samchain/econo-pairs-v1 huggingface dataset:
In any case, one must always keep in mind whether a persistent drop in activity is the result of a cyclical problem in the economy or responds to a more permanent phenomenon, such as lower potential growth. In the latter case, it is not evident that the output gap is much wider in the face of a slowdown and, therefore, it is not evident that medium-term inflationary pressures are lower. Again, the conduct of monetary policy of the past few years is a good example of how it implicitly ensures economic stability, as its stance remained expansionary even with annual inflation rates above 4%, understanding that they obeyed to an exceptional episode of exchange rate depreciation. The prolonged period of low growth that Chile has endured in recent years has put downward pressures on medium-term inflation. Therefore, within this framework that I have described, monetary policy has been and will continue to be expansionary. Measuring how expansionary monetary policy is, is no easy task. Typically, the so-called neutral rate is used as a benchmark. Our most recent estimates, which we reported in a box in our Monetary Policy Report of last September, place it between 1% and 1.5% in real terms. With a real MPR that is now at zero and with the prospect of a further reduction in the near future, which we use as a working assumption for the baseline 10  scenario of this Report, there is no doubt that we are providing a considerable boost to the economy.

Its implementation must also be timely, which requires having enough information for a better understanding of the economic environment, and acting promptly when changes occur. Obviously this entails taking some risks, as certainty is always elusive. One example of this may come from the recent evolution of monetary policy conduct in Chile. At our presentation before this Committee last December, we noted that our baseline scenario featured as a working assumption that the monetary stimulus would be boosted by 50 basis points, which would be done in the following months. New information convinced us that such impulse would need to be speeded up, so we took action in our monetary policy meetings of January and March. Moreover, the Report I am presenting you now uses a MPR trajectory that goes al little further as a working assumption. Also, as always, as circumstances change and the medium-term inflation outlook varies, monetary policy will be adjusted accordingly. Furthermore, monetary policy and its underlying diagnosis must be persistent enough for it to influence economic decisions regarding saving, investment and pricing, which operate with significant lags. In Chile, estimates indicate that it takes from two to eight quarters for a MPR movement to completely pass through to the economy. Now, this can vary if economic conditions are complex or the magnitude of the impulse is estimated to be still not large enough. The events in the developed world during recent years provide a good example.
•  Most notably, the country would import the ECB’s credibility, which could possibly lead to a lower inflation rate. •  Euroisation would also eliminate exchange rate risk. In turn, the country in question may benefit from lower interest rates. •  On the micro-economic side, euroisation would lead to lower transaction costs, and might provide a boost to trade and financial integration. These benefits can, however, not be taken for granted. Most of these benefits can indeed only be reaped if they are supported by sound economic policies. •  For instance, inflation may still be running high in case of pro-cyclical fiscal and wage policies. Accordingly, euroisation cannot be a substitute for stability-oriented policies. •  Again, this underlines the importance of having in place a stability-oriented macroeconomic framework, such as the one established at EU level. What are the possible costs and risks of euroisation? •  First of all, the country in question may face an inappropriate monetary policy stance in case of diverging business cycles. The loss of an independent monetary policy and the exchange rate instrument may make it more difficult for the country in question to respond to idiosyncratic shocks, or to correct a loss of competitiveness. •  The country in question could also run into logistical difficulties, since it would exclusively depend upon private arrangements with credit institutions for a number of key services, such as banknote handling and the execution of high-value payments.

