samchain/econo-pairs-v1 huggingface dataset:
All but few prices are completely liberalized and driven by healthy market conditions. Fourth, in respect to so-called Ballassa Samuelson Effect, I agree with President Duisenberg, that it is mostly an empirical issue. I think the extent of this effect has been overstated and overdone in many theoretical studies. Empirical data in respect to Poland has shown, that in the past the contribution of BS Effect to the overall inflation rate has been in the range from 1% to 1.5%. As a matter of fact, BS Effect is also present in the Eurozone, in countries like Greece and Portugal. This is not the reason for, as some people heralded, a weak euro. Problems of Greece are not responsible for weak euro that is, if one thinks euro is weak. The already mentioned disinflation, limited scope for future corrective inflation, and manageable level of BS Effect make the Maastricht Inflation criteria achievable. Fiscal criteria must be met in the interest of the countries concerned, as it would contribute to their economic growth. Fifth, there is an intermediate period between the date of entry of Poland and other candidate countries into the European Union and membership of the Monetary Union. The question is, what is the optimal length of this period. I would like to point out, that it might be a rather turbulent time. BIS Review 1/2002  1  Economic forces behind convergence and rapid capital flows might create an economic roller caster.

Such considerations mean that it is essential that banks have a sound strategy and good systems of risk management. The main responsibility for this rests with the board of directors and with senior management, although the regulators also have a responsibility to check that they are doing their job properly. To assist us in that process, we have recently issued a guideline which sets out the standards which we expect the board of directors to observe. One important feature of the guideline is the need for a strong independent element on the board provided by non-executive directors who can bring a fresh perspective to strategic planning based on their expertise and outside experience. Having said that, non-executive directors with the right degree of independence and expertise are not easy to find. This is one of the main challenges in corporate governance in Asia. Although sound strategic direction from the top and good internal systems of control are the primary defences against increased risk, banks also need to make sure that they hold sufficient capital to support that risk. The present capital adequacy regime formulated by the Basel Committee has been in place since 1988. Although it has served its purpose well, it is showing signs of its age and needs to be 3  BIS Review 93/2000  replaced. The Committee is therefore proposing to introduce a new Capital Accord, the guiding principle of which is that it should be more risk-sensitive.
And, increasingly, these tests are being applied in recruitment decisions, when seeking to match the characteristics of potential employees to an organisation. These same tests have been far less often used by organisations to gauge the cognitive diversity of their existing employees. For example, there is no reason they could not be used to construct a cognitive map of an entire organisation to gauge its degree of cognitive diversity. Making transparent that cognitive map would then provide incentives to take seriously any lack of cognitive diversity, as well as enabling peer comparison. As the measurement technology exists, these would be big but eminently feasible steps for organisations to take. To be futuristic for a moment, Magnetic Resonance Imaging (MRI) scans these days provide a different lens on cognitive and personality traits – a techni-colour cognitive map. It is early days to be drawing firm links between the brain’s wiring and individual character traits, but progress has been rapid. As one example, the neuro-biology company Emotiv Lifesciences has created a brainwave reading rig, which offers real-time analysis of cognitive activity. 65 While we are some way from arming ourselves with only an MRI scan when judging performance and potential, perhaps in future that will not seem so fanciful. The Bank is taking steps to improve its own cognitive diversity. For example, it has sought to widen the range of disciplines from which it recruits over the past few years. Of this year’s graduate cohort, only 40% has a degree in pure economics and finance.

