samchain/econo-pairs-v1 huggingface dataset:
8 [20]  Could confidence in the inflation target have been maintained with a less expansionary policy? As I noted, some analysts would probably argue that it is important to defend the inflation target, but that this could have been done with a less expansionary policy, where the repo rate would not have needed to be cut below zero. This is a view that I have greater understanding for. However, there are many arguments against it. The expansionary policy conducted by the Riksbank has indeed led to inflation turning upwards and to long-term inflation expectations being once again at or very close to 2 per cent (see Figure 11). But the upturn in inflation has been bumpy and fragile and there are some signs that it has slowed down in recent months. Moreover, the upturn has to a fairly large degree been based on the krona being relatively weak and its sustainability rests on the assumption that the krona will not appreciate too rapidly going forward. It is very probable that developments would have looked quite different with a higher repo rate. And in this context the significance of a repo rate that is only half a percentage point higher should not be underestimated. It is not particularly difficult to imagine a scenario where the krona in such a case would have strengthened, possibly quite significantly, economic activity would have slowed down and inflation and inflation expectations would have turned downwards.

Some transactions are not registered at all, for example, those in the underground economy, some imports and so forth. The decomposition of nominal GDP into a change in real output and a change in the price level is not a trivial exercise even in advanced market economies. But in these countries, e.g. in Germany or USA, the prediction of real GDP rests on more solid grounds - one knows approximately what is the “potential output” as the starting point for some guessing as concerns the development in the medium term. In transition economies, in the period of deep structural changes, the estimate of both real GDP and potential output is much more difficult. BIS Review 25/1997  -7-  The traditional unidirectional link from money to income is blurred in advanced market economies by the existence of many forms of financial assets with different degrees of liquidity. In transforming economies, the scope for reserve assets (Treasury bills) and investment assets (bonds, shares) is still limited but is widening step by step, thus weakening also the links between the money stock and expenditure flows. What is probably even more important, at least in the Czech Republic, is the financing of receivables and current liabilities through quasi-commercial credits (inter-enterprise indebtedness). There is a scope, created by enterprises themselves, for offsetting the potential effects of monetary stringency on spending plans.
We are currently expanding the FedTrade platform, in order to have more flexibility in conducting MBS auctions in the future. In the Treasury market, purchases are distributed across securities with different maturities, with the intent of removing a specified amount of duration risk from the market without causing significant market disruption. For recent programs, this maturity distribution has been announced at the outset, and a schedule of specific operations is released at the beginning of each month.8 Such transparency is possible because the composition of Treasury coupon securities available for purchase is reasonably predictable. Within this purchase distribution, both newly issued (on-the-run) and more seasoned (off-the-run) securities are often purchased. Outright purchases of MBS are executed in the TBA (To-Be-Announced) market. The TBA market is built around a trading convention that allows market participants to trade thousands of different MBS backed by millions of individual mortgages using only a few standardized contracts, which are grouped based on key characteristics such as the coupon of the security that will be delivered. These factors help make the TBA market homogeneous and highly liquid – useful characteristics given the scale of Desk operations.9 Mortgage originators sell  6  Using the individual answers to Question 8 in the January 2013 Survey of Primary Dealers on the probability of the size of the balance sheet at the end of 2013 and 2014, one can calculate the average individual uncertainty around each dealers’ point forecast. For the end of 2014, this is around $ billion.

Simon M Potter: The implementation of current asset purchases Remarks by Mr Simon M Potter, Executive Vice President of the Markets Group of the Federal Reserve Bank of New York, at the Annual Meeting with Primary Dealers, New York City, 1 March 2013. *  *  *  Thank you all for attending today’s annual primary dealer meeting. Primary dealers play an important role in financial markets and an integral role as counterparties for operations to implement monetary policy. You are also an important source of market intelligence for the Desk, providing insight into market developments, structure, and functioning dynamics. A meeting like this provides a valuable opportunity to communicate our counterparty expectations, as well as strengthen our ongoing relationship. Given your important role in the implementation of monetary policy, I thought I would take this opportunity to discuss the Federal Reserve’s ongoing purchases of Treasury and agency mortgage-backed securities (MBS). As you are well aware, at the September 2012 Federal Open Market Committee (FOMC) meeting, the FOMC decided to increase policy accommodation by purchasing $ billion per month of agency MBS and continue the Maturity Extension Program (MEP). Then at its December meeting, the Committee chose to continue buying $ billion per month in longerterm Treasury securities following the completion of the MEP.
Even though the krone has depreciated from its strong level at the beginning of the year, competitiveness is still relatively weak after many years of high wage growth. In addition, vacancy rates for commercial premises are high and rents have fallen. Another risk is that wage growth may accelerate again, as it did following the interest rate reductions in 1999. This risk is also being reduced by a slackening labour market. Unemployment in 2004 will probably be on a par with the level in 1996 and 1997. Annual wage growth in these years was a little less than 4½ per cent. The low pay increases in this year’s wage settlement also indicate that the social partners have placed more weight on the effects of pay increases on future developments in interest rates, the krone exchange rate and employment. In addition, activity in public and particularly sheltered industries is probably still feeling the impact of the expensive pay increases last year and earlier years. We expect that in light of the experience gained in 2002, public entities will exercise more caution in future wage settlements. Developments in the krone exchange rate represent another source of uncertainty. The relationship between the krone exchange rate and the interest rate differential against other countries is not necessarily stable over time. Themes in international financial markets shift. However, the depreciation of the krone this year is contributing to stabilising inflation and activity in the economy.

