samchain/econo-pairs-v1 huggingface dataset:
However, the current  10  For example, the output gap fell between 8 to 10 percentage points, which could explain, without lags, a decline of about 3 to 4 percentage points in inflation, by applying textbook Phillips curve or more complex estimations (Brayton and Tinsley, 1996) for the US, which are not very different from those of Chile. The actual decline in inflation in Chile has been about 10 percentage points. 11  The Fed does not have an explicit financial stability objective, although its role in this matter is widely known. See, for example, Plosser (2007). 8  BIS Review 113/2009  experience in many emerging markets is a demonstration that the objectives of financial stability and price stability can be preserved even under extreme tensions. In sum, conducting monetary policy through an inflation targeting regime, with flexible exchange rate, clear mechanics for exceptional sterilized intervention only when there are clear signs of misalignments, a countercyclical fiscal rule, and a strong financial regulatory framework has worked quite well to mitigate the effects of the worst crisis the world has faced in several decades. References Batini, N. and E. Tereanu (2009), “What Should Inflation Targeting Countries Do When Oil Prices Rise and Drop Fast?,” IMF Working Paper No. WP/09/101. Bernanke, B. and M. Gertler (1999), “Monetary Policy and Asset Price Volatility,” in New Challenges for Monetary Policy, Proceedings of the Jackson Hole Symposium 2005, Federal Reserve Bank of Kansas City, pp. 77-128.

Growth in mainland GDP was revised upwards by an average of 1 percentage point per year for the period 1995-1999. The largest revision was for 1999. As late as in May 2002, we believed that growth in 1999 had been 1.1 per cent. The revised figures now show that growth was in fact 2.7 per cent. It is obvious that such revisions can have a considerable impact on the actual output gap. Norges Bank is currently systematising different vintages of national accounts figures. We can then go back and evaluate monetary policy in “real time” to learn how we should respond to uncertain data. Frank Knight (1921) differentiates between “risk” and “uncertainty”.12 With risk, we know the probability distribution for the potential outcomes, but with pure uncertainty we do not. Thus, there is risk, but not  10  In the opening address at last year’s Jackson Hole conference, Alan Greenspan expressed the following: “Uncertainty is not just an important feature of monetary policy landscape; it is the defining characteristic of that landscape. As a consequence, the conduct of monetary policy in the US at its core involves crucial elements of risk management.”  11  Orphanides, A. “The Quest for Prosperity without Inflation”, Journal of Monetary Economics, 50(3), April 2003, 633-663. 12  Knight, Frank H. (1921) “Risk, Uncertainty and Profit”. 6  BIS Review 6/2004  uncertainty, associated with the fall of a die, according to Knight. Thus, for a decision-maker, risk is far more manageable than pure uncertainty.
Petroleum wealth and the krone exchange rate In the long term, the exchange rate tends to adjust so that there is a balance both within the domestic economy and in the current account. 4  4  The point for 2004 shows the real exchange rate with wage and inflation projections for 2004 from Inflation Report 2/04. BIS Review 47/2004  Petroleum wealth, defined as the value of oil and gas under the seabed and the value of the Government Petroleum Fund, provides the basis for substantial foreign exchange revenues in the years ahead. The relative significance of these revenues will nevertheless decline gradually. The share of Norwegian imports that can be financed by foreign exchange revenues from petroleum wealth will become increasingly smaller. Other export earnings must then be increased substantially. This will require a considerable improvement in competitiveness over time. Norway’s history as an oil nation goes back to the end of the 1960s. Rough estimates5 suggest that the real exchange rate that ensures balance in the external account when petroleum wealth no longer has the same significant role in the economy is more in line with the real exchange rate that we started with. This is shown in the chart, where the real exchange rate in the very long term will revert to the level prevailing before petroleum extraction began.

