samchain/econo-pairs-v1 huggingface dataset:
41 Whether there are diminishing marginal returns on additional purchases or actual limits on capacity for using  this tool—implying a size of the balance sheet beyond which further asset purchases become difficult or less effective—is a question for further research. Nevertheless, policymakers may weigh the relative merits and risks associated with asset purchases differently based on the balance sheet’s starting size. 42 The FOMC’s Policy Normalization Principles and Plans note that the Committee does not anticipate selling  agency MBS as part of the normalization process, but says that “limited sales might be warranted in the longer run to reduce or eliminate residual holdings.” 43 Changing the composition of assets within the portfolio, as was done during the MEP, can similarly influence  financial conditions without changing the portfolio’s size or increasing the supply of reserve balances. In this case, capacity to reallocate the portfolio is constrained by existing holdings. 44 Previously, agency MBS operations were conducted on a commercial dealer-to-customer trading platform. The  switch to FedTrade minimized operational risk, improved efficiency and competitiveness, and increased transparency around the Fed’s mortgage operations. 13 / 13  BIS central bankers' speeches

We estimate that if we had not cut the MPR by a combined 350 basis points (bp) between January and February, this rate would be some 250 bp above where it is today. A similar situation can be seen in the case of consumer loans. The cost of mortgage financing, meanwhile, has been less sensitive to the changes in the MPR precisely because those are long-term borrowing decisions. However, without the drop in long-term rates – which has partly originated in the monetary easing – mortgage rates would have stayed largely above their current levels (figure 3). We estimate, then, that the monetary policy decisions recently adopted have begun to pass through to the credit conditions faced by households and firms. This pass-through should continue in the near future, especially after the reduction in the MPR that the Board determined last week. We will keep monitoring these effects permanently, because for us it is essential that the MPR propagates to market rates smoothly. We certainly expect the latest MPR reduction last Thursday to result in additional decreases in the banking system’s lending rates. This type of exercises also permits to evaluate the impact of the higher degrees of uncertainty, volatility and risk we have been observing since last September.
To be able to evaluate our policy – not only the political authorities – but also financial markets and the general public need to know how we interpret our mandate, our view on how the economy works and trade-offs. Therefore, monetary policy must be transparent. Transparency and communication are also important for monetary policy effectiveness. Monetary policy works mainly through expectations and is only effective if the central bank is able to influence interest rate expectations. Professor Michael Woodford has expressed this very clearly in stating that monetary policy is “management of expectations”. “For not only do expectations about policy matter, but (…) very little else matters”. The central bank determines the shortest money market rates through the key rate. The shortest rates, however, are of limited importance. Economic agents’ spending depends more on their interest rate expectations. In recent years, Norges Bank has strived to achieve greater transparency with regard to its monetary policy strategy. As from the beginning of 2003, the Board has published its monetary policy strategy document for the next four months. The strategy was initially published at the end of the period to which it applied. Since June 2004 it has been published ahead of the period. While the document was initially an appendix to our Inflation Report, it is now the first section of the Inflation Report with monetary policy assessments. The strategy includes a recommended interval (red bars) for the policy rate over the following four months, conditional on economic developments that are broadly in line with our projections.

The Board assesses the key rate at monetary policy meetings within these four months on the basis of the approved strategy. The Bank thus gives the market some indication of the upcoming monetary policy decisions. As from last November, we took this process one step further and published our own forecast for the interest rate three years ahead. This means that we have now in a sense “assumed ownership” of the interest rate in our projections. Chart 3 shows the interest rate forecasts in the previous Report, published a few weeks ago. BIS Review 26/2006  1  Forecasts for inflation, output, the interest rate and other variables are based on an assessment of the current situation and a perception of how the economy works. There is substantial uncertainty associated with future interest rates, as illustrated in the fan charts. 1 While we assumed the interest rate to be constant through the forecasting period in 2001 and 2002, our projections were based on market expectations in 2003 and up to November last year. On some occasions we stated that it was our view that the interest rate would move on a different path than that indicated by market expectations. For example, in June 2004 we stated that “the most appropriate alternative now seems to be that the interest rate should be kept unchanged for a longer period than indicated by market expectations”.
Yet upside risks persist here, stemming mainly from the possibility of further increases in oil prices – given the instability of the market – and from the potential emergence of second-round affects in a more buoyant economic setting. But the fact that the level of output is still below potential provides leeway for the recovery to continue for some time without generating excessive inflationary pressures. In any event, the European Central bank will remain watchful so as to prevent risks to price stability in the medium term from materialising. The Spanish economy Throughout last year and in early 2006, the expansionary cycle of the Spanish economy continued and intensified, in contrast to the difficulties experienced in the euro area as a whole in emerging from the phase of low growth currently in train. Spanish GDP increased by 3.4% in 2005, while employment advanced at an equally high rate of 3.1%. In both cases, these rates were several tenths of a point up on the previous year's figures. Moreover, 2005 saw the publication of the new Spanish National Accounts base 2000 figures, which meant a considerable upward revision of economic growth since 1995 and, especially, since 2000. These new estimates reflect more appropriately the dynamism of the population and of employment these past few years, and they show a more buoyant economy more closely in step with the expansionary behaviour seen in other economic variables such as credit or tax revenue.