The Swiss franc only weakened again recently with the prospect of a COVID-19 vaccine and hopes of a faster recovery of the global economy. On a trade-weighted basis, the Swiss franc is almost 1.5% stronger in nominal terms than at the end of June (cf. chart 3). It thus remains highly valued. As reported in our interim results, we carried out foreign exchange market interventions totalling CHF 90 billion in the first half of this year. On a trade-weighted basis, the Swiss franc has strengthened some 5% in real terms since the beginning of 2020. Had we not intervened, the franc would have appreciated significantly more, and this would have placed an additional burden on our economy in an already exceptionally challenging environment. Page 2/5  Zurich, 17 December 2020 Andréa M. Maechler  News conference  Final sprint in transition to SARON  Let me now say a few words about the changeover from Swiss franc Libor to SARON. The end of Swiss franc Libor is fast approaching. In November, the Libor administrator launched a consultation procedure on the discontinuation of Swiss franc Libor as per end-2021. Market participants in Switzerland may therefore only have around 12 months to complete the necessary work for a smooth transition to SARON. Only the heavily used tenors of US Libor are expected to be granted an extension until mid-2023. However, this will not affect the Swiss franc Libor I have been focusing on in my remarks.
The Relation Between a Central Bank’s Degree of Independence and Inflation 14  ITA  12  SP NZLD  8  UK FRA SWE DEN CDA  6  BEL  4  NLD  10  AUS  USA JPN  GER SWZ  2 0 0  1  2 3 Degree of independence  4  5  Source: SOU (Govt official reports) 1993:20  It should be stressed that an independent position for the Riksbank is not the same thing as a monetary policy conducted without democratic control. The monetary policy objective has been made law by those who are popularly elected. It is making the objective operational  BIS Review 14/1998  -6-  and the ongoing work to secure the goal decided by the Riksdag that has been delegated to the Riksbank. Question 4: Why 2 per cent? The question of how the monetary policy objective should be made operational has several dimensions. By selecting a clear objective for monetary policy, it is possible to monitor and evaluate it in an effective way. This is especially important when the Riksbank is being given an independent status. A clearly defined inflation objective also has the advantage of being able to function as an “anchor” for households’ and businesses’ expectations. This function alone can be an important feature, not least when a regime of low inflation is being established. The objective for the Riksbank’s monetary policy is inflation of 2 per cent annually, as measured by the consumer price index.

When prices for marker products surge, even if their share in the consumer basket is rather small, this might speed up inflation expectations. This is what we observed in sugar and sunflower oil prices last year. Today, inflation expectations are already high, and this impact might be even stronger. Inflationary pressure is still spurred by higher prices in global markets. Recently, prices for food products, coal, non-ferrous metals, and especially natural gas continued to trend upwards. Increased gas prices are pushing up prices for nitrogen fertilisers, which might ultimately become an additional driver of pressure on prices in food markets put by agricultural enterprises’ costs. However, there are also goods demonstrating a stabilisation of prices and even their adjustment downwards. These are steel, iron ore, precious metals, and lumber. Nonetheless, we cannot be confident yet about how steady these trends are. Global markets remain a source of elevated inflation risks. However, the question is not only and not so much about transitory factors. It is more important that the indicators of steady inflation are above the target. This is about demand-side pressure, or to be more precise, about a considerable gap between the current level of demand and the potential of supply to meet such demand. It is not always possible to build up production capacities quickly.
BIS central bankers’ speeches  1  7. Here, it is worth noting that the three prerequisites for sustainable and equitable growth should be properly addressed. They are (1) social inclusion, (2) ecology and, (3) the stability of financial system. Any kind of disruption in any of these fundamentals can jeopardize sustainable and equitable growth. Thus, today, lessons that will be drawn from the development experiences of Thailand shall be focused on these three fundamentals. 8. Firstly, with regard to social inclusion, one obvious consideration is how to create opportunities for everyone to contribute to and benefit from economic growth. Therefore, we need to take into account the principle of equality of opportunity when planning and implementing the process of economic development. 9. To follow the principle of equality of opportunity, we need to ensure unbiased governance and regulatory environment for businesses and people. This is to remove or reduce arbitrary restrictions and to create “competitive neutrality”. A level playing field is the first and foremost step for the prevention of income inequality. 10. Although a fair playing field is important, it is, in itself, not enough to uphold the principle of equality of opportunity. By realizing that everyone is endowed with different capacity as well as is in different social and economic contexts, supportive policy adapted for each social group is needed. For instance, as in the case of Thailand, researches indicate that broadening financial access and promoting financial literacy has significantly raised the country’s growth rate.