Given its neurological roots, it should perhaps come as no surprise that history is pock-marked with instances of overt and enduring fear of strangers, whether that “strangeness” derives from differences in race, gender, culture, religion, political ideology, socio-economic status or age. The notion of the evil stranger is steeped in ancient folklore and political discourse. Historically, fear of strangers has plainly not been the only reason for discrimination and oppression. Self-interest, and the pursuit of power or command over scarce resources, has also had a huge influence throughout history. From Ancient Egypt, where colour prejudice was thought to depend on which ethnic group held sway, to the slave trade to apartheid, unpalatable historical examples of power-based discrimination are depressingly legion. 6 Even if such biases have been ever-present through human history, their precise form appears to have changed over time as societies themselves have evolved. Tectonic shifts in flows of people, and in laws and social norms, have brought about a significant reshaping of biases over the course of the past few centuries. One important shaping factor here is likely to have been migratory patterns. 2  Schaller and Neuberg (2008). 3  Faulkner et al (2004). 4  Todd and Gigerenzer (2012). 5  Goodall (1986). 6  Goldin et al (2011). 2  BIS central bankers’ speeches  Cross-border flows of people have occurred throughout human history: at times an involuntary response to poverty or persecution, at others a voluntary response to opportunity and prosperity.
We also supplement our analysis with a number of other indicators of resource utilisation in the economy. As I mentioned earlier, long-term sustainable growth in the economy is determined partly by technological developments in society. This means that production per hour worked shows an increasing trend over time and thus is one of the more important contributions to long-term growth. But long-term changes in the factors of production can also affect potential growth. If we measure the labour force’s contribution to production in the number of hours worked, one can express it simply as our long-term growth potential depending on how much we work and how productive we are. However, it is important to point out that it is the more long-term developments in productivity growth and the change in labour contributions that are significant in this context. 2  BIS Review 64/2004  I mentioned earlier that different methods of estimating potential growth can give quite different results. One of the reasons is that it is difficult to distinguish the more long-term sustainable trend from temporary developments. It is of course no easy task to determine whether a change is permanent when we receive new statistics on economic developments. However, it appears that this can even be difficult to determine afterwards, when studying the historical trend. As I intend to illustrate, this applies to both productivity and labour supply.

It is always true that monetary policy is too restrictive for certain segments of the economy and too expansionary for others. Since there can only be one monetary policy for Switzerland, it must geared to the economy as a whole. Ensuring price stability in the medium and long term is the guiding principle. The SNB’s monetary policy strategy, however, is sufficiently flexible to react in an optimal way to uncertainties related to business cycle developments or the situation on the financial and currency markets. In implementing this policy, the SNB must be able to maintain its credibility at all times. Only then can it effectively – in the long term – fulfil its constitutional and statutory mandate of pursuing a monetary policy in the interests of the country as a whole. BIS Review 70/2010  1
Although this announcement substantially reduced the probability of extreme events and led to an easing in the financial and credit markets, the economic situation in the monetary union remains vulnerable and the level of uncertainty is still considerable. A further source of uncertainty are the upcoming fiscal decisions in the US. Swiss economic outlook In Switzerland, real GDP in the third quarter increased again following a downturn, due to a temporary recovery in exports. For the fourth quarter, however, we again expect significant weakening in growth. Consequently, economic growth for this year is likely to come to around 1.0%, as forecast to date. For 2013, we expect growth of 1.0–1.5%. While the gradual revival in the global economy is having a supportive effect, the strength of the Swiss franc will hold back export momentum and corporate investment expenditure. Domestic demand is also likely to be restrained over the next few quarters. In view of the modest pace of growth, production capacity in Switzerland will probably remain underutilised in 2013. The rate of unemployment is likely to rise further. Given the fragility of global conditions, the downside risks also remain high for Switzerland. Monetary and financial conditions I will now turn to monetary and financial conditions, which are almost unchanged as compared to the situation in summer 2012. Interest rates in the Swiss franc money market continue to fluctuate around zero. Since mid-June, the three-month Libor has fallen from some 9 basis points to only 1 basis point. Interest rates in the repo market are predominantly negative.

For 2012, the inflation rate will amount to –0.7%. For 2013, we expect inflation of –0.1% and for 2014, 0.4%. In the foreseeable future, therefore, there is no risk of inflation in Switzerland. The third quarter of 2012 saw weak growth and a decline in trading activity worldwide. Although growth in the US economy and some of the emerging economies picked up, a mild recession persisted in the euro area. In Switzerland, real GDP in the third quarter increased again following a temporary downturn. For the fourth quarter, however, we expect significant weakening in growth. Consequently, economic growth in Switzerland for the year 2012 is likely to remain unchanged at around 1.0%. For 2013, we expect growth of 1.0–1.5%. The downside risks for the Swiss economy remain considerable. Although the measures announced by the European Central Bank (ECB) have significantly reduced the probability of extreme developments in the monetary union, there is still substantial uncertainty in connection with the management of the debt crisis in the euro area. It also remains to be seen how far the upcoming budget consolidation in the US will hamper growth. This question is weighing on the sentiment in the financial markets and the real economy. Moreover, momentum in the Swiss residential mortgage and real estate markets remains strong, and has led to a further increase in risks for financial stability. Global economic outlook I would now like to outline the outlook for the global economy and Switzerland in more detail.
In the Basel framework there are some buffers, in particular the countercyclical buffer, that are intended to be activated in boom periods, precisely in order to make banks more resilient, and to be deactivated during recessions. Here the analysis of the Basel Committee suggests that the release of such buffers had a positive effect on lending during the pandemic. The results, for example, specifically for the euro area, for which we had more microdata, suggest that banks are adjusting internal capital targets cyclically: in boom periods banks reduce their own internal capital targets, and they do the opposite when there is a recession. The evidence also points to the fact that macroprudential authorities have the ability to influence these internal capital targets by releasing or activating the CCyB (Countercyclical Capital Buffer). This is precisely why the evidence points to the fact that the release of the capital buffer also generated a reduction in banks’ internal capital targets and this ultimately allowed them to provide more credit to the economy. If I combine all this information, the one thing that is clear to me now, which I think we need to think more about it in the next stage, is that we need to consider whether there is sufficient releasable capital in the system. Let me give two very concrete examples of why I think this is necessary. The best example is the COVID-19 crisis.

