samchain/econo-pairs-v1 huggingface dataset:
Something similar happened with copper, other minerals, grain, etc. The response of inflation did not take long to arrive on the scene. Since the inflation peak of last year, Chile is one of the countries where inflation has dropped most sharply.6 Inflation  4  For more discussion on this issue see De Gregorio (2008a). 5  For more information on the inflation rise of 2007 and its external origin see De Gregorio (2008b). 6  This is also applicable if we leave aside the possible effect of changes in the CPI measurement methods. BIS Review 41/2009  3  expectations have also shown major adjustments in the face of this new global scenario (Figure 4). However, the main issue in the most likely scenario, is the effect on inflationary pressures of the increase in output gaps and the decrease in international commodities’ prices resulting from the global recession. Its effects on the inflation forecasts for the next two years are highly relevant and have enabled the application of countercyclical policies. The antiinflationary commitment ensuing from monetary policy conduct based on a flexible inflation targeting regime has paved the way for an important and unprecedented adjustment of monetary policy. Likewise, for monetary policy to be effective, rate changes must be transmitted to the entire yield curve, and this is achieved by implementing a monetary policy based on a credible anchor. In fact, since the Central Bank announced a downward bias of the MPR, the market has started to include this monetary easing at all horizons.

In view of the existence of political barriers to international trade, the flow of capital and goods was equally as possible one hundred years ago as it is today. It goes without saying, however, that as a result of the rapid development of technology, especially in the ICT area, which drastically lowered the cost of the said exchange, the international integration of trade, investment, financial and other services is now more advanced than it has ever been before. In recent years globalization “tail wind”, mainly through increasing competition, productivity and growing imports from low-cost countries, helped to reduce inflation in CEE countries. HICP inflation in the region 2 fell from average 7.7 percent in the years 1997-2000 to 3.8 in 2001-2006. It led to a prolonged period of very low nominal and real interest rates. Nominal interest rates (average for CEE countries with flexible exchange rate regimes) have fallen from 8.8 percent during 2002-2005 to 5.4 during 2006-2007. Real rates decreased from 3.0 to 1.7 in the same period. This in turn helped to accelerate credit growth and fuelled asset bubbles. The amount of loans granted to households increased 3.5 times since 2004 and almost 10 times since 2000. Low deposit rates and economic upturn in CEE after EU accession encouraged both financial institutions and individuals to move toward more risky forms of investment. As a result, real estate prices soared after 2004 and equities listed on stock exchanges reached historical highs.
These investments are mainly represented by the private investments, which count for about 80 percent of total investments. The financial sector has given an ever-stronger support to this development, through the increase of lending activity and the range of services provided. Thus, credit to the economy increased by an average of 34 percent during the last two years, being at the same time accompanied by a prolongation of maturity term. The sectoral development of the Albanian economy has been a dynamic development over the last years. Sectors that have provided a major contribution to the annual growth rate are considered to be: “Trade, hotels, restaurants”, “Construction”, “Transport” and “Other services”. These sectors have contributed about 75 percent of the economic growth over 2004. This development is accompanied by a redistribution of the relative contribution of economy sectors to GDP, and also by a redistribution of the production factors, the labour forces and capital support. The large demand for the infrastructure development, for increasing and expanding the productive capacities as well as for housing made that construction sector be characterized by high development rates. It contributed by an average of 17 percent to the economic growth of the last three years, although the added value in this sector represented only 10 percent of GDP in 2004. Sales of the “Trade, hotels, restaurants” sector increased by 6.2 percent over the nine-month period of 2004, in comparison with the same period of the previous year. This sector performed nearly 44 percent of total sales for this period.

