samchain/econo-pairs-v1 huggingface dataset:
Therefore, I will share with you some of the lessons from my own experience. First, I will refer to the importance of having a good fiscal and monetary policy mix. If fiscal policy is relaxing, then the natural reaction is to tighten monetary policy. But one should take  BIS central bankers’ speeches  1  into account that monetary policy cannot always be a substitute to a sound fiscal policy. In other words, not always and in any circumstances can monetary policy steps compensate for fiscal policy measures. Secondly, I will touch upon the risks related to pro-cyclical fiscal policies. We have experimented this in Romania and are fully aware on the risks related to the boom-bust cycles. During booms, as budget revenues pick up there is a strong temptation to spend more and no appetite to publicly debate the issue of structural deficits. On the other hand, when bust emerges one realize how limited your toolkit is and that all measures to address the situation translates in to a prolonged recession and GDP volatility. Last but not least, I will refer to the monetary policy by underlining how essential financial stability is to help achieve our overriding goal which is price stability. As I said before, it is my belief that the two are not conflicting; they may be compatible if your measures are carefully implemented.

2  BIS central bankers’ speeches  In this context, the need for principles of the above-mentioned international organisations to be supported and adhered to by both private and public sectors becomes increasingly clear. This should be done by adopting and implementing codes of conduct at corporate level and industry-wide, as well as by improving the legal, institutional and regulatory framework pertaining to corporate governance. Let me now turn to Europe. In the case of the European Union, the crisis has exposed fundamental weaknesses of the European economy, revealing growing internal imbalances. The functioning of the European Monetary Union has been under particular stress as the existing surveillance procedures proved to be not comprehensive enough. One point that has been neglected was the relevance of current account deficits. I believe that within the EU, the external deficits of Member States are relevant as they reveal discrepancies related to competitiveness, and therefore inconsistent and weak coherence of the economic policies. The accumulation of imbalances has triggered a slow pace of recovery in Europe. The crisis took its toll on productivity, and prices and competitiveness remain key issues. Also, the functioning of the European Monetary Union caused headaches because of insufficient comprehensive preventive and supervisory procedures. Moreover, sovereign debt crisis has brought in the limelight not the crisis of the euro per se but of the institutions that governs the eurozone. In this context, I will repeat what Douglas North said: Institutions play a pivotal role in governance.
The European Union needs an economic and social model aiming at facilitating adjustments into new employment rather than the excessive protection of unproductive jobs. Investments are needed to build more efficient infrastructures. We need better support for research and development activities, and also improvements in our policies regarding human resources and education. All these measures are key for productivity in the European Union to pick up and are of utmost importance to make the single market work better to the benefit of all Europeans. Structural reforms that are designed to increase the flexibility of markets permit a higher level of sustainable long-run growth and employment. They furthermore enhance the capacity of the participating countries to cushion macroeconomic shocks. The more rigid labour, product and financial markets are, the higher will be employment and income losses experienced in response to changing domestic and external economic conditions. This is due, in particular, to the fact that with nominal rigidities prices and wages cannot adjust suitably and in a timely manner. Conversely, the speedier adjustments of wages and prices can take place in response to changes in macroeconomic conditions, the lower will be the burden of adjustment put on volumes and thus the lower the costs in terms of employment and output losses. We recognise that the implementation of structural reforms requires courage and leadership. Especially, they may temporarily be perceived negatively by some economic agents.

