samchain/econo-pairs-v1 huggingface dataset:
Moreover, the ultimate aim of the policy is to get the annual rate of growth of nominal spending in the economy back to the 5% or so that it averaged during the first decade of the Monetary Policy Committee’s existence and which is consistent with inflation at target and growth at trend. In contrast, over the past year, nominal spending has fallen by roughly 5% (Chart 8). The £ billion of asset purchases has been calibrated with this in mind, though it will be some while yet before we know how effective the policy has been in achieving the objective. Indeed, the truth is that we will probably never know exactly how effective the policy of Quantitative Easing has been, for the simple reason that we can never know with precision what would have happened in its absence. My only confident prediction is that academic economists and their PhD students will be poring over the topic for decades to come. To conclude, I want to return to some accounting issues. As I noted earlier, the Asset Purchase Facility is set up as a separate entity, indemnified by the Treasury. The Bank is committed to transparency about its operations, and we will be publishing annual accounts for the Asset Purchase Facility, drawn up in accordance with established international accounting principles. The Asset Purchase Facility receives coupon payments from the government on the gilts it holds, as well as some income from its small holding of corporate assets.

But we are now at a critical point in the timeline. The very complexity of this issue is why the industry cannot afford to wait any longer. The clock is ticking, and there are 901 days left. 1 Alternative Reference Rates Committee, Second Report, March 2018. 2 Financial Stability Oversight Council. 2018. Annual Report. Washington (revised June 20, 2019). 3 International Organization of Securities Commissions, Principles for Financial Benchmarks, Final Report, July  2013. 3/3  BIS central bankers' speeches
While, it forms a basis for the accountability principle, the law does not specify the size of the deviation from the target that will require such an explanation. In other words, details of accountability mechanism are left to the Central Bank’s own initiative. Therefore, the Central Bank has established an effective and enforceable accountability mechanism by setting a symmetrical uncertainty band of 2 percentage points in both directions around the point target. As stated above, the inflation target has been defined over a very comprehensive CPI index. The CPI index also comprises of price items that are beyond the control of the monetary policy such as food, energy and administered goods. In emerging markets like Turkey, shortterm fluctuations in exchange rates can lead to unpredictable temporary fluctuations in inflation as well. Since a sudden reaction of monetary policy to factors that are beyond its control will increase volatility in macroeconomic variables, inflation-targeting central banks adopt a medium-term approach and allow temporary fluctuations in inflation as long as the expectations are under control. In this framework, the primary objective of setting an uncertainty band is to establish a measurable criterion that will enable to determine to what extent the deviations from the point target will be tolerated with respect to the accountability principle. In view of the above-mentioned factors, it has been decided to keep the uncertainty band at 2 percent for 2008 as well.

It is necessary for the communication policy of the Central Bank that the open letters and Inflation Report would be perceived as complementary factors. Role of public sector in inflation targeting strategy It should be reemphasized that the monetary policy should be supported by fiscal policy in order to be able to turn the downward trend in inflation into a long-term and lasting achievement. The fiscal policy can affect inflation through various channels. A particular channel, through which fiscal policy has direct effects on inflation, is the price and tax adjustments in the goods and services produced by the public sector. Making these adjustments in line with a pre-announced schedule or a pre-described rule would diminish  BIS Review 4/2008  3  uncertainties regarding inflation forecasts and thereby contribute to the reputation of inflation targeting regime. The Central Bank sets inflation targets on the basis of the budget projections of public sector. Therefore, while updating the monetary policy stance, the trend of public sector expenditures, which is a very important component of total demand, is closely monitored. Moreover, keeping public sector wage adjustments consistent with the inflation target is very important as the private sector take these adjustments as a benchmark for their own wage adjustments. Due to all these reasons mentioned above, the Central Bank closely monitors the income and fiscal policy implementations, and frequently emphasizes the importance of structural reforms that would enhance the quality of fiscal discipline and predictability of fiscal policies.
No evidence is necessary to assert that these methods failed because of an extreme event that struck everything. These failures were exacerbated by severe liquidity shortages and widespread panic in the markets. 7 Broadly speaking, the theory of finance has two branches: asset price theory and corporate finance theory. It is paradoxical that while asset price theories, and their application to the real world, are based on the existence of complete markets and full arbitrage (consider, for example, CAPM), corporate finance theories that explain firms’ financial decisions are essentially dominated by information asymmetries and are plagued by frictions from principal (owner)-agent (executives) problems. This dichotomy will have to be corrected over time to ensure that more realistic models of how financial markets work become available, models which will shed more light on economic policy recommendations. Crisis prevention As for the current crisis, one pending issue is whether it could have been anticipated. Once again the question arises: “Where was the profession, its academics and authorities, such that it failed to foresee the severity of the problem?” It is tautological to say that crises are unpredictable, or else they would never occur. History is plagued with crises. Moreover, crises have become more frequent in recent decades as compared with the Bretton Woods period, although their severity and duration have not changed significantly (Bordo et al., 2001). Important efforts have been made to identify early warning indicators that could anticipate a crisis (Berg et al., 2004).