Svein Gjedrem: Monetary policy and the economic situation Speech by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Norwegian University of Science and Technology, Trondheim, 2 September 2003. The text below may differ slightly from the actual presentation. The speech is based on the assessments presented at Norges Bank’s press conference following the Executive Board’s monetary policy meeting on 13 August and on previous speeches. The Charts in pdf can be found on the Norges Bank’s website. *  *  *  The operational target of monetary policy as defined by the Government is inflation of close to 2.5 per cent over time. The inflation target provides economic agents with an anchor for their decisions concerning saving, investment, budgets and wages. The inflation target is a vehicle for monetary policy’s contribution to stabilising output and employment. This intention is also expressed in the Regulation on Monetary Policy. High demand for goods and services and labour shortages normally point to higher inflation. When interest rates are increased, demand falls and inflation is kept at bay. When demand is low and unemployment rises, inflation will tend to slow. Interest rates will then be reduced. Norges Bank sets the interest rate so that future inflation will be equal to the inflation target of 2½ per cent. The interest rate has been reduced since December last year in response to the change in the inflation outlook.
Due to the use of regulatory data, the effective CET1 surplus takes into account CET1 resources (calculated from the public requirements) used, where applicable, to meet leverage ratio requirements, MREL requirements and lower quality capital requirements (i.e. where AT1 and Tier 2 instruments are allowed but not utilised). 20 We exclude corporate lending supported by government-provided relief schemes during the pandemic given the zero risk-weights attributable to that lending during Covid-19. 11  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  11  Is it stigma or is it uncertainty? One possible challenge to these findings is that they may reflect firms’ concerns about breaching regulatory minimum requirements during the pandemic, and/or about their ability to rebuild depleted buffers going forward; and may have nothing to do with the stigma of breaching regulatory buffers. The arguments go as follows: a firm entering the crisis with lower headroom would naturally be more cautious than a firm with higher headroom and hence, when the uncertainty about the economic environment is large, it would naturally increase its capital ratios by more to prevent it breaching minima. Alternatively or in addition, banks may have entered the crisis with low headroom because they faced profitability challenges, restricting their capacity to grow capital organically. If so, then they may be averse to capital ratios declining, fearful that if conditions subsequently swung around quickly, they could languish inside regulatory buffers for longer than their competitors if their profitability challenges were to persist.

3  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  3  preliminary lessons learned earlier this month.4 Also this month, the Financial Stability Board submitted an interim report to the G20 on lessons learned for the financial system as a whole.5 A major lesson that has emerged so far is that the banking system has remained resilient through the Covid19 pandemic while continuing to provide credit to the real economy. This is, in part, due to the substantial increases in capital and liquidity held by banks as a result of the adoption of the post-Global Financial Crisis reforms, and represents a major vindication of those reforms. If I can use the analogy of a fire, one did break out in the banking system following the onset of the pandemic, but because the locus was well fire-proofed – with capital and liquidity – and because both the monetary and fiscal firefighters were alert and acted quickly and decisively, the fire was put out before it could take hold. But it was not obvious that this would have been the case at the outset. In particular, it was by no means certain that the regulatory capital buffers built up ex ante by banks as a result of those reforms, and designed to allow them to lend to the real economy whilst absorbing losses, would actually be used in that way.
This would help foster value-added characteristics of the Thai economy and increase opportunities for our people, businesses, and everything else that will bring about a better standard of living for all. The two mega-trends I have outlined, when combined with the flood crisis at the end of last year, mean that Thailand needs to quickly upgrade infrastructure to improve competitiveness. In particular, public investment in effective natural resources management system and improved governance of public administration will serve as an important driving force for sustainable economic growth. Evolution of economic activities in line with the changing environment While the immediate obstacles may have changed, the overall challenges that have remained require all parties to formulate a strategic framework and policy space, to enable the Thai economy to stride pass the transitional gateway smoothly. For the public sector, the implementation of policy that promotes investment and enhances competitiveness effectively relating to infrastructure, education, and governance such as reducing corruption and improving political resiliency would be an important impetus to boost Thailand’s position in the competitiveness race. This is because public investment attracts further investment from both private investors and foreign investors, the so-called crowdingin effect. For the private sector, the search for new markets, improvements of production efficiencies, creation of value-added goods and services, and effective risk management are things that the private sector can do to prepare for new challenges.