On the methodological side, it is quite obvious that imposing caps in ratings based on the sovereign is equivalent to constraining the results of whatever quantitative models rating agencies use. This is arbitrary and reduces the information conveyed by the ratings while leading to severe pricing distortions in assets across countries. Investors in capped securities will require a premium over similar but higher-rated securities while other investors are limited by regulation in their incentives to buy poorly rated securities. Additionally, it should be mentioned that ABS originated in countries under stress have performed considerably well even during the crisis. Indeed, ABS default rates have remained low in these countries and at levels comparable to non‐stressed jurisdictions (including the US). Thus, unless clients and regulators have (also) access to ratings without the cap, there should be minimal regulatory reliance on the ratings. In any case, additional transparency on loans, the existence of reliable credit registers or credit score systems should be mentioned as instruments to help market participants understanding better the  BIS central bankers’ speeches  3  European ABS risk profile. Additionally, such information could even support entrants into the business of assessing credit risk, which currently lacks competition. Whereas the policy conclusions are often hard to come about, one thing seems clear: Europe must avoid ending up with zombie banks as well as with zombie firms. Zombie banks and zombie firms have never been a characterization of a well-functioning financial system and economy.
Jan Frait: Monetary macroeconomics and central banks in turbulent times Lecture by Mr Jan Frait, Deputy Governor of the Czech National Bank, at the MEKON 2023 conference, organised by the Faculty of Economics, VSB-Technical University of Ostrava, Ostrava, 17 March 2023. *** I'd like to thank the conference organisers for inviting me to the place where I began my academic career in late 1990 and which then became my ticket to the board of the central bank ten years later. The knowledge I gained from my discussions here at the Faculty, specifically in the Department of Economics, has always been a foundation stone for me in making monetary policy decisions. At conferences, central bankers these days tend to give presentations in which they show charts to explain what's going on in the economy and what we can expect to see in the near future. But for this conference, for the first time in my professional life as a central banker, I have opted to give a straight lecture. This will hopefully better enable me to convey to you my longerterm view of the relationship between academic monetary macroeconomics and monetary policy-making. I will try to support this intention by not citing any literature – neither my own, nor that of my favourite economists, nor that of economists whose relevance I have doubts about.

For a while, modern macroeconomics tried to get around this more or less intractable situation by picking just one out of a wide set of stories, often treating it as if it were immutable in time and space. And when reality deviated from that story for an extended period, it opportunistically explained it away as bad luck in the form of a series of unpredictable adverse shocks. A persistent challenge for inflation-targeting central banks is the phenomenon of inflation itself. We recognise that the CPI or some similar inflation measure, which lies at the heart of this monetary policy framework, may not be an ideal representation of what is meant by inflation in traditional monetary theory. Personally, I still adhere to the monetarist definition that inflation means a steady and continuous rise in the price level, that is, a situation where different price categories and nominal variables generally show a similar trend. CPI inflation does not quite fit this definition, and it is not always desirable to regard its short-term fluctuations as genuine inflation or deflation. This is partly because CPI inflation tends to change quite frequently as a result of shocks of a non-macroeconomic and non-monetary nature. If the central bank were to try to slavishly keep CPI inflation at a certain target level at all times, it would have to change interest rates or other instruments frequently and significantly, and would probably not be successful in doing so.
Wc are increasingly moving towards more principles based prudential standards; in addition, we have revamped our supervisory framework to provide a more structured and risk-oriented approach to the on and off-site examination process, while encouraging our front-only supervisors to think analytically. Despite these achievements, we still have substantial work ahead of us. Above all, our experience with risk-based supervision indicates that there is no going back to the mles-based approach of supervision given the dynamic nature of the banking business. And second, building a robust risk-based supervisory regime requires substantial time and resources and it will necessitate a material shift in the way both supervisors and bank managcment think about risk and risk management. I must therefore, commend APEC for this initiative in bringing together bank supervisors from the AsiaPacific region to learn and to share views on this very important topic. It is my sincere hope that all of you take this opportunity to gain insights from our highly experienced and knowledgeable experts as well as from each other on the practical aspects of risk-focused supervision. BIS Review 56/2004  1  Ladies and Gentlemen, I am pleased to declare open the APEC Pinancial Regulators Training Initiative Regional Seminar on Risk-Focused Supervision and Risk Assessment. I wish you all stimulating discussions in the week ahead and a very pleasant stay in Bangkok. Thank you. 2  BIS Review 56/2004