The economic activity at home is backed up by an improvement of the overall global climate, during the last two months, by attempting improvement signs of lending activity and by the seasonal effect of summer time. Global economy is being characterised by a more moderated downturn of the economic activity at industrialised countries, accompanied with a growth of the world trading activity and low inflationary pressures at global level. Nevertheless statistical data regarding the Albanian economy still remain at low level, the indirect indicators suggest this later is characterised by a positive economic growth, but slower compared to the succeeding years. The low pace of both retail sales and budget revenues increase, the exports slowdown, the lower expansion of lending to the economy and business and consumer’s confidence indexes show that Albanian economy is going through a slower growth phase relative to the one of previous year. This situation is also mirrored on the low inflationary pressures, revealed by the low level of core inflation, which is a proper appraiser of the domestic demand pressures. In August 2009, annual inflation pointed to 2.2 percent, remaining within the targeted band of the Bank of Albania, but close to its lower limit. Seasonal tendency of prices’ behaviour was confirmed to have the same intensity even during this period, by keeping the inflation value at the same rate with that of the preceding month.
Rapid trade liberalisation across Asia has improved market access. Rising incomes in the Asian region where more than half of the world population resides has generated a huge cumulative market. This increase in consumption demand has led to the development of an extensive modern retail sector across the region. Supported by stronger economic fundamentals, emerging economies are expected to grow at higher rates over the next five years compared to the period prior to the crisis in 2000 to 2008. The IMF projects that emerging economies in Latin America, the Middle East, Africa and Asia will, on the average, grow by 6.1% in the period 2010–2014, higher than compared to the period 2000–2009. Asia’s prospects during this period will be sustained by several structural factors. First, Asia has a favourable demographic structure with a relatively young population with a higher propensity to consume. The high savings rate in Asia also allows for higher consumption demand with more than adequate surplus to finance the required investments activity. In addition, financial intermediation in Asia is progressively deepening to meet the new financing needs of households and businesses. In this more recent decade, greater financial integration is taking place. This financial integration will result in a more efficient recycling of Asian savings into investments within Asia. It has been estimated that Asia needs to invest about USD 8 trillion in infrastructure development over the next ten years.

Mario Draghi: Structural Reforms, inflation and monetary policy Introductory speech by Mr Mario Draghi, President of the European Central Bank, at the ECB Forum on Central Banking, Sintra, Portugal, 22 May 2015. *  *  *  Accompanying charts can be found at the end of the speech. Summary Structural and cyclical policies – including monetary policy – are heavily independent. Structural reforms increase both potential output and the resilience of the economy to shocks. This makes structural reforms relevant for any central bank, but especially in a monetary union. For members of monetary union resilience is crucial to avoid that shocks lead to consistently higher unemployment, and over time, permanent economic divergence. It therefore has direct implications for price stability, and is no less relevant for the integrity of the euro area. This is why the ECB has frequently called for stronger common governance of structural reforms that would make resilience part of our common DNA. Structural reforms are equally important for their effect on growth. Potential growth is today estimated to be below 1% in the euro area and is projected to remain well below pre-crisis growth rates. This would mean that a significant share of the economic losses in the crisis would become permanent, with structural unemployment staying above 10% and youth unemployment elevated. It would also make it harder to work through the debt overhang still present in some countries.
(a) Excluding Saudi Arabia due to unavailability of data. (b) Weighted averages use each country’s equity market capitalisation as weights. (c) Numbers may differ slightly to those in the text due to rounding. 20  BIS central bankers’ speeches

Moreover, developments in the financial markets are very rapid and there is every reason to believe that the relationship changes over time. If one looks back at global developments over the past year, the financial markets appear to have coped with more and greater shocks than many would have thought possible. The IT and telecom bubble burst, a simultaneous international slowdown in economic activity began, Turkey experienced a financial crisis, the USA suffered terrorist attacks on 11 September and began a war against Afghanistan and the American energy company, Enron, collapsed. Finally, Argentina suffered a severe crisis. The private market operators were not saved by further measures from the IMF, as many had expected. However, not even all of these events together appear to have had any serious long-term effects on the global financial markets. In addition, it now seems as though the repercussions for the real economy were relatively slight, despite the fact that households and companies, particularly in the USA, were heavily indebted when the economic upturn began. Does this mean that we can now write down the risk of financial imbalances and crises delaying the economic upturn most analysts predict to be on its way? Have economic policy, the financial infrastructure and the behaviour of market operators been adapted to the globalised, technologically well developed financial markets to the extent that the contagion effects on the real economy of financial disturbances has declined significantly during the past decade?
Although we have seen marked improvements in the critical areas of capital, liquidity, and resolution, we have not yet fully addressed the root causes of many of the problems that have plagued the financial sector. I am thinking of not only the excessive risk-taking and leverage in the run-up to the crisis, but also the repeated scandals related to LIBOR, FX, money laundering, sales practices; unfortunately, the list goes on and on. Underlying these scandals is often an inadequate corporate culture, where accountability and ethical conduct have fallen by the 1/3  BIS central bankers' speeches  wayside. The good times we’re in can exacerbate these problems in three ways. First, there’s a risk of complacency setting in—an “if it ain’t broke, don’t fix it” mentality. Second, in a strong economy, the hard numbers that we tend to focus on when examining profits, losses, capital, and liquidity can look like everything’s coming up roses, even when an uncomfortable reality lies beneath. And, finally, culture is a long-run investment that takes many years to develop and requires constant reinforcement to preserve. If you let it erode, you can’t go to the market and obtain a new “culture” overnight. As I mentioned, establishing a more robust regulatory framework was absolutely necessary for a healthier, more resilient financial system. But, it is far from sufficient. The danger we face today is that people may conclude that the hardened defenses are enough, and other supervisory activities around culture, conduct, and governance are superfluous.

