samchain/econo-pairs-v1 huggingface dataset:
This will not only facilitate the task of monetary policy, but will contribute to the continued reduction of unemployment in the euro area. It is the best recipe for sustainable robust growth. In addition, long-term growth perspectives for the euro area will be strengthened if Member States intensify fiscal consolidation. All in all, looking ahead, GDP for the euro area is expected to grow approximately close to trend potential growth. In a context of moderate but still substantial economic growth and of inflationary pressures, which are expected to weaken over the medium run, the Governing Council of the ECB decided on its Thursday 10 May’s meeting to adjust the key ECB rates by 25 basis points. More precisely, as our President Wim Duisenberg explained on behalf of the Governing Council, the decision was grounded on the following key monetary, financial and economical developments: On the monetary side, which constitutes as you may know the first pillar of the ECB monetary policy strategy, M3 growth no longer poses a risk to price stability. Such a statement results from the following considerations:  BIS Review 49/2001  1  -  M3 growth has been on a gradual downward trend since the beginning of last year, reflecting the tightening of the ECB monetary policy, which started in November 1999.

To some degree, this is perhaps what has happened to value-at-risk based techniques, which have been massively adopted by the financial industry. Because they use more or less similar parameters and have the same features – for example, they took inadequate account of market liquidity at the time of the 1998 crisis –, such tools tend to give converging signals to those that use them. They thus encourage the herd behaviour that I discussed previously. -  Of course, the fact that some market participants are more sophisticated than the average is a guarantee that standardisation will remain limited, since they will develop techniques that are little used by others. -  However, supervisors are helping to spread the idea that financial institutions should round out their current range of risk management tools to include extensive use of stress testing. This technique offers a better reflection of the varying situations of institutions and of the diverse perceptions that institutions have of exceptional events. The application of stress testing techniques and their results are thus inherently more diversified than those resulting from methods based on the value-at-risk approach. These are only examples of options to help improve the functioning of markets. Indisputable progress has already been made: the generalisation of concepts of appropriate transparency since the Asian crisis and the comprehensive use of stress testing are two significant examples. However, I would like to stress one point.
BIS central bankers’ speeches  5  Chart 2: Housing market activity 20  Thousands per month  Thousands per month  160  18  140  16  120  14  Housing transactions(a) (right-hand scale)  12  100  10  80  8  60  6  40  Housing starts(b) (left-hand scale)  4 2  20  0  0 2006  2007  2008  2009  2010  2011  2012  2013  Sources: Department for Communities and Local Government, HM Revenue and Customs, ONS and Bank calculations. (a) (b)  Number of residential property transactions in the United Kingdom with a value of £ or above. Number of permanent dwellings in the United Kingdom started by private enterprises up to 2011 Q1 (seasonally adjusted by Bank staff). Data for 2011 Q2 to 2013 Q4 have been grown in line with seasonally adjusted data for permanent dwelling starts by private enterprises in England. Chart 3: Business investment Percentage changes on a year earlier 30 ONS business investment  20 10 0 -10 -20 -30  Range of investment intentions surveys(a)  -40 2005  2007  2009  2011  2013  Sources: Bank of England, BCC, CBI, CBI/PwC, ONS and Bank calculations. (a) Includes survey measures of investment intentions from the Bank’s Agents, BCC and CBI, scaled to match the mean and variance of four-quarter business investment growth since 1999. Measures weight together sectoral surveys using shares in real business investment.

