samchain/econo-pairs-v1 huggingface dataset:
There are clear risks in sight: in particular, heightened geopolitical tensions could dampen business and consumer confidence. Furthermore, the risk of insufficient structural reforms could weigh on the business environment. How can this uncomfortable cocktail of high unemployment (11.5% this July) and ultra-low inflation in the euro area (0.3% in August, i.e. far below the ECB’s target of below, but close to, 2%) be overcome? How, if at all, can Europe avoid a stagnation scenario such as that faced by the Japanese economy for decades? We do not see Japanese-style deflation in the euro area, as a number of factors differ distinctly from Japan in the 1990s. Firstly, we, the ECB, took decisive action at a very early stage in the crisis, and have continued to do so. Most recently, against the backdrop of a persistently weak inflation outlook, slowing growth momentum and subdued monetary and credit dynamics, we decided in early September to adopt a number of additional monetary policy initiatives which will complete and complement the measures already announced in June. On the basis of our current information, we expect inflation to remain at low levels, before gradually increasing during 2015 and 2016. Furthermore, while inflation expectations have declined, particularly at shorter maturities, our measures will underpin the firm anchoring of inflation expectations in line with our aim of maintaining inflation rates below, but close to, 2%.

Mario Draghi: Interview with Lithuanian business daily Verslo Zinios Interview by Mr Mario Draghi, President of the European Central Bank, with Verslo Zinios, conducted by Mr Dalius Simenas on 25 September 2014. *  *  *  The saying that “When America sneezes, Europe catches a cold” was absolutely true in the aftermath of the dramatic collapse of Lehman Brothers in the autumn of 2008. We are now seeing signs of a recovery in the United States and the United Kingdom, but are still not seeing any in the euro area. Does this worry you? What is missing? I am not sure I can agree with the last part. The euro area has, in fact, been recovering since the second quarter of 2013, when the economy returned to growth after six quarters of recession. It is true, however, that the recovery seems to have lost momentum recently: the flat GDP reading in the second quarter of 2014 was disappointing. According to the preliminary information received over the summer, economic conditions have been somewhat weaker than expected. Overall, however, we expect modest growth in the second half of the year and continue to expect euro area domestic demand to be supported by various factors. These include our accommodative monetary policy stance, favourable financing conditions and structural reforms, which should sustain private consumption and investment. At the same time, unacceptably high unemployment and continued weak credit growth are likely to curb the strength of the recovery.
Furthermore, the ABI’s recent joining of the UN Environment Programme’s Principles for Sustainable Insurance Initiative – the largest collaborative initiative between the UN and the insurance industry – is an important step. This commitment to coordinated action between industry, regulators and governments alike is essential given the global nature of climate change impacts. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  Conclusion There is clearly plenty of work left to do – but there are also plenty of opportunities to take. The United Kingdom has a relatively unique chance to establish a new position within the international insurance system, maintaining strong links with the EU but also looking further afield; whilst also ensuring that our regime is tailored best to fit our domestic requirements. We now have the ability to set our own direction. I have aimed here to set out what direction that might be – an approach that enables healthy competition, and the benefits competition brings, without sacrificing our reputation for strong prudential standards. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8

This brings me to the specific topic of this panel: conducting monetary policy when fiscal space is limited. BIS central bankers’ speeches  1  The aftermath of the recent crisis left all economies in the region struggling to reignite economic growth. Most of the countries are doing this while at the same time facing the pressing need to consolidate their public finances. Albania is no exception. Although the repercussions of the crisis were not so severe, economic growth has almost halved compared to its pre-crisis trajectory. Aggregate demand is unable to generate full employment of labor and capital, while CPI inflation has continuously undershot our target. In this economic landscape, our monetary policy has taken an ever more expansionary stance: the policy rate – now at 1.25% – is at a historical minimum, which would have been unthinkable a few years ago; we have increased our liquidity injection operations as well as expanded the range of accepted collateral; and we have also made use of conditional forward guidance as an alternative instrument of monetary policy. On the other hand, our public debt jumped from around 55% of GDP in 2008 to around 72% of GDP today, on account of the joint action of automatic stabilizers and some degree of countercyclical fiscal stimulus. However, this fiscal expansion was thought to be unsustainable, especially given the difficult financing conditions in international financial markets.
With regard to the Bank of England, their Inflation Report published in August (Bank of England 2010a) contains a forecast that is also based on the policy rate following market expectations, where inflation falls slightly below the target in two years’ time, and GDP growth is close to its historical average, and the GDP level is still lower than before the crisis. This and the minutes from the meeting in October (Bank of England 2010c) do no indicate that the Bank of England will follow a policy rate path that is higher than market expectations. 7  7  After the Riksbank’s monetary policy meeting the Inflation Report and minutes from the meeting in November have been published (Bank of England 2010b, c). Neither do they indicate a policy rate path above market expectations. BIS Review 158/2010  9  If the statements and signals from these central banks indicate interest rate paths in line with or below market expectations, it is not reasonable, in my opinion, to assume – as the main scenario does – that foreign interest rate paths will be clearly above market expectations. In this situation it is more reasonable, at the very least, to proceed on the basis of market expectations according to implied forward rates. One reason for assuming higher future policy rates than the market pricing may be that these abnormally low nominal and real interest rates are not compatible with the Riksbank’s usual models and with the historical patterns for how foreign inflation, GDP and interest rates interact.

