samchain/econo-pairs-v1 huggingface dataset:
Among the factors driving it are, first, the progressive normalisation of financial conditions brought about by the Eurosystem’s expansionary monetary policy and the reduction in the degree of financial fragmentation in the area. Favourable labour market developments are also playing a notable part in kick-starting domestic demand, by contributing to upholding household disposable income and to improving confidence. Among the domestic spending components, mention should be made of household consumption (underpinned by improved disposable income and by recourse to saving), the sustained increase in business investment (driven by brighter final demand prospects) and the culmination of the sharp adjustment of residential investment, where there are signs of stabilisation. For the first time in the last six years, close-to-zero or slightly positive rates can be observed in the aggregate real estate price indices. Lending figures remain in a contractionary phase, in parallel with private-sector deleveraging. But, on the data available, this process is proving compatible with a shift in credit flows towards companies with better output and export prospects and in a sounder financial position. Foreign trade flows have undergone quite sharp changes in 2014, brought on by the loss of momentum in our export markets (most particularly in specific emerging economies and in the EU) and the acceleration in imports as the recovery took root. As a result, the net contribution of the external sector to GDP has diminished and the pace of adjustment of the external imbalance has slowed.

While some of these developments are conceivably temporary, the high cyclical sensitivity of our imports alerts to the need to broaden our export base and to continue increasing the presence of Spanish companies in markets with greater growth potential. It is also an indicator of the problems our competitiveness poses not only for exports but also, domestically, with regard to imports. On a par with other euro area countries, Spain’s inflation rate is trending extremely moderately. In the summer months the year-on-year rate of change in the CPI turned negative (-0.2% in September) owing to the influence of temporary factors that affected the prices of unprocessed food and energy products, following marked increases in 2013. That said, core inflation has posted practically zero growth since the start of the year, suggesting there are other, more persistent factors making for a greater sensitivity of costs and prices to the need for the economy to adjust. At the end of the year the inflation rate is expected to return to positive – though very low – values. Fiscal policy Such is the macro-financial setting in which the State and Social Security Budget for 2015 has been drafted. The scenario is more favourable than in previous years, which should help us to continue the fiscal consolidation process. The improved cyclical position and the significant reduction in the risk premium and interest rates on public debt have a major direct positive effect on public finances, in contrast to the adverse pressure wielded by these variables in recent years.
Parallel with the move towards vertical integration, the internationalisation of the capital markets and harmonisation of laws and rules within the EU has led to increased pressure to consolidate operations across national borders. In many cases there have previously been legal barriers to international consolidation. Now that the barriers are gradually being removed, competitive pressure on the existing national infrastructure companies is increasing. At the same time, there are stronger incentives for cooperation and even mergers between stock markets in different countries and also between clearing and settlement organisations. In other words, there are also tendencies towards horizontal integration. The question of what is most beneficial for the functioning of the economy as a whole - vertical integration or horizontal integration - is not an easy one. In both cases there are benefits from economies of scale. There are also concentration tendencies, which can in turn lead to deficiencies in competition in the markets for trading and clearing securities. I believe that it is extremely important that we authorities - and I mean here financial supervisory authorities, competition authorities, ministries of finance and central banks - closely monitor developments in this field. The public authorities' supervision and oversight of the financial infrastructure is also affected by how the infrastructure companies are owned. When these are run as profit-making limited companies with external owners, there is an evident risk of monopolistic pricing. Here the Swedish Competition Authority has a difficult but important task.

