samchain/econo-pairs-v1 huggingface dataset:
In this section I show how consumer prices for various groups of goods and services have developed since 1995. This is the type of basic data needed when calculating underlying inflation with the aid of exclusion. Table 1 below shows the fifteen components (or price groups) in the CPIF that have varied the most since 1995, measured according to the standard deviation for the series. 19 The results show that prices of coffee, tea and cocoa have had the most volatile rates of price increase during the period. Table 2 shows the fifteen components that have varied the least. This shows that rents have had the least volatile rate of price increase during the period. Table 1.

SPEECH DATE:  13/05/2019  SPEAKER:  Deputy Governor Henry Ohlsson  VENUE:  Swedish Society of Financial Analysts  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  Underlying inflation – for better or for worse∗ Thank you very much for the invitation to come and speak at the Swedish Society of Financial Analysts! Concepts such as underlying inflation and core inflation are often used in discussions on inflation and monetary policy. But what do these concepts actually mean? And what do measures of underlying inflation actually measure? My aim today is to discuss why central banks are interested in underlying inflation and how it can be measured. I will first explain why we need to measure underlying inflation (or core inflation, which I regard as a synonym) and then briefly describe the history of the concept. There are two common methods of calculating underlying inflation, and on the basis of these I will discuss which properties are desirable for measures of underlying inflation. I will also present different examples of measures. There are measures that are better or worse with regard to how well they fulfil the criteria for desirable properties. But a first conclusion is that there is no measure that is unequivocally better than all the others. Although there are a couple of measures that are clearly better than others.
New entrant banks can do a bit, but the big incumbent banks need to be healthy too. Their repair is now underway. That has required, and will continue to require, realism about asset values, expected losses and risks – not pretending, taking the medicine. In that sense, it is a policy in the spirit of Hayek.10 So the overall policy package has combined Keynes and Hayek. Conclusion In the wake of such a massive crisis, recovery has needed active monetary, liquidity and banking policy. Beyond the realm of central banking, it needs supply-side reform – to create optimism about higher incomes and better investment opportunities in the future. 8  See the Minutes from the Monetary Policy Committee’s meeting on 7–8 November 2012: “At the present time, it was possible that elevated uncertainty and a desire to reduce leverage meant that real activity was less responsive to lower borrowing costs than normal. But this situation could easily reverse, and with it the traction that lower yields could have in stimulating demand and output.”  9  See Broadbent (2012), “Productivity and the allocation of capital”, pages 30–33 of the Monetary Policy Committee’s November 2012 Inflation Report: and Tucker (2013), Annual Report to the Treasury Select Committee. 10  There is echo of this in Bean (2013), “Global aspects of unconventional monetary policy”. 4  BIS central bankers’ speeches  If recovery does gain traction, the MPC will need to avoid misperceptions about the likely course of policy.

The government having revised its Remit to the MPC, the Committee has, in effect, formally clarified that it is adopting a probing approach to policy in order to strike the right balance between risks to stability and the risks of sclerosis. To be clear, I do not see the Forward Guidance – and personally would not favour – committing the Committee to knowingly keeping policy loose beyond the point that would be prudent. I say that because, in parts of academia and the commentariat, the expression “low for long” is used in a rather special way to mean just that: that policy should be loose beyond the period that, ex post, would warrant special stimulus, in order actively to deliver a persistent rise in inflation and inflation expectations above target, thereby pushing down prevailing real rates of interest and so accelerating recovery.2 While not without insight on the mechanics of monetary stimulus, that stream of economic modelling makes the absolutely critical assumption that even as the monetary authority deliberately generates a persistent rise in inflation, its anti-inflation credibility remains 100% intact; later, the central bank simply announces that things are back to normal. That is utterly unrealistic. To re-iterate: the MPC’s forward guidance provides an articulated framework for a probing approach to policy, without a change in our preferences on inflation.3 Saying more about the Committee’s approach to policy in this way might be particularly valuable during a period when signs of recovery have become more apparent.
Emphasis on improved corporate governance goes hand in hand with the need for improvements in risk management standards. Sound risk management practices will minimise adverse consequences  BIS Review 51/2004  3  faced by financial institutions during periods of uncertainty. Robust internal controls to provide qualitative standards are also necessary to complement the quantitative analysis of risk to provide the necessary checks and balances. In the area of Islamic banking, the requirement to manage the risks becomes more important because of the unique peculiarities in the contracts. Basel II has, to a certain extent, incorporated some aspects in the identification of risks, in particular the credit, market and operational risks that can be assimilated by the Islamic banks in terms of its product offering. Another important pre-condition to sustain the continued growth of Islamic banking and finance is a comprehensive legal infrastructure for legal redress arising from disputes in Islamic financial transactions. The legal infrastructure needs to comprise both effective regulatory and substantive laws as weIl as appropriate adjudicative fora to resolve disputes relating to Islamic financial transactions. To address this, efforts are needed to develop a sufficient number of competent lawyers and judges that are equipped with sound knowledge and expertise in both Shariah and civil laws to deal with such matters. This would need to be supported by an efficient court system that can effectively deal with all Islamic banking and finance cases, whose decisions are enforceable over the range of financial issues.

