samchain/econo-pairs-v1 huggingface dataset:
A reduced correlation – or even a lack of it – could simply be a consequence of the effective monetary policies of central banks which have succeeded in anchoring inflation expectations to price stability. 11 Direct effect of globalisation on domestic inflation The two more direct effects of globalisation on world and domestic inflation dynamics have been more visible but have partly offset each other, and the relative impact may be changing over time. On the one hand, raw materials and basic commodities, notably oil and other sources of energy, have become scarcer relative to world demand, leading to substantial upward pressure on prices. [see Chart 1] For example, Brent crude oil prices have increased almost tenfold over the last nine years, reflecting to a very large extent the impact of rising demand, especially in emerging market economies [see Chart 2], although supply-side factors have also played a role during some periods. On the other hand, the integration of a large reserve of low-cost, skilled labour in the international economy and the increasing production of manufactured goods in emerging market economies have put downward pressure on import prices of manufactured goods as well as on wage demands in industrial economies. As a consequence, the prices of a wide range of manufactured goods have been declining since 2000. This is reflected in the unit value of imports of manufactured products in the euro area, which in mid-2007 was virtually at the same level as in 2000.

Giannone, D., M. Lenza and L. Reichlin (2007), “The Equilibrium Level of the World Real Interest Rate”, paper presented at the First Annual Risk Management Institute Research  12  BIS Review 9/2008  Conference “Capital Flows and Asset Price: The International Dimension of Risk”, Singapore 6-7 July. Hartmann, P., F. Heider, E. Papaioannou and M. Lo Duca (2007), “The role of financial markets and innovation in productivity and growth in Europe”, ECB Occasional Paper No. 72, September Ihrig, J., S.B. Kamin, D. Lindner and J. Marques (2007), “Some Simple Tests of the Globalization and Inflation Hypothesis”, International Finance Discussion Papers, Board of Governors of the Federal Reserve System, No. 891. Kose, M.A., E. S. Prasad, K. Rogoff and S.-J. Wei (2006), “Financial Globalisation: A Reappraisal”, NBER Working Paper 12484 Kose, M. A., E. S. Prasad and M. E. Terrones (2005), “Growth and Volatility in an Era of Globalisations”, IMF Staff Papers, vol. 52, pp. 31-63 Kose, M. A., E. S. Prasad, and M. E. Terrones (2006), “How Do Trade and Financial Integration Affect The Relationship Between Growth and Volatility?”, Journal of International Economics, vol. 69, pp. 176-202. Kroszner, R. S. (2007), “Globalization and Capital Markets: Implications for Inflation and the Yield Curve”, Remarks at the Center for Financial Stability (CEF), Buenos Aires, Argentina,16 May.
On the other hand, raising the interest rate more rapidly would increase the risk of a stronger krone, which could prevent inflation from reaching the target of 2.5 per cent. The projections indicate that the interest rate will rise by about 1 percentage point in the course of the next year. This is consistent with expectations in the money and foreign exchange market. At the 2-3 year horizon, we expect a further, gradual rise in the interest rate. Norges Bank’s projected interest rate slightly further ahead is somewhat higher than forward rates in the financial market, but market rates in Norway and other countries may have been pushed down by extraordinary factors in the world economy. Norges Bank has assumed that money market rates among our trading partners will also increase gradually over the next three years. The interest rate path in Norway and abroad may be consistent with an approximately unchanged krone exchange rate. With interest rate developments as outlined above, CPI-ATE inflation is projected to increase gradually from about 1½ per cent today to close to 2 per cent at the beginning of 2007. There are prospects that inflation will increase further and reach the target of 2.5 per cent in the second half of 2008. With a gradual reduction in unemployment, Norges Bank expects wage growth to pick up after a period. At the same time, profit margins are expected to edge up in pace with rising demand and capacity utilisation.

