samchain/econo-pairs-v1 huggingface dataset:
The bank then forwards this money to a subsidiary bank in another country. The subsidiary in turn lends the money to an end customer. If we now assume that the borrower is unable to repay the loan, for example because he has borrowed in a currency other than the one he has his income in, then the subsidiary bank may find it difficult to repay its loan from the parent bank. The parent bank may then in turn find it difficult to repay its loan. This means that the liquidity risk in foreign currency ends up in Sweden although the lending that created the risk took place outside Sweden’s borders. The best solution for limiting the liquidity risk is that the central bank or the supervisory authority in the country where the risk develops takes action. However, if the authority in this country does not deal with the situation we must ask ourselves whether the situation poses a serious risk to the Swedish banks and, if so, whether we should act, for example by introducing a reserve requirement in foreign currency for the Swedish bank. Action on the part of the Riksbank is a second best solution, but this alternative is probably still better than doing nothing at all. We will therefore investigate the measures we can take to better limit the risks that are built up outside Sweden in the future. In this connection, the possibility to set reserve requirements is one of the alternatives we are investigating.

In order to give the bank an incentive to quickly phase-out this support in the event that the State did acquire shares, the agreement stipulated that the preference shares would be converted to common stock with extra voting rights if they were not redeemed within three years. The internationalisation of the financial system – a challenge Cross-border banks generate a particularly negative external effect. If a cross-border bank experiences problems in one country, the costs incurred are distributed between the countries in which the bank operates. From the authorities’ point of view, the problem is that it is difficult today to prevent a systemic risk that arises and develops in another country. The principle that is applied in the EU today, the so-called home country principle, states that it is the authority in the country where the company concerned has its registered office that is responsible for supervision. This means that if a bank has a branch in another country the authority in the bank’s home country is responsible for supervision, but if a bank has a subsidiary bank in another country then the authority in the country concerned is responsible. The crisis has demonstrated that the home country principle in its current form is inadequate for preventing cross-border risks. An example inspired by the situation in the Baltic countries may clarify the problem that cross-border banks pose to national authorities. Assume that we have a Swedish bank that borrows in foreign currency on the international market.
It seems to me, however, that in this respect the ECB has relatively little reason to change fundamentally what has served our monetary policy well, both in normal and crisis times. The speed and path of the phasing-out of non-standard measures will depend on developments in financial markets and the economy. The current situation of ample liquidity in euro area money markets guarantees a continued positive impact on financing conditions. As regards the monetary policy stance itself, it will be designed as always to deliver price stability, in the medium and long term, in line with our definition. Crisis prevention Governments and central banks have been focused on financial reform since October 2008. The new financial architecture will build on the assumption that a re-pricing of risk around its fundamental value is needed. Price discovery within the market in pursuit of a fundamental equilibrium in risk pricing – one that can be sustained by long-term trends – is likely to take time and experience some further oscillations. A question that remains is: Where will this process end? As aggregate – undiversifiable – risk diminishes, this will be reflected in lower premia that financial markets pay for risk-taking. We know that the commitment by central banks to keep inflation low and stable, communicate clearly about their price stability objectives, and then act on those objectives, has all contributed to a long-term reduction in macroeconomic risk. The fraction of the reduction in risk compensation related to having a stable macroeconomic framework is a steady acquisition of modern societies.