It is harder and less rewarding for an academic to formulate distortions – of which the real world has plenty – than to use tidy competitive models to explain important stylized facts with a minimum of new ingredients. Scientific advances and models help us think about and interpret the world; they provide us a way to think about specific problems, but their scope is limited. We must avoid the temptation of thinking that a theoretical simplification is a full description of reality. But we must also avoid the other extreme, which totally dismisses what theory teaches because “reality is much more complex”. This is true, but it does not imply that all we have learned is just a theoretical exercise without practical use in reality. Models must be taken realistically, recognizing that they capture at most a small portion of reality. As for the future, the current crisis will certainly provide material for many research studies that will try to figure out what failed and how to avoid making the same mistakes again. Still, I think it will be difficult to develop simple, manageable models that can make substantive progress in having a complete description of reality. Some interesting efforts will most likely be made, but it will not be easy for them to become part of the heart of macroeconomics, since they will be necessarily complex.
It is important to note that the big changes which occurred in the repo rate and thus in the interest costs of housing in recent years were linked to the transition from the high inflation regime of the seventies and eighties to a regime of price stability. A continued confidence in the low inflation regime would imply that such large changes in the interest rate component are less likely in the future. It is evident from what the Riksbank has said earlier in various contexts that there are price effects, which will not be caught within the tolerance interval and which we do not need to counteract fully by monetary policy measures. Attempts to do so could destabilise the economy further, partly due to time lags in the effects of monetary policy. Consequently, if unexpected disturbances were to occur, or if taxes and subsidies were to be changed, for example in connection with a major change in the tax system, we would have to accept that this would have an immediate effect on the price level. Temporary deviations from the targeted inflation rate may therefore happen. What is important with respect to such deviations is to drive inflation back to the target within the horizon where monetary policy has its biggest effect on price developments. The possibility to achieve the inflation target is accordingly affected not only by how the target variables are defined, but also by what time perspective is used when the policy is evaluated and how wide the applied tolerance level is.

The Exchange Rate In small, open economies, the exchange rate has an important influence on inflation. At the same time, it is a variable that has fluctuated considerably in recent years for reasons which have not always been easy to foresee and interpret. How changes in the exchange rate should be handled in practical policy depends above all on how lasting a change in the exchange rate is judged to be. More enduring changes that have an effect on inflation forecasts obviously have to be taken into account In order to decide on the duration and what is a reasonable reaction, one normally has to know what brought about the change. Several different cases can be discerned: A nominal change in the exchange rate can be a result of a change in the real equilibrium exchange rate. This case is in principle simple to manage since it normally does not lead to a changed picture of inflation and thereby does not occasion any specific policy measures. Changes in the real equilibrium exchange rate have not been an especially common reason for changes in the exchange rate in recent years, at any rate since the krona fell in connection with the changeover to a flexible exchange rate in 1992. A change in the nominal exchange rate may also have to do with a change in the long-term view of the steadfastness in economic policy, or what is termed credibility.
The FPC has recommended that banks should ensure that they take the necessary steps to put our system in a place where it can support the economy without compromising its stability. The Bank of England has taken steps to extend the Funding for Lending Scheme, and within that has acted to provide a clear incentive to stimulate lending by banks to small firms. But banks that are short of capital cannot increase lending. That is why in March the FPC made a series of recommendations to ensure that UK banks are well capitalised, and that banks meet that requirement in a way that does not hinder lending to the economy. You may be assured that we are determined that the newly formed PRA follows through on those recommendations. 2  BIS central bankers’ speeches

