samchain/econo-pairs-v1 huggingface dataset:
This paradigm shift could jeopardize our independence and our mandate. Ultimately, it could lead to a loss of confidence in the value of the money, as observed in the past. In revisiting the interaction between monetary and fiscal policies, there is a need to make a clear distinction between short-run opportunities, corresponding to the current crisis period, and medium-term challenges, which will arise when the economy has fully recovered. In addition, in the euro area, having a single monetary authority and 19 national fiscal authorities creates further challenges in the absence of coordination among Member States on their budgets and of a permanent euro area fiscal capacity. This is why risk-sharing across the euro area should not rely only on fiscal mechanisms but also on private markets by completing the Capital Markets Union. In the short term, the risk of fiscal dominance is not an issue. Today, monetary and fiscal objectives are fully aligned and require expansionary policies from both sides. Fiscal policy can help monetary policy to achieve its inflation objective by boosting demand. Firms and households are encouraged to borrow in such an environment, which allows them to benefit fully from the monetary stimulus. Monetary policy can also render fiscal policy more effective. The dominant view is indeed that fiscal policy becomes more effective at the Effective Lower Bound (ELB) because monetary policy is less likely to react to offset its effects.

David Carse: The state of the banking industry in Hong Kong Speech by Mr David Carse, Deputy Chief Executive of the Hong Kong Monetary Authority, to the Hong Kong Foreign Bank Representatives Association, Hong Kong, 6 May 2003. *  *  *  Ladies and gentlemen, Thank you for the opportunity to speak again to the Hong Kong Foreign Bank Representatives Association. I want to use this opportunity to take stock of the state of the banking industry at what is a more than usually uncertain period for Hong Kong as it battles with the impact of atypical pneumonia. In Hong Kong you need to be prepared for the unexpected. At the beginning of the year, we were all worried about the looming war in Iraq and the damage that it might cause to the global economy and to Hong Kong. Little did we know that the main threat to the people and the economy of Hong Kong would come from the SARS virus. The recent performance of the banking industry The outbreak of the disease is one of a number of shocks that the banks in Hong Kong have had to cope with over the last five years. I will not dwell on the list, which will be familiar to you, but it includes two recessions, five consecutive years of consumer price deflation, a collapse in property prices of 65% from the peak in October 1997 and a surge in personal bankruptcies.
Thus, as a matter of fact, the central banks of major countries will have to repeat the exploit of Odysseus: to pass between Scylla and Charybdis. This situation is fraught with mounting volatility in global markets and the Bank of Russia takes this into account while pursuing its monetary policy. We are moving consistently towards our target: annual inflation of 4% in late 2017 and further. Why do we need low inflation? (Although 4% inflation is low only for Russia, it is much lower in the overwhelming majority of countries). First, low inflation abates macroeconomic uncertainty and risks for business. Second, it stabilises household incomes, in particular those of the lowest-income families, and third, contributes to development of long-term lending and long money in the economy. As a matter of fact, low inflation is an integral part of the investment type of economic growth. Considering all the external and internal challenges, a very cautious, moderately tight monetary policy needs to be pursued to achieve the inflation target. This is not the only one. Decreasing inflation expectations of households and businesses are largely conducive to inflation reduction. Therefore, confidence in Bank of Russia policy is very important. We are open for dialogue. We try to explain our actions, show how they influence interest rates and the economy as a whole, and to convince people, proceeding from facts, that Bank of Russia forecasts on inflation are coming true. Inflation has slowed down to about 7% (as we predicted a year ago) and inflation expectations also gradually abate.