Jean-Claude Trichet: EMU and the euro - successes and challenges Speech by Mr Jean-Claude Trichet, President of the ECB, delivered at the conference “The Euro Five Years After”, Amsterdam, 12 October 2004. *  *  *  Ladies and gentlemen, it is a great pleasure to share some thoughts on the European Monetary Union with the distinguished attendance gathered in this conference by the European Commission and the EU Presidency. The establishment of the new currency - first in book-entry form and successively in its full physical embodiment - has made western Europeans fully part of a more integrated area and is substantially contributing to reinforce their European identity. More recently, the enlargement of the Union, and in particular the inclusion of the new democracies of Central and Eastern Europe, has represented yet another grand contribution of Europe to the diffusion of free institutions, the safeguard of geopolitical stability and peace, and the promotion of economic progress on a global scale. We have decided to build a larger and peaceful Union of people to which the rest of the world can look for encouragement and example. It is around these themes that I will organise my few remarks today. My purpose will not be that of communicating a sense of complacency over past achievements. I will try to convey in my words the visionary drive towards action that still inspires the process of institutional transition in our Continent.
In case the issue of liquidity bills is deemed necessary, the method of issue of the said bills and other related information will be announced to the public in advance by a press release. As always pointed out, the Central Bank deems the stability and development of financial markets as a supporting objective for the effective implementation of policies pertaining to price stability. As a matter of fact, compatible with the floating exchange rate regime, the Central Bank has taken measures towards maintaining financial stability several times in the last four years. Within this context, the Central Bank, the primary goal of which, entrusted to it by law, is to establish price stability, will continue its practices to enhance the effectiveness of the monetary policy and liquidity management, also in 2007. Accordingly, the Central Bank may change not only its liquidity management strategy, but also the borrowing and lending interest rate margins in cases of unpredictable changes in market conditions and according to the new needs. Obviously, under the floating exchange rate regime, the Central Bank is able to implement the YTL liquidity policy in a more flexible manner than it can under a fixed currency peg regime and can act more promptly and flexibly to meet the YTL liquidity needs of the banking system. The Central Bank can prevent excessive fluctuations in money market interest rates as long as they are consistent with the inflation target.

It will be followed around a year later by a polymer £ note featuring Jane Austen. The decision to move to polymer for these notes follows a three-year review and a broad public consultation exercise. Our research has shown a compelling case for polymer notes. Polymer notes bring three main benefits: •  They stay cleaner than paper banknotes because they are resistant to dirt and moisture;  •  They are more secure because they incorporate advanced security features that make them difficult to counterfeit;  •  And they are more durable, lasting at least 2½ times as long as paper banknotes, ensuring that notes in circulation remain of high quality. Because replacements are needed less often they are both cheaper over time, and more environmentally friendly. These advantages mean that a switch to polymer is a natural step in the evolution of banknote design. But you don’t have to take our word for it. Nearly 13000 people have told us what they thought, in surveys and at over 40 events up and down the UK, and 87% – the vast majority – were in favour of polymer notes, especially once they had a chance to see and handle prototype notes. After that public consultation, we’re confident that the switch to polymer will have broad public support.
Over the next two days I look forward to meeting with your elected officials in Newark, visiting Newark Now, sitting down with the Episcopal Community Development Housing Counselors, as well as meeting with New Jersey community bankers and credit union officials, visiting the manufacturer Accurate Box, touring Jersey City and learning more about the pharmaceutical industry – my staff has booked a packed schedule. The role of the New York fed By way of introduction, let me briefly review what the New York Fed does and what makes my job so interesting. As always, what I have to say reflects my own views and not necessarily those of the Federal Reserve System or the Federal Open Market Committee, also known as the FOMC. I am vice chair of the committee and we meet eight times a year in Washington, D.C., to set interest rates and make other decisions about monetary policy. At every meeting of the FOMC, each committee member presents his or her current outlook for their region and for the overall economy. For these assessments, we augment input from our research departments with critical information about local economic conditions supplied by our board of directors, regional advisory councils and conversations with local stakeholders, such as the feedback I will get from you today. At the regional level, we continually track economic conditions in our District, and we have created a number of tools for this purpose.

