy rates in themselves that lead to imbalances and threats to financial stability. It is if the low policy rates lead to an overheated economy that problems arise, such as in Sweden prior to the crisis at the beginning of the 1990s and more recently in Greece, Portugal, Ireland and Spain. It is the overheated economy that entails exaggerated optimism, with for instance property prices being pushed up above levels that are fundamentally motivated, an excessive construction boom and risky investments. It is not the low interest rates in themselves. Low interest rates that do not lead to an overheated, but to a balanced, development in the real economy and inflation do not appear to entail imbalances.

There is a generally-accepted principle that looking a few years ahead, CPIF inflation is the relevant operational measure of inflation. The reason for this is that in the short term, CPI inflation is affected directly by the Riksbank’s own repo-rate adjustments and monetary policy should not react to these temporary effects. CPIF inflation does not include these effects. In the longer run, these effects largely cancel one another out, and then it is CPI inflation that is relevant. 4 The point of using CPIF inflation as the operational measure is thus to best stabilise CPI inflation in the longer run. In the longer run, monetary policy should therefore be assessed with regard to how well it stabilises CPI inflation around the target and unemployment around a long-run sustainable rate. 3  The employment gap is equal to the labour-force gap (the “participation” gap) minus the unemployment gap, where the “gap” refers to the difference between the actual rate and the long-run sustainable rate. If the labour force gap is not so small that it can be ignored, the employment gap can be stabilised by more precisely stabilising unemployment around the sustainable unemployment rate minus the labour force gap. 4  This is entirely in line with the recommendations in the assessment made by Goodhart and Rochet (2011), and which the Riksbank agreed with in its consultation response.
1  For an extensive survey, see Reinhart, C and Rogoff, R, (2009), This time is different: eight centuries of financial folly, Princeton University Press. 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  Stagflationary threats were tamed by new regimes for monetary stability that were both democratically accountable and highly effective. Clear remits. Parliamentary accountability. Sound governance. Independent, transparent and effective policy-making. These were the great successes of that time and their value endures today. But these innovations did not deliver lasting macroeconomic stability. Far from it. Price stability was no guarantee of financial stability. An initially healthy focus would become a dangerous distraction. Against the serene backdrop of the so-called Great Moderation (Chart 1), a storm was brewing as total non-financial debt in the G7 rose by the size of its GDP (Chart 2). Several factors drove this debt super-cycle including demographics and the stagnation of middle-class real wages (itself the product of technology and globalisation). In the US, households had to borrow to increase consumption. “Let them eat cake” became “let them eat credit”.2 Financial innovation made it easier to do so. And the ready supply of foreign capital made it cheaper.

Many approaches were tried, some proved their worth, while others were abandoned. The establishment of these monetary institutions was not a constant reinvention of the wheel; rather, progress was evident. The sound institutions that have grown in this way represent valuable capital for our country and have made a significant contribution to Switzerland’s prosperity. I feel that it behoves us to become familiar with the history of our monetary and currency institutions. This is true not just for the employees of the SNB, but in particular for them. In fact, this was the original idea behind Professor Baltensperger’s book, namely to improve employees’ knowledge of Switzerland’s economic history. Or, expressed in a different way: To encourage them to “become familiar with the ground on which we lay our foundations”. On the initiative of the former Chairman of the Board, Jean-Pierre Roth, an internal seminar on the history of the Swiss currency in the 19th and 20th centuries was organised in the autumn of 2008 and in the spring of 2009. It became clear that no work yet existed which covered the entire period of the history of the Swiss franc. It was this realisation that laid the foundation for this book. The book was ultimately written by expanding on the material derived from the internal seminar. As you will be able to conclude for yourself after reading the work, the result can certainly be considered a resounding success. The book by Professor Baltensperger is a beautifully illustrated work with fascinating contents.
To do that is both messy and costly. A difference to previous crises is the new financial products that have turned sour. It will be difficult to deal with these opaque and complicated new breeds of lemon. However, this does not make it less important to get the lemons – rather the contrary. There are also no shortcuts in dealing with bad assets. The losses must be recognised. A loss is a loss. The costs involved may make it tempting to sugar-coat the lemons by letting the bad assets be valued above market value, but this will only postpone the recovery. One possible approach to dealing with bad assets is through various forms of asset relief measures. However, if asset relief is offered, then the pricing must be set at conservative  2  BIS Review 118/2009  market values. A transfer value set above the market value is basically a transfer of money from taxpayers to bank-owners. This could also be costly over time, in terms of increased moral hazard. In addition, pricing above market prices may destroy the asset market for years to come and thus add to the costs of the crisis. To restart a market, it is crucial that investors become confident that the bottom has been reached. This confidence can only be achieved by the realistic and transparent valuation of assets. Once at the bottom, people will start to listen to good stories about the future again. Risk appetite will return and market activity will pick up.