Elvira Nabiullina: Structural reform, banking system challenges and global developments affecting the Russian financial system Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the 25th International Financial Congress, Moscow, 30 June 2016. *  *  *  Good afternoon, distinguished colleagues! This year we are hosting the 25th jubilee forum and at the same time the first one. We have changed its name, i.e., the banking congress became the financial one, and expanded the range of discussed topics in intention to embrace all the sectors of the financial market. On the one hand, this transformation was about to happen since the central bank functions as a mega-regulator and we are seeking to have a constructive dialogue with all the sectors of the financial market. On the other hand, this is a reflection of the global trend: the nonbank financial sector starts playing an ever greater part in global markets and regulation of this sector draws ever more attention from regulators throughout the world to minimise risks and ensure its stable development. Financial stability is coming to the fore in central bank policies. As you might remember, The Black Swan by Nassim Taleb enjoyed popularity a few years ago. It should be noted that despite the fact that there are a great number of world experts and analysts studying the situation and possible risks, the ‘black swans’ are not uncommon in the financial markets.
The most important component is a long-term framework for financial market regulation that lays the basis for a robust financial system. The new Basel III framework is an important step in the right direction. An important feature of this regulatory framework is that the system-wide risk in the financial sector will be explicitly taken into account, and not only institution-specific risk. This chart showing a bank’s balance sheet provides a simplified presentation of how the new regulation will affect banks. They will be required to hold more capital and capital of higher quality. New capital requirements will be supplemented with stricter liquidity management requirements and quantitative requirements regarding liquidity buffers and stable funding. This will reduce banks’ vulnerability to market turbulence. Under the new regulatory framework, it will be more costly for banks to expand rapidly. They will not have the option to finance growth with short-term market funding to the same extent as earlier. Moreover, the new framework includes macro-prudential measures that can be triggered when necessary. Basel III includes a countercyclical buffer that is effective when credit growth becomes excessive. When this buffer is effective, the banks must set aside more capital for their loans. This will increase their capacity to absorb future losses, which to some extent can also dampen credit growth during an upturn. In today’s situation in Norway, with elevated debt burdens and rising house prices, a countercyclical buffer could be a useful instrument. Basel III will be an important step towards a framework that strengthens the basis for financial stability.

Svein Gjedrem: Globalisation and monetary policy Welcome address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Norges Bank Conference on Monetary Policy “Jarle Bergo Colloquium: Globalisation and Monetary Policy”, Oslo, 7 March 2008. *  *  *  It is a great pleasure to welcome you all to Norges Bank’s conference on monetary policy. The bi-annual conference on evaluation and assessment of monetary policy is a tradition at Norges Bank. This year the conference is being held in honour of my dear friend and colleague, Jarle Bergo, who is approaching the end of his twelve-year term as Deputy Governor of Norges Bank. He is now resigning office to take the position of Alternate Executive Director of the Nordic-Baltic Constituency at the IMF. Jarle Bergo started his career as an economist in Norges Bank in the late sixties. Over the years he has made crucial contributions both to the work of the Bank and to its organisation. I am sure that I speak for all of us who have had the pleasure of working closely with him when I say that he has also made a vital contribution to the atmosphere in the Bank through his pleasant manner and good humour. We have titled this conference “Jarle Bergo colloquium: Globalisation and Monetary Policy”. Both globalisation and monetary policy are themes wide enough to fill up numerous conferences by themselves, and only a few questions will be addressed here today.
In the United States growth was so rapid that at least two authors wrote books entitled “The Roaring Nineties” and another chose the title “The Fabulous Decade”. In contrast, continental Europe experienced slow growth and heart-searching over structural reforms. As with much else, our economic performance lay somewhere between the excited exuberance of the United States and the relative disappointment of continental Europe. So the UK experienced a non-inflationary consistently expansionary - or “nice” - decade; a decade in which growth was a little above trend, unemployment fell steadily, and, supported by the improved terms of  BIS Review 45/2003  1  trade, real take-home pay rose without adding to employers’ costs, thus allowing consumption to grow at above trend rates without putting upward pressure on inflation. Will the next ten years be as nice? That is unlikely. The terms of trade will probably not rise as much in future as they have in recent years - about 10% since 1996 when sterling started to appreciate - not least because sterling’s effective exchange rate has fallen by around 7% since the turn of the year. Moreover, there is no longer the margin of spare capacity that has provided a buffer for policy over much of the past decade. So when shocks, as they will, hit our economy it is almost inevitable that there will be somewhat greater volatility of both output and inflation than the remarkable stability to which we have become used in recent years.