The crisis severely eroded people’s trust in the industry, both here and abroad. Governments and regulators quickly got to work fixing the main deficiencies in the existing regulatory framework. These included requiring much stronger loss-absorbing capital to weather severe economic downturns, demanding greater liquidity cushions to withstand market and funding disruptions, and creating a robust resolution framework to protect both the economy and the taxpayer in the event of a failure of a systemically important firm. These changes were appropriate and necessary. We must not lose sight of their importance in safeguarding the soundness of the financial system and in ensuring that future generations do not have to suffer the economic trauma that we lived through this past decade. Bringing us to the present day, we are in a much, much better place, in terms of both the financial sector and the overall economy. We have a more robust regulatory regime in place, and banks are well positioned to survive future storms. Furthermore, our economy’s in great shape; we’re in the second-longest expansion in history, and economic data from both the United States and countries around the world continue to trend upwards. As a policymaker, solid growth, a strong labor market, and inflation near our target are all exactly what I want to see. Paradoxically, it’s precisely this sense that things have gotten so much better that worries me most.
For instance, during the fourth quarter of 2008, the overall balance of payments deficit widened to US $ million from US $ million recorded the previous quarter. Merchandise export earnings declined to US $ million from US $ million realised in the third quarter of 2008 following a sharp reduction in metal export earnings. Metal export earnings declined by 23.1% to US $ million in the fourth quarter of 2008 from US $ million the previous quarter. Metal export earnings at US $ million in the first quarter of 2009 were 52.6% lower than the US $ million recorded in the similar period last year. A slide in both copper and cobalt export earnings owing to lower prices accounted for this outturn. Nonetheless, it should be noted that commodity prices on the international markets have since recovered considerably and have thus started to bring improvement in Zambia’s external position. Foreign capital inflow reduced Ladies and Gentlemen, the global financial crisis led to a decline in the foreign portfolio investment inflows as investors generally reduced their exposure to financial instruments from emerging markets. The risk aversion towards emerging markets thus led to a reduction in foreign portfolio inflows and holdings in Zambia’s Government securities. This resulted in a  2  BIS Review 161/2009  net outflow of foreign portfolio investment since funds that matured were not rolled over and new funds coming in were being scaled down.