Or, alternatively, it assumes that the cost of moving policy more vigorously to create greater headroom above the zero lower bound is justified in risk management terms – that the cost of a tighter policy setting than required is justified by benefits of avoiding the risk of having to use exceptional policy tools at the lower bound. I have however seen little evidence in the UK that monetary has a consistently asymmetric impact in normal 20  times. As to the risk management argument, I do think the experience of the last 10 years shows that there are policy tools which, while not the primary instrument, remain available close to or at the zero bound. It was partly for this reason that the MPC’s recent statement on the unwinding of QE made clear that QE remained a weapon in the Committee’s armoury. 21  20  Such evidence that exists for other economies suggest the opposite is true – that monetary policy has greater impact when it is raised than when it is lowered. Tenreyro and Thwaites (2016) 21 As it stated in the June 2018 MPC minutes: In the event that potential movements in Bank Rate are judged insufficient to achieve the inflation target, the reduction in the stock of assets could be amended or reversed. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  A sharper tightening of policy has also been suggested to avoid financial stability risks.
The damage to confidence – confidence in ratings, in valuation tools, in the capacity of investors to evaluate risk – will prolong the process of adjustment in markets. This process carries with it risks to the broader economy. Macroeconomic and supervisory policies have an important role to play in containing those risks. Let me mention several critical areas of policy. Monetary policy The Federal Open Market Committee (FOMC) has reduced the nominal federal funds rate target substantially in a relatively short period of time, with much of this reduction occurring ahead of the deterioration in confidence and the broader slowdown in spending that is now apparent. But even with those reductions in short-term interest rates in place, financial conditions have tightened as risk spreads on a wide range of asset classes and institutions have increased considerably. The critical risk to the economic outlook remains the potential for the strains in financial markets to have an outsized adverse effect on real economic activity, particularly by exacerbating the already significant weakness in the housing sector. It is important for monetary policy and liquidity instruments to be used proactively in addressing this risk. BIS Review 27/2008  3  But this is not the only challenge we face. Headline and core inflation have come in higher than anticipated, and inflation expectations have also moved up.

My remarks today will focus on three areas – firstly, the outlook for the Malaysian economy as developments continue to unfold in the domestic and international economic environment. Secondly, I will discuss some of the key lessons that may be drawn from the recent credit turmoil and their implications for the Malaysian banking system. And finally, I will take the opportunity to share with you some thoughts on our vision for the financial sector beyond our current financial sector masterplan and the thrust of our strategies going forward. The Malaysian economy enters this more challenging period following several consecutive years of solid growth that averaged 6%. The economy grew by 6.3% in 2007, the fastest pace in three years with the growth momentum being sustained in the first half of 2008. In the first quarter of this year, the economy expanded by 7.1%. This stronger growth was achieved despite the more difficult environment with slower global growth and increased uncertainties in the international financial markets. The successful transformation of the Malaysian economy in this recent decade has been one of the important contributing factors. It has led to more diversified sources of growth resulting in a more balanced economy. While the external sector remains important, domestic demand now has a more significant role in driving the growth process. In addition, the services sector has become a more important source of growth. Moreover, the agriculture sector continues to expand as Malaysia benefits from the high commodities prices.
If the central projection’s a long way from target, that can tell you something about the MPC’s view of the suitability of the yield curve – given, at least, all the other assumptions in its forecasts. In May 2009, after the first slug of QE, the Inflation Report forecast was well below target. This suggested that, unless the economy improved much faster than it expected, the Committee believed that monetary conditions would need to be looser than implied by the yield curve at the time. As things turned out, that’s exactly what happened. But there are limits to how far this kind of reasoning should be taken. One particular problem, when it comes to the so-called “lift-off” date for interest rates, is that the yield curve is currently very flat. As a result, even relatively moderate changes in forward rates, prompted by unexceptional news about the economy, can result in big shifts in the date at which the yield curve first reaches some particular level. But that doesn’t mean the MPC’s views about future policy have moved so dramatically. If nothing else, this demonstrates the problem with focusing too obsessively on that particular date. More generally, the MPC’s inflation forecast is a far from perfect indicator of interest rates. It involves lots of conditioning assumptions, not just forward interest rates, and any of these can change. Our understanding of the economy evolves over time and the economy itself is always subject to unforeseeable shocks.