Jean-Pierre Roth: Swiss outlook and global developments Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Icon Roadshow Euro 2008, Frankfurt am Main, 17 March 2008. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The Swiss economy looks back on a number of successful years during which it was a very active participant in the growth of the world economy. The export sector rapidly expanded its presence in the new markets, thereby making an important contribution to this development. What was remarkable was that the increased foreign activities were not detrimental to Switzerland as a production location. On the contrary, the Swiss location benefited overall. Reforms aimed at strengthening and opening up Switzerland as a business location have also made a substantial contribution to economic prosperity in recent years. The turbulence on the financial markets that erupted in mid-2007 is unlikely to leave the Swiss economy unscathed. The export sector, including the banks, will be affected by the slowdown in the international economy. An additional factor is the substantial rise in the value of the Swiss franc over the past few months against the euro and the US dollar. However, we are already in a position to learn quite a bit from the financial market turmoil.
We determine the price – the interest rate – of banks’ payments among themselves, we supply the central payment system. And if something goes wrong with RIX, Sweden’s financial lifeblood, it is the Riksbank’s task to manage the situation Monetary policy and financial stability are two sides of the same coin – financial stability affects how monetary policy is spread to the rest of the economy and price stability contributes to a stable financial system. Both monetary policy and various tasks to promote financial stability are part of a central bank’s core operations and I believe that it is in reality not possible to differentiate between these tasks. All this is interconnected since, as I said earlier, the central bank is where the money is. It is also at the central bank where the amount of money can be increased or reduced. Allow me in conclusion to illustrate the importance of preventing financial crises. Over the past 150 years, economic activity, measured in terms of GDP, has not fallen so often but when it has, it has often been in conjunction with a financial crisis. Six out of nine cases of substantial downturns in GDP have occurred in connection with a financial crisis. Of the rest, two coincided with the two world wars. The fact that we were spared financial crises between 1945 and 1990 depends to a high degree on the strict regulation that prevailed on the financial markets, although this regulation led to other types of problem.

Thus far, 6 Kijang Emas scholars have completed their studies and have returned to serve the nation, while another 7 of them are expected to complete their studies in the next six months. For the 2014 Kijang Emas scholarship, we received a total of 331 applications, representing 82% of the 405 straight A+ students in the country. From this, the Bank had shortlisted 26 students based on their SPM results and also their level of involvement in co-curricular and sports activities. The students then underwent a rigorous evaluation process under the Bank’s “Kijang Academy” assessing their technical and leadership competencies, as well as their values. We are pleased to award 3 outstanding students the Kijang Emas Scholarship this year. Having just completed their SPM, Justin and Nurizati will be enrolled into the pre-university programme, whilst Alicia will be pursuing her undergraduate studies. Alicia has successfully obtained a conditional offer to study for the BA degree in Law at the prestigious University of Cambridge. Following their pre-university programme, Justin aspires to be a doctor and Nurizati is keen to read dietetics. I am confident that all of you will do your best and will contribute to the future of our nation. In addition to the Kijang Emas scholarship award, every year the Bank also awards scholarships to about 40 high achieving SPM students for them to pursue their undergraduate studies abroad with the objective of them being part of the Bank’s future talent pool.
Miguel Fernández Ordóñez: Recent developments in the Spanish economy Testimony by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, before the Senate Budgetary Committee, Madrid, 23 November 2009. *  *  *  Ladies and gentlemen, I appear before this Committee as part of the parliamentary discussion of the State Budget for 2010, at a time when the deep international financial and economic crisis is giving way to a recovery, albeit one that is expected to be slow and not free from uncertainty. Following the successive downward revisions to growth projections during the summer of 2007, the outlook has begun to improve in recent months. Indeed, many countries are posting positive growth rates for the third quarter of 2009. Yet we must acknowledge that this improvement is largely the outcome of the extraordinary large-scale measures adopted globally to boost demand and support the financial system. We still do not know whether the incipient world recovery is sufficiently self-sustaining for the exceptional stimuli to begin to be withdrawn without the risk of economic activity falling again. In the case of the Spanish economy, the situation is more complex. While there has been a similar or even lesser decline in output than in other developed countries. However, the effects in terms of employment and public finances have been sharper. Hence the role economic policies must play to consolidate the recovery is essential. We are thus at a crossroads where it is vital to make the right diagnosis and select the right economic policy tools.