Mr Erçel discusses the monetary policy of the European Central Bank Opening speech by the Governor of the Central Bank of the Republic of Turkey, Mr Gazi Erçel, at the Economic Research Foundation, Istanbul. 18/12/98 European economic and monetary union (EMU) will come to life at the beginning of next year. The European Central Bank (ECB) will commence operations, and the euro will become an official reserve currency. Eleven of the 15 countries in the European Monetary System will link their domestic currencies to the euro by January 1, 1999. They will stop issuing their own currencies three years later. There will no longer be independent domestic monetary and exchange rate policies. Instead, monetary and exchange rate policies will reflect the needs of the euro region as a whole, as determined by the European Central Bank. This stage has obviously not been reached easily or quickly. This new institutional arrangement was the product of years of effort. First the philosophical groundwork had to be established, before the technical work could even begin. The final stages were only reached gradually. The European Union was thoroughly thought out. Under German initiative, with French support and British technical assistance, and contributions from all the others, the institutions were established which will be responsible for monetary and exchange rate policy decisions under the Maastricht Treaty and the Stability and Growth Pact. Countries have made heroic efforts to satisfy the Maastricht convergence criteria.
The extent to which the projects that Spain ultimately submits for European funding under the NGEU satisfy these conditions is a question that we will have to analyse in great detail in the coming quarters and that will directly affect their ultimate impact on aggregate activity. 5  For a review of the empirical evidence on the scale of the fiscal multipliers see, for example, V. Ramey (2019), “Ten Years after the Financial Crisis: What Have We Learned from the Renaissance in Fiscal Research?”, Journal of Economic Perspectives, Vol. 33(2), pp. 89-114. 16  In short, the macroeconomic forecast underpinning the Draft Budget is subject to downside risks, arising from the possibility that the effects of the pandemic on economic activity may be more negative than projected (as has been the case in recent weeks worldwide), and from the difficulty of absorbing the funds available under the NGEU programme in quality projects in the necessary time frame. The last point I wish to make in this respect is that, to the extent that there are appreciable risks that the pick-up in activity in 2021 may be weaker than forecast, there is also a risk that the budget deficit, the unemployment rate and inflation may deviate from their forecasts in 2021. In the case of the deficit, in response to the ongoing health crisis the European Commission has allowed Member States to temporarily diverge from the paths determined by the European budget rules for the budget deficit, public expenditure and government debt in normal conditions.

Let me outline how this balanced policy approach might work in practice. The Fed could sharpen its forward guidance by pledging to keep policy rates near zero until one of two events occurs. First, this policy would account for the liquidity trap risk by communicating that we intend to keep the federal funds rate at exceptionally low levels as long as the unemployment rate is above a 7 percent threshold. Reductions in the unemployment rate below this level would represent meaningful progress toward the natural rate of unemployment and might be a reason to lessen policy accommodation. Second, this policy would account for the risk of higher inflation – that is, we would be committed to pulling back on accommodation if inflation rises above a particular threshold. 1  4  Evans (2011). BIS central bankers’ speeches  I would argue that this policy’s inflation-safeguard threshold needs to be above our current 2 percent inflation objective. My preferred threshold is a forecast of 3 percent over the medium term. Now, calling for tolerance of inflation up to 3 percent may seem shocking coming from a conservative central banker. However, the most recent research shows that improved economic performance during a liquidity trap requires the central bank, if necessary, to allow inflation to run higher than its target over the medium term. Such policies can generate the above-trend growth necessary to reduce unemployment and return overall economic activity to its productive potential.
By April of last year, it had fallen nearly 10 percentage points, which translates to 25 million fewer people working—an astounding drop. Fortunately, EPOP has risen considerably since then, but it’s still more than three percentage points below pre-pandemic levels. That difference translates to about eight and a half million fewer people working, close to the statistic I cited on the number of lost jobs that is based on a survey of employers. These are aggregate numbers and only tell part of the story. It’s also important to understand that the downturn has disproportionately affected certain sectors of the economy and segments of society. Service-sector jobs, especially those in hospitality and leisure, fell dramatically with last spring’s shutdown of the economy. And a large share of the job losses fell on Black and Hispanic households. Now I’ll turn to inflation, the other half of our dual mandate. With recent rises in energy prices and the reversals of last spring’s large price declines, the inflation rate has increased from the very low levels seen during the earlier stages of the pandemic. As the economy further reopens, these dynamics will continue to play out, and I expect inflation to run somewhat above our 2 percent longer-run goal for the remainder of this year. It’s important not to overreact to this volatility in prices resulting from the unique circumstances of the pandemic and instead stay focused on the underlying trends in inflation.