A study of Swedish data shows that such changes have contributed approximately 0.2 percentage points a year during the second half of the 1990s(3). 3 The same picture, although applying to the situation in the United States, can be seen in US studies. 4 Another possibility to improve the accounting is to look more closely at the link between labour and capital. So far the analysis has been based on the two resources in production being dealt with separately. But there are good examples of when labour and capital are interdependent. Technical knowledge becomes particularly valuable with regard to the development of programs and systems, the production of computer games, etc. Artists, film stars, elite athletes/sportsmen and others active in the experience industry get more out of their special skills through the developments in IT and communications. The US central bank governor Ben Bernanke uses the company Walmart as another example. 5 For the purpose of using the IT investments the company had made, they reorganised their work, gave the staff further training and changed the relationship to their suppliers. This type of technique for general use, of which IT can be said to be an example, can in turn push up other investment, such as further education. There are also other ways of developing the analysis.
The standardisation of risk management methods and the resulting herd instinct on the part of market-dealers brings with it a number of disadvantages, such as liquidity shortages on certain market compartments, which lead to more volatile prices, credit rationing for certain borrowers and micro-financial contagion whereby “innocent victims” bear the brunt of imbalances stemming from other economies. Such risks have become greater with the development of over-the-counter derivatives markets, which are a potential source of instability for the overall financial system. Liabilities are generally financed with credit, they are based on asymmetric information and risks are concentrated on some of the largest global financial institutions. These institutions may also be tempted to take excessive risks when they come under pressure from heated competition and shareholders’ demands for value. Of course, the prudential authorities approve of high returns on equity, but systematically aiming for returns on equity of 15%, 20%, or more while world growth averages 3% to 5% could make institutions more vulnerable. Actually, the search for profitability should not induce institutions to resort to extreme gearing in which debt replaces capital, or distort portfolio structures by undue focus on high-yield financial assets which also entail a high degree of risk. Nor should it lead them to curtail operating costs excessively, thus reducing the resources devoted to internal control.

Consequently, this policy can only be effective if the authority responsible for defining and implementing is credible. The conjunction of a clear, overriding objective of price stability (which has been explicitly laid down in the statute of the ECB), with well-established institutional independence ensures the continuity of the monetary policy decisions made by the authorities. •  Secondly, the emergence of a globalised market has quite naturally led to new developments in monetary policy instruments. Interest-rate instruments have gained in importance to the detriment of quantitative and regulatory instruments. Third consequence: renewed set of risks to the stability of financial systems First of all, it is worth noting that financial liberalisation did not eliminate the occurrence of financial crisis. The development of new financial instruments, increasingly mobile and rapid capital flows, and faster reactions on the part of the players have rendered markets more volatile. Moreover, stock market prices and interest rates in the various financial centres have become closely correlated due to increased arbitraging between currencies and financial products and the spread of disintermediated financing.
Later on the same page, the minutes said “However, contacts in a number of Districts appeared less upbeat than at the time of the November meeting, as concerns about a variety of factors—including trade policy, waning fiscal stimulus, slowing global economic growth, or financial market volatility—were reportedly beginning to weigh on business sentiment.” See Minutes of the Federal Open Market Committee: December 18–19, 2018, Board of Governors of the Federal Reserve System, January 9, 2019. 4 See FOMC issues addendum to the Policy Normalization Principles and Plans, Board of Governors of the  Federal Reserve System, June 14, 2017. 5 See John C. Williams, 'Normal’ Monetary Policy in Words and Deeds, September 28, 2018. 6 See FOMC Communications related to Policy Normalization, Board of Governors of the Federal Reserve  System, updated June 13, 2018. 4/4  BIS central bankers' speeches

The trap is falsely to conclude that, because some economic models contain no explicit reference to it, money cannot be one of those signals. The conventional riposte is that, if monetary policy were set incorrectly, warning signals would also be observed contemporaneously in other indicators such as measures of inflation expectations, demand or interest rates. I would not want to rely on that for three reasons, which together imply that the growth of money and credit may signal in advance of other indicators that Bank Rate is set at a level inconsistent with bringing inflation back to the target in the medium term. First, we do not have good indicators of the expectations of businesses and employees and, in looking at measures of expectations in financial markets, we must be alert to the possibility that those expectations are formed by people falling into the same trap. Second, the spending of many households and businesses is constrained by the need to use money in transactions and by the availability of credit.14 For these households and businesses, changes in the availability of money and credit lead changes in their spending intentions. Thirdly, official interest rates are not a sufficient statistic for the array of effective interest rates confronting borrowers and lenders – risk premia which reflect the creditworthiness of the borrower  14  8  Goodhart (2007). BIS Review 43/2007  alter effective interest rates.
Economic policymakers often confront the problem that a future policy setting that is optimal today is not likely to be the policy that it would be optimal to follow tomorrow. Before central bank independence, a problem for monetary policy was that a government promise to deliver low inflation was not credible. Wage and price setters knew that if contracts were based on the assumption that future inflation would be low, the government would not be able to resist the temptation to generate inflation higher than promised because that would temporarily boost employment and output. So the initial promise was not believed. Once expectations of high inflation were embedded into prices and wages, it was at that point rational for the government to tolerate high inflation, because the cost of reducing it would be a deep recession. The idea of giving central banks independent control over monetary policy was to remove this temptation to inflate. 15 Communication is a potential solution to the credibility problem. If policymakers are transparent about the objectives of a policy – and the strategy to be followed in pursuit of those objectives – it will be easier to hold them accountable for their actions. This increases the incentives for policy makers to meet their objectives. Despite all these benefits, it does not always follow that more communication is beneficial. More communication can be costly and self-defeating. First, private participants face costs in collecting and processing information that could mean important messages are lost.