As that uncertainty dissipated and households began to feel more confident about the outlook, so the saving rate fell back (Chart 1). There is probably some scope for it to fall a little further, but continued firm consumption growth really depends on us seeing a pickup in household income growth, of which I will say more shortly. There is more scope for housing investment to continue driving growth. Housing starts and the level of housing transactions are still respectively around 25% and 10% below their averages during the pre-crisis decade (Chart 2). But the supply of new housing is not as elastic as one would like, because of planning restrictions and the like. Consequently there is a risk that increased demand for housing ends up mainly in higher house prices rather than more houses. In turn, if associated with excessive expansion in mortgage lending, that may create future financial stability risks. For that reason, the Bank’s Financial Policy Committee, which is charged with maintaining the overall stability of the financial system, is keeping a beady eye on the housing market. BIS central bankers’ speeches  1  For the recovery to be both sustained and sustainable, however, we really want to see three things happen. First, business investment needs to pick up the baton in supporting demand growth. Second, we need to see a revival in productivity growth, which in turn would sustain both higher real wages and higher profits, thus supporting continued household and business spending growth.
Let me just say that I remain convinced that the currency board has remained a fundamental source of stability for Hong Kong in the 239 months of its existence since it came into being in October 1983. What else can be done to ensure monetary and financial stability not just in Hong Kong, but also in this rather fragmented and diverse region, in terms of geography, size of markets, culture and stages of economic development? To my mind, much greater regional co-operation in the monetary and financial arenas should be on the policy agenda. Such co-operation can take many forms, ranging from increasing and more open interactions between central banks in the Asian region for the purpose of enhancing the stability, integrity, diversity and efficiency of financial intermediation in the region, and admittedly very much further down the road, to serious discussions of whether monetary integration and the establishment of an Asian Monetary Union should be a goal. BIS Review 42/2003  1  But to do that, we need to build stronger personal links between economists working on monetary and financial issues at universities, in central banks and in international institutions such as the IMF and the BIS. By debating and discussing and, yes, disagreeing, we can over time generate much more clarity about what path we need to follow in enhancing monetary and financial stability in Asia and elsewhere. Some may wonder why I include academic economists in that list. I do so for three important reasons.

We also continue to monitor and improve our system of banking supervision, in recognition of the fact that one reason we did ride out the Asian financial crisis was undoubtedly that banks were strong. Some observers have suggested throwing some sand in the wheels of international finance. By limiting capital flows, the argument goes, it becomes easier for central banks to maintain monetary and financial stability in turbulent times and to cope with the potency of international finance that comes with globalisation. Indeed, control in one form or another has become quite popular in this region. But, for an international financial centre such as Hong Kong, whose main source of income stems from an ever-growing economic and financial integration with the rest of the world economy, such a policy is, to us, clearly undesirable. Moreover, the Basic Law of Hong Kong also bars any foreign exchange control policies and any restrictions on the free flow of capital within, into and out of Hong Kong. Others suggest that the Hong Kong economy would be better able to withstand economic shocks and disturbances if the currency board was adjusted or gave way to something else: different observers have different pet ideas and there seems to be no agreement on what that alternative would be. I have spoken a great many times on this topic and I do not propose to do so again today.
In fact, the lessons from the housing boom and bust may have been even more traumatic. There are many versions of this story, and most have a word like “scarring” in them. Perhaps some potential homeowners, having seen the wild gyrations in home prices during the 2000s, have soured on homeownership altogether. This would result in a reduced homeownership rate due to a loss of confidence in housing as a good financial investment. Data indicate that homeownership has declined, especially among younger workers. However, households in our Survey of Consumer Expectations continue to report that they believe that housing is a sound financial investment. So, the explanation for our declining homeownership rate doesn’t appear to be that homeownership has lost its luster as an investment. And, reduced homeownership doesn’t explain why people who still own homes have become less likely to tap their available equity to finance consumption. Other households may have been scarred by the experience of seeing their neighbors who borrowed heavily during the boom lose their homes and have their credit ratings badly damaged. Observing these consequences may dissuade current homeowners from making themselves vulnerable to foreclosure by borrowing against rising home values. This would lead to an increase in a household’s precautionary demand for savings in the form of higher housing equity. This increased equity cushion would guard against the risk that the household could find itself in a negative equity position in the event of a future decline in home prices.

This rapid swing—a reduction of more than $ billion on an annual basis—in the resources available for household consumption was associated with a sharp and prolonged slump in personal consumption expenditures during the Great Recession. Typically, consumption growth slows but remains positive during a recession. In contrast, consumption actually contracted by over $ billion during the Great Recession. Between 2009 and 2012, households continued paying down debt of all kinds—with the exception of student loans, which behave differently from most other forms of consumer borrowing. Ultimately, housing prices stabilized and began to increase again in 2012. 2/5  BIS central bankers' speeches  However, since that turning point in home prices over five years ago, something surprising has happened. Nationally, home values have risen over 40 percent since 2012, and are now very close to their pre-crisis levels on average—just 4 percent below their all-time peak reached in early 2006. Most other kinds of debt—first auto, and now, credit card debt—have joined student debt by starting to rise again, resuming their traditional role in financing consumption. The surprising development is that housing debt has stayed virtually flat. The previous behavior of using housing debt to finance other kinds of consumption seems to have completely disappeared. Instead, people are apparently leaving the wealth generated by rising home prices “locked up” in their homes. The implications of this development have been quite significant for the retail sector.
…to our own interest rate path These problems disappeared or at least were much alleviated when we chose to present our own forecast for the interest rate path. One important reason why the new interest rate assumption was introduced was so that it would become easier to understand the motives behind our decisions. This creates better opportunities to evaluate monetary policy. It thereby provides good conditions for accountability and legitimacy for an independent central bank like the Riksbank. To refer back to what I said earlier this evening – I believe that the new system will enable us to better meet the requirements for openness and clarity made of us in our interaction with the general public and the financial markets. As I mentioned earlier, it is probably difficult a central bank to be much clearer than this with regard to what they consider to be well-balanced monetary policy. We gain an even better tool for influencing expectations among households, companies and agents in the financial markets. This is a precondition for monetary policy to function well. One aspect that may not have been given so much attention is that it has become simpler for households planning their private economy to form an impression of which direction the interest rate will take. Previously, many people were probably forced to rely entirely on financial advisers to understand how the Riksbank envisaged interest rate developments a couple of years ahead. Now this information is available in our Monetary Policy Report.