More broadly industrial production, exports, and retail sales figures appear to have improved, although they remain sharply negative on an annual basis. In addition the broad-based recovery in commodity prices also suggests that the global economy is on a path to recovery. However, despite this more positive outlook for the global economy, it is not clear that Africa has seen its worst days. For many countries in Sub-Saharan Africa, the ramifications of the  1  Source: IMF World Economic Outlook (WEO) update July, 2009. Figures for exports reflect annualized percent change of 3 month moving average over previous 3-month moving average. BIS Review 128/2009  1  crisis are still working themselves through the system. Initially, financial markets rather than the financial system bore the initial brunt of the crisis in Africa, as economies experienced a sharp reversal of financial flows, and exchange rates depreciated sharply, and capital markets registered sharp declines in market capitalization and trading volumes. Thankfully there are clear signs that financial markets have now stabilized, with exchange rates appreciating and inflows of portfolio flows and FDI showing tentative signs of recovery. In Zambia, for example, between September 2008 and April 2009, the country experienced a negative portfolio inflow. Non-resident holdings of Treasury bills declined from around 16% of outstanding bills in September 2008 to zero by end March 2009. During this period the exchange rate of the Kwacha against the US dollar depreciated by around 60%.
With several factors both internal and external having materialized over the last several weeks, one can already see that 2014 will be yet another challenging year for the Thai economy. However, with cooperation from all sides, I hope we shall be able to weather the upcoming storms with a common vision and readiness, and that a clear blue sky is beckoning in the distance. Thank you. 2  BIS central bankers’ speeches

Better monitoring the general public's inflation expectations is not an easy task since inflation expectations of firms or consumers are not directly observable. For the moment, reliable data on consumers or firms’ inflation expectations are quite scarce in the euro area whereas in other jurisdictions expectation surveys have been developed quite extensively – famous and recent examples include the New York Fed Survey, the Tankan survey in Japan or the different surveys developed by the Bank of England. In this respect, the new Bundesbank household survey contributes to fill the gap and it is also an excellent example of the recent efforts made by central banks to collect new and better information on expectations of economic agents. II. Communication of central banks should also target households  For the moment, our most reliable information on the general public’s inflation expectations in the euro area comes from the consumer survey conducted by the European Commission. When comparing the different sources of inflation expectations with consumer survey expectations, we can see that they deliver a very different message on the level of inflation expectations, compared to financial markets. European households perceive an inflation rate close to 10% whereas their inflation expectations are closer to 5%. One implication of such a result is that we need to improve a lot our communication to a more general audience. Another conclusion we can draw is that, if households are not well aware of the level of inflation, they perceive quite well the overall evolution of inflation over time (Figure 2).
Under the said assumption, output gap becomes clearly negative as of the third quarter of 2006 and the contribution of demand conditions to falling inflation increases. According to the projections produced under such conditions, inflation drops rapidly compared to the previous scenario and is realized between a 1.9 4.5 percent by the third quarter of 2007. Thus, the possibility of inflation falling evidently under the path consistent with the target increases (Graph 26). Risk elements Distinguished Participants, It should be emphasized once more that the forecasts that I have presented were produced under a main scenario, which was developed on the basis of the above-mentioned assumptions and shortterm outlook in the light of current data. In the event of a possible threat to the medium-term inflation outlook by risk elements, the Central Bank will review both its forecasts and the stance of monetary policy towards the future. Distinguished Guests, In the final part of my speech, I would like to touch on the risks in question. Uncertainties about the course of oil prices are the leading risk element with respect to the achievement of the inflation target in the coming period. In the forecasts produced in the previous Inflation Report, oil prices were assumed unchanged. However, these prices persisted to rise throughout this period and reached high levels in recent times. The unfavorable impact of oil prices on  BIS Review 67/2006  19  annual inflation became one of the factors that slowed down the decline in inflation expectations in the first quarter of 2006.

For instance, the impacts of differentiation in productivity ratios in the tradable and non-tradable sectors compared to the Euro zone on relative prices and real exchange rate behavior in the process of convergence with the European Union are analyzed in one of the boxes. Moreover, in addition to the box in which international gold prices and the impacts of these on the CPI are analyzed, the Report also contains a box in which the targets and realizations relating to inflation and Net International Reserves are evaluated within the context of IMF conditionality. Distinguished Guests, After this general overview, I would like to summarize the evaluations and the inflation forecasts of the Central Bank in the latest Report, which will be published on our web site today. Inflation developments In the first quarter of 2006, the fall in inflation displayed a slowdown tendency in line with our predictions in the previous Inflation Report and the annual rate of increase in consumer prices was realized as 8.16 percent as of the end of March 2006. This slowdown stems from the base effect created by the price increases that have realized at historically very low levels due to the reduction in the Value Added Tax (VAT) rates of food, health and education items made in early 2005 (Graph 1). Graph 1.
Thus, in terms of labour cost competitiveness, Malta has kept pace with the euro area average. However, to maintain competitiveness a further focus on the wage setting process may be appropriate. In particular the basic principle must be to emphasise that productivity improvements are at the basis of sustained wage increases, and that these are best negotiated at firm level, where improvements in productivity can be best gauged. Consequently, any cost of living adjustments should form part and parcel of the collective agreement and not be superimposed on collective agreements by legislation as happens today. Indeed, already a number of collective agreements incorporate the COLA increase, and I suggest that this should be the norm. Another important message that has emerged from the sovereign debt crisis is the need for fiscal prudence, which provides the space for countercyclical fiscal policy during a downturn. In the euro area, fiscal policy is the major macroeconomic management tool at the national level. Thus, in periods when economic activity is relatively strong, policy needs to be sufficiently prudent to build the necessary fiscal buffers that would be utilized during periods of weaker growth. BIS central bankers’ speeches  5  In the aftermath of one-off expenditure during 2008, the deficit ratio in Malta declined in 2009 despite the recession of that year and narrowed slightly further in 2010. The debt ratio generally declined until 2008, but then picked up in 2009, partly in response to the contraction in the economy.