(An effect of this sort was clearly at work in the last Inflation Report forecast: weaker equity prices led the Committee to revise down its forecast of domestic investment, partly offsetting the effect of a shallower yield curve on the projection for GDP growth.) But the impact of such swings seems to be larger on market yields than on actual forecasts of interest rates. The red line in Chart 6 plots the gap, in months, between the date of the first UK rate rise implied by the sterling yield curve and that expected by professional forecasters. When the line goes up, markets are pushing out this “lift-off” date further than analysts. And you can see this tends to happen when risky assets do poorly (the blue line is an estimate of the risk premium). Conversely, the gap narrows when risk appetite improves. This pattern suggests that market interest rates might be influenced by more than the expected path of interest rates 6. To be clear, the MPC produces its forecasts on the yield curve as it is, not what it believes the market’s true expectation of future interest rates to be. So the fact that the two might differ does not, in and of itself, invalidate the sort of inferences we’ve been talking about. But it should, at the least, make one a little careful about describing the yield curve as “the market’s expectation of future interest rates”.
During 2011, additional activities requested by banks and non-bank financial institutions were approved, consisting in introducing new market products and diversifying the existing products of financial institutions. Moreover, a preliminary approval was granted to new bank branches and agencies (10), but at low paces, whereas the activity of some bank branches and agencies was closed (11). As at year-end, there were 528 bank branches and agencies operating in the country and 1 branch operating abroad. Regarding supervision of the financial activity under the jurisdiction of the Bank of Albania, allow me to reiterate that it remains within the security parameters and is resilient to unexpected shocks. 6  BIS central bankers’ speeches  The Bank of Albania remains committed to monitoring the Albanian financial system rigorously and vigilantly, aiming at identifying early the potential risks and taking corrective measures to prevent them. Besides the foregoing directions of Bank of Albania’s work, I would proceed with some other activities of our work, which contribute not only to fulfilment of our legal tasks, but also to development of the financial system and market economy in Albania. 4. Other Bank of Albania activities    Bank of Albania’s role in the European integration  In the light of the objective for Albania’s integration in the European Union, the Bank of Albania has strived for aligning its activities and regulations with the European Union directives and standards.

They have revealed that the entities have generally taken preventive measures. Transparency and publication of information were subject to reforms in 2011 and aimed at establishing a more appropriate business climate for banks and providing higher protection to the public. Banks, on their side, have responded positively by adapting their internal regulatory framework in line with these changes. Further improvement is needed to enhance the transparency with regard to credit agreements, which have been a source of customer complaint and on focus of examinations on transparency and corrective measures taken by the Bank of Albania. The practices for deposit and account estimation, as well as disclosure and addressing of customer complaints are generally regarded as less problematic. Supervision of non-bank financial institutions is also a functional part of the Bank of Albania. Their number amounted to 19, from 17 a year earlier; their specific share remained unchanged, accounting for 3.1% of banking system assets. During 2011, their activity posted moderate growth with regard to total assets, loan portfolio and financial profit. Overall, non-bank financial institutions have adhered to regulatory framework and supervision standards. However, on-site examinations have identified several problems, thereby making appropriate recommendations related to them. Among them, we would highlight the need to: improve lending process; revise internal regulatory framework; enhance transparency to clients, etc. The expansion dynamics of the financial sector activity is reflected in the licensing process.
This is what I called a "Financing Union for Investment and Innovation", notably to shore up equity, which is the key to an innovation economy. The aim is crystal clear: within a Monetary and Banking Union, a cross-border merger must not be more difficult and cumbersome than a “domestic” merger. Several levers must be pulled if the obstacles to these activities are to be removed. From a supervisory point of view, this involves promoting a consolidated approach by granting more waivers on liquidity and capital so as to allow more flexible capital allocation and limit ring-fencing. From a resolution point of view, internal MREL requirements should be a tool to facilitate the resolution of institutions, but they would become meaningless if calculated on a national basis. They must be calculated at the level of the Banking Union, considered as a unique jurisdiction. Indeed, compartmentalising an internal MREL within national borders would be an obstacle to the single market and European banking crossborder mergers. As a first concrete step, I suggest that the European Banking Authority publish a comprehensive stock-taking of all the regulatory and supervisory obstacles to cross-border activities and mergers. *** Conclusion: Banks must be prepared for these extreme situations because: -  There is no such thing as zero risk, despite the improvements to prudential regulations and the reinforcement of banks' financial capacity. -  The failure of a single participant, even one considered to be secondary, can have systemic effects, as even the largest groups are now no longer immune.