Øystein Olsen: How does the key policy rate operate? Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Centre for Monetary Economics (CME), BI Norwegian Business School, Oslo, 25 September 2018. * * * Accompanying charts of this speech. Introduction Just over a week ago, we marked the tenth anniversary of an event that shook the global economy. The Lehman Brothers bankruptcy added fuel to a smouldering financial crisis, which gathered strength and spread quickly. Financial market activity came to a halt. Investors demanded high risk premiums. Faced with a crisis that could lead the economy into a deep recession, central banks cut policy rates sharply and injected liquidity into the market. It was the beginning of ten years of historically low interest rates and the use of unconventional instruments. It would take a long time to get economies back on their feet again. For Norway, the financial crisis brought an abrupt end to a three-year long period of gradual increases in the key policy rate. In the course of autumn 2008, the key policy rate was lowered three times, by a total of 2.75 percentage points. By the following summer, the key policy rate had been lowered further, to 1.25 percent. Even though growth in the Norwegian economy picked up fairly quickly, Norwegian interest rates over the next few years were influenced by a persistently low international interest rate level.
And, finally, the number of people in employment - and let’s never forget we are talking about people here - is currently around the highest number on record. Now we don’t have fully comparable data for Scotland within this overall picture. Interest rates are of course identical, and as far as we can tell, the inflation story over the past seven years is pretty much the same as in the rest of the UK. So, too, is the story of sustained economic growth. On the basis of annual data Scotland’s economy, too, has grown year by year over the period - at an average rate of 2.6%. And on the basis of the new quarterly GDP data series for Scotland, produced by the Scottish Executive, Strathclyde University’s Fraser of Allander Institute concluded that, while the Scottish economy is somewhat more volatile than that of the UK as a whole on a quarterly basis, it moves broadly in line with the UK over longer periods. 1  BIS Review 5/2000  We do have consistent data for the labour market. And this shows that Scotland too, like the UK as a whole, has enjoyed a steady fall in the rate of unemployment, from a peak of some 10% at the end of 1992 to just over 5% now. In the case of Scotland, this is the lowest rate since the middle of 1976. (It compares with the truly grotesque Scottish rate of unemployment of close to 14% in the mid-1980s.)

Figure 12  Real commercial loans and non-mining Imacec (annual change, percent)  20  Commercial loans  15  20 15  10  10  5  5  0  0  -5  -5 Non-mining Imacec  -10  -10  -15  -15  -20  -20  97  01  05  09  Source: Central Bank of Chile. 18  13  17  Figure 13  Commercial loans during recession episodes (1) (2)  (difference with respect to annual change in period 0, percent)  8  8  Covid-19  6  6  4  4  2  2  0  0  -2 -4 -6 -8  -2  Global financial crisis  -4 -6  Asian crisis  0  1  2  3  4  -8  5  (1) Horizontal axis shows months. Period 1 is first month with negative Imacec. (2) Real data based on CPI splicing with 2018 anual base. Source: Central Bank of Chile using data from the Financial Markets Commission and the National Statistics Institute (INE).
Given this progress, I propose to talk about what a resolution transaction looks like in practice before turning to some of the preconditions for resolution to be feasible and credible. I will focus in particular on making liability structures compatible with resolution. The FSB was asked by G20 leaders to prepare, by the time of the Brisbane summit, proposals on the adequacy of global systemically important banks’ (G-SIBs) loss absorbing capacity when they fail. Such loss absorbing capacity is sometimes referred to as “gone concern loss absorbing capacity”, or GLAC. The equivalent provision in BRRD is the Minimum Requirement for Own Funds and Eligible Liabilities, or MREL. In both contexts the concept is essentially the same: both GLAC and MREL aim to ensure that banks have in place an adequate stock of liabilities that can be used to cover losses and meet recapitalisation needs in a resolution. I will concentrate my remarks on large international banking groups, or Global Systemically Important Banks (G-SIBs) in the parlance of the FSB. The BRRD applies to all credit institutions and certain investment firms. Member States will therefore need to think through how MREL should apply to other firms. But, crucially, EU G-SIBs are often active in third countries and non-EU firms have extensive EU operations. This explains why the FSB’s proposals on GLAC are a crucial part of ending the problem of Too Big to Fail and in effect internationalise the concept of MREL beyond the EU. Resolution transaction The resolution of a G-SIB is likely to involve bail-in.

