samchain/econo-pairs-v1 huggingface dataset:
I also believe that it may be difficult to raise the target in a situation where inflation undershoots the target significantly, particularly if the central bank has cut the policy rate to the “near zero lower bound”, that is, the level at which may countries are now. Here there is rather a risk that the increase will be perceived as a more or less desperate and in the worst case not particularly credible measure to obtain a little additional help getting out of a difficult situation. Apart from the best time to change the inflation target being in a relatively normal situation, I would also think it would be easier if several central banks did it at the same time. 16  For a definition of secular stagnation and a summary of empirical evidence and policy implications, see Rawdanowicz et al (2014). 17  See, for example, Krugman (2014). 18  See, for example, Hamilton et al (2015) and Rogoff (2015), who say that the world is in the adjustment phase of an unusually large debt cycle, a “debt supercycle”. See also the debate between Bernanke (2015) and Summers (2015). 8  BIS central bankers’ speeches  Financial crisis has affected the central banks’ analysis and working methods I have given some examples of questions that will probably continue to be argued in the international discussion of how inflation-targeting may need to be adapted and modified.

However, it is not necessarily a law of nature that technological advances always create at least as many jobs as they take away. The digital technology developments have made it increasingly profitable, and to an increasing degree possible, to replace human labour with machinery. It is probable that “technological unemployment” resulting from automation will become a more common phenomenon in the coming period than it has been so far, although this is of course something that remains to be seen. If this were to be the case, a lot more groups in the economy will experience downward pressure on their wages. This may, in turn, have a restraining effect on inflation. Globalisation, the acceleration of international trade and the integration of China and other developing countries into the world economy, has been an important underlying trend in the global economy and will probably remain so in the coming period. Like digitisation, globalisation affects the economy through many different channels. Perhaps the one that has been most in focus in the discussions on inflation is the downward pressure that results from industrialised nations increasingly importing cheaper goods from, for instance, China. 13 This essentially concerns cutting the price of import goods relative to prices of domesticallyproduced goods, while inflation is a change in the general price level that affects all prices.
With the benefit of hindsight, we can see the introduction of the euro ten years ago as a prescient, forward-looking response by Europe to the challenges and risks of the present world. I would now like to consider my third question: What challenges lie ahead for the single currency? Despite all the achievements, this is not the time for complacency. There are important challenges. The most important and most direct is of course to tackle the financial market turbulence and the economic downturn. But there are also challenges which go beyond tackling the current situation. But they are related to it in part. I would like to consider three challenges briefly: the securing of sound government finances, structural reforms in the euro countries and the expansion of the euro area. Securing of sound government finances Sound government finances are critical. They complement the ECB’s stability-oriented monetary policy. They prevent the fiscal policies of one country in the euro area from having  6  BIS Review 16/2009  negative effects on other countries. Beyond that, sound finances make a national economy more flexible. They are part of a growth-friendly environment. The fiscal policies of the Member States should promote the smooth functioning of Europe’s Economic and Monetary Union. The Stability and Growth Pact is the instrument to guarantee this. The Pact is the most important pillar in the economic union. It supports the monetary union. The strict and credible implementation of the Stability and Growth Pact is essential.

I have myself been the governor of the independent Banque de France during these ten years. The independence was granted in January 1994, five years before the euro. During these five years I was particularly proud that our primary goal, price stability, was reached in line with our definition – below 2% – and was fully compatible with price stability in Germany during the same five-year period. It can be said that, with the creation of the euro, the stability culture has been “Europeanised” and given the legal face of an international treaty European stability consensus The primary mandate of price stability and the independence of central banks as laid down in the Maastricht Treaty, are an expression of a stability consensus which has grown in Europe – even worldwide – in recent decades. There exists today a general awareness of the fact that stable prices are indeed a fundamental condition for sustainable economic growth and employment. The priority for price stability as the primary objective of monetary policy as well as the independence of the ECB enjoy broad support from the people of Europe. In surveys of citizens throughout the euro area, an overwhelming majority regard price stability as an important goal. An overwhelming majority believe it important that the ECB and the Eurosystem are independent of governments in order to achieve this goal. This support from our fellow citizens in the Euro area matters greatly to the ECB.
It is absolutely necessary to take action every time these shocks give signs that they may propagate from specific sectors to the rest of the prices in the economy. Preventing such propagation is the primary task of monetary policy. In this Report’s baseline scenario, the foreseen trajectory of monetary policy meets this objective. In any case, as it has done in the past, the Board will adopt any necessary measures to deal with events altering the macroeconomic scenario and the inflationary outlook. As our country’s economic history has shown, and reminded us unequivocally just a few years back, inflation is an evil that hits especially hard those who have the least resources. The main contribution that the Central Bank can make to the country’s development is to keep inflation low and stable, paving the way for sustainable growth. Making today the necessary changes to monetary policy will avert more severe adjustments in the future that would certainly increase the associated social costs. Accordingly, the Board will continue to conduct monetary policy so that annual projected inflation into a two-year horizon stands at 3 percent. Thank you. BIS central bankers’ speeches  5  Figure 1 Inflation indicators (annual change, percent) 12  12  9  9  6  6  3  3  0  0  -3  -3  06  07 CPI  08 CPIX  09 CPIX1  10  11  CPI w/o foodstuffs and energy  Sources: Central Bank of Chile and National Statistics Institute (INE).