We will see what the precise outcome of the present dialogue will be, but already I would like to say that I find some of the resistance shown by banks generally, and even more so, the controversy that has arisen in Italy in particular, inappropriate and unfounded. For non-performing loans, we have to plan ahead if we are to stop picking up the pieces afterwards. If we ever needed proof of the necessity for independent European supervision, this controversy has provided it. II. The second challenge is to encourage consolidation within the Banking Union  Consolidation must be the result of consistency, and consistency is considering the Banking Union as a unique jurisdiction. -  We must therefore stop hindering cross-border bank consolidations in the euro area. 3  We need to ensure that the implementation of new regulations does not give rise to new barriers. The development of cross-border banking activities is essential to reinforcing the single market, facilitating the allocation of savings and financing investment. We still lag far behind the American market in this respect: the market share in the United States of the top five banks is more than 40% whereas the market share in the euro area of the top five banks is less than 20%. Sound and safe cross-border consolidations would make banks better able to diversify their risks across the euro area, and channel savings more effectively towards productive investment.
[31]On the principle of separation between the monetary policy and supervisory functions, see Article 25 of the SSM Regulation and the Decision of the ECB on the implementation of separation between the monetary policy and supervision functions of the European Central Bank (ECB/2014/39), OJ L 300, 18.10.2014, p. 57. [32]Article 284 TFEU and Article 15(3) of the Statute of the ESCB. [33]Articles 20 and 21 of the SSM Regulation. [34]Interinstitutional Agreement between the European Parliament and the ECB on the practical modalities of the exercise of democratic accountability and oversight over the exercise of the tasks conferred on the ECB within the framework of the Single Supervisory Mechanism, OJ L 320, 30.11.2013, p. 2. [35]Memorandum of Understanding between the Council of the European Union and the ECB on the cooperation on procedures related to the Single Supervisory Mechanism (SSM), 11.12.2013. [36]The Governing Council’s quantitative definition of price stability adopted in 1998 is as follows: "Price stability is defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%." In 2003 the Governing Council clarified that in the pursuit of price stability, the ECB aims at maintaining inflation rates below, but close to, 2% over the medium term. [37]Article 1, first paragraph, of the SSM Regulation stipulates that the supervisory tasks of the ECB should contribute “to the safety and soundness of credit institutions and the stability of the financial system within the Union and each Member State”.

1  Daníel Svavarsson: International investment position: market valuation and the effects of external changes. Central Bank of Iceland: Monetary Bulletin 2008/1. BIS Review 52/2008  3  Focusing again on developments this year, the attention of the outside observer is easily arrested by the depreciation of the króna. I mentioned earlier that it was overvalued for a rather extended period to the extent that the Central Bank warned that it would at some stage have to depreciate. The depreciation came earlier and faster than we would have hoped, partly and perhaps most importantly because of the radical changes in global financial markets after the middle of last year and the associated reassessment of risk. These changes meant that the access of Icelandic banks to foreign financing was seriously curtailed. Additionally, questions were raised about the viability of the Icelandic economy in light of the large imbalances and all of this led to an erosion of confidence. Subsequently, the exchange rate depreciated significantly. By the end of March it had fallen to a historically low level in real terms, a level that was clearly below its long-term equilibrium value. The Central Bank responded to the developments in March by raising its policy rate by 125 basis points on Tuesday morning after Easter, followed by a further 50 basis points increase on April 10, bringing the policy rate to the 15.5% which I have already mentioned.
In turn, this means that a country-specific shock will be harder to handle for stabilisation policy. However, large asymmetric shocks occur fairly seldom, no more than a handful of times in the course of a century and as long as the shock – be it of internal or external origin – affects all countries within the monetary union, this poses less of a problem since the common monetary policy can respond to such a shock. If the monetary union also has a floating exchange rate, it will act as an automatic stabiliser. The principal gains to be anticipated from joining a monetary union come from an improved functioning of the economy and an increase in foreign trade. A common currency means greater price transparency and therefore stiffer competition in, primarily, markets for tradables. In a country with a floating exchange rate, small- and medium-sized companies often find it too costly to hedge against currency risk when exporting or importing. When joining a monetary union, the absence of currency risk provides a greater incentive to trade, an incentive that will grow with the size of the union. Also, a common currency means that transaction costs for currency trading disappear. 1  Already Mundell (1961) noted that “[e]xcept in areas where national sovereignty is being given up it is not feasible to suggest that currencies should be reorganized…” (p.664). BIS Review 73/2006  1  However, when a country is weighing loss against gain, both are difficult to quantify.

The crisis showed that there was ample scope to improve the efficiency and resilience of the global financial system. Through clarity of purpose and resolute implementation Brisbane will mark an important milestone in our efforts. That we have reached this point is a triumph of the optimists. But we must not stop work. There is still much scope to improve. The process of reform is not over. We will continue to learn and adjust. And we must continue to manage the system effectively in the face of new risks. With that we can deliver the open and resilient financial system that can support strong sustainable balanced growth around the world. BIS central bankers’ speeches  5