The article pointed out the differences between an asset-price bubble and a bull market. The author was of the view that people who don’t manage to enter the stock market in time or don’t dare to do so when the market has gone up will regard it as a bubble and will support the government taking measures to cool things down; but investors who have entered the market will see the increases as a bull market. Price increases can be interpreted in many ways. Well, a nonmainstream view like this may have some merit and, right or wrong, it illustrates the difficulty of dealing with asset-price bubbles, particularly the courage needed to make decisions at critical moments. Whether these decisions are correct or not is difficult to say with total confidence and certainty beforehand, and mistakes may be made. But we cannot avoid mistakes by not making decisions because the damage to society of an asset-price bubble is too great to ignore. And we should not just rely on the government to stop the bubble expanding. It requires the involvement of banks, corporations and individuals – they need to be more risk-conscious and self-disciplined. My colleagues at the HKMA and I will do our best, and I invite everyone to work hard together to meet the challenges brought about by the global financial tsunami. BIS Review 167/2009  3
Such an apparatus is also needed to promote the firm's operational efficiency and to ensure compliance with managerial policies, laws, regulations, and sound fiduciary principles. Effective risk management is based on a foundation of good corporate governance and rigorous internal controls. Taking calculated risks is part of any business enterprise. That is well understood. At the same time, each firm needs to have in place the technical systems and management processes necessary not only to identify the risks associated with its activities but also to effectively measure, monitor, and control them. An effective risk management and control structure is not sufficient, however, if it is not accompanied by an institutional culture that ensures that written policies and procedures are actually translated into practice. Ultimately, a firm's culture is determined by the board of directors and the senior management it installs. In particular, the actions of senior management and the consistency of their decisions and behavior with the values and principles they articulate are critical to shaping firm culture. It is vital that managers make certain that their commitment to an environment that includes effective risk management and rigorous controls filters fully down the line to all employees in their organization. Official regulation and supervision provide a second line of defense against financial instability. Governments have long recognized that banking and other financial institutions, because of the nature of the functions they perform, must be subject to at least some form of regulation and official oversight. Governments have a broad mandate here.

Risk analysis and buffer-raising will also be a challenge for Eesti Pank in the forthcoming periods. The central bank just finished its first year as a member of the euro area, with one of the lowest equity to monetary policy assets ratios among euro area central banks. We must bear in mind that the revenues and expenditures of monetary policy operations are shared within the Eurosystem in proportion to the central bank’s participation in the total capital. The Supervisory Board of Eesti Pank thus resolved to raise the central bank’s capital adequacy ratio to the average level of euro area central banks in the long term. In order to bring the ratio into line with Eesti Pank’s participation in the Eurosystem, the capital adequacy ratio must be raised. This means that the central bank’s equity must be raised from 0.37 billion euros to approximately 1.3 billion euros. Eesti Pank’s equity currently stands at 0.07% of the Eurosystem’s total equity, while Eesti Pank’s participation in the Eurosystem stands at 0.26%. [QUO VADIS, EURO AREA?] 1. It is not only the central banks that can contribute to a successful exit from the crisis – the governments of member states must, as soon as possible, implement the measures taken and agreements made by the European Council and the euro area heads of state and government. Closer cooperation in the field of economic policy, along with clear-cut, functional rules, serve the interests of all members. 2.
The gradual shift towards more flexible monetary policy led to a greater need to illustrate the fact that it is the entire expected sequence of events for inflation and the real economy a few years ahead that is important to monetary policy decisions, and not merely the levels we foresee two years ahead. And the focus should be on not only current interest rates, but also expectations of future interest rate changes 6 . Now we instead use an assumption that the policy rate will develop in line with financial market expectations. This means that the monetary policy discussion can now be based on a relatively realistic development of the interest rate throughout the forecast period. This makes it easier to assess our policy, to compare our forecasts with those of other forecasters and it enables clearer communication with regard to future policy. If inflation is expected to be close to target in a two-year perspective, this could indicate that market expectations of interest rate developments are reasonable. However, to determine this we must also take into consideration the expected sequence of events for inflation and the real economy that would result from this interest rate path. In our communications we point out that the assumption that our policy rate will follow implied forward rates is not a commitment from the Riksbank that the repo rate will actually develop in this way.