Some countries are in a relatively favourable position because their past management was wise and prudent, while others are already very close to losing credibility. Spain – where fiscal consolidation had progressed more than elsewhere – will have to make sure that it keeps its fiscal credibility in the years to come in strictly meeting the requirements of the Stability and Growth Pact. A clear plan for a medium-term fiscal correction becomes even more pressing for rapidly ageing societies like ours, as an increasing numbers of pensioners will mean mounting claims on public transfers. IV. Conclusion  More than one year after the dramatic deepening of the financial crisis in September 2008, we can spot a number of signs of economic stabilisation in the euro area. We have halted the freefall in economic activity that we witnessed over a period lasting more than six months after the intensification of the crisis in mid-September 2008. But the crisis has debilitated the real economy. As I said, the crisis has proved so deep because it has deprived our citizens of confidence. Every business activity is by its very nature an act of trust, an expression of confidence. As regards bankers, by granting loans more actively to entrepreneurs they can contribute to transmitting and inspiring confidence to the economy at large. Being part of the euro area and the European Union will help in this process.
Also, the independent asset management company managed to limit the losses on the troubled assets they took over from the Swedish banks. Something similar seems to be occurring right now in the UK. The British also applied the good bank-bad bank model in the restructuring of Northern Rock. While the good part of that bank is still in the red, the bad part looks likely to return to making a profit already this year! So even though it is very difficult to assess all the direct and indirect effects of one particular solution in relation to another, those examples at least indicate that you can achieve better outcomes by acting economically savvy. But following the principle of being economically savvy is important not only because recklessly spending taxpayers’ money is irresponsible. It also serves other functions. One is combating moral hazard. Some people see the injection of state money as undue intervention, and look on it as a sign that you are abandoning the mechanism of private markets. Quite frankly, it signifies the opposite. To preserve the discipline in markets, it is important that shareholders and creditors are not allowed to walk away from a failure without suffering economic damage. So, did investors and creditors suffer their fair share of the losses during the recent crisis? Unfortunately, my answer is “no”. In many of the recent banking failures around the world, incumbent shareholders have maintained their ownership stakes or even remained in control of the bank. Creditors have enjoyed explicit or implicit guarantees.

If you want to maintain confidence, you simply do not have the luxury of time. But even if you cannot hinder a crisis, addressing it as early as possible and with determination can at least limit its effects. So my second principle of effective crisis management can be summed up as acting swiftly. While this principle is easy to support, crisis management in practice is often characterised by the opposite: taking too little action, too late. Essentially, there are two main reasons for supervisory and other authorities to neglect taking sufficient action in time – they lack either the willingness to act or the ability to act – sometimes both. There are many reasons for supervisory and other authorities to not want to act. Pressure from the industry and politicians is one of the first that springs to mind. Sometimes – consciously or unconsciously – supervisory and other authorities also want to let banks gamble on turning themselves around. And banks and their shareholders are often more than willing to play along – they face a one way bet as they approach the brink of failure. But in the end, the longer you wait, the harder you fall. For that reason, I don’t have a high opinion of regulatory forbearance or other excuses for supervisory inaction. Ability to act may also be constrained. First and foremost, the ability to act is, of course, dependent upon the tools available.
This represented a deconstruction of the old model of central banking.5 In my view, while there were enormous innovations of enduring value during this period, the reductionist vision of a central bank’s role that was adopted around the world was fatally flawed. 2  Other banks were restricted to partnerships of up to 6 members. 3  During the 1866 and 1878 crises the Bank lent freely to the system but allowed the insolvent Overend Gurney and City of Glasgow Bank to fail. And in 1890 it used a “lifeboat” approach to rescue Barings which was perceived to be solvent. Note however that there is no definitive evidence that an explicit set of Lender of Last Report (LOLR) principles was accepted by the top of the Bank and its directors. The emergence of the Bank’s LOLR role in this period is discussed in Collins (1988), Capie (2002) and Dornbusch and Frenkel (1984). 4  In the late 19th Century the banking system was relatively unregulated (and partly self-regulated) – the Bank did not have an explicit supervisory infrastructure or system of prudential control until 1979. Nevertheless the scope of the Bank’s responsibilities was arguably as broad then as it is now, albeit that the mix was different. 5  See Padoa-Schioppa (2011). 2  BIS central bankers’ speeches  In particular, it failed to recognise that financial stability is as important an objective of macroeconomic policy as price stability, and it downplayed the interrelationships between the two.

