samchain/econo-pairs-v1 huggingface dataset:
I would like to commence my speech by reviewing the global economic outlook, given its ongoing influence on our policies. Volatilities in financial markets continue amid uncertainties about global monetary policies and concerns over global growth. Interest rate volatility experienced some decline right after the anticipated first Fed rate hike in December 2015; however, volatilities began increasing as of early 2016 mainly due to worries about the Chinese economy and geopolitical developments (Chart 1). The global economic slowdown since 2014 continued into the second half of 2015, especially across emerging market economies. Commodity prices remained on the decrease as well. Developing economies were largely affected by the global fluctuations in this period. Portfolio inflows stayed weak and exchange rate volatilities remained high (Chart 2). The effects of global market volatility were felt in the Turkish economy as well. However, reduced domestic uncertainty and the CBRT’s tight monetary stance and other liquidity –and financial-stability– oriented policies limited these effects. Chart 1. Chart 2. (MOVE Index) (Basis Points)  (4-Week Moving Average, Billion USD)  VIX and US Interest Rate Volatility Index  Source: Bloomberg. BIS central bankers’ speeches  Portfolio Flows to Emerging Economies and Currency Volatility Index (JPMVXYEM) (Percent)  Source: EPFR, Bloomberg  1  1. Monetary policy and financial conditions  As you all know, we released a road map on 18 August 2015 regarding the policies to be implemented before and after the normalization of global monetary policies.

We revised the year-end inflation forecasts for 2016 and 2017 upwards by 1 point and 0.5 points, respectively, compared to the October Inflation Report forecasts. As I have just mentioned, driven mostly by oil prices, USD-denominated import prices have registered a considerable decline since October 2015. When analyzed jointly with exchange rate developments, the downward revision in the assumption for oil and import prices is expected to pull down the end-2016 inflation forecast by 0.6 points compared to the October Report forecast. On the other hand, the portion of January 2015 public price adjustments which exceeds the inflation target, is likely to push the end-2016 inflation forecast up by 0.4 points. Another influential factor on forecasts in this period proved to be the rise in net minimum wages. Given the announced support by the government and the effects of this minimum wage rise on demand and costs to the employer, we revised the end-2016 inflation forecast upwards by 1 point. Considering the effect of the minimum-wage-rise, we attribute 0.3 points of this to the food inflation, which we raised from 8 to 9 percent for 2016. Lastly, we estimate that a higher-than-projected actual inflation rate at end-2015 compared to the October Inflation Report forecast coupled with the rise in core inflation indicators will push the end2016 inflation by 0.2 points.
Florin Georgescu: Challenging the status quo in management and economics Opening remarks by Mr Florin Georgescu, First Deputy Governor of the National Bank of Romania, at the Strategica International Academic Conference "Challenging the Status Quo in Management and Economics", Bucharest, 11 October 2018. * * * Distinguished guests, Ladies and Gentlemen, I am glad to welcome you at the National Bank of Romania, as we host today the 6th edition of this prestigious international conference, together with the National University of Political Studies and Public Administration, and the Romanian Academic Society of Management. The debates today will be held under a generous and timely topic: “Challenging the Status Quo in Management and Economics”. We couldn’t have a better moment to discuss challenges to the status quo than today, as we witness a whole range of economic, social and political forces pushing for change all over the world. If this change is in the sense of progress or not, that remains to be seen. I trust that your presentations and insights will shed more light on these trends. I confess that I had a look at the titles of the presentations in both days of the conference, and the word that appears most frequently in these titles is knowledge. And I realize that not less than 50 years ago, Peter Drucker, the philosopher and management guru, launched the concept of knowledge economy. Since then, economists and management specialists of all doctrines, put knowledge at the forefront of their views of the world.

