samchain/econo-pairs-v1 huggingface dataset:
These matched each other almost pound for pound and were both constant through the wars. 20 The political reaction was immediate. It was Sheridan, Irish playwright and Whig MP, who only a month after suspension described the Bank as an “old lady” who’d “fallen into bad company…at the St James’s end of town” and been “seduced” by the “young gentleman” Pitt. Gillray’s famous cartoon memorialised the description and the nickname “Old Lady” stuck. 17  16  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  16  David Ricardo – blamed the subsequent rise in prices squarely on the suspension and the growth of unbacked banknotes and called for an immediate restoration of convertibility. Yet, in some ways, one might be surprised that prices didn’t rise further (inflation averaged 2% between 1792 and 1815). One reason was that, despite the criticism, the Bank did not, by and large, abuse its new-found discretion21. It ran what might be described as an accommodative policy, allowing prices to rise and fall with government spending and the general level of demand, but not an outright expansionary one (Chart 12a). Another is that, while the timing was a matter of fierce debate, the belief that convertibility would be reinstated at some point, and at the original price, was widespread (it was eventually restored in 1821).

High demand for oil combined with limited idle production capacity and uncertain production levels in many oil-producing countries have led to a sharp rise in oil prices and other energy prices. High energy prices are boosting investment in the petroleum and electricity sectors, with considerable impetus to the engineering industry. Increased trade has engendered higher demand for shipping services and favourable freight rates. This has in turn led to a boom in the shipbuilding industry. While oil prices are high, they are still lower than the prices that prevailed after the OPEC II shock in 1979. Norwegian oil production, on the other hand, has increased considerably since then. Price developments have also been favourable for many metals. Prices for fresh farmed salmon have also shown a pronounced rise in recent years. As consumers, we are benefiting from ongoing globalization through falling prices for many imported goods. After a shift towards a higher share of imports from low-cost countries, prices for Norway’s imported consumer goods have fallen virtually every year since the mid-1990s. BIS Review 50/2006  1  The change in clothing prices may serve as an illustration. Prices rose by around 3 per cent annually for a long period, but since 1995 they have been falling by about 6 per cent annually. This kink point coincides with the dismantling of barriers in the textile trade and with a period of rationalisation in retail trade in Norway. The magnitude of the current income shock is best seen in a longer, historical persepective.
The 1988 Accord was in many ways a success, as it was simple and represented the first internationally accepted standard for defining and measuring the adequacy of a bank’s capital. But simplicity became its drawback. Leading institutions quickly moved toward more sophisticated risk measurement and management techniques. The Basel Committee believes that this progress in risk management deserves recognition and encouragement. So, together with leading institutions worldwide, supervisors began exploring ways to incorporate more sensitive measures of risk into the capital framework. The initiative can be attributed above all to the person who delivered this address last year, Bill McDonough. Bill brought intellectual leadership, exacting standards, and unflagging enthusiasm to a project so important that quickly consumed much more than the two years some initially thought it would take to complete. But Bill knew it was worth it. He convinced leaders in the industry, in central banks, and in supervisory agencies that merely revising the rules would be unsatisfactory. Instead, he wanted to advance the state of the art in risk management across the industry. He did not seek a reduction in capital requirements but rather an increase in the stability of the global financial system - a goal that would benefit not just banks, but more broadly businesses and consumers. It was a privilege to work with Bill on a project that represents not just good banking policy, but most importantly good public policy.