These different characteristics also determine in essence: •  The way the insurance institution is established and functions,  •  The way the insurance fund is managed and the forms the institution possesses for increasing its value in extraordinary cases, which is the level of the contribution amount by the insured institutions in ratio to the objectives for increasing the insurance fund and for raising the covering capacities;  •  Relation to insured institutions;  •  The role of the state in the insurance institution’s capital;  •  Requirements with regards to necessary human resources and objectives on the intended level of personnel’s expertise;  •  The way the banks and foreign bank branches are insured;  1/3  •  The way of determining the payment of the insurance contribution on the basis of insured institutions risk profile, etc.
High food prices have led to a reduction in purchasing power and social unrest in many areas. By limiting exports of foods and thereby keeping the supply in their own country many countries are hoping to be able to keep down domestic prices. The fact that this in turn risks pushing up world market prices even further and making the situation worse for some countries does not seem to carry any weight. Commodity price rises of course have consequences for monetary policy. How will commodity prices develop, and what contagion effects will there be for other prices? These are questions that every central bank has to take into account when making decisions. It was also something we discussed at the Riksbank’s most recent monetary policy meeting just over two weeks ago. I shall return to this shortly. Why have commodity prices risen so much? What is this sharp rise in commodity prices due to? As is often the case, it is difficult to point to any individual factor that will provide a complete explanation. Many factors have played a role. A product such as rice is, when one looks at it, rather different to a product such as oil. This would indicate that the driving forces have not been identical. But at the same time, the price increase has been so similar for so many different types of commodities that one can suspect there must be some common denominator.

In a world of instantaneous communication, interconnected markets, and more complex instruments and risks, effective cooperation between private and public sector players is vitally important for financial stability, both domestically and globally. At the same time, we must be certain that our joint efforts to ensure the safe and sound operation of our financial markets do not stifle the innovation and creative energy that are constantly improving how financial markets operate and the way firms do business. With these thoughts in mind, we must ask ourselves how, by working together, we can best meet the challenges to our financial markets posed by the loss of trust stemming from corporate governance breakdowns and misleading accounting practices at some prominent businesses. In answering this question, I am mindful of a basic reality. Namely, despite the successes of previous private/public sector cooperative efforts, additional issues that need our attention will always arise because of the open and dynamic nature of our financial system. As I noted, we have already begun to address some of the causes for investor scepticism. Still, we have much to do. I would like to comment on four broad issues: corporate governance, executive compensation, accounting, and disclosure. 1. Corporate Governance  Looking to the immediate future, I believe that one challenge for directors and executive management is to find outside directors who are sufficiently independent but still knowledgeable about and engaged in the business of the company on whose boards they will sit. Independence reflects qualities of objectivity, experience, insight, and force of character.
Or (as in the MPC’s May 2022 monetary policy summary) entertain dissenting views not just on votes on Bank Rate but also on the communication reflected in the summary. 16. For a discussion of these risks and their potential consequences in a previous interest rate cycle, see Pill (2019). Page 13 17. See Bank Rate increased to 1.25%, Bank of England, 16 June 2022. 18. The views expressed in this speech are not necessarily those of the Bank of England or the Monetary Policy Committee. I would particularly like to thank Saba Alam and Nick Bate for their help in preparing the speech. I have also received helpful comments from Andrew Bailey, Tom Belsham, Ben Broadbent, Fabrizio Cadamagnani, Alan Castle, Andrew Hauser, Neil Kisserli, Catherine L Mann, Nick McLaren, Dave Ramsden, Michael Saunders, Fergal Shortall and Silvana Tenreyro, for which I am most grateful. The responsibility for all remaining errors is my own. Returning inflation to target - slides