The interplay between the Riksbank and the market is of central significance for monetary policy. It is a question of mutual dependence. For example, the Riksbank is to supply an efficient payment system – a financial infrastructure. We also oversee the stability of the system. Moreover, we are responsible for providing Swedish banknotes and coins. However, at the same time we are dependent on the financial markets to implement monetary policy measures. The game rules for our interaction with the financial markets have changed quite a lot over the past 25 years. The most dramatic changes took place in connection with the deregulation of the credit and foreign exchange markets that begin in the 1980s. The deregulation has contributed to more efficient pricing which better reflects demand and supply conditions. The efficiency of the financial markets has considerable importance for the impact of monetary policy via the transmission mechanism. The impact of our policy also depends on how well we succeed in communicating our intentions to the market. The more open and clear we are, the better chance we have of influencing interest rate setting in the way we want, not just in the short term, but also over a part of the so-called yield curve. This makes some demands of our actions. BIS Review 40/2007  1  The other aspect – that we are a public authority with responsibility towards the general public and their elected representatives – also makes a number of demands of us.
The challenge for EM policy makers in a globalised financial system is not that different from the one faced by a fisherman who lives by the sea, and that is, how to benefit from the riches offered by the sea while avoiding the dangers. So let me now turn to how I believe we can do that. Reaping the benefits and mitigating the risks The question I would like to pose and attempt to answer is: “What can EMEs do to strengthen their buffers and increase their resilience against the risks arising from integration with the global financial system?” I am going to frame my answers within three broad categories: one, in terms of reducing external vulnerabilities, two, in terms of improving policy frameworks; and three, in terms of strengthening domestic economic fundamentals. First, in terms of external vulnerabilities, I think storms in the global sea of liquidity are a source of concern, but for policy makers in EMEs, the consequential concern is how seaworthy is our own boat? Can it withstand a stormy sea? In my observation, capital flows often tend to accentuate domestic vulnerabilities and that can create the greatest risk of financial instability. For those who choose to borrow from the international financial markets, it is good to remember that even in a world of abundance, restraint is a virtue. Like the sirens of Greek mythology, the international banks may go around EMEs telling them how easy it is to get funding.

Despite the series of shocks from the foreign and domestic environment which the Macedonian economy has faced in recent years, we maintain the average inflation rate at the level of 1.5%, which is very close to the average inflation of the Euro area countries and confirms the adequacy of the monetary setup in this period. The nominal exchange rate of the denar against the euro has been maintained at a stable level, contributing to stable expectations and maintaining the confidence of economic agents. We have maintained the foreign reserves at a comfortable level by guarantying currency stability and dealing with shocks. The banking system is set on a completely market basis, with the presence of renowned international banking groups – stable, liquid and capitalized. Our permanent investment in observing the international standards in the banking regulation and the modern supervisory standards has made a great contribution. 1/2  BIS central bankers' speeches  No central banking institution can be set on firm grounds without dedicated and responsible people who have a vision, follow the direction of the modern central banks and at the same time work very hard to follow that path. In recent years, we have been continuously investing in the human capital. The support that we receive from international financial institutions, along with our dedication enables us to have a high quality core of professionals.
Other notable factors are the structure of the population, new housing construction and access to loans. Regardless of what it is that generates an increase in house prices, this probably stimulates household consumption via the wealth effect, just as a house price fall has the opposite effect. An increase in the value of houses and tenant-owned apartments can be realised in part by using the property as loan collateral. If this happens when interest rates are low, households will be more interested in mortgaging the increased value of their property in order to buy durable goods such as cars and household appliances, for example. House prices therefore have significance for demand and thereby for monetary policy. The lending potential and interest rates of banks and mortgage institutions are also important. Access to loans increases the chances of realising an increase in value but also makes it possible to finance a house purchase. In addition to the inflation target, the Riksbank has the task of promoting finan-cial stability, which is a prerequisite for a proper implementation of monetary policy. A functional payment system, capital supply and arrangements for spreading risks are a precondition for the efficient working of the economy in general. An important instrument for the Riksbank’s work on stability is the twice-yearly publication of a report that evaluates the risks in the financial system. Lending to households and the development of house prices have been recurrent themes in the Financial Stability Report in recent years.