Therefore, the Basle Committee has quite rightly advised that regulators and banks should approach it with caution even with regard to the simplest approach to Basel II. We commenced our journey one year ago, together with the industry, and we will move slowly, but steadily, towards full implementation of the basic approach, hopefully in 2008. We will, however commence our test runs in parallel with Basle I in 2006, fine tuning our systems for full compliance as we go along. This would be in line with the widely accepted policy that countries should adopt the options and approaches that are most appropriate for the state of their markets, their banking systems, and their supervisory structures. In Sri Lanka, as in most countries, the banking sector enjoys predominance in our financial system. As is to be expected, the financial environment, domestically, is becoming more innovative and competitive to meet the sophistication of peer foreign banks and the needs of investors and consumers. This naturally increases their risk profile. Increasingly, therefore, our remit as regulators is to ensure an efficient risk management framework and the adequacy of resources to mitigate risk. Against this background, therefore, Basle II is synonymous with good risk management, not only of the core risk of credit default, but of a wider range of risks such as market risk and operational risk in Pillar I .
Nor Shamsiah Mohd Yunus: Crisis preparedness menu for guardians of financial stability Opening address by Ms Nor Shamsiah Mohd Yunus, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 14th IADI Conference on “Crisis Preparedness Institutional Arrangements and Coordination, Crisis Communication and Contingency Planning”, Kuala Lumpur, 28 October 2015. *  *  *  It is a great pleasure to be here amongst the company of distinguished members of the deposit insurers’ fraternity, fellow supervisors and central bankers. We meet here today, almost seven years, after the collapse of a single firm that shattered conventional wisdom and redefined the “rules of the game” for the management of financial system stability. Seven years later and counting, the path to sustainable recovery remains unclear. The cumulative impact of reforms in the financial sector also remains to be seen. In such an increasingly unpredictable world, crisis preparedness has become more important. Much is already being done on various fronts to prepare us better to manage crises. This has mostly focused on policy reforms, the supporting infrastructure and institutional arrangements. Also important however, and much less discussed, are aspects of crisis preparedness that cannot easily be reduced to a pre-defined framework or template for action. These aspects are humility, agility and trust, and this is what I would like to address today. Let me begin with a short story. On 10 May 1996, three teams set out to conquer the world’s tallest peak, Mount Everest.

Playing to form, during the period of the Great Moderation, it was held that central banks and policymakers had successfully moderated destabilising booms and busts in the long term. Financial ‘innovation’, while not eliminating risk completely, had found new ways to effectively distribute risks across diversified agents and borders. Or so it seemed, even though no one fully understood or had enough information to know where the risks ultimately ended up. All of the above lent credence to the deep-seated faith that “this time would be different”, until the extended period of macroeconomic calm was abruptly brought to a jolting halt by the Great Recession. BIS central bankers’ speeches  1  The future terrain of crises will continue to be fraught with uncertainty and a humbling recognition of our inherent limitations. Policymakers therefore need to proceed with a healthy dose of humility. Much like the harsh, volatile weather conditions at the world’s highest peak, the next crisis will be unpredictable, and likely exceed our capacity to control or prevent. In this post-crisis era, we have seen wide ranging policy and institutional reforms in many jurisdictions. They are important, even critical, to correct past errors and respond to future anticipated challenges. But their implementation, and our reliance on them, should acknowledge the constraints that we face. Contemporary understanding of the sources, drivers and transmission channels of systemic risks remains incomplete. Multifaceted policy frameworks and toolkits designed to curb systemic risks and manage crisis are also still evolving.
But even a snail can make considerable progress provided it keeps going. I am told that the world record for a snail is about 16 cms a minute, or roughly one kilometre in 4 days. On that basis a snail could leave here this evening and be in the BIS in Basel in under a year. It necessarily takes time to build an international consensus to move forward on any significant issue, and you need a broad consensus if whatever it is you agree is to have any meaningful effect. And if you look back over ten, or even five, years, rather than just at the outcome of any particular meeting, then the amount of progress really has been very considerable. Overall economic management Let me illustrate this first in relation to the broad consensus that now exists – within the developing, emerging, and transition economies as well as within the industrial world – on the general approach to overall economic management. That consensus can perhaps be summed up essentially as "macroeconomic stability and supply-side flexibility", though that characterisation needs elaboration. On the macro-economic side we have learned – and it has taken some countries longer than others – that you cannot achieve what we are all trying to achieve – sustained growth, high levels of employment and rising living standards – simply by pumping up demand in our economies through expansionary monetary and fiscal policies without proper regard to the underlying supply-side capacity of our economies to meet that demand.