December 1995=100  Oslo Stock Exchange Benchmark  300 275 250 225 200 175 150 125 100 75 50 25  S&P 500  03  n  n  n  n  n  n  n  Ja  Ja  Ja  Ja  Ja  Ja  Ja  02  01  00  n Ja  99  97  98  Oslo Stock Exchange IT  96  300 275 250 225 200 175 150 125 100 75 50 25  Source: EcoWin SG Gausdal 31.01.03  Many other countries also experienced a period of strong expansion in the 1990s. Economic growth in the US was particularly high. New technology generated optimism and laid the basis for strong investment growth. At the same time, wage growth and inflation remained low. Equity prices, however, rose sharply just before the turn of the millennium, particularly in the US, but also in many other countries. 1  The output gap, which is a reflection of capacity utilisation in the economy, is measured by different methods: the trend GDP method (the HP method) and the potential GDP method (the production function method). When using the HP method, adjustments are made for the increase in vacation days in 2001 and 2002. This is also taken into account when applying the production function method. The output gap is zero if aggregate output is equivalent to the level of activity that can be achieved over time without generating a rise in price and cost inflation.
Independence should allow us to incorporate into our decision-making elements that are relevant for the welfare of citizens in the long run. It is much more difficult for politicians to do this, basically because, of course, they incorporate the political cycle into their decision-making. But, if this is the case, then the legitimacy of central bank´s independence is essentially based on utilitarian grounds, in the sense that we think, with this independence, we are in a better position to deliver on our mandate. The key e is how can we invest in this legitimacy in a better way. Probably the best way to do so is to connect this need for delivering on our mandates to the controls, the transparency and the accountability that always needed to go hand in hand with independence. Relate to the efficacy in delivering on our mandates, one thing that probably we have not done enough, and I will give an example of what the Basel Committee is doing, is to evaluate what we do, and in particular evaluating our own capacity to deliver. Central banks do very often is to emphasise the need for the evaluation of other public authorities. But it is not always the case that we do this with our own mandate. Of course, we have to take into account that when evaluating it is difficult to construct the counterfactual. It is very complex, and of course, a social science such as economics is not always ready to give a definitive answer.

But this disentangling is done, or is at least attempted in this paper, and the pieces of evidence that are provided in it point precisely to the importance of the financial reform. Let me give you some results that in my opinion are relevant: i) we find that banks with higher capital ratios suffered less in terms of, for example, increases in CDS spreads; ii) we also find that strongly capitalised banks showed greater increases in lending than other banks, and, iii) a third result is that the uptake of the public support measures was higher precisely in those banks that had higher capital ratios. The interesting thing about this evaluation is that at the same time there might be some lessons to learn. We are already highlighting some pieces of the regulatory reform that might not be working as intended and let me focus on one issue on which Claudio has also worked in depth in recent years, which is to understand whether capital and liquidity buffers are  2  usable as envisaged. We wanted banks to have higher levels of capital precisely to be used in a situation of crisis. So, if in the end we observe that this capital is not being used, there is a problem, and we might need to modify some parts of the legislation. The evidence is that banks might have been hesitant to use the regulatory capital buffers had it been deemed necessary in practice.
Banks’ staff costs have not fallen anywhere near as much as shareholder returns. Conduct costs have also depressed returns in investment banking as well as retail banking. Indeed, looking forward, concerns about future conduct risks, generally, may also be clouding investors’ perceptions of banks’ prospects. The scale and uncertainty around conduct losses is notable. UK banks’ overall misconduct costs have totalled nearly £ billion to date – they have exceeded £ billion per annum in each of the past four years. This uncertainty, one hopes, should fall over time. Investors’ expected returns Turning to the other part of the price to book equation, expected returns, the reforms to the prudential regulation of banks since the crisis and, in particular, to the level and quality of capital required from banks has reduced the risk to investors. That reduction in risk should, all else equal, be reflected in the return investors demand. There are signs that investors have, albeit slowly, started to lower the returns they demand to reflect lower risks. Banks have cut their medium-term pre-tax return on equity targets by about 3.5 percentage points on average since 2009 – from around 15% to around 11.5%. This is welcome and necessary. Some of the reduction probably reflects lower risk-free rates. But some reflects the significant increase in banks’ resilience. There may, however, be factors that are still inflating required returns beyond the levels merited by risk.