Mervyn King: Stocktake of the UK economy Speech by Mr Mervyn King, Governor of the Bank of England, at the East Midlands Development Agency/Bank of England Dinner, Leicester, 14 October 2003. *  *  *  The Bank of England is back in Leicester. Between 1844 and 1872 there was a branch of the Bank of England in Leicester, located in Gallowtree Gate. Sadly it operated at a loss, in part because the Agent lived in style driving about town in a carriage and pair with two men in livery, and the branch was closed. Only six years ago did we re-establish our links with the City through the creation of a new Agency in the East Midlands. The purpose of that Agency - staffed by four members of the Bank who work in rather less style than their predecessors - is to listen to you and other businesses about what is happening on the ground. The reports of our Agents around the country are crucial to the Monetary Policy Committee. The information we receive from you, and our other eight thousand business contacts around the country, are key pieces in the large jigsaw puzzle of the UK economy that we assemble each month in order to see the big picture. Some of the statistical fog hanging over the British economy lifted a week or so ago with the publication of a new picture of demand and output over a number of years.
Notes: Pink diamond represents October 2021 inflation outturn. Energy prices are also the biggest driver of the sharp decline in CPI inflation forecast from the middle of next year, contributing 2.7 percentage points of the forecast fall of 5.7 percentage points in CPI inflation to 5.2% in 2023Q4. Volatility of gas prices has also been a key feature. Greater security of European supply through this winter has helped ease pressures but there remains significant concerns about next winter, and in November the MPC flagged that a persistently higher path for energy prices remains a possible alternative scenario. And given the uncertainties and balance of upside risks, we incorporated an historically large upside skew on our inflation forecast. Sustained labour market tightness Back at the time of the November 2021 MPR, most MPC members were concerned that the end of the furlough scheme could be material for near-term developments in the labour market, as some of the estimated 1 million workers still on furlough when the scheme ended in September 2021 moved into unemployment. The November MPR forecast was for unemployment to rise to 4.5% in 2021Q4. As the economy recovered, employment remained resilient and unemployment fell to 4.1% after the end of the furlough scheme, only slightly higher than its level prior to the pandemic in Q4 2019.

Uncertainty has come not just from new shocks hitting the economy, most notably huge increases in energy prices, but also from unexpected developments, particularly in the labour market, as well as from other sources, like the on-going impact of Brexit and the pandemic. Economic uncertainty can be illustrated in various ways. Chart 1 shows a market-based measure of volatility two years ahead, the horizon for monetary policy, which has been on a sustained and steeply rising trend over the last year, and spiked very recently at a much higher level even than during the global financial crisis. Without wishing to downplay the audience today, the Bank-watchers who matter most for whether the MPC meets its target of getting inflation back to 2% are households and businesses. Uncertainty is impacting directly on them, undermining their confidence to make decisions and plan ahead, adding to what is already a very challenging economic situation in the face of the cost of living crisis and tightening financial conditions. In economics, the concepts of ‘risk’ and ‘uncertainty’ are usually distinguished using the terminology of Frank Knight (1921). Risk refers to cases where we know the potential outcomes and the probability of them happening. Uncertainty refers to cases where we don’t know the possible outcomes (or their probabilities) in advance. Another broad approach has been suggested by Kay and King (2020) in their book on ‘radical uncertainty’.
Therefore, only through proper Pillar II supervisory review can we understand the true risk profile of banks, so that capital requirement is set in line with the risks assumed by banks. To carry out this task, the authorities need to have the right prudential rules in place, as well as the supervisory capability and capacity. At the Bank of Thailand, we are developing prudential standards and risk-focused on- and off-site examination practices and manuals so that each supervisor can work on a common structured approach to risk analysis. Moreover, a lot of resources have gone into supervisory training to equip our supervisors with the necessary tools and build up their sound judgment for the implementation. In parallel, the Bank of Thailand has proposed the New Financial Institutions Businesses Law to the Parliament to give us the necessary legal basis to implement both effective banking supervision and Basel II. To foster Pillar III market discipline enforcement, the authorities are working on an appropriate safety net to replace the blanket guarantee that undermines the functioning of the Pillar III. It’s obvious that without lifting the blanket guarantee, market discipline will not work no matter how much disclosure is required. At present, the Ministry of Finance is in the process of reviewing the draft legislation on Deposit Insurance Agency before submitting it to the Parliament.