On the way to price stability, the inflation target is determined jointly with the government. As you know, these targets have been determined and announced as follows: 5 percent for 2006, 4 percent for 2007, 4 percent for 2008 Our primary objective is to attain these targets. The Central Bank will support the growth and employment policies of the Government, unless it conflicts with this objective. Likewise, with the Law No: 1211, the Central Bank has been entrusted with the power of establishing the “exchange rate regime” jointly with the government. The floating exchange rate regime, which was introduced within this framework, will continue to be implemented, preserving its basic implementation framework. Turkey has grasped a golden opportunity to get rid of the damage created by inflation with which it has had to live more than 30 years. The period of “Declining inflation” is about to end. Our next objective will be to achieve and preserve the price stability. This will be the most significant contribution of the Central Bank in mobilizing the growth potential of our country. Thank you. BIS Review 33/2006  1
Growth remains high in China. Growth among trading partners is expected to slow this year. In the years ahead, we expect that growth will be relatively stable. Uncertainties that may contribute to weaker developments include high oil prices and the possibility of weaker housing markets in a number of countries. On the other hand, solid business sector profitability in many countries may result in stronger investment growth than assumed. The outlook for growth in different regions indicates that the imbalances in the global economy, with a large deficit in the US and large surpluses in a number of other countries, will persist. Low growth in the euro area and Japan is weakening the prospect of a gradual correction. This increases the risk associated with these imbalances. Increased imbalances in addition to high oil prices and volatile oil markets are contributing to the uncertainty surrounding developments in the global economy. There are particularly large imbalances both in the US balance of trade and current account. This is partly due to the federal budget deficit. Moreover, US households have a high level of consumption and a low level of saving. Strong demand in the US has sustained growth in the world economy. The deficit in the US is offset by surpluses in Europe and Asia. Persistent deficits have pushed up US foreign debt to a high level. The US population is growing faster than that of other OECD countries.

To some degree, this likely reflects the anchoring exerted by stable inflation expectations. But some of the price pressures can be attributed to other, more temporary, factors:   Higher oil and gasoline prices and their pass-through into the costs of other goods and services.   Upward pressure on imputed homeowners rents due to increased demand for rental housing.   Higher import prices for goods, such as apparel. This reflects many factors including commodity prices pressures and higher wage inflation in countries such as China. Some of these upward pressures on inflation appear to be fading. Oil and gasoline prices have fallen in recent months. Apparel price inflation should gradually ease, given the sharp drop seen in cotton prices. Owners’ equivalent rent should also eventually stabilize as multi-family construction picks up and programs that shift real estate owned by banks to investors so they can be rented gear up. More generally, there are several reasons to think that inflation will remain moderate and close to our objective. First, and most obviously, the economy continues to operate with significant slack. Second, measures of underlying inflation show little upward pressure. In fact, one – the Federal Reserve Bank of New York’s Underlying Inflation Gauge – is turning down. This measure uses a very wide set of variables to forecast the underlying inflation trend (Figure 6). Third, it is hard to be very concerned about inflation risks when the growth rate of nominal labor compensation is so low and stable.
This is consistent with economic activity fluctuating around its full capacity level, going from periods of capacity under-utilization to periods of over-utilization. So the maximum level the MPR will ultimately reach and when this will happen in the current cycle is something the CBC Board will be analyzing as events unfold. This year to date, a 200 basis point increase has already accumulated in the MPR and we believe further increases will be needed. The magnitude and timing of these increases will respond to incoming data, risks and their implications for inflationary prospects, taking into account the lags that are inherent to monetary policy. Thus, no scenario can be ruled out. It is likely that in the coming meetings the magnitude of the correction will be reduced and there may even be pauses. Likewise, although today it seems less likely, it can also happen that the recent pace is maintained if inflationary risks so recommend. In any case, there seems to be consensus in market expectations that smaller adjustments will be required going forward. Actually, most forecasts place the MPR around 6% at the end of this year (figure 17). Conclusions The last several years have been very complex. Policy makers have faced probably the greatest challenges in decades. Swings in economic activity, inflation and expectations, among many other variables, have been marked in unprecedented ways. Chile’s macroeconomic policy framework has given proof of its flexibility and effectiveness, succeeding in mitigating and overcoming the effects of the world crisis. Today we face new, significant challenges.