Criterion 2, which states that for given inflation developments, the loss Lt will increase with fluctuations in economic activity, is covered by the first and second segments. Criterion 3, which states that monetary policy shall be robust, is covered by the second, third and fourth segments. The adjustments made in March were expressed by slightly increasing the weight given to the output gap, , because financial imbalances can often build up in periods of high capacity utilisation. At the same time, weight was given to avoiding substantial deviations in the interest rate from a normal level. This consideration is expressed in the final segment in the loss function. This can help to mitigate the risk of a buildup of financial imbalances, even in periods when capacity utilisation is not particularly high. Chart: Key policy rate Normally, the key policy rate cannot achieve several objectives simultaneously. In the case of conflicting objectives, the choice of interest rate path will involve a trade-off between different considerations. If monetary policy only took into account the low level of inflation, the key policy rate would be rapidly reduced and kept close to zero for a good while. Inflation might then pick up faster, partly as a result of a weaker krone. In the light of the trade-off against other considerations, however, the Bank does not want to accelerate the pace of inflation. The result would be a pronounced impact on output and employment.
23  All speeches are available online at www.bankofengland.co.uk/speeches  23  Conclusion Before the great wave of globalisation, a series of major institutional reforms increased the transparency and accountability of central banks. The enhanced monetary policy credibility that this brought resulted in a marked drop in inflation and sizable reduction in the sensitivity of inflation to changes in slack. By driving greater competition, increased globalisation has reinforced the effectiveness of these reforms. 57  Monetary policy makers, including the MPC, drew on this credibility during the financial crisis, keeping inflation expectations anchored in the face of deflationary pressures from both home and abroad. Regardless of how external influences on inflation evolve in future, the institutional framework of the Bank of th  England, which is currently celebrating its 20 anniversary of independent monetary policy, leaves the MPC well equipped to deliver price stability. The biggest determinants of the UK’s medium-term prosperity will be the country’s new relationship with the EU and the reforms that it catalyses. Many of the adjustments needed to move to that new equilibrium are real in nature, and are not in the gift of monetary policymakers. But monetary policy can help build the foundations for lasting prosperity by achieving the inflation target in a way that helps smooth real adjustment in the economy and supports jobs in the wake of very large external forces. This is the best contribution the MPC can make to the good of the people of the United Kingdom.

Rather like the MPC, the owners of Quantitativeasing, winner of all three of his races in 2009, have yet to decide how many outings he will have in 2010. They are waiting for race conditions to become clearer. The bold action, taken both at home and abroad, helped to end the collapse in confidence and spending last year. But equally bold action will be needed to prevent a similar crisis from recurring. The origins of the crisis lay in our inability to cope with the consequences of the entry into the world trading system of countries such as China, India, and the former Soviet empire – in a word, globalisation. The benefits in terms of trade were visible; the costs of the implied capital flows were not. The new entrants adopted a strategy of expanding manufactured exports to create employment. High rates of saving depressed domestic demand. So substantial trade  BIS Review 4/2010  1  surpluses were required to keep total demand in line with supply. Equally, the countries importing those manufactured goods ran trade deficits and required low saving rates to maintain balance in their economies. Everyone seemed to gain. High-saving countries created employment, and low-saving countries enjoyed faster consumption growth as cheap imports meant that living standards rose by more than the increase in production – worth around half a percentage point a year in the United Kingdom. These were the benefits of greater trade. But the pattern of poor countries saving a lot and rich countries borrowing was not sustainable.
In the third quarter of 2011, mounting concerns regarding sovereign debt sustainability across the euro area, coupled with the slower-than-expected recovery in U.S. real estate and labor markets intensified the downside risks regarding global economic activity. Accordingly, global economic activity forecasts were revised downwards and expectations for a further delay in the normalization of monetary policy in advanced economies grew stronger. Mounting uncertainties regarding the global economy and the deterioration in risk appetite led to capital outflows from emerging economies. This outlook not only fed into short-term inflationary pressures in emerging economies, but also highlighted concerns over growth and financial stability. 2  BIS central bankers’ speeches  1. Monetary policy developments and monetary conditions  The policies that we, as the Central Bank of the Republic of Turkey (CBRT), have been implementing since end-2010, aimed at gradually rebalancing the economy towards a robust growth composition without hampering the medium-term inflation outlook. Accordingly, we pursued policies to prevent excessive deviation of exchange rates from economic fundamentals in either direction, while also taking the necessary measures with the support of other institutions to ensure reasonable levels in loan growth rates (Chart 2 and 3). As a consequence of measures taken by the Central Bank and the Banking Regulation and Supervision Agency (BRSA), loan rates continued to rise in the third quarter (Charts 4 and 5). A marked slowdown is observed in credit growth owing to the lagged effects of  BIS central bankers’ speeches  3  measures taken and a deceleration in economic activity.