Peter Pang: Developing critical financial infrastructure between Hong Kong and Thailand Opening remarks by Mr Peter Pang, Deputy Chief Executive of the Hong Kong Monetary Authority, at the HKMA-BOT Joint Press Conference on the Launch of US Dollar – Thai Baht PvP Link, Hong Kong, 28 July 2014. *  *  *  Deputy Governor, ladies and gentlemen, 1. Good afternoon. It is my great pleasure to welcome you all to this press conference jointly organised by the Hong Kong Monetary Authority (HKMA) and Bank of Thailand (BOT). I would like to thank Deputy Governor Mr. Krirk Vanikkul for joining me here to announce the launch of the payment-versus-payment (PvP) link between BAHTNET, the Thai Baht Real Time Gross Settlement (RTGS) system in Thailand, and the US dollar RTGS system in Hong Kong. 2. Time flies. About a year ago the HKMA and BOT announced in Bangkok to build this PvP link. With the concerted effort of colleagues on both sides, the link went live today as scheduled, after completion of the system development and meticulous testing with the users. The banks in both jurisdictions have been fully engaged to ensure maximum readiness, on both technical and business fronts, for the launch of the link. 3. This PvP link is an iconic project that symbolises the determination of the HKMA and BOT to work together to promote financial integration and financial stability in the region through the linkage of critical financial infrastructure. It will bring significant benefits in three areas. 4.
Page 11 of 19  How to define “future expenditure” More broadly, it is still difficult today to formally calculate productive or "future" expenditure, i.e. spending that would have the most favourable long-term effects on economic growth and output capacity or on the climate transition. A consensus appears to be emerging in economic research literature whereby spending on public investment has a more positive effect on growth than operating expenditure. For example, according to our internal models, mediumand short-term multipliers are higher for public investment than for public sector wages. But would this also be true in respect of expenditure on any roundabout or multimedia centre? There is fierce debate around what exactly investment or productive capital actually includes: “basic” infrastructure like roads, bridges and airports generally form the common denominator, to which building construction is sometimes added. “Social” infrastructure such as education or public health  Page 12 of 19 facilities constitute another potential category of productive expenditure: investment in education and skills boosts labour productivity and the economy's innovation capacity. More recently, “digital” infrastructure has sometimes been included in productive expenditure, albeit with less clearly defined boundaries, and before us the enormous challenge of artificial intelligence. This  list  of  questions  without  answers  may  appear  frustrating. But it is also, primarily, a call for more research, and Paris should be a centre of excellence here thanks to institutions that are pioneers in this area (France Stratégie, OECD in the international arena, etc.).

The challenge ahead is to help manage the transition to a monetary system that provides flexibility in the exchange rates of all the major economic areas, and this has to be handled with care. Even with good policy choices here and in other countries, bringing these imbalances down to a more sustainable level will take time. During this period of adjustment, despite our fundamental economic strengths, we will be vulnerable to an elevated risk of volatility in financial markets. This prospect makes this a good time to examine the health of the financial system. The strength of the financial system is a major factor in determining how well economies respond to shocks - weak financial systems amplify the damage to growth. The stronger the financial system, the more effective policy - monetary policy in particular - can be in cushioning the effects of those shocks and helping to restore expansion. We are fortunate in the United States today to have a strong financial system. This system has a tremendous capacity to match capital to ideas, reward innovation, and channel savings to the highest return. And it has demonstrated a capacity for very considerable resilience and stability in face of shocks. What are the main sources of these strengths? Our banks are stronger than they have been in the past. Their larger earnings capacity, higher capital cushions, and the greater diversity of their activities help shield them from a broader range and greater magnitude of shocks than in the past.