After the COVID19 outbreak disrupted our usual ways of communication and in-person contacts, this may be among the first international conferences on financial and economic history to take place physically again. To be more precise – almost entirely physically – since some of our speakers have had to deal with last-minute unforeseen circumstances and will present their research remotely. Thus, today we will have the opportunity to appreciate a series of papers and presentations, 1/2  BIS central bankers' speeches  commencing with the keynote speech by Thomas Mayer. He will lay ground by pairing the two main functions of money. On the one hand, money is a means of transaction that stores value over time and space while being a standardised unit of account to record this exchange. On the other hand, the printing or minting of money has been a potent funding instrument and a symbol of the state. Therefore, we expect to hear what motivates sovereign states to choose to adopt a common currency in a monetary union. We have seen in history how newly established states are eager to reaffirm independence in their internal political discourse by creating a national currency, but then resort to pegging to global currencies if, for example, in need to rein inflation or gain overall policy credibility. Sometimes they even adopt a foreign currency as their own unilaterally, as demonstrated by recent examples in close parts of Europe (Kosovo and Montenegro).
•  The management of the Fund is delegated to Norges Bank. The Bank’s task is to implement the investment strategy and exercise ownership rights. Norges Bank also provides professional advice to the Ministry on investment strategies. Norges Bank has built an organisation with emphasis on investment returns and based on three fundamental principles: Accountability, transparency and professional standards. Norges Bank manages parts of the funds internally, while parts are managed by external managers appointed by the Bank on a commercial basis. Transparency and disclosure of information are key features of the Fund. All investment principles and guidelines as well as strategic advice and second opinion reports are made public. We publish quarterly reports on Fund performance, which are presented at press conferences. The Fund’s annual report discloses a list of every single investment held at the end of the year, and also provides an overview of corporate governance work, including voting at general meetings. Initially, transparency was aimed at building confidence among Norwegians, but we have also seen that our policy of transparency is highly appreciated internationally. The Fund’s investment strategy is to maximise financial return with moderate risk. The longterm strategic allocation is defined in terms of a benchmark portfolio, which consists of equities and fixed income instruments. Equities account for 60 per cent of the Fund's strategic benchmark portfolio, while fixed income instruments account for 40 per cent.

The GDP deflator would increase by 0.7%, whereby the rise in nominal GDP would be around 2.6% compared with the potentially meagre end-2014 figure of 1%. Overall, these forecasts coincide with those on which analysts concur, although the latter generally involve a somewhat lesser fiscal effort than envisaged in the Draft Budget. The macroeconomic setting accompanying the Draft Budget is subject to downside risks, owing to the uncertainty surrounding international and, in particular, European economic developments. It is against this macroeconomic and financial background that the Draft State and Social Security Budget for 2015 was unveiled in late September. Before continuing, I should point out that, along with the Draft Budget, the Budgetary Plan for 2015 was presented in October. The Banco de España considers that the preparation and publication of this Plan is a most valuable step forward for the control and transparency of our public finances. BIS central bankers’ speeches  3  The Budgetary Plan for 2015 includes information on the budgetary planning of the regional and local governments, and it thus offers a view of overall general government conduct. The Budgetary Plan is important because it fills a substantial information gap: the lack of integrated information relating to all general government activity at a time at which a new budgetary cycle is beginning. Given that its publication marks the main change since my appearance in Parliament in October, I shall now focus on its content. Budgetary programming foresees, firstly, fulfilment of the budget deficit target for 2014, at 5.5% of GDP.
Indeed, the economic outlook has significantly darkened in recent months. We are now confronting higher and more persistent inflation, tighter financial conditions and a global growth slowdown. The war in Ukraine looms over the current outlook and is exacerbating the impact of all these economic challenges. As a consequence, recession risks are spreading, and there is considerable volatility in financial and commodities markets. At the current juncture, decisive economic policies are more important than ever. From the perspective of central banks, fulfilling our mandate of ensuring price stability is crucial. Decisive action by us in the current juncture will support medium-term growth, by reducing inflationary pressures and avoiding a de-anchoring of inflation expectations. Communicating clearly and transparently is key to avoiding disruptions in financial markets. From the perspective of governments, it is critical that they provide support to the most vulnerable households and firms. But this support must be temporary and targeted. In particular, we need to avoid a general fiscal stimulus that amplifies current inflationary pressures or a permanent increase in fiscal imbalances that would weigh on public debt sustainability. In other words, consistency between fiscal and monetary policy is of the utmost essence. And beyond this immediate response to the crisis, governments need to look beyond the current juncture and press ahead with structural reforms to increase medium-term growth potential. In particular, they should focus on the green transition and rethink the functioning of energy markets.