However, due to the forces that underlie it, it is evident that this  BIS central bankers’ speeches  3  trend can be mitigated but not reversed by just a unilateral measure. In January, the CBC launched a substantial process of reserve hoarding, by announcing the purchase of 12 billion dollars, the equivalent of around 5 points of GDP, the largest since the mid-1990s (figure 7). This intervention is sterilized, that is, the pesos issued to buy the dollars are withdrawn through debt issuance. Not doing this would mean that the increase in liquidity would be inconsistent with monetary policy, which would then be oriented to a forex objective and would divert away from its inflation target. I don’t need to explain why this would be terribly damaging to our economy. The purpose of the intervention is twofold. On the one hand, it allows having more reserves which, despite their costs, are a good hedge against sharp movements in capital flows. Although most economies did not significantly deplete their reserves during the crisis, their sole existence prevents destabilizing capital movements from occurring. On the other hand, the forex intervention mitigates exchange rate adjustments. As we have said before, without the intervention the peso would have appreciated further. Still, it is worth pointing out that the appreciation of the Chilean peso is not so different from that of the currencies of a large group of emerging or commodity-exporting economies, whether they have intervened their exchange rates or not.
It then takes  Bank of England  Page 3  time for changes in those spending choices to affect prices in the shops. This means that the Monetary Policy Committee needs to look ahead and focus on the outlook for inflation, as much as on its current level, when deciding the appropriate level of Bank Rate today. When we look at the outlook for inflation today, we have to recognise that the full effect of the higher level of Bank Rate is still to work its way through financial markets and the real economy. There is another complication. What actually happens in the economy – to economic activity and inflation – will be determined by aggregate demand and supply. Economic life plays out at the intersection between them, in an economic equilibrium. While it is sometimes useful to focus on one of the two, taking the other as given, we always have to bear in mind that market economies work through the forces of both demand and supply. For monetary policy, the natural starting point is the demand side. Monetary policy exerts a powerful influence on the components of aggregate demand – on consumption and investment – but it can do little to affect the supply side – the production technologies and know-how used to make goods and services available for use in the economy. But ultimately, it is the balance between demand and supply that determines inflationary pressures in the economy.

Ladies and gentlemen, I hope that some of my more general comments on the deficiencies of the current regulatory “push” have not ruined your motivation for this meeting. I wish you every success in your work. BIS central bankers’ speeches  3
i  “The Global Economy and the Global Financial System: In an Era of Revival and Metamorphosis”, Speech at the Institute of International Finance (IIF) Spring Membership Meeting, Haruhiko Kuroda, Governor of the Bank of Japan, 9 May 2017. ii European Commission, Standard Eurobarometer 87, Spring 2017. iii Musgrave (R.) and Musgrave (P.), Public Finance in Theory and Practice, McGraw Hill, 1989. iv Kazuo Ishiguro, The Remains of the Day, 1989.

But an appreciably weaker development of consumption, which was a prominent component of one of the alternative scenarios, seems to have become somewhat less probable. Exchange rate The Riksbank does not target the exchange rate. The monetary policy target is price stability. But the exchange rate does feature as one important factor in the Riksbank’s assessment of inflation in the coming two years. The exchange rate conditions demand in the economy, particularly in the export sector, and also affects inflation directly in the form of import prices. The latter, more immediate effect is, however, transitory and of secondary interest provided it does not influence inflation expectations and thereby price and wage setting behaviour. An assessment of future inflation therefore requires a forecast or judgement of the exchange rate in the coming two years, yet this is a variable that is notoriously difficult to predict and has fluctuated widely for Sweden since 1992. A natural starting point for this is the current exchange rate together with an estimate of what a reasonable long-term level might be in relation to competitiveness, financial saving, etc. The past six months provides an example of how the argument might go. Since October 1996 the krona’s effective exchange rate has weakened by about 7 per cent. Most of this change stems from the appreciation of sterling and the US dollar against currencies in continental Europe (Diagram 6).