Average Inventory  Crude Oil Price (rhs)  Figure 5 Crude grade qualities  Source: JPMorgan Commodities Research, Energy Intelligence Group  BIS Review 69/2004  7  Figure 6 Crude oil futures contract volumes (NYMEX)  60  300'000  50  250'000  40  200'000  30  150'000  20  100'000  10  50'000  0  0  1995  1996  1997  1998  1999  2000  2001  Non-Commercial Long Contracts WTI Crude Oil (USD/ bbl) (lhs)  2002  2003  2004  Non-Commercial Short Contracts  Figure 7 Historical WTI futures price curves 50 45  U S D /b b  40 35 30 25 20 15 0  1  2  3  4  5  6  Y e a rs to e x p iry 2 0 0 4 -1 1 -1 2  8  1 ye a r a g o  3 ye a rs a g o  BIS Review 69/2004  Figure 8 Backwardation O il Spread (Spot - Futures 3M ) in U S D 3.00  2.00  1.00  0.00  -1.00 Spread Poly.
Many industrial outputs of developing countries have failed to make a mark in the international markets because of the absence of welldeveloped after sale and maintenance services. The Indian auto-maker, Maruti, failed to sell its fuel economy car until Suzuki of Japan stepped in with technology and after-sale services. Therefore, without the attendant services, it is not possible for either industry or agriculture to sustain itself. Sri Lanka which is devoid of a sufficient natural resource base would find it difficult to enhance growth through industry or agriculture alone. The country’s available land is limited and its population density at 293 persons per square kilometer is one of the highest. In comparison, Canada has a density of 3, USA 31, New Zealand 14, Australia 3 and Russia 9. While the latter group of countries could  8  6  World Development Report 1987, p.39  BIS Review 4/2007  conveniently move into extensive farming, Sri Lanka’s choice is limited only to improved productivity through intensive cultivation. That again is through innovation which comes from services. The second factor that would drive Sri Lanka to the services sector is the ever rising globalization of services. In the past, services which, by nature, cannot be stored, were non-tradable. Hence, there was no any prospect of selling, services beyond the borders of a country limiting its clientele to its own citizens.

In envisioning the future direction of the industry in our own region, it would be constructive for us to reflect on the evolution of the modern insurance industry and contextualise it to our own prevailing and prospective environment. The modern insurance industry came with the maritime expansion which accompanied cross-border trade activity, and the rapid urbanisation which saw significant human and economic losses experienced during the Great Fire of London. This led to the establishment of the first fire insurance company and the invention of the building blocks for life insurance as we know it today. Then, as societies became more affluent, endowment and with-profit policies grew in significance as instruments for savings. As industrialisation and urbanization intensified, the break down of traditional systems of social protection prompted the expansion of insurance products that covered retirement, accident, medical care and unemployment. Throughout the 20th century, business models have continued to evolve in tandem with the higher levels of financial literacy, rising consumer expectations and advancements in  BIS central bankers’ speeches  1  technology. As competition compressed margins, there was a migration beyond tied-agency and commission-based distribution models to include fee-based financial advisors and direct marketing. Bancassurance and the participation of retailers in insurance distribution have also allowed insurers to significantly expand their reach with lower cost structures, while specialisation along the value-chain enabled even greater efficiencies. This more diverse landscape has enabled a much wider and deeper penetration of insurance in the advanced economies.
For example, the leading global fund managers recently indicated that they consider sustainability to be a core criterion for investment selection, given that sustainable portfolios could offer higher risk-adjusted returns and that companies that follow sustainable criteria may have greater potential for success in the medium term. Let me finish my address by highlighting that there is still some considerable distance between expectations and the reality of the data at hand, but also that the pace of change is very brisk. Standards are and will always be imperfect, but this is no excuse for us not to try to move forward. Thank you. 4