The launch of the ABF Malaysian Bond Index Fund today marks another important milestone resulting from EMEAP Central Bank cooperation in the region. It represents the successful implementation of the Asian Bond Fund project to accelerate the development of the domestic bond market and to promote greater integration among the regional bond markets. The listing of the ABF Malaysian Bond Index Fund is thus another major step forward in the development of the Malaysian bond market, and to enhance further its potential to contribute to sustained and balanced growth of our economy. The bond Exchange Traded Fund is an investment instrument with a low entry cost. It is a highly efficient, transparent and convenient investment tool designed to appeal not only to institutional but also retail investors. With an affordable standard lot size, the bond Exchange Trade Fund provides an avenue for retail investors to have access to the bond market. It thus offers investors an additional investment alternative as well as an opportunity to diversify their investment into more asset classes. The ABF Malaysian Bond Index Fund comprises investments in Government and Quasi Government securities and tracks an index, which by design is replicable and transparent. The listing of the ABF Malaysian Bond Index Fund today will not only add to the diversity of listings on Bursa Malaysia but would also pave the way for the increased introduction of other more innovative products in the future.
Are we done? Have we finished the journey? No, we're not at destination. Do we still have ground to cover? Yes, we have ground to cover. I can even go further than that: I can tell you that, barring a material change to our baseline, it is very likely the case that we will continue to increase rates in July, which probably doesn't come as a big surprise to you, but that's what I'm telling you. And this is so because we are determined to reach our target in a timely manner, and to continue to apply the principles that we have applied today: data dependency, the three elements of the reaction function, and moving meeting by meeting. Obviously, we are better informed at each projection meeting which happens, as you know, in June, in September and later. To your second question: I don't know what difference to make between a pause and a skip. I have not studied enough the press conference of my friend and colleague, Mr  4/10  BIS - Central bankers' speeches  Powell. But as far as the ECB is concerned, I said what I said: we have hiked interest rates. Unless there was a material change to our baseline, we will continue to hike at our next meeting. So, we are not thinking about pausing, as you can tell. I have two questions.

Henrique Meirelles: Regulation and international standards in Brazil, the US, the EU and Switzerland Speech by Mr Henrique Meirelles, Governor of the Central Bank of Brazil, at the First International Conference on Law & Economics, IBMEC São Paulo, in cooperation with the Foundation for Law and Economics at the University St Gallen, Switzerland, held in São Paulo, 2 April 2009. *  *  *  The world is experiencing the most severe economic and financial crisis in 80 years. What started as a deleveraging process in the US banking system has extended to a strong downturn not only in advanced economies, but also in the emerging world. It is emblematic that we are here today in São Paulo discussing regulation at a time the issue is also being discussed at the meeting of heads of states of the G-20 in London. Much of the focus of the meeting relates to the redesign of the international financial system and its regulation, including possibly the outline of a sort of international financial regulator. The current financial turmoil is ultimately a result of the failure of regulators, supervisors and policymakers in the advanced economies to prevent excessive risk-taking and leverage and to account for the interplay between regulated and non-regulated markets, partly due to their fragmented regulatory frameworks, partly due to legal restrictions on information and data sharing. Lax regulatory standards, coupled with poor risk management practices, deleterious incentives for risk-taking and deficient corporate governance structures in financial institutions are costing the global economy a high price.
Growth in public spending from last year to this year is estimated at seven per cent. This is considerably stronger than the growth in value-added in the private sector of the mainland economy, which is estimated at around four per cent. The guideline for fiscal policy has been followed closely. Real growth in public consumption is estimated at 1½ per cent. In other words, growth in the production of public services will be moderate, even though public spending is rising sharply in nominal kroner terms because of the steep increase in the cost of producing public services. This reflects high wage growth in the public sector. There have also been substantial increases in transfers to the household sector in connection with our social security system. As a result, most of the strong growth in central government allocations translates into a sharp rise in household consumption, while growth in public service production remains moderate. This is only to be expected when there is steep increase in public sector allocations in an economy where there are no available resources. Employment and labour force participation rates are high. The labour market is tight. Unemployment remains low, with limited available resources. There will be slow growth in the labour force. Working hours have been reduced by increasing the number of vacation days. In addition, outflows from the labour market have risen over the last few years as a result of early retirement and the use of disability pensions.