Other major central banks such as the Fed and the Bank of Japan followed the example of the ECB, in 2012 and 2013 respectively, and also adopted the same 2% inflation target. This “conceptual convergence”2 is remarkable. Incidentally, even though exchange rates are not a monetary policy target, we should note that the euro traded at USD 1.17 on 1 January 1999 and at USD 1.14 at the end of December 2018, with an average rate of USD 1.21 between 1999 and 2018. 1/6  BIS central bankers' speeches  With regard to our mandate, the results are tangible [slide 1]. During the 20 year period prior to the introduction of the euro (1979-98), average inflation in the euro area was at 4.9%, compared with only 1.7% during the 20 years that have followed. What’s more, better controlled inflation means lower financing costs as risk premiums are reduced. Interest rate differentials and sovereign spreads have consequently narrowed significantly [slide 2]. The France-Germany spread fell from an average of 1.9% between 1986 and 1992 – the period of the single market without a single currency, between the Single European Act and Maastricht – to 0.4% in 2017-18. The Italy-Germany spread has narrowed by 3 percentage points. If, theoretically, one of these countries wished to leave the euro, it would in all likelihood experience an immediate at-leastequivalent increase in its public financing costs as well as its private financing costs to households and businesses.
Excluding short-term influences, bond yields in the major countries - apart from the special case of Japan - are converging around a level of around 7% which suggests that relative macro-economic, monetary and fiscal discipline will be sustained, though it will stop short of effective price stability. I conclude, secondly, that the markets see current developments in the US and the UK as essentially cyclical; and that they anticipate a pick-up in activity elsewhere somewhat further ahead. And I conclude, thirdly, that there remains some considerable uncertainty about the prospect for European Monetary Union, in particular about its initial membership but also about the extent of the discipline it will involve. Now, of course, these conclusions are based on the bond markets as they currently are, which is a bit like forecasting the past! What you really need to know is how the markets will evolve in the future. Happily it is not my task to venture down that path. It is during our next session that the market experts will seek to “forecast the future”. But I do hope they will tell us whether they agree that relative stability will indeed persist, in the medium and longer term, how they see the different national situations evolving in the more immediate future, and what prospects they see for EMU. These seem to me to be the key issues for the future and I look forward to listening to what they have to say. BIS Review 22/1997

Once the testing system is fully operational and we are convinced of its efficiency, these restrictions will be gradually lifted. We believe that at this juncture it is our responsibility to protect our investors. We might as well move forward some of the law regulations — those making customers’ qualification tests mandatory — from April 2022 to at least 1 October 2021. At the time, we went along with market players and provided for a fairly comfortable and soft transition period in the law. We had an extensive discussion with Federation Council members. It stands to reason however that the major shift in the situation calls on us to take meaningful action to protect consumer rights. I admit that financial institutions themselves are unlikely to welcome this proposal, and their feedback will be negative. This is where we count on you to help, just as we have always counted on your support of our initiatives related to efficient consumer right protection in the financial market. The key reason for this is the nature of financial institutions: they are financial intermediaries which should operate in the interest of businesses and consumers, just like the Speaker said. We therefore believe that now is the time for prompt and serious discussion of this matter to make a decision. I am now handing over the floor to Sergey Shvetsov, who will enlarge on these and other initiatives I have presented.
The second issue concerns the treatment of unrealised losses on debt securities carried at amortised cost - I am referring to the unrealised losses that materialised when SVB had to sell part of its government bonds portfolio: should these unrealised losses be recognised in the current prudential framework, beyond their simple disclosure in the financial statements? More precisely, should these unrealised losses be fully reflected in the banks' equity capital? On this subject, we believe that we must take the time to identify precisely all the advantages and disadvantages of such a solution, which may appear simple but has multiple side effects. On the one hand, the impact of these unrealised losses is already taken into account in the shortterm liquidity ratio, the LCR. On the other hand, systematically accounting for debt securities at their market value would lead to a rise in the volatility of equity capital, with the risk of generating pro-cyclical sales phenomena. In particular, this would have a downward impact on equity capital during periods of rising interest rates - as we are currently experiencing - with the harmful consequences that you can imagine for the financing of the economy and for the public debt market: a fall in the supply of long-term fixed-rate loans and disorderly sales of debt securities. The third issue concerns supervisory practices. Sound regulation implemented at the global level is a good thing. But it cannot be at its best without strict, intrusive and reactive supervision.