Ravi Menon: Asia's digital transformation Remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the GIC Institutional Investors Roundtable, Singapore, 31 October 2018. * * * Ladies and gentlemen, good morning. I thank GIC for the invitation and am pleased to meet all of you. Why FinTech? About three-and-a-half years ago, the Monetary Authority of Singapore (MAS) made a momentous decision - to promote an innovative and dynamic financial sector by working with the industry to harness the power of technology. We saw that technology was transforming the way people live their lives, the way companies deliver products and services, and the way cities work and connect. Meanwhile, the financial industry globally was facing the headwinds of slower economic growth, tighter regulation, and keen competition from non-financial technology players. Technology presented an opportunity to inject new dynamism and new growth in financial services. It was an opportunity to increase efficiency in an industry that had some of the most archaic practices around – just think of interbank payments and settlements. It was an opportunity to manage risks better: financial institutions were pouring ever more resources into compliance and risk management – and still getting into trouble. Most of all, it was an opportunity to improve people’s lives to bring financial services to the unbanked and uninsured in Asia; to help a growing middle class plan its finances more holistically and efficiently; to help enterprises raise money, make payments, and tap new markets.
Normally these things carry on uninterrupted during recessions: output of public services is in general less volatile than private-sector output (Chart 3). But on this occasion, sweeping all before it, the pandemic curtailed many of these more standard activities, even after the full lockdown was ended in the summer. In the third quarter of this year, for example, real healthcare output – as estimated by the ONS – was still more than 20% lower than in 2019Q3. Taken together, measured declines in measured health and education output accounted for a quarter of the near-9% drop in aggregate GDP during the course of that year. Note that there’s been no decline in nominal spending on public services, or the collective incomes of people who work in them. Employment in public services has continued to rise and so have average wages. It’s just that, at least as measured in the national accounts, productivity in that sector has declined and the implicit price of those services – the so-called “deflator” – has risen. The result is an additional wedge, relative to any normal downturn, between (measured) real GDP and household incomes. Chart 3: Drop in GDP partly reflects a steep fall  Chart 4: Households protected from fall in  in measured output of public services. This has  national income  no impact on household incomes  Sources: ONS and Bank calculations. Sources: ONS and Bank calculations.

I can only wish for a holistic approach someday; but we certainly cannot wait until we know everything on all nature-related risks before we act on climate. Page 6 sur 13 B. What we don’t know yet Drawing a parallel with the progress made on climate, we face two significant challenges ahead for biodiversity issues: metrics and scenarios (“IPCC type”) and macroeconomics and finance (“NGFS type”). 1. Biodiversity metrics and scenarios Biodiversity – and even more so nature – is complex and multidimensional: for example, biodiversity measurement cannot be reduced to a single metric like the concentration of greenhouse gas in the atmosphere and the associated rise in temperature for climate change. We still lack understanding on, and especially awareness of, this phenomenon. Thankfully, the IPBES, which we could describe as the IPCC equivalent for biodiversity, is advancing knowledge and raising awareness about biodiversity. It provides landmark assessments of biodiversity loss and ecosystem services, including work on scenarios that we could explore further as we aim for improved risk assessment by the financial sector, just like we did with IPCC scenarios.
Borrowers needed to sell assets to meet the calls; some highly leveraged firms were unable to meet their obligations and their counterparties responded by liquidating the collateral they held. This put downward pressure on asset prices and increased price volatility. Dealers raised margins further to compensate for heightened volatility and reduced liquidity. This, in turn, put more pressure on other leveraged investors. A self-reinforcing downward spiral of higher haircuts forced sales, lower prices, higher volatility and still lower prices. This dynamic poses a number of risks to the functioning of the financial system. It reduces the effectiveness of monetary policy, as the widening in spreads and risk premia worked to offset part of the reduction in the fed funds rate. Contagion spreads, transmitting waves of distress to other markets, from subprime to prime mortgages and even to agency mortgagebacked securities, to commercial mortgage-backed securities and to corporate bonds and loans. In the current situation, effects were felt in the municipal and student loan markets. The most important risk is systemic: if this dynamic continues unabated, the result would be a greater probability of widespread insolvencies, severe and protracted damage to the financial system and, ultimately, to the economy as a whole. This is not theoretical risk, and it is not something that the market can solve on its own. It carries the risk of significant damage to economic activity.

There are those who have suggested that by intervening to forestall, and ultimately prevent, a bankruptcy filing by Bear Stearns, the Federal Reserve risks magnifying the chance of future financial crises, by insulating market participants from the consequences of excessive risk taking. It is important to recognize that had we not acted we would in effect have penalized those individuals, companies and financial institutions that had behaved more prudently, but would have suffered significant damage from the effects of default by a major institution. The negative consequences to Bear’s owners and employees from recent events have been very real – so real that no owner or executive or director of a financial firm would want to be in Bear Stearns’ position. While we clearly knew that our actions, both in the context of the JPMorgan Chase transaction and in the establishment of the Primary Dealer Credit Facility would affect incentives for financial market participants, adding to the risk of “moral hazard,” we believe that the lesson of the actual outcome for equity holders will serve to check and even diminish incentives for undue risk-taking. I believe that the actions taken by the Federal Reserve on a number of fronts in recent months have reduced some of the risk to the economy that is inherent in this adjustment in financial markets.
Benoît Cœuré: Investing in Europe – towards a new convergence process Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the Panel “The big rethink for a stronger Europe”, The Economist Roundtable with the Government of Greece, Athens, 9 July 2014. *  *  *  I would like to thank Lucas Guttenberg, Jean-Francois Jamet and Marion Salines for their contributions. I remain solely responsible for the opinions contained herein. Summary Economic and Monetary Union (EMU) is a political triathlon. It requires resilience and resolve to perform well at all times in the three disciplines of a currency union: fiscal policy, economic policy and financial policy. EMU is a team effort. Only if every participant performs well can the euro area team be strong. This is the most important lesson from the crisis. The European economy is undergoing a moderate recovery, but complacency would be unwarranted. To really overcome the crisis, there are some remaining major challenges still to be faced. The euro area is not in a financial crisis anymore, but it must still contend with high debt, low growth and unacceptably high unemployment. These are reason enough to remain alert and continue acting. In recent years, economic policy-making rightfully focused on re-establishing the most important necessary condition for growth: stability. For companies to invest, for firms to hire, for households to consume, a stable economic environment is tantamount.