As you know, I never comment on what my colleagues have said. On the basis of our decision, which was taken by the Governing Council with an overwhelming majority, I would like to emphasise the following points. First, we are totally independent of governments and pressure groups of any kind. It is not by chance that we have guaranteed price stability, but by taking decisions which have pleased neither governments nor lobby groups. Second, our mandate is price stability. From 1999 to the present we have delivered average annual inflation of 1.98% for 330 million European citizens. We are unswervingly committed to price stability. Third, we re-absorb all of the liquidity that is injected through our interventions. We are not printing money and there is no change to monetary policy. Fourth, the aim of our interventions is to enable certain markets to function more normally, in order to ensure the correct transmission of our monetary policy, which is unchanged. Fifth, we have taken note of the decision by governments not only to strictly comply with their undertakings to reduce deficits, but also, on the part of a number of them, to step up their budgetary consolidation efforts. For us, this is absolutely of the essence. BIS Review 76/2010  3  Does the situation of the Spanish banks concern you? I have no particular comments at this stage. On the international level, prudential supervision by the Banco de España has always been regarded as rigorous, particularly with its concept of dynamic provisioning.
6 For example, the SBIF may require that the effective net worth of the bank or banks involved be more than 8% and up to 14% of their risk-weighted assets; or demand that the limit of the loans granted by a bank to another financial institution be reduced to 20% of the effective net worth (section 35, banking law). Concluding remarks The challenges facing emerging market economies are different from those of industrial countries. While the latter struggle with ensuring a sustained recovery from the Great Recession, the former have to manage a healthy and vigorous process of growth, which is not exempt from tensions. The need of the world to rebalance saving-investment across countries will have as counterpart capital flows adjustments. Exchange rate flexibility, avoiding serious misalignments, should help to smooth this process. It is tempting to think that emerging economies did not suffer the financial crisis for having better regulatory framework than industrial ones. However, the issue is somewhat more complicated. In some way, emerging markets enjoyed also less complexities and smaller sized financial systems. For the current level of development and the size of the financial system, regulations appear to have worked fine. But, the challenge is how to allow continued financial development in the context of a solid financial system. For this reason it is very important to learn from mistakes in more mature markets, and to participate and analyze coming changes in the global financial landscape.

Ladies and Gentlemen, Provided that the current political deadlock is soon resolved and the new political equilibrium is reached, these fundamentals should provide a solid platform for Thailand’s economic growth going forward. A recent study by the Bank of Thailand’s staff finds Thailand’s potential GDP growth to be in the range of 5.5-6.1% between 2008 and 2015. This may appear a far cry from the 1987-1996 period when the growth of the Thai economy averaged 9.5%. However, everyone now realizes that the Thai economy then was operating beyond its potential and therefore not sustainable. In contrast, our staff’s projection was based on a balanced growth path scenario used to characterize an economy in a steady state. There is however an important catch in the cited projection and that is the implicit assumption that the ratio of real gross investment to real GDP recovers from the current level of 22% to 28-30% by the end of the period. Thus, things like mega-project investments are conceivably already included in the projection. The current political doldrums only make the scenario far reaching. Without the resuscitation of investment, Thailand’s potential growth rate will likely fall to a lower path. The same study also points out the impact of demographic change on Thailand’s future growth. By 2026-2035, the economy’s potential GDP growth rate under the balanced growth path assumption is projected to fall to 4.8-5.4% due to ageing population.