And I am convinced that today’s conference will play an important role in sharing developments in the frontier economies – the next wave of emerging economies which will contribute to the regional and global growth and prosperity. 17. Last but not least, I would like to express my sincere gratitude to our cohosts, the International Monetary Fund (IMF) and the Japan International Cooperation Agency (JICA), who make the conference possible. I wish you all a successful conference and look forward to your discussions. 18. Thank you. BIS central bankers’ speeches  3
Specifically, we’ll suppose that people suddenly learn that, three years hence, productivity in the tradable sector is going to start to fall (relative to base). To fix the numbers, we’ll scale the hit so as to produce a material decline in the fair value of the exchange rate – 10%, say. Given the other parameters in the model, this requires an anticipated and overall decline in labour productivity of around 8% in the tradable sector, 5% in the economy as a whole. The results of the 9  simulation are shown in Charts 9(a)-(h) . Because the foreign exchange market fully and correctly anticipates the productivity hit the depreciation occurs immediately and does nothing further when productivity actually falls (9(b)). In the interim, the weaker currency provides a big fillip to the tradable sector. Its sterling profits rise significantly and, for as long as productivity holds up, this encourages a significant expansion in investment, employment and output (the green lines in 9(c),(d) and (g)). This is the “sweet spot” I referred to in the talk I gave about sterling earlier this year. 10  I should emphasise that there’s nothing in this simple model that inhibits the response to this sweet spot. New investments are assumed to be costlessly reversible – firms can easily get out of them once productivity starts to decline – capital and labour can be easily moved from one sector to the other and there’s complete certainty about the timing and scale of that event.

8  All speeches are available online at www.bankofengland.co.uk/speeches  8  people’s professed expectations of Brexit are too imprecise to matter for current decisions – it’s apparent from this survey that households have been relatively relaxed about the process, at least compared with the foreign exchange market. Measured by what really counts – their consumption – households’ effective expectations haven’t shifted as much, if at all. The same is apparent in consumer confidence surveys, which are still close to historic averages (Chart 7), and in the hard data. According to national accounts estimates the household saving rate has actually fallen since the referendum (Chart 8) and consumption has continued to grow. Chart 7: Consumer confidence  7  Sources: GfK/EC, YouGov/CEBR, and Bank calculations. Chart 8: Aggregate saving rate has fallen  For definitions, see the November 2017 Inflation Report, p. 10. The resultant combination of a weak exchange rate and relatively resilient domestic demand, clearly apparent in Chart 2, has had consequences for inflation. If the foreign exchange market had been as sanguine as households, we would not have witnessed anything like the same rise in import prices, or the import-sensitive parts of the CPI, that we have done. Conversely, the rise in inflation would also have been smaller had households’ effective expectations been as pessimistic as those in the foreign exchange market. Let me expand on this. The first point is illustrated well enough by recognising the importance of sterling’s depreciation for inflation.
BIS central bankers’ speeches  7  Figure 1: Bank of England Balance Sheet as a share of nominal GDP Per cent 30 25 20 15 10  2010  2000  1990  1980  1970  1960  1950  1940  1930  1920  1910  1890  1900  1880  1870  1860  1850  1840  1830  5 0  Sources: ONS, www.measuringworth.org/datasets/ukgdp/result.php# and Bank calculations. A variant of this chart was originally published in a speech by Andrew Haldane (2009), “Banking on the state,” http://www.bankofengland. co.uk/archive/Documents/historicpubs/speeches/2009/speech409.pdf. Figure 2: Membership of the Sterling Monetary Framework Sterling Monetary Framework members 160 140 120 100 80 60 40 20  2007  2008  2009  2010  2011  2012  2013  2014  0  Source: Bank of England. 8  BIS central bankers’ speeches  Figure 3: Sterling liquid assets relative to total asset holdings of UK banking sector(a)  Per cent 16 14 12  Narrow Ratio(a)  10  Broad ratio(b) Reserve ratio(c)  8 6 4 2  2000  2002  2004  2006  2008  2010  2012  2014  0  Sources: Bank of England and Bank calculations. (a) Data for building societies are included from 2010 onwards. Prior to this, data are for UK banks only. (b) Cash + Bank of England balances + money at call + eligible bills + UK gilts.