A problem, of course, was the persistent weakness of the Euro in foreign exchange markets, despite strong "fundamentals" in terms of conventional analysis. This was largely the result of an outflow of capital, much of it drawn into the US by the magnetic attraction of prospective corporate earnings growth – and apparently continuing despite the US slowdown. The euro's weakness gave rise to widespread – but in my view unjustified – criticism of the ECB. The task of a central bank operating an independent monetary policy is necessarily a limited task, not least because it effectively has only one instrument – its control over short-term interest rates. Its role – as I said earlier – is essentially, to use that instrument to influence aggregate demand in the economy, with the aim of keeping demand broadly in line with the supply-side capacity of the economy. The measure of its success is consistently low inflation. Against that criterion the ECB has been relatively successful. The Euro area economy has grown, above trend, with core inflation nevertheless remaining within the tolerance range of 0-2%, even though on the headline measure, influenced by rising oil prices and the weaker exchange rate, inflation has for the time being moved above the top of that range. The ECB would have put that internal stability of the Euro area as a whole at risk if it had attempted at the same time to use monetary policy to target the euro's exchange rate.
•  For a few weeks in October the market thought the worst was over but the publication of Q3 results renewed fears about the scale of bank losses which sparked a new squeeze in the money markets and a further sharp fall in bank share prices towards the end of the year. •  Co-ordinated action by central banks helped to ease the short-term funding pressures at the year end (Chart 4); and hopes rose that the acute phase was over as banks declared their losses and, where necessary, managed to attract new capital including from sovereign wealth funds. Where we are now But markets have remained difficult in the New Year. While LIBOR spreads have not returned to the levels of early December, money markets are sticky. Corporate bond and credit default swap rates have continued to climb, leveraged loan prices are dropping quickly, securitisation markets remain largely closed and the CDS and equity prices for banks continue to deteriorate. This continuing strain reflects three main factors. First, it reflects fears about the future path of the economy especially in the US and the scale of new losses that may bring – not just in housing, but also in other forms of lending. Second, however, there is continuing uncertainty about the scale and distribution of losses that have already occurred: •  To illustrate the uncertainty on overall scale, Chart 5 sets out different estimates of sub-prime losses based on different estimation methods.

I am well aware that both functional authority and tools lie beyond the Riksbank’s remit, but as household debt and problems on the housing market affect the way the economy works, this development is also a source of unease for the Riksbank. Housing prices have been rising for a long time To begin with, I would like to say a few words on how housing prices have developed in Sweden. Since 2005, they have more than doubled, but the price rise started before then. The fact that housing prices have risen so rapidly for such a long period of time and are now historically high can be explained by factors such as the imbalance between supply and demand for housing, rising real wages and lower taxes, which have increased households’ disposable incomes. 8 Housing prices fell in the autumn of 2017, but have since then recovered slightly. The fall in prices has also affected housing construction, which, after increasing strongly in recent years, slowed down again in 2018 and 2019. Over time, the development of housing prices has contributed towards increasing household indebtedness, even if the slightly weaker development in recent years has contributed towards lending for household mortgages now increasing more slowly than previously. All in all, this has led to household debt as a proportion of disposable income (the debt-to-income ratio) staying relatively unchanged over the last year, but being expected to continue to increase over the coming years. 9 The debt-toincome ratio for the entire household sector is currently over 186 per cent.
Before the crisis, the policy rate and marginal cost of funds were close together, with the spread of the loan rate above funding cost reflecting the cost of intermediation and the default risk. The onset of the crisis then pushed both market rates up relative to the policy rate as concerns about the solvency of financial intermediaries rose. Focusing on the policy rate alone overstates the degree to which the effective monetary stance loosened in the wake of the collapse of Lehman’s. A corollary of this, together with the severity and the duration of the downturn, is that policy is more likely to be constrained by the zero lower bound than previously thought. Ahead of the crisis, simulations with macroeconomic models suggested that, with an inflation target of 2 per cent, the zero lower bound would bind around 10 per cent of the time. The costs of this were pretty modest, however, because such episodes were likely to be short in duration (see e.g. David Reifschneider and John Williams, 2000). That analysis looks less persuasive now. Indeed a study by Williams (2009) suggests the ideal level of the US Federal Funds rate after the collapse of Lehman’s would have been around minus 4 per cent6 and puts the cost of this constraint – ignoring the scope for other policies – at around $ trillion over 2009–2012. Other policies are, of course, available.