This has led to an increase in short term inflation forecasts by 0.6 points (Table 1). The assumptions about fiscal policy used for medium-term forecasts were based on the outlook presented in the Medium Term Program (MTP). Therefore, the baseline scenario envisages that the ratio of primary expenditures to GDP would gradually be reduced from 2012, the public debt-to-GDP ratio would continue to fall, and the risk premium would remain broadly unchanged. Moreover, tax adjustments and administered prices are assumed to be consistent with inflation targets and automatic pricing mechanisms. Distinguished Members of the Press, As I have already stated, since the publication of the July Inflation Report, emerging economies have faced rapid capital outflows due to the deteriorating risk appetite. In this respect, excessive depreciation in the Turkish lira has become more evident. This development, coupled with the increase in prices of administered goods, has raised the risk of deterioration in pricing behavior. We responded to these developments strongly by increasing our overnight lending rate markedly in our October meeting (Chart 6). We expect monetary tightening to contain inflationary pressures in the period ahead. However, inflation is forecasted to increase significantly in the short term with the contribution from low base effects in unprocessed food prices.
The present report therefore does not discuss those options in as much detail. In Chapter 3, however, is an in-depth discussion of Icelanders’ experience with independent monetary policy and a floating exchange rate. The strategy formulated in coming months must take into account this material if all options are to be considered. It is also necessary to examine which prudential rules would be applied in order to reduce the risks related to domestic financial institutions’ foreign assets and liabilities and the risks related to unrestricted capital flows. These rules are discussed in a newly published Central Bank report entitled Prudential rules following capital controls. That report discusses the limitations on liquidity and foreign exchange risk and the restrictions on domestic financial firms’ international operations that must be in place if movement of capital  BIS central bankers’ speeches  1  is unrestricted in other respects, particularly if Iceland retains its own currency. The discussion below also takes account of these two publications. 1 1.2  Iceland’s experience with its own currency  Iceland has had its own currency since 1885, maintaining parity with the Danish krone until June 1922, when it was devalued by 23%, followed by a temporary float (see Chapter 12). It can be said that the króna came into existence as an independent currency at that time. The experience with it has been mixed, and efforts to preserve the value of the currency have been largely unsuccessful.

Do some policy options make it easier to lift the controls than others? Which comes first, lifting the controls or deciding the currency issue? At what exchange rate should so-called offshore krónur be converted if Iceland establishes a currency board or adopts another currency unilaterally? Is it possible that capital account liberalisation will wait until – or even beyond – accession to the EU? These questions are not easy to answer, and exhaustive answers are beyond the scope of this report, but a few points can be made nonetheless. The most desirable option must be to lift the controls before deciding the currency issue. First of all, Iceland needs to lift them – for its own sake and due to international obligations – and the process has already begun. Second, it appears clear that either the controls must be lifted before Iceland adopts another currency or establishes a currency board, or onshore and offshore krónur must be converted at the same exchange rate. Any other course could be considered default, with severe repercussions for Iceland’s future access to foreign credit markets. Third, the EU regulatory framework assumes that capital controls will be lifted prior to membership. 10  BIS central bankers’ speeches  If liberalisation proves so difficult that Iceland cannot achieve it without outside assistance – which hopefully will not be the case – the most straightforward solution would be to refer the problem to the EEA, as free movement of capital is provided for in the EEA Agreement.
those caused by fluctuations in economic activity. This applies both to the development of productivity and the labour supply. At the same time, distinguishing between processes that are lasting and those of a temporary nature is one of the most important aspects with regard to the discussion of a country's capacity for long-term growth. Let us then study the determining factors one by one. Signs of a better growth in productivity My third slide shows the development of labour productivity, measured as GDP per hour worked, together with an estimated trend (Figure 3). We see that productivity growth varies strongly, but also that it shows a tendency to increase over time, particularly during the 1990s. This is a marked difference compared with developments in the 1970s, when the trend was instead a downward one. During the 1980s the actual productivity growth levelled out at a low level and was often around 1 per cent or below - with the exception of a few individual years. During the 1990s, on the other hand, there was a rapid increase and productivity growth stabilised at a level above 2 per cent. We don't know exactly what was the driving force behind this development. But allow me nevertheless to indicate some factors that may have played an important role. The economic crisis at the beginning of the 1990s probably played a not so insignificant role in raising productivity growth during the first half of the 1990s.