Source: Central Bank of Chile. 9  Figure 7 Nominal exchange rates (averaged index, 1/Jul/2007-10/Dec/2010=100)  80  70  70  60  60  Peru  Thailand  Rango (1)  Promedio  Eurozone  80  Czech Rep.  90  Mexico  90  South Korea  100  Israel  100  Canada  110  Colombia  110  Indonesia  120  Malaysia  120  New Zealand  130  Brazil  130  Chile  140  South Africa  140  Japan  150  Australia  150  Spot (2)  (1) Range indicates peaks and troughs of the local currency parities during the period. (2) Spot value as of 10 December 2010. Sources: Central Bank of Chile and Bloomberg. Figure 8 Real exchange rates and international reserves (*) (percent)  Depreciation of RER (%)  10 5 0  Lithuania Bulgaria  Denmark  Hungary Czech Rep.  Estonia  Hong Kong  Algeria  N. Zealand China Poland Peru Romania Israel Russia Canada Japan Sweden Korea Malaysia Phillipines S.Africa Mexico Indonesia Australia Chile Brazil Norway Argentina  -5 -10  India  -15  Latvia Croatia  -5  0  Turkey  Saudi Arabia  Singapore  Thailand  Iceland  5  10  15  Reserve acumulation as % of GDP (*) Considers variations between September 2009 and November 2010. Source: Central Bank of Chile based on data from the BIS and Bloomberg.
Deposit insurance, like other forms of insurance, is there to deal with low probability events that have a major impact if they occur. To make an obvious analogy, you still take out fire insurance even if you do not expect your house to burn down. Hong Kong stands out as one of the few developed banking centres which does not have a DIS. There is of course no reason why we should follow the rest of the world just for the sake of it. But we should at least keep our safety net arrangements under regular review to ensure that they are still appropriate to changing market circumstances. This is what we did last year when we engaged an external consultant to consider whether the existing deposit protection arrangements in Hong Kong were sufficient, and if not how they should be changed. The conclusion was that an explicit and limited form of deposit insurance should be introduced. We subsequently undertook a public consultation on this proposition and on the detailed design features of the proposed scheme. This consultation generated a heated, albeit civilised, debate. Not surprisingly, some of the large banks vehemently opposed the scheme. Opinion in the community as a whole was however generally supportive.