Participating will also have the added advantage to have first-hand knowledge of the decisions made in this context and thus avoid having partial and/or distorted information communicated by parent banks in accordance with group-level agendas. The second argument relies on the fact that, in many of the non-euro area new Member States, the domestic banking systems are dominated by banks headquartered in the euro area – in the case of Romania, for example, euro area banks account for 80 percent of the banking system’s assets; the same is true for the Czech Republic and Hungary (where foreign-controlled banks hold above 80 percent of total assets) and to a lesser – though still significant – extent in Bulgaria and Poland (around 70 and 60 percent respectively). Subsidiaries and branches of these banks are often important enough so that they are deemed systemic at the host country level, even though their balance sheets are small relative to their parent entities. Non-euro countries are therefore already well integrated into the European financial market. Clearly, the objective of preserving the integrity and ensuring the smooth functioning of the European financial market is not something that concerns only the euro area, but is relevant at the EU level. In this context, it is hardly surprising that Romania embraced the Banking Union idea – it makes perfect sense that the reality of a significant, even systemic, cross-border presence in the banking systems of non-euro area countries is matched by effective cross-border supervisory and regulatory institutions.
Should the general economic situation indeed deteriorate further, the solvency of borrowers would also worsen. This would result in losses in the big banks’ lending portfolios. The effect on banks with a domestic business focus would depend on the extent of the deterioration in the international environment. Entering into risk is a bank’s core business and, as such, is desirable. What is important is that these risks can be both calculated and carried. However, experience shows that is not always the case. In each of the three most recent international financial crises, a Swiss big bank was particularly hard hit. Each time a crisis occurred an increasing amount of equity was wiped out. This should serve as a warning. If the wheels are not set in motion now, the impact of the next crisis could be even more severe. Should a big bank collapse, the consequences for Switzerland would be dire. Therefore, measures need to be taken now in order to ensure that the Swiss big banks are sufficiently  BIS Review 80/2008  1  resilient in the future. The SNB and the Swiss Federal Banking Commission recognise a need for action in – basically – four areas: capital, liquidity, monitoring and crisis management. In our stability report we discuss measures in all four areas. Today I would like to focus on the most important measures in the area of capital. It is in the nature of the financial markets that there will always be crises.

The guidance which CPSS/ IOSCO produce following the current consultation will need to be unambiguous. That work can build a solid defence against failure. But one of the central lessons of the crisis is that we must be able to cater for the worst, when all defences are breached. The FSB has therefore been consulting on how resolution regimes can be applied to CCPs (and other financial-infrastructure providers). I hope that G20 Ministers will keep the FSB’s feet to the fire on this. If CCPs are probably the most important example of where resolution regimes need to be extended, they are not the only one. Insurance is another. And you won’t be surprised to hear me say that, given the ubiquity of regulatory arbitrage, shadow banking and the world of funds and special purpose vehicles could be another. That makes it important that resolution is not the special preserve of the G20 jurisdictions. With many asset management vehicles domiciled in offshore centres, we are going to need them to get on the resolution bandwagon Conclusion To conclude, let me say just this. It is absolutely essential that the TBTF problem is cracked. Nothing is more important to the success of the international reform agenda. Without it, global finance would remain fragile; and to protect against that, the international financial system would balkanise as individual countries sought to protect themselves. The stakes are high.
Andrew Bailey: It’s a recovery, but not as we know it Speech by Mr Andrew Bailey, Governor of the Bank of England, Mansion House, London, 1 July 2021. * * *  Introduction Lord Mayor, there has been nothing usual about the last sixteen months. Even long-standing neighbours like the Bank and the Mansion House have had to resort to video conferences rather than popping round for a word. And one of the trickiest issues for all of us is dress code and etiquette – is this a ties on or off video, who knows? I can admit that I don’t seem to be a very good predictor of dress code. But you did throw me not long ago Lord Mayor, when we had a video call about an hour before we were both speaking at an event, and I can reveal that you were dressed in a Mansion House bomber jacket. So, white tie to black tie to bomber jacket. I should say that by the time of the event, the Lord Mayor had changed into something more conventional. The story so far Conventional is not a word I have used about the performance of the economy in the last sixteen months. Last calendar year, UK GDP declined by an annual growth rate of 9¾%, and based on our last forecast in early May we expect it to grow by 7¼% this year. It’s more meaningful to express the level of activity relative to the end of 2019 (pre-Covid).

There are I think three reasons for this. First, it is in the nature of the shock – Covid itself does not destroy economic capacity over the longer term in the same way as a war, although of course the number of lives lost has been tragic. Second, the evidence here and in other countries indicates that the economic impact of Covid has attenuated with each successive wave – we are all by nature adaptive in our behaviour. For that reason, both in the UK and in a number of other countries, GDP releases during more recent periods of restrictions have typically surprised to the upside, relative to our expectations based on the effect of previous lockdowns. Third, the economic policy response has been designed to ensure that the longer term damage – often termed scarring – has been as small as can be. This has involved both monetary and fiscal policy pursuing their own independent objectives in a consistent and complementary manner. And just to be very clear on this point, when we use the tools of policy 1/5  BIS central bankers' speeches  consistently, and the objectives of policy are consistent, there is no compromise of independence whatsoever. So, we find ourselves now in a situation where there is an output gap, or slack as it is also called, but it is nowhere near as large as would be implied by the fall in demand if this was a normal recession.