In the period ahead, the one-week repo rate will remain our main policy tool, and we will continue to implement the monetary policy within a simplified operational framework. The inflation-focused monetary policy will be our strongest weapon that will serve as a shield against global fluctuations and financial market volatilities. Our determination to fight with inflation will secure the strength and prestige of the Turkish lira. 3 In the current period, high levels of inflation and inflation expectations require a tight monetary policy stance. The monetary stance will continue to be determined in view of inflation developments and inflation expectations, and at a degree of tightness that will rapidly restore the disinflation process and ensure its sustainability until we achieve our medium-term targets. Until there are strong indicators that point to a permanent fall in inflation, we will continue to set the policy rate at a level above inflation, in a manner to maintain the strong disinflationary effect. To sum up, we will make our decisions with a data-centered perspective, taking into account all macroeconomic data flow, inflation in particular. In the new period, we will make the best use of our corporate capacity to ensure a permanent fall in inflation. It should be noted that the stability to be achieved in the general level of prices will positively affect macroeconomic and financial stability through the fall in country risk premiums, the start of reverse currency substitution, the uptick in foreign exchange reserves, and a permanent decline in financing costs.
Overnight rate 5 ahead years according to market pricing and expectations of the policy rate 5 years ahead 8 Expectations of the repo rate, 5 years ahead Nominal forward rate, 5 years ahead  7 6 5 4 3  2 1 0 97  00  03  06  09  12  15  Sources: TNS Sifo Prospera a nd the Riksbank  Increased risks to the financial system A persistent low interest rate environment may threaten the stability of the financial system. A stable financial system forms a condition for monetary policy and also fiscal policy to succeed. If the financial system is threatened, the government may need to intervene with various support measures. This may be very expensive, not least in Sweden, considering the size of the Swedish banking sector. One lesson from the economic crisis at the start of the 1990s is that healthy public finances form a condition for achieving good economic development with stable inflation. To reduce the risks to the financial system and public finances – and, ultimately, monetary policy – it is therefore important to have a smoothly functioning regulation of the banking system. The policy area with main responsibility for counteracting the emergence of financial imbalances and contributing to the stability of the financial system is macro- and microprudential policy.