As I previously stated in this House, both of these aspects are essential for adapting labour market conditions to firms’ specific circumstances and, ultimately, for allocating the productive resources available more efficiently, in particular labour, to different economic activities and sectors. On the other, by rationalising the conditions under which permanent contracts may be terminated, the reform shapes an environment which will be more conducive to job creation and job stability, once the current difficult circumstances are behind us. Overall, the labour market changes should help promote the adjustment of working and productivity conditions as means for restoring competitiveness. However, it cannot be ruled out that some of the effects of this reform will not be immediately discernible and that, given the setting of sluggishness and uncertainty in which Spanish economic activity is currently unfolding, there may be some further adjustment in employment levels. This effect would be softened if firms were swiftly to use the various forms of internal flexibility provided by the new labour legislation. In turn, the favourable effects of this reform will be amplified if they are accompanied by measures that enhance the competitive environment in which firms take decisions and that provide for the liberalisation of sectoral aspects that are key to ensuring efficient and flexible economic behaviour. Ambitious measures here would help bring about a virtuous circle which, through job creation and growth, would see more rapid progress in the difficult tasks of the financial deleveraging of the private sector, the normalisation of the banking system and fiscal consolidation.
High electricity prices may lead to a pick-up in CPI inflation through 2006. However, the rate of increase in energy prices is still expected to slow as from spring next year. A fall in energy prices may curb CPI inflation as from 2007. The rise in prices for non-energy goods has been moderate in recent years. Price impulses from imported consumer goods have been particularly weak. Their contribution to inflation has been negative virtually every year since the mid-1990s, partly reflecting increased trade, a shift in imports  2  BIS Review 92/2006  towards low-cost countries and a substantial improvement in distribution efficiency in Norway. Price impulses from imported consumer goods are expected to continue to exert downward pressure on inflation in the period ahead, albeit to a lesser extent than in previous years. The rise in prices for domestically produced goods and services pushed up CPI inflation until this year, but since the beginning of the year this measure of inflation has edged down again. The 12-month rise in prices for goods and services produced in Norway, excluding energy, was 1.1 per cent in August, 0.2 per cent lower than in July. This is the lowest domestic inflation rate witnessed since autumn 2004. The reduction in day-care rates in January this year has pushed down domestic inflation by an estimated 0.3 per cent over the past year. The rise in prices has been lower than expected for both goods and services.

In a situation where the proportion of public spending has reached a very high level (in 1999 it accounted for 49% of GDP in the euro area, compared with only 39% in Japan and 34% in the United States) and where government deficits are limited by the Treaty and can no longer be covered by inflation, the role of private savings in the future financing of retirement attains a crucial dimension. I should like to end this first part by saying that the positive effect of price stability on domestic savings naturally contributes, in the world capital market we live in, to guaranteeing the lasting attractiveness of the euro area for long-term financial investments by non-residents. This also requires that other economic policies contribute to a favourable environment, through structural measures aiming at increasing flexibility in the labour market and efficiency in the markets for goods, services and capital. I have emphasised the effects of the Eurosystem’s monetary policy on the volume of savings and its consolidation. The creation, with the euro, of a vast currency zone also contributes to a more efficient management of savings. BIS Review 6/2000  2  2. The creation of the euro is leading to larger and more integrated financial markets, improving the allocation of financial savings. The creation of the euro has accelerated the development and integration of the capital markets in Europe, which have been helped along in recent years by financial liberalisation and technological innovation.