And then I will talk about steps that we are taking to equip local talent with the essential skills required to cope with the evolving needs of the industry. The first set of issues on risk culture are more about the “mindset” of our talent pool. And the second set of issues are more about the “skillset” of our talent pool. Bank Culture 3. Let’s start with our efforts on bank culture, which is all about putting in place a framework for guiding the behaviour of risk takers. When it comes to behaviour, it is obvious that hard and rigid rules can only serve as the bottom line, whereas perception, incentive and culture are the real behavioural drivers. For nearly a decade since the Financial Stability Board commenced its work on the risk culture, the HKMA has been promoting efforts for cultivating sound risk culture and values in the banking industry. We always say that there is no single formulation of “sound” culture. But we do encourage banks to focus on three fundamental elements: First, a strong “tone from the top”, supported by sound governance; Secondly, an appropriate incentive system that drives desirable behaviour; and Thirdly, an effective feedback mechanism which provides an “echo from the bottom”. 4. In order to facilitate banks to translate these fundamental elements into effective practices, the HKMA has launched various initiatives over the years, including selfassessment on bank culture, and culture dialogues with individual banks.
Mr Heikensten reviews policy developments and changes affecting Sveriges Riksbank, and assesses the current situation and outlook  Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Risksbank, at the Autumn Conference Centre for Business and Policy Studies on 12 October 1999. *  *  *  The autumn conference, arranged by the Centre for Business and Policy Studies, is a tradition I have come to enjoy and an opportunity of looking back on the course of monetary policy and considering future challenges. My review last autumn began with the observation that a good deal had happened as regards economic developments and the conditions for monetary policy. Much the same applies on this occasion. Two years ago we were in the throes of what looked like being a strong cyclical upswing with attendant price increases. My remarks at the autumn conference caused short interest rates to move up about 0.10 percentage points in expectation of a tighter policy. Little more than a month later the Riksbank did in fact raise the repo rate. Last year the situation was very different, with an international financial crisis and great uncertainty about its effects on the real economy. The krona had become markedly weaker and there was some discussion at the conference about the Riksbank’s recent currency market intervention. Later that autumn the Riksbank reduced the repo rate in two steps. Today the prospects for growth and employment are bright again and the krona is substantially stronger.

Even if inflation expectations continue to be low and there are certain signs that the economy is functioning more efficiently, the growth rate will have to be brought into line with the long-term potential. That we shall do in good time. We can thereby contribute to good, stable growth in the Swedish economy for a long time to come. Figure 1. GDP growth and inflation in Sweden, forecasts for 1999 Per cent 4.0 3.5 3.0  GDP growth, forecasts for 1999  Inflation, forecasts for 1999  4.0 3.5  Riksbank forecast  3.0  Consensus forecast  2.5  2.5  2.0  2.0  Consensus forecast  1.5  1.5 Riksbank forecast  1.0 0.5  1.0 0.5  0.0  0.0 Autumn 1998  Spring 1999  Autumn 1999  Autumn 1998  Spring 1999  Autumn 1999  Sources: Consensus and the Riksbank  7  BIS Review 111/1999  Figure 2. Contributions to GDP growth Percentage points; 1999-2001 forecast (main scenario) Final domestic consumption  3.5  3.5  3.0 2.5  3.0 2.5  Net exports  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0  -0.5  -0.5  -1.0 -1.5  -1.0  Stock building 1995  1996  -1.5 1997  1998  1999  2000  2001  Sources: Statistics Sweden and The Riksbank  Figure 3.