Let me now finally discuss what all this may entail for the four major Swedish banks and discuss some of the claims in the debate on the Basel Committee's work. To do this properly, we need to know something about the banks’ current capital situation. Figure 1. Sweden has a large share of national special requirements  Source: Sveriges riksbank  One can describe the major Swedish bank's capital levels in a number of different ways. The banks themselves usually state their CET 1 capital ratios as a percentage of risk-weighted assets. The four major Swedish banks currently have a total of around SEK 2,800 billion in risk-weighted assets. In comparison, their total assets amount to more than SEK 13,000 billion. The risk-weighted assets are largely calculated with the aid of the internal models I mentioned earlier. Finansinspektionen's total CET 1 capital requirement of the major Swedish banks is around 18 per cent of their risk-weighted assets, or around SEK 510 billion. The major Swedish banks currently meet these capital requirements. All in all, they have a CET 1 capital ratio of around 20 per cent of their risk-weighted assets, or SEK 550 billion. SEK 550 billion may seem a lot, but in relation to the banks’ total assets it corresponds to just over 4 per cent. This does mean that the major Swedish banks now meet the future leverage ratio requirement of 3 per cent that I mentioned earlier.
For many firms, including Italian imprenditori, their market naturally expanded from their domestic market to the whole of the euro area. According to empirical studies, the euro has thus led to a 5 to 15% increase in trade between Member States. An internationally recognised currency The economic size of the euro area and the stability of its currency allow the euro to play an international role. Before the euro, in 1995, only the Deutsche Mark was an international reserve 2/6  BIS central bankers' speeches  currency, with a share of 15% of global reserves. Today, our shared currency accounts for 20% of international reserves, in second place behind the dollar. An internationally recognised currency generates economic gains: the financial markets are more attractive for foreign investors, more liquid, and therefore more efficient. But it also carries a political weight: I know that when Mario Draghi speaks at the G7 or at the G20, the whole world listens to Europe attentively. In the global financial arena, which has become turbulent, this union is our greatest chance; none of our countries would have such clout in insolation. Our sovereignty relies necessarily on European sovereignty. * * * The euro makes us more robust, and gives us more confidence in our currency: this is a considerable asset amidst so much uncertainty. The euro has naturally also provided us with a strong symbol of unity among European nations.

All this should lead to a more harmonised regulation and supervision across countries, and as a result also foster financial integration. 2  BIS Review 47/2010  For central bankers, the part of the reform which directly concerns them is the establishment of the ESRB, a new independent body that will for the first time carry out a comprehensive macro-prudential oversight of the financial system of the EU. The ESRB will also issue risk warnings, and, where appropriate, recommendations, and follow up their implementation. This body will bring together the central bankers, the heads of the three supervisory authorities, the Commission together with the supervisors of the 27 EU Member States to regularly discuss and assess the financial stability conditions in the EU. In that respect, the ESRB shows some keen similarities with the Financial Stability Council in the proposed financial reform in the United States. The ESRB is expected to support financial integration through its contribution to financial stability in the EU. Indeed, if market participants are confident that the authorities take properly into account the interdependencies between countries and the various components of the financial system, they are likely to fully exploit the possibilities offered by cross-border activities in the EU.
The significant weight of food prices within the Consumer Price Index (CPI) in Turkey – as is the case in many developing countries – increased the volatility of inflation. In 2007 and onwards, rapidly increasing food and energy prices in the international markets caused inflation to display an upward trend on a global scale. As a matter of fact, by November 2008, inflation rates in all developing countries – apart from Brazil – implementing inflation-targeting regimes exceeded inflation targets by a significant margin (Chart 2). This observation confirms the fact that the relatively high inflation figures of 2007 and 2008 in our country should be assessed mostly as a reflection of global factors. Chart 2. Inflation targets and realizations in the developing countries 18 16  N o vem b er 2008  14 Inflation  12 10  T arget B and  8 6 4 2 Iceland*  South Africa*  The Philippines*  Guatemala  Turkey  Chile  Colombia  Romania*  Brazil  Peru  Mexico  Israel*  Slovak Rep.  Korea*  Czech Rep.  Hungary  Poland*  0  * As of October 2008 Source: Central Banks, IFS, TURKSTAT, and CBT. As inflation remained significantly above targets for a protracted period, it entailed the Central Bank to pursue an efficient communication strategy.

You could probably do the Volcker Rule in a more efficient way to achieve the same objectives without the burden of regulation that you have right now. You know, right now, if you’re an equity trading desk and the equity market falls very violently, you really aren’t supposed to go in and buy equities unless you actually have customer orders. So, you actually have this crazy situation where the equity desk can’t actually buy equities to support the market. So, I’d like to see the Volcker Rule looked at to see if there’s a way of doing it in a way that – if you’re a client-facing business, and you’re trading your own asset class, you have a little bit more freedom to buy and sell when markets are volatile and maybe provide actually a little liquidity support in the market. But also make it a lot easier, I think, to enforce the Volcker Rule. The other thing I would say is relief for smaller banking institutions. The financial crisis was not about small banking institutions. It was about large banking institutions and particularly it was about large broker-dealers. And so I think the Dodd-Frank Act imposed a lot of compliance and regulatory costs on smaller banking institutions. And I think – we have about 6,500 smaller banks in the United States plus a lot of credit unions and other financial intermediaries.