In all these areas, we have made substantial progress in recent years. During the crisis, the ECB has taken all appropriate measures to ensure that price stability provided an anchor in an uncertain and volatile economic environment. Consistent with this principle, our recent decisions have aimed at addressing the risk of too long a period of low inflation and at ensuring that inflation expectations remain firmly anchored. As for financial stability, the crisis has shown us how the functioning of an economy becomes impaired without a well-functioning, robust financial system. This requires striking the right balance between insuring against crises, curbing risk-taking behaviour and mitigating moral hazard with a strong incentive framework. The establishment of the European Stability Mechanism and the launch of banking union, with its Single Supervisory Mechanism and Single Resolution Mechanism, have been milestones in this respect. The stabilisation and ongoing repair of the Greek banking system is another example. As a third dimension, the crisis has shown us the kind of existential threat to monetary union that can be brought about by the build-up of excessive imbalances, i.e. by the lack of fiscal and macroeconomic stability. The lesson drawn from this existential threat was that there was a need to reform economic governance. We should be very careful now not to roll back this achievement, in particular in the fiscal domain. New growth will not be generated by new debt. On the contrary: sound fiscal policies are essential for growing out of debt.
Macroeconomic risk management The main risk stemming from the world economy is the deceleration of the US economy. We still do not know, and there are unusually big uncertainties, about the depth and duration of the US slowdown. However, this slowdown should not be a surprise, and is an expected consequence of a correction in US current account imbalances. The adjustment to those imbalances, sooner or later had to result in economic slowdown and a correction of exchange rates (see, e.g., De Gregorio, 2007, and Obstfeld and Rogoff, 2007). Indeed, as I argued some time ago, a current account reversal should occur sooner or later and a depreciation of the dollar should help. The Central Bank of Chile included among the risks described in the Inflation Report, the correction of global imbalances since January 2004. The adjustment was triggered and seriously aggravated by the subprime crisis. Usually central banks define a baseline scenario to orient monetary policy. We make public this scenario in three Monetary Policy Reports that are presented to the Senate. Deviations from the baseline scenario result in adjustments of the path of monetary policy. Risk management becomes central when deviations are not small, and the probability of occurrence of large and disruptive deviations becomes significant. In that case, strong actions may be needed, which may result in large deviations from the policies envisioned in the base projection. In this context, we can interpret current policy actions in the US as exactly doing risk management.

Finally, drawing upon lessons from the recent experience I will talk about risk management in monetary policy, and what it implies in such an uncertain economic environment as we face today. Commodity prices and domestic adjustment Recent increases in the prices of commodities have been dramatic: many reached record highs in a very short period of time. This increase has been particularly broad across commodities and unexpectedly persistent. Commodity price indices (index 1967=100) 500  1000  400  800  300  600  200  400  100  200  0  00 Total Food  01  02  03  04  05  06  07  0 08 Metals  Source: Commodity Research Bureau (CRB). BIS Review 39/2008  1  Copper price (US cents/Lb.) 2006  2007  305  323  2008 (f)  2009 (f)  Jan. MPR 295  Mar. --  Jan. MPR 250  Mar. --  Deutsche Bank (7 mar) Scotiabank (20 mar) JPMorgan Chase (14 mar) Barclays (13 mar) Merril Lynch(19 mar) Cochilco (9 jan) IB's Mean  332 295 315 354 308 310 321  325 325 310 343 320 310 325  274 -228 295 291 270 272  306 250 246 326 291 270 284  Futures (1)  316  368  314  357  Actual Mean (2)  313  350  Central Bank of Chile  (1) Futures consider average of the last 10 working days prior to 20 March 2008.
MONETARY POLICY’S CURRENT CONSTRUCTION A long target horizon permits a gradual monetary adjustment When assessing monetary policy’s construction, we look ahead to assess the path of inflation in the coming twelve to twenty-four months. A relatively long target horizon does have the drawback that earlier assessments may have to be revised. One reason for choosing a long horizon - with the attendant difficulties in making reliable forecasts - is the time lag before effects of monetary policy materialise. By acting in good time, it is possible to adjust interest BIS Review 35/1998  ˝  -7-  policy more gradually and smoothly. In this way, any consequences that altered inflation prospects may have for the monetary stance will usually be gradual and small. With a shorter target horizon, the inflation assessments might be more accurate but the monetary policy responses would have to be more pronounced in order to fulfil the target. There would also be wider fluctuations in output and employment. Real factors like production and employment are accordingly taken into account when making this choice. In view of the difficulties in assessing and forecasting economic tendencies and monetary policy effects exactly, the Riksbank has opted for one to two years as its normal target horizon. Lower CPI figures The forecasting problem can be illustrated with assessments from the National Institute of Economic Research; I use them here simply as an example, not to single out the National Institute from other forecasters.