Although the international money markets have now calmed somewhat, we have not yet seen the end of the turmoil on the financial markets – neither for the financial institutions involved nor for the international economy. After four years of strong growth and low inflation, this means more difficult times ahead for the Swiss economy. Due to the turbulence on the financial markets, the economic outlook has become more uncertain while, at the same time, inflationary pressure has heightened over the past few months – not such a comfortable position for a central bank. A positive element remains the achievements of the past few years, which have laid the foundations for a higher long-term growth trend. These need to be further improved in order to retain Switzerland as a dynamic business location. BIS Review 21/2008  1
It must be possible for any financial institution, even a large one, to fail, without threatening the future of either the financial system or the real economy. In the last two years, the risks presented by systemically important banks to the stability of the financial system and the economy in general have become only too evident. First, in principle, systemically important institutions have an incentive to enter into excessive risks (moral hazard). Should these risks materialise, this can lead to losses of unimaginable dimensions, as has indeed occurred. Second, the potential costs of supporting systemically important banks are enormous. Third, the larger the systemically important institutions compared to the size of a country’s economy, the greater the likelihood that the costs in question will exceed the capacity of that individual country to bear them (the “too big to rescue” issue). The leaders of the G20 countries were quick to recognise the significance of these risks and they asked the Financial Stability Board to elaborate proposals before the end of October 2010 on how the “too big to fail” and “too big to rescue” issues could be addressed. In its interim report on this matter published at the beginning of November 2009, the FSB focuses on three elements. At the same time, it is closely monitoring the development of additional proposals at national and international level.

When global economic activity improves, global export prices are expected to rise. Initially, the krona is expected to strengthen somewhat in trade-weighted terms, which will dampen the impact on Swedish import prices in the near term. However, from the beginning of next year, we assess that the krona will no longer contribute to holding down import prices and they will then rise faster. As economic activity in Sweden strengthens, the rate of wage increase will also rise. At the same time, we have assessed that labour productivity is increasing, which means that unit labour costs will continue to grow by around 2 per cent a year in the coming years. The fact that import prices rise faster, at the same time as unit labour costs continue to increase at a normal rate, will lead to companies’ total marginal costs gradually beginning to grow at a more normal pace. We also predicted in July that the demand situation would improve during the forecast period, partly thanks to higher demand from abroad and a continued expansionary monetary policy in Sweden. We are expecting that it will become easier for companies to raise their prices when demand increases. Companies’ profit shares will also increase towards more normal levels then. All in all, these factors – increasing unit labour costs, rising import prices and higher price mark-ups – lead to the assumption that inflation will rise in the coming period.
Banking liberalisation provided the spur for our local banks to raise their game and compete with some of the world’s largest banks while maintaining high prudential standards and they have done well. We had previously announced the Government’s policy of maintaining the local banks’ market share at no less than 50% of total resident deposits. This remains our position. We are committed to having strong local banks at the core of the banking system. In a very real  BIS central bankers’ speeches  3  way, our three strong local banks also give Singapore the confidence to continue opening up the banking sector to foreign competition. Encouraging foreign banks to deepen their Singapore roots A diverse international presence and global connectivity must remain key strengths of Singapore’s financial centre. We host many international banks, who conduct an increasing share of their activities out of their Singapore offices. Some banks have moved their global heads of business to Singapore, or hubbed specific business lines or IT operations in Singapore. Consumers and corporate customers have benefited from the wider range of products and services, offered at competitive rates. The majority of foreign banks in Singapore operate as branches, taking advantage of the cost efficiencies arising from branching within an international bank. We continue to support the use of branches for the vast majority of banks in Singapore, which are in the wholesale and investment banking businesses. Additional measures may be appropriate for retail banks that are important to the domestic market.

We will allow greater foreign bank participation in Singapore’s domestic financial system in a way that strengthens financial stability and that encourages foreign banks to deepen their roots in Singapore. MAS will make several refinements to the QFB programme: (i) We will require existing QFBs that are important to the domestic market to locally incorporate their retail operations. The key objective for requiring local incorporation is to strengthen depositor protection. One indicator of importance to the domestic market will be the share of domestic deposits. MAS is also evaluating other factors that may be relevant to individual QFBs and will consult them on the criteria for requiring local incorporation. Not every QFB needs to be locally incorporated. (ii) A very small number of QFBs may become significantly rooted in Singapore over time. For these significantly rooted QFBs, MAS will consider granting an additional 25 places of business, of which up to 10 may be branches, as part of an overall package negotiated with the home countries of these QFBs which are free trade agreement (“FTA”) partners with Singapore. This will bring the total to 50 places of business for such QFBs. Being significantly rooted entails both additional privileges as well as responsibilities to contribute to the stability of the Singapore financial system. 4  BIS central bankers’ speeches  A significantly rooted bank will be determined by both qualitative and quantitative attributes.