This is no easy task even if there is every indication that they will continue to be low for the foreseeable future. We must remember, however, that history has also taught us how economic development can sometimes take unexpected twists and turns. Future challenges The global real interest rate continues to be low I have mentioned a few different possible reasons for the downward trend in the global real interest rate – demographic factors, lower growth and higher demand for safe assets. These factors will probably continue to exert an influence in the period ahead, with lower interest rates as a consequence. In such a case, this  8 See Hansen (1938). 9 See also Bernanke (2015) and Rogoff (2015) for additional arguments that can call the theory of secular  stagnation into question. 10 See Yi and Zhang (2016). 10 [23]  would also be in line with pricing on the Swedish financial markets. The market pricing of the overnight rate five years ahead is around 1 per cent, which indicates that the policy rate will continue to be low (see Figure 6). Market participants’ expectations of the policy rate as expressed in surveys indicate similar levels (see Figure 6). Figure 6.
As to liquidity risk, the fact that depositors prefer shorter terms, while investors, driven by expectations of high inflation and uncertainty, prefer longer terms, has caused a mismatching of the maturity structures of the assets and liabilities of the banking sector. As a result, banks become more vulnerable to liquidity risk. Financial distress and global financial crisis were the main ingredients of the conjuncture of 1998. Following scattered failures in the emerging financial environment, almost all emerging economies began to be treated as risky, due to growing uncertainty about the near-term outlook for the financial markets. In this situation, international investors became more cautious about investing in the emerging markets and became reluctant to provide them with credit. Turkish banks slowed their disbursements of credit, preferring to be liquid in the marketplace. We also checked using different ratios for the liquidity in the system. Interest rate risk is another important form of systemic risk. Since the maturity structure of interest-sensitive liabilities in the Turkish banking system tends to favor the relatively shorter maturity segments, external funds are repriced at shorter intervals than assets. This mismatch in the pricing structure at various periods increases the sensitivity of assets and liabilities to changes in interest rates. Banks manage the degree of interest rate risk to which they are exposed during times of rising interest rates by converting their low interest bearing securities into high interest bearing securities by means of repurchase transactions. Interest rate swaps and some other derivative instruments are also used to hedge interest rate risk.

5 See Bobeica, E and Jarocinski, M., “Missing disinflation and missing inflation: the puzzles that aren’t”, Working  Paper Series, European Central Bank, Frankfurt am Main, forthcoming. 6 See e.g. Lyziak, T. and Paloviita, M., “Anchoring of inflation expectations in the euro area: recent evidence based  on survey data”, Working Paper Series, No1945, European Central Bank, Frankfurt am Main, August 2016; and Speck, C., “Inflation anchoring in the euro area”, Working Paper Series, European Central Bank, Frankfurt am Main, forthcoming. 7 See Box 7 “The relationship between HICP inflation and HICP inflation excluding energy and food”, ECB  Economic Bulletin, Issue 2, 2016. 8 For a more detailed assessment of the pass-through of our non-standard measures to financial conditions see,  e.g., P. Praet, “The ECB’s monetary policy response to disinflationary pressures”, speech at ECB and Its Watchers XVII conference, Frankfurt, 7 April 2016; M. Draghi, “The state and prospects of the euro area recovery”, speech at the European Banking Congress, Frankfurt, 18 November 2016. 5/5  BIS central bankers' speeches
This Seminar is one of the platforms for regulators and financial institutions to come together to share views and experiences in regulatory issues particularly pertaining to accounting standards, financial framework and transparency in the Islamic banking operations. I also hope the participants would take the opportunity to acquire as much knowledge as possible during these two days from the invaluable insights presented by the distinguished speakers. On that note, I wish you a successful Seminar. Thank you. BIS Review 35/2002  3

Notwithstanding the deal reached during the special meeting of the European Council held on 25 November, the uncertainty surrounding the UK’s future relations with the European Union continues. Should the deal be rejected, the immediate effect would be an amplification of the loss of momentum. The European Central Bank continued to pursue an accommodative monetary policy throughout 2018, against the backdrop of a continued recovery in economic activity in the euro area as a whole, to ensure that inflation would converge sustainably to the target of below, but close to, 2% in the medium term. Following very strong growth in 2017, real GDP in the euro area continued to expand during the first three quarters of this year, albeit at a slower pace, with an annual growth rate of 1.7% being registered in the third quarter. The latest information, while being somewhat weaker than  expected, remains consistent with an ongoing economic expansion. In turn, with the economy growing at rates above potential, and with the unemployment rate declining steadily, inflation should gain momentum. Indeed, the euro area inflation rate stood at 2.2% in October, up from 2.1% in September and from 1.4% a year earlier. That having been said, measures of underlying inflation, which strip out the contributions of volatile items such as energy and food, remain muted. The situation in international financial markets during 2018 remained very challenging. Most asset classes today are in negative territory when compared to the start of the year, which is a very unusual phenomenon.