Moreover, falling interest rates have lowered house mortgage interest costs. Then there is the Government’s proposed reduction of tobacco tax. However, the price shocks from the supply side are mainly transitory and tend to lower the CPI temporarily but not necessarily inflation’s underlying trend. It follows that these effects probably should not have much influence on monetary policy. This holds even though the CPI change figures are likely to move outside the lower tolerance limit for a time during 1998, mainly on account of the lower tobacco tax. How strong is the upward trend? As I mentioned earlier, the primary concern for monetary policy is inflation’s underlying rate and trend. In that the monetary conditions have been expansionary for some time and both economic activity and resource utilisation are rising, Sweden should be moving BIS Review 35/1998  ˝  -8-  towards a situation with some increase in underlying inflation. This phase may not be imminent or involve anything dramatic but rising resource utilisation will ultimately lead to it. But there are some factors which may defer it. They have to do with the momentum in the Swedish economy and the impact that may come from the crisis in Asia. Another central factor is the exchange rate’s underlying trend. In addition there is the increasingly discussed uncertainty about the sustainability of international share prices. To sum up, most of the evidence suggests that economic growth in Sweden will become stronger in the coming two years.
So asset purchases aimed at flattening the yield curve are probably best kept in the locker marked For Emergency Use Only. 4. The objectives of monetary policy: the inflation target  Following Japan’s “lost decade”, and given impetus by the deflation scare after the bursting of the dot-com bubble, a number of studies appeared evaluating the likelihood of other advanced economies reaching the ZLB. Simulations of macroeconomic models where monetary policy follows some version of a Taylor rule suggested that an inflation target of 2 per cent would entail relatively frequent episodes of the ZLB acting as a binding constraint on monetary policy (Reifschneider and Williams 2000; Coenen, Orphanides and Wieland 2004). For example, in simulations with the Federal Reserve Board’s macroeconometric model, Reifschneider and Williams found that the ZLB was reached about 10 per cent of the time. Nonetheless, these studies suggested that with an inflation target as low as 2 per cent, the adverse effects of the ZLB on macroeconomic volatility would be relatively modest. That was because the magnitude and duration of the constraint on policy actions were pretty mild. Only with inflation targets of 1 per cent or less did the ZLB result in noticeably higher variability of output and inflation. So an inflation target of 2 per cent or so looked to provide enough room for monetary policy under most circumstances.

But keeping interest rates low in the future will boost future inflation, thus raising expected inflation and boosting activity today. The problem is that the central bank lacks the incentive to stick to this strategy once economic conditions have improved and the ZLB episode is past, i.e. the policy is time inconsistent. So the central bank needs to have some way of making credible a commitment to what will subsequently seem like future irresponsibility; words alone will not suffice, unless reneging on those words carries a significant reputational cost. It is important to distinguish this policy strategy from simply communicating that policy rates are likely to stay low because output and inflation are expected to stay low. That may help to align expectations with the views of the policy maker and be valuable in aiding transparency, but does not represent the pursuit of a policy strategy under commitment. As noted above, the earlier deflation scare, following the collapse of the dot-com bubble, had already persuaded the FOMC not only to keep the target Federal Funds rate at an especially low level, but also first to indicate that it would remain low for an “extended period” and then to indicate that the monetary stimulus would be withdrawn at only a “measured” pace. This has something of the character of attempting to reap the benefits of being able to commit in the future by sticking to past promises.