The primary factor behind the falling inflation rate is a growing confidence in inflation targeting, which during the years following 1993 gradually affected inflation expectations. In recent years the repo rate in Sweden has been lower than the corresponding steering interest rates in the USA, the UK and the EMU area. Many doubted whether Sweden as a small country outside of the euro area would ever be able to live with short-term interest rates lower than those set in Frankfurt. However, we have succeeded in doing so for some time. If one looks at the short-term real interest rates now, they are at approximately the same level as in the euro area and Sweden, at around 2 per cent. The fact that we in Sweden succeeded in achieving a good growth rate during the second half of the 1990s without causing overheating and raised interest rates, was because we started off with a very low level of resource utilisation. Following the crisis at the beginning of the 1990s, unemployment was at a record high level and there was considerable unutilised capacity in industry. It was not until recently, since the end of last year, that we have begun to approach the capacity ceiling. Furthermore, Sweden has shown a positive development in private saving throughout the entire 1990s, and the household sector's burden of debt is currently much lower than it was after the crisis at  BIS Review 34/2001  1  the beginning of the last decade.
Demand decreases with the cost of borrowing, RB and supply increases with the return on bank debt (including deposits), RD, which for simplicity is taken to move in line with the policy rate R. In addition, there is a spread between RB and RD, reflecting expectations of default not only by end borrowers but also by the financial intermediary. In credit booms, this spread is often unsustainably compressed, while during credit crunches it widens sharply. Our macroprudential instrument, K, is assumed either to reduce the demand for credit, or to increase the spread between RB and RD, or both. Either way it reduces the total quantity of credit, C. Now unlike macroeconomic stability, which can be characterised as output being at its sustainable level once nominal wages and prices have adjusted and inflation is at target, there is no corresponding simple characterisation of financial stability. But for simplicity, let us assume that the authorities have in mind some maximum level of leverage that is consistent with the risks to future financial stability remaining acceptable. Then we have the downward-sloping frontier FS (for Financial Stability) in the right-hand panel that shows the minimum acceptable level of the policy rate for any given setting of the macroprudential tool. A reduction in perceived risk leading to excessive exuberance on the part of investors or borrowers would shift this frontier to the right. Putting these two policy relationships, PS and FS, together we get Chart 11.

And there will often be scope for those affected to work out ways to circumvent them, including by moving activities outside the regulatory perimeter. As Federal Reserve Board Governor Jeremy Stein has noted, monetary policy may be a blunt tool for addressing financial stability risks, but it does have the virtue that it “gets in all of the cracks”. 7 So, there may well be times when monetary policy is the only game in town to guard against incipient financial stability risks. In that case, we are back in the world where monetary policy makers need to be prepared to consciously lean against the wind by deliberately undershooting their inflation target in the near term in order to reduce the likelihood of something nastier down the road. This thinking has now been embodied in the Chancellor’s remit for the MPC, which sets our objectives each year. It notes that “circumstances may arise in which attempts to keep inflation at the inflation target could exacerbate the development of imbalances that the FPC may judge to represent a potential risk to financial stability. The FPC’s macroprudential tools are the first line of defence against such risks, but in these circumstances the MPC may wish to allow inflation to deviate from the target temporarily.” The remit also directs the MPC to have regard for the actions of the FPC and vice versa. I opened my remarks tonight by observing that my time at the Bank has neatly fallen into two halves.
This requires all actors – both at national and European level – to play their parts in line with their respective mandates as laid down in the EU Treaties. BIS central bankers’ speeches  1  No monetary stimulus, indeed no fiscal stimulus, can be successful unless accompanied by the right structural policies – policies that foster potential growth and instil confidence. I would like to illustrate this argument by focusing on investment, which will also be discussed at the informal ECOFIN this weekend. Investment has been one of the great casualties of this crisis. The downturn in business investment in the euro area since 2008 has been much more severe than in earlier business cycles. From peak to trough, business investment decreased by around 20%, against 15% in the 1992 recession. The level of business investment in the euro area has only slightly improved since 2008, whereas in the US it is above its pre-crisis level. We will not see a sustainable recovery unless this changes. A decisive rise in investment is essential to bring inflation closer to where we would want to see it, to stimulate the economy, and to bring down unemployment. So what can we policy-makers do to revive investment? My main message today is that only if structural, fiscal and monetary policies go hand in hand will the euro area see investment return. Let me focus in particular on the decisive contribution which structural policies can make.

They have at their disposal a second policy lever of direct relevance for investment, namely fiscal policy. Companies will only invest in the future when there is confidence and certainty about the future, about the medium-term fiscal path, and ultimately about taxes. We need a consistent and credible application of the Stability and Growth Pact across time and across countries. Within the existing framework, governments can find space to support productive investment, and achieve a more growth-friendly composition of fiscal policies by lowering the tax burden and reducing unproductive current expenditures. In parallel, it may be useful to have a discussion on the overall fiscal stance of the euro area with the view to raising public investment where there is fiscal space to do so. In this regard, there is also a complementary role to play at European level in supporting the rebound in private investment. I therefore welcome the € billion package announced by the incoming Commission President two months ago. The role of monetary policy Let me finally say a few words on the contribution of monetary policy. We successfully fought the confidence crisis in the euro that raised interest rates to abnormal levels. We provided the euro area banking system with unprecedented funding. We have continuously lowered our policy rates. Now we have reached the lower bound. To ensure that this very accommodative monetary policy stance is transmitted to the real economy across the euro area in an equal manner, we have also deployed a number of non-standard tools.