Going forward, the challenges imposed by the rising trend of urbanisation and other demographic changes are set to become more pronounced. The implications of this for financial education strategies are far-reaching. It will require a fundamental re-thinking of current approaches to delivering financial education that will have its optimal impact. The approach will need to be comprehensive and with all stakeholders in the financial ecosystem. We have a shared responsibility to develop effective channels for delivering financial education, build the necessary infrastructure and continuously evolve relevant financial capability programmes that will facilitate consumers to make sound financial decisions with confidence, and cope successfully with the new emerging economic and financial challenges. This Summit provides an excellent opportunity for stakeholders to come together to generate new knowledge and ideas in our journey towards achieving effective participation in the financial system through financial education. It is such concerted efforts that will strengthen the potential to create an enduring impact that will make the difference in achieving a more balanced and sustainable economic future. 4  BIS central bankers’ speeches
The background was that resource utilisation was still assessed as relatively high and economic activity was expected to strengthen significantly in the light of the policy pursued, with ensuing higher inflation. In addition, inflation was still high and there was uncertainty over this, partly connected with resource utilisation. However, the recovery began to slow down, partly in the wake of continued stock market falls. At the same time, the earlier assessment that the upturn in inflation during 2001 had been temporary was confirmed, as inflation was now in line with the target again, which reduced uncertainty over possible contagion effects. Given this development, the repo rate was lowered twice during the autumn, by 0.25 percentage points. There are important similarities and important differences between the situation now and then. Inflation has risen sharply now, as it did then, as a result of some easily discernible supply shocks, with what are probably fairly transitory effects. The geopolitical unrest has had negative effects on the global economy, ever since 11 September 2001. However, there are also important differences. The krona weakened at the beginning of 2001, which together with a tendency towards higher inflation expectations brought about an interest rate hike. Over the past year the krona has remained relatively stable against the euro and strengthened against the dollar. Expectations of economic activity were also different in 2001. That year, up to the early autumn, they were aimed at relatively high growth and a rise in resource utilisation, although growth expectations were slightly lower than a year earlier.

The latest revisions have entailed an upward adjustment of GDP and productivity in Sweden during the years 1993-2002. In 2000 and 2001 the Riksbank made the assessment that there were unutilised resources in the economy and that inflationary pressure was thus modest. When the actual inflation rate rose, we felt obliged to review this picture, and some adjustment was probably justified. However, the most recent figures nevertheless indicate that the original assessment was largely correct. It is important not to get carried away by the most recent statistics and rapidly draw up new trends to follow. Future assessment of the Riksbank Let me finish by emphasising something I accentuated in the beginning. We aim to provide you on the Committee of Finance with the best possible information for your assessments and discussions. If you have any wishes or views with regard to how the material and the information you have received today could be further developed, we would of course be happy to hear them. We shall do all we can to satisfy your wishes. Thank you. BIS Review 15/2003  5
He recounts an episode when the colonial government imposed “fees” on disobedient district chiefs simply by painting black crosses on these stone wheels. This miraculously and promptly induced them to change their ways just in order to have these marks erased again and thus - in their perception - their wealth restored. Friedman concludes that this example illustrates “how important appearance or illusion or “myth”, given unquestioned belief, becomes in monetary matters. Our own money, the money we have grown up with, the system under which it is controlled, these appear “real” and “rational” to us. Yet the money of other countries often seems to us like paper or worthless metal, even when the purchasing power of individual units is quite high.” The euro has been in existence for almost two years now. It does not come in the form of stone wheels. In fact it does not yet have any concrete and tangible expression at all. Until the introduction of euro banknotes and coins at the beginning of 2002 it will essentially remain a “virtual” currency, which may perhaps seem as remote, unfamiliar and unnatural in the eyes of the public as the stone wheels described by Friedman. This lack of tangibility and visibility of the euro in part accounts for the particular challenges that the euro faces in winning the hearts of the general public as a new currency which has yet to replace the familiar and trusted national notes and coins in circulation.

Inflation - like war, to which it is often closely associated - destroys the fruit of honest labour, it devalues savings and investment, it erodes the social fabric of society and ultimately puts the very foundations of democracy and freedom at risk. This is one of the lessons of the bitter history of the 20th century, which was a century of hyperinflation in the wake of wars and wars in the wake of hyperinflation. No one has described the deleterious effects of inflation more vividly than Stefan Zweig has done in his book “Die Welt von Gestern” on Germany in the 1920s. He depicts the sense of distrust, despondency, desolation and despair that hyperinflation brought to Germany in 1923 (in the wake of the first world war) from which the fragile democratic and economic institutions of the young Republic were never really to recover (thus preparing the ground for the Second World War). Zweig contrasts this with the pre-war “golden age of security”, when “it paid to put money year for year in safe investments”, when “the saver was not yet robbed”, the “honest deceived” but when the “most patient, not the speculators had the greatest profit”. He concludes “that nothing has rendered the German people so embittered, so full of hatred, so ready for Hitler as this inflation” (own translation). From this one could establish not just an economic case but an ethical obligation to maintain price stability.