To give you the punch line, this research and work done by others in the field lead me to conclude that, although we have made great strides, a good deal of slack remains in the labor market. Labor force participation and employment As everyone in this room is aware, the labor force participation rate has fallen throughout the recession and recovery and is now at a 35-year low. 1 As Julie Hotchkiss described earlier this morning, it is well understood that much of the decline is due to trends that far predate the Great Recession. The movement of baby boomers into retirement age and the longrunning declines in teenager and prime-age male participation would have significantly reduced labor force participation rates independently of the economic downturn. Chicago Fed economists first did work on the prospects for a declining labor force participation trend back in 2001 – near the time the rate peaked at just over 67 percent. 2 Even after revisiting this topic numerous times and with multiple generations of research assistants running the programs, their views about the trends that are consistent with the composition of the population and a labor market near equilibrium have not changed much  1  The labor force participation rate is defined as the share of the population aged 16 and older who are either employed or unemployed. To be unemployed, a person has to not have a job but be actively looking for work in the prior four weeks and to be currently available to work.
London has averaged 3.3% annual growth since the financial crisis while Sydney has averaged around 2.9%. San Jose (which encompasses Silicon Valley) has averaged 2.7% p.a. It is hard to imagine a dynamic city growing at less than 2% or worse still, 1.5%. It will be unattractive to investors and talent, including the city’s own investors and talented people. A reasonably good rate of growth helps to create opportunities and preserve a sense of progress and hope, particularly among the young. It will also facilitate upward social mobility. 11 / 17  BIS central bankers' speeches  The experience of other leading cities suggests that demographics is not destiny. Yes, vibrant cities do attract people – and their additions to the labour force add to growth. But the main source of their growth and dynamism is not headcount but productivity. This is not an in-depth study but it appears that about two-thirds of overall GDP growth in the cities shown is due to productivity improvements. In comparison, productivity has accounted for about half of Singapore’s GDP growth. There is clearly scope for us to do better and thereby sustain our dynamism. How can we do this? 12 / 17  BIS central bankers' speeches  First, Singapore has scope to reap the human capital dividends that are arising from the continuous investments we have made in education and training in past decades. As recently as 2000, 45% of the resident workforce had below secondary school education, and only 12% had university education.

9 / 17  BIS central bankers' speeches  First, we should not grow despondent over our slowing rate of economic growth. The empirical experience of countries over time shows a negative relationship between level of income and the growth of income. It is not a perfect negative relationship as you can see from the scatter but it suggests that countries with low levels of GDP per capita tend to have higher rates of GDP growth. This is called “catch-up” in the literature. Meanwhile, countries with higher levels of GDP per capita tend to grow at slower rates as they are more mature. Singapore is a mature economy as you can see: it has one of the highest levels of per capita income in the world. We will not be able to sustain the 6-7% rates of growth that were seen a decade ago. And there’s nothing to be unhappy about this. In fact, our position above the downward sloping line in the slide shows that we have managed to grow faster in recent years than countries with similar levels of per capita income. 10 / 17  BIS central bankers' speeches  But while we must accept a lower rate of growth than before, as a global city, we cannot afford to grow too slowly either. It seems many leading global cities grow at rates between 2.5-3.5%, faster than the national average of the countries they are a part of.
Hence, monetary policy functions primarily by influencing expectations regarding future interest rates. Economic agents therefore need to understand the central bank’s intentions in its interest rate setting. In the November 2005 Inflation Report, Norges Bank published its own forecast for the interest rate for the first time. The aim is to enhance the predictability of monetary policy. With a predictable monetary policy, market participants can react to new information in a way that contributes to stabilising developments in output and inflation. Norges Bank’s interest rate forecast should satisfy two main criteria. First, the interest rate should be set with a view to stabilising inflation close to the target in the medium term. The horizon will depend on disturbances to which the economy is exposed and the effects on the path for inflation and the real economy ahead. Second, the interest rate path should provide a reasonable balance between the path for inflation and the path for capacity utilisation. In the assessment, potential effects of asset prices, such as property prices, equity prices and the krone exchange rate on the prospects for output, employment and inflation are also taken into account. Norges Bank forecasts inflation, output and the interest rate simultaneously. There is considerable uncertainty associated with the forecasts for capacity utilisation in the economy (the output gap), and there is no simple relationship between developments in capacity utilisation and inflation.

The expansion of money has been sustained by the increased demand of the public sector for funds at end-2011, as well as the stable contribution of the demand by the private sector. The latter continues to reflect developments in the real economy, being conditioned mainly by weak demand for loans by businesses and households. In December, the loan portfolio of the banking system to the private sector was 10.4% higher than a year earlier. Similar to the most part of 2011, it has reflected the demand of the private sector to fund its liquidity, consumption and investment needs, materialising also the hesitation of the private sector to commit to long-term projects. In addition to demand factors, the supply of loans is assessed to have been more tightened in the second half of 2011, reflecting the added prudence of the banking system in lending. Latest developments in financial markets are influenced by the normal and quiet performance of demand and supply, which is in line with the monetary policy signals. The key interest rate cut to 4.50% is reflected in eased borrowing costs for banks, while it is expected to be completely transmitted to other higher-maturity market segments. Overall, risk, liquidity and inflation premiums in financial markets remain contained. Projections for the expected performance of the economy support the assessment for positive, though below potential, growth of the Albanian economy for the year ahead. Foreign demand is expected to continue to provide positive, but more moderate, contribution to aggregate demand increase.