Before I do that, I should first like to update you on the state of our economy as the painful adjustment process draws to a close and as clear signs of economic recovery emerge. I should also like to address some of the concerns – unnecessary ones, in my view – that still seem to be clouding the view of Hong Kong from outside. The recovery Those of you who heard me in June last year may well be a little sceptical about any advice from me on the outlook for the Hong Kong economy. Although I was under no illusion about the less prosperous times that lay ahead, like many at the time I was perhaps a little too sanguine in my assessment about the impact that the Asian crisis would have on Hong Kong. However, the temptation now for many is to go to the other extreme: to be very cautious in making predictions about the future and to acknowledge signs of recovery only very reluctantly. This is understandable when we are still only just moving out of our sharpest recession on record. Yet even the pessimists would now, I think, acknowledge that the storm signals are down, the clouds are thinning out, and there are shafts of sunlight in the distance. I speak only metaphorically, of course.
Meanwhile, the Bank had established a Board of Banking Supervision ‘to advise the Governor on supervisory matters and oversee the implementation of the (reformed) Banking Act’  28  and the supervisory  24  Hall, Maximilian, J.B. Handbook of Banking Regultation and Supervision, Hertfordshire, Woodhead Faulkner, 1993, p.75 Ibid, p.95 26 Kynaston, p.79 27 Hall, p.77 28 Ibid, p.23 25  8  All speeches are available online at www.bankofengland.co.uk/speeches  8  function was further expanded. And this brings me back to the collapse of Barings Bank in 1995, following which a report into the existing supervisory arrangements was commissioned from the (now also-collapsed) Arthur Andersen, which in 1996 set out recommendations to overhaul the Bank’s supervisory approach. What you can see in all this is that supervision is not a static game, and has to move with the times. But there are also some constants. In particular, although we have moved a very long way from the supervisory practices (and hairstyles, other than the resurgence of beards amongst male supervisors) of the 1970s, we have maintained the view of our predecessors that supervision cannot be a narrow, tick-box, compliance exercise, and that judgement plays a key role. Building society supervision  The merchant and trading banks of the City of London were no doubt significant in the world of wholesale international finance. But there was another group – the building societies – that served a critical function in servicing the UK economy, particularly retail customers.

6  IATA - 2020 Worst Year in History for Air Travel Demand Changes in transport behaviour during the Covid-19 crisis – Analysis - IEA ESSD - Global Carbon Budget 2020 (copernicus.org) 9 Cut global emissions by 7.6 percent every year for next decade to meet 1.5°C Paris target - UN report (unep.org) 7 8  3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  Governments may be responsible for the policies to achieve net zero. But much of the emissions reduction itself has to come from the corporate sector. And that requires investment – and lots of it. In the UK alone, spending on low-carbon technologies and infrastructure will need to rise five-fold, from £ to £ a year (Chart 4), or 2½% of GDP. Globally that number is more like 8% of GDP. Chart 3: UK balanced path to net zero  Source: Sixth Carbon Budget - Climate Change Committee (theccc.org.uk)  Chart 4: UK sectoral investment needs  Source: Sixth Carbon Budget - Climate Change Committee (theccc.org.uk)  Much of the job of financing this investment programme falls to the financial sector: to banks, and to investors in companies’ equity and debt. The scale of that task would be challenging even if the path to net zero were certain. But it is not – so investors must also manage the potential for significant losses on their assets, as and when more aggressive policies to reduce emissions come on stream, or physical climate events grow in intensity.
The changes happening in the technologies around money will have an impact on the business model of the retail banking system that has deposit accounts at its core and that has hitherto dominated the payment and settlement machinery. It is certainly not our job to protect or preserve any particular business model for the provision of financial services. But the banking system, operating within the framework of the Bank of England monetary policy to govern the unit of account and under the regulation and supervision of the Bank and the FCA, is at the centre of the creation and of the use of the majority of our money as a means of payment and as a store of value. 16  Over 90% of customers described themselves as satisfied with their bank according to a survey by GfK NOP commissioned by the Competition and Markets Authority for its investigation into the personal current account sector. 17 The unit is a joint initiative by the PRA and FCA to provide information and support for those thinking of setting up a new bank in the UK: https://www.bankofengland.co.uk/prudential-regulation/new-bank-start-up-unit 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  Given this role of the banking system in our economy, we have to ensure that the banks and the system as a whole are robust and have the resilience to withstand very severe risks. Our framework of regulation and our annual stress test of the banking system is designed to give this assurance.

The answer may seem trivial ex post but if these issues had been highlighted and subjected to more transparency, we believe that the ultimate outcome probably could have been different. A lot of the surprise seemed to come from the fact that virtually all risk management had been done within a “local” framework, rather than genuinely extreme stress tests. If regulators, rating agencies or, for that matter, bond and equity investors had demanded analysis based on extreme stress tests, many of the repercussions in the system could have been identified. The main point is that a stress test has to be internally consistent. As an example, if you stress test a 30–40% fall in US residential real estate prices and that shows your institution would be in trouble, you need to make consistent assumptions about the deteriorating credit conditions of your counterparties, anyone that provides reinsurance and general market conditions. At some level, there is always a stress scenario that forces bankruptcy. Perhaps the greatest sin in the years preceding the financial crisis was blatantly ignoring what really would happen if the “unthinkable” drop in US house prices actually happened9. Some major institutions seemed to have had no grasp of how risky their exposures really were, despite spending millions on risk management and while being inspected by regulators on an ongoing basis.