I have comments in three areas: the political economy genesis of the UK’s system; how it bears on the communication of monetary policy or what Blinder called the ‘cacophony problem’; and a plea for Blinder to widen his enquiries beyond interest-rate setting. Political economy and one-member/one-vote Modern Britain has no tradition of non-elected officials taking major executive decisions affecting the whole of the nation. This is in marked contrast to say the US where, at Federal level, the President is the only member of the executive to have reached office via the ballot box. Nor in the living memory of the UK people have we had any crises of democracy, so we have not developed national institutions, such as Germany’s Bundesbank, whose place in society was not mediated via our democratic processes. In consequence, when debates about the possibility of central bank independence got underway in earnest from the mid1980s, a widely perceived stumbling block was that central bank officials could not account personally for their decisions on the Floor of the House (of Commons). There was a democratic deficit. Resolution came via the political cost of the failure of other approaches to monetary policy, in which Ministers running for re-election decided rates; the happenstance of the development during the 1980s and 1990s of influential committees of Parliament, before which central  1  See http://econ2008.bankofcanada-conference.ca/wp-content/blinder.pdf  BIS Review 96/2008  1  bankers could (and frequently do) appear; and specific design features of the monetary regime itself.
Newly listed companies were a prime lending target of both local banks and the many foreign banks that had established offices in Hong Kong. Having done so, local management needed to justify the existence of these offices and were keen to lend to companies whose newly listed status seemed to provide an image of financial respectability. During this period Hong Kong experienced the shift away from relationship banking that has been seen in other markets around the world. It was not unusual to find even medium sized companies with dozens of bankers. Companies often ended up with more cash than they needed and in a number of cases this was channeled away from core businesses into ill-advised diversification or into speculative ventures in the stock and property markets. Typically these property ventures were in Mainland China and came to grief when austerity measures began to be enforced there from 1993 onwards. Problems with medium-sized corporates in Hong Kong had therefore surfaced even before the onset of the Asian crisis. But the crisis accentuated the problems and reduced the chances that the companies concerned could turn themselves around. In the light of this, coupled with the fact that the prolonged nature of the crisis is putting the finances of even well-managed companies under strain, it should come as no surprise that the main bad debt problems of the Hong Kong banks have surfaced in their corporate lending.

Jean-Pierre Danthine: Market developments, Swiss monetary policy and foreign exchange reserve management Introductory remarks by Mr Jean-Pierre Danthine, Member of the Governing Board of the Swiss National Bank, at the half-yearly media news conference, Berne, 16 June 2011. *  *  *  In my remarks, I would like to examine three topics. First, I will comment on developments in the international financial markets. Then I will briefly address the situation in the Swiss franc money market and the implementation of monetary policy. Finally, I will talk about the management of the foreign exchange reserves. Developments in the international financial markets Developments in the international bond, share and foreign exchange markets are mixed and, as before, characterised by relatively high volatility. The relatively favourable global economic developments and the fact that the balance sheets and the liquidity situation of corporations outside the financial industry are in relatively good – in some cases very good – shape are having a positive effect. By contrast, the balance sheets of many governments reflect the consequences of crisis measures and increasing structural debt problems. Thus, in recent quarters, the financial markets have presented a mixed picture. Signs of an improvement in the prevailing mood have been followed by setbacks attributable to the serious impending challenges. At the beginning of the financial crisis, these were mainly concentrated in corporations’ balance sheets. Since then, the market has increasingly shifted its focus towards the risks associated with government debt.
This will surely require a smoothly functioning credit channel, of such importance in European economies. The European Central Bank’s strategy review In this third part of my address I will take a longer-term perspective and reflect on the changes that are occurring in the conduct of monetary policy in the advanced economies, which have prompted the ECB, like other central banks, to review its strategy. In the years leading up to the 2007-2012 crisis, which in our case coincided with the initial years of the ECB’s existence, a broad consensus took hold in the advanced economies regarding the role and functioning of central banks. Specifically, according to this view, the monetary authorities should act as independent entities, not directly controlled by governments, with a clear mandate to promote price stability and, in some jurisdictions, such as the United States, full employment. 11  The price stability mandate is normally expressed as a numerical inflation target, frequently 2% or, as in the case of the ECB, a rate below, but close to, 2%. To achieve its price stability target, the central bank adjusts the general level of interest rates on the funding raised – via bank loans or in the debt markets – by agents in the real economy (businesses, households and governments). Although the central bank controls the nominal interest rate, it is the “real” interest rate – that is, the nominal rate less expected inflation – that is relevant for households’ and businesses’ spending decisions.

For example, in the June TLTRO III operation, participating banks received a total of € trillion, a record high for the Eurosystem’s refinancing operations. The evidence available suggests that these operations have fulfilled  1  See Aguilar et al. (2020). 3  the purpose for which they were conceived, since banks have indeed used the funding received to lend to the real economy.2 These measures, along with those adopted complementarily both by national governments (in particular through the public loan-guarantee schemes) and by the prudential authorities, aimed at enabling financial institutions to use some of the capital buffers built up in recent years, have been pivotal in facilitating the flow of financing to the economy during the crisis.3 Near and medium-term challenges for the euro area economy and monetary policy Let me now share some thoughts on the current outlook for the euro area and the role that monetary policy could play in the near and medium term. One year on from the first reported cases of COVID-19 in Europe, the coronavirus pandemic continues to exact a tragic human cost and pose enormous challenges for the economy. Since reaching its weakest level last spring, economic activity in the euro area has been on a recovery path. However, this recovery is subject to a high level of uncertainty and has been partial, uneven and fragile.