The foreign capital penetration in the countries I refer to is still low and mainly reflects the inability of our financial systems to facilitate the absorbing of foreign investments in our economies. Finally, considering the above mentioned trends of financial intermediation the following region specific sources of risk need caution scrutiny, namely credit risk, indirect foreign exchange risk, and vulnerabilities associated with foreign branches entry. -  Credit risk  The acceleration of credit growth rates in some countries of the region is warning when associated with an increase in the NPL ratio. Unfortunately there are chances that the buildup in credit risk may be underestimated The deterioration in quality of disbursed credit is not immediately apparent as the increase in the share of new loans can temporarily depress the reported nonperforming loans (NPLs) and credit quality problems typically emerge with a delay. In the aftermath of deterioration in loan portfolio an increased risk of a credit crunch  BIS Review 119/2007  7  emerges; when banks recognize the extent of the build up they may sharply cut or reverse lending growth. Specifically the domination of foreign banks in the region may possess additional risks associated with a possible credit crunch. As long as subsidiaries of foreign banks earn high profits, they have easy access to new capital from their headquarters given that they account for a small share of the loan book of their international banking group.
Therefore, the combination of strong fundamentals and our pragmatic policy response left emerging market economies such as Brazil better prepared for the eventual exit from unconventional monetary easing. But the question is better prepared for what? Let me now turn to the second topic of my remarks which is the… Impact of normalization on Brazil and other EMEs Let me begin by noting that the process of normalization of monetary conditions underway in global financial markets is, overall, a positive development for emerging market economies. Despite market volatility, it reflects the gradually improving outlook for the world’s largest economy. As global growth and global trade recover, emerging market economies will benefit. We knew that, despite the best efforts to communicate an exit strategy from unconventional monetary policies, the beginning of any discussion about “tapering”, i.e. the possibility of a reduction of asset purchases such as what occurred in May, would lead to a re-pricing of risk and a global sell-off of emerging market assets. It indeed happened as we anticipated. Emerging market economies have generally seen depreciating exchange rates, increasing  1  See IMF spill-over reports and in particular, IMF (2013b) and Ostry and alii. (2012). 2  For example, Rey (2013) and the IMF papers listed in the references. 2  BIS central bankers’ speeches  sovereign bond yields and credit default swap spreads, and in many cases falling stock market prices. In Brazil’s case, the sell-off has manifested itself mostly as a search for protection, more than actual outflows.

Switzerland has a long tradition of organising its core financial market infrastructure as a joint enterprise, according to the ‘user-owned, user-governed’ principle. In the case of the repo market, the current solution has proven its worth. Nonetheless, due to changes in the stock market and regulatory environment, the SNB has undertaken a reassessment of the situation. In the light of this, the SNB has decided to conduct its monetary policy operations via a new trading platform, provided by SIX Group Ltd, as of May 2014. In this way, the repo market will be based on an integrated solution, in which the trading platform, securities settlement system and payment system are covered by a single source. Moreover, further developments will also be possible, for example the expansion of trading to incorporate further products. Since the new trading platform will resemble the existing Swiss franc repo system (Eurex Repo), access for market participants will entail only minimal adjustments. We are confident that an integrated solution is the best means of ensuring a robust repo market infrastructure. BIS central bankers’ speeches  3  Charts  4  BIS central bankers’ speeches