But that needn’t be so – because key aspects of Islamic finance make it particularly well suited to financing the post-Covid recovery:   First, the philosophical focus on equity-like sharing of risk and reward will become increasingly relevant as market participants get to grips with the scale of debt accumulated in response to Covid. The attractions of debt are obvious when interest rates are so low – particularly for those able to lock in long-term fixed rates in local currencies. But those borrowing at floating rates, at short maturities, or in foreign currencies, face sharp negative income shocks when rates rise, debt rolls over, or local currencies depreciate. Risk-sharing contracts, including those promoted by Islamic finance, pose materially lower medium-term risks to stability.12 The Bank of England has long advocated the risk-sharing merits of GDP-linked instruments, which could be packaged in sukuk form. 13 And, together with HM Treasury and the FCA, we have recently announced a high-level working group to consider ways to foster a longer-term financial markets culture to support productive investment.14    Second, Islamic finance seeks to avoid investing in socially detrimental activities. In fact, it was pro-ESG before the term was ever invented!
A major improvement to the inflation targeting framework itself was to confirm explicitly beginning with the 2013 remit that the MPC is required to have regard to trade-offs between keeping inflation at the target and avoiding undesirably volatility in output. In other words, the MPC can use the full flexibility of inflation targeting in the face of exceptionally large shocks to return inflation to target in a manner that provides as much support as possible to employment and growth or, if necessary, promotes financial stability. Even more fundamentally, the lessons of the global financial crisis prompted a radical overhaul of the Bank’s broader policy framework. The crisis exposed the limits of inflation targeting itself, notably how a healthy focus on price stability could become a dangerous distraction. Central banks had won the war against inflation only to lose the peace as financial vulnerabilities built remorselessly during the Great Moderation. Price stability clearly is not a guarantee of financial stability. With the deficiencies of the Tripartite regime1 on full and painful display, the decision was taken in 2012 to give the Bank of England responsibility for macroprudential and microprudential supervision. Two new independent committees, the FPC and the PRC, were created and charged with maintaining financial stability and safety and soundness of banks and insurers, respectively.

Furthermore, recovery varies from one industry to another. Overall, the situation today is much better than many observers had expected at the beginning of 2015. The Swiss economy has once again demonstrated its flexibility by, for example, making swift adjustments to working hours and taking measures to improve production processes. In view of the structural changes taking place, this adaptability will remain key, regardless of developments in the international economy and exchange rates. I’m thinking here of traditional retailing, which increasingly has to compete with internet trading. Digitalisation, too, presents new challenges for manufacturing and finance that will continue to call for major efforts on the part of companies and staff in all the industries concerned. Current monetary policy  What challenges does this situation pose for our monetary policy? We have the statutory mandate to ensure price stability. In so doing, we must take due account of economic developments. Since the beginning of the year, the inflation rate in Switzerland has climbed above zero again (cf. chart 4). As is the case with our trading partners, this is largely driven by oil and food prices. Core inflation is somewhat lower, primarily because of underutilised production capacity. Our current forecast puts inflation in mid-2019 at around 1%. Given low inflation and underutilisation of production capacity, maintaining an expansionary monetary policy in Switzerland is the right course of action to take. The Swiss franc is still significantly overvalued.