Need to address communications  Finally, to successfully address this risk with a unified front, we must develop an approach to enhanced communications around cyber threats and events, and revisit supervisory guidance in this area. Silence and fear of sharing intelligence in this area could be detrimental to efforts to address the vulnerabilities systematically. We know that breaches have occurred and will continue to occur until the industry is better equipped to be ahead of the attackers, not playing catch up. Right now we are interested in learning from these breaches and using intelligence garnered to get ahead of game. There is a lot to think about here. With all this in mind, I will end this part of my remarks with a reminder of what we see as the key components of any solution designed to address cybersecurity. It must: •  Be comprehensive, risk-based and threat-informed;  •  Be a joint effort between public and private sectors;  •  Be flexible enough to evolve as technology advances; –  Automated  –  Scalable  •  Support information sharing;  •  Leverage best practices;  6  BIS central bankers’ speeches  •  Include all in the industry – regardless of size or processes (internal systems or external providers); and  •  Delve deeper than one step below the surface. Conclusion We live in an ever-changing environment where speed and agility are of the essence.
7 See the 2014 report “ERAC peer review of the Spanish research and innovation system”, authorised by the European Commission. 15/18  The growth of firms is influenced by the availability of external financing to undertake new investment projects. In Spain’s case, as is known, this financing is mainly through bank loans, especially at smaller-sized companies. In the immediate run-up to the crisis, the standards governing this type of loan to firms were relatively lax. That made for abundant bank financing, which was particularly conducive to the creation and survival of numerous firms, many of them small in size. However, the companies resorting in best conditions to such lending did not always evidence high productivity. Indeed, the buoyancy of loans extended to relatively unproductive firms in the years prior to the crisis made for the build-up of macrofinancial imbalances. Conversely, in recent years, the allocation of lending appears to be proving more efficient. Specifically, funds tend to be earmarked for companies showing a comparatively more favourable economic and financial situation and that are more productive.8 This change in lending standards might be linked both to experience of the crisis and to financial regulation changes. In particular, the regulatory requirements applied to credit institutions have been significantly tightened with the aim, among others, of better aligning the level and quality of bank capital to the real risks assumed by banks. The weight of construction-related investment has diminished, partly as a result of the credit-allocation changes I have just referred to.

3  Because Swiss GDP statistics do not fully take into account the improvement of the terms of trade regularly realized by the tradable sector, the growth differential between Switzerland and other advanced economies is overstated but remains significant nevertheless. See e.g., Term-of-Trade Changes and Real GDP: Evidence from Switzerland, Ulrich Kohli, SNB Quarterly Bulletin, June 2002. BIS Review 24/2004  3  Monetary policy and EMU Accession to a monetary union transfers the power over monetary policy from the national to the union level. There are costs and benefits to such an abdication of monetary sovereignty. Nominal interest rates are equalized throughout a monetary union and the nominal exchange rate is no longer available as a tool for alleviating the impact of asymmetric shocks. Necessary economic adjustments between different countries of a monetary union must therefore occur through various price and factor movements. As I have already suggested, imposing real wage adjustments in particular can be politically costly. In the case of both the UK and Switzerland, these potential costs of EMU membership are mitigated by virtue of flexible labor markets in both countries. In the case of Switzerland, EMU accession would also lead to the loss of an interest rate bonus our country has traditionally enjoyed. At least partly, this bonus is rooted in the credibility of the Swiss National Bank, acquired over a long period of independent and successful monetary policy (Chart 2).
BIS central bankers’ speeches  3  I am pleased to say that both the US and the EU appear now to be inching toward recognition of each other’s implementation of the standards. The threat of fragmentation of the market seems to be receding, even if success is not yet assured. But it is an example of the differences that can arise in implementation even when there is international agreement on standards – a theme to which I will return. On shadow banking, the FSB has identified activities outside the banking sector that can give rise to some of the same risks as banking. And this is beginning to generate proposals for regulatory reform. The US and EU have, for example, developed proposals on regulation of money market funds. And there should be an important first agreement this year on how to manage systemic risks that can arise from securities financing transactions such as in the huge global repo market. Finally, ending “too big to fail”. This may well be the litmus by which the public judges the success of the entire reform programme. Nothing has so incensed public opinion and damaged societal support for the financial sector than the apparent “heads I win, tails you lose” experience of private profits and pay when things went well and public losses when they did not. We will not fully restore public confidence until we can show that we can resolve failing banks – no matter how large – without public support.

It means measures to reduce disruption to financial markets if a bank is wound up. And crucially it means agreement between the authorities in the countries in which these global banks operate on how they should be resolved if they fail. We have made a lot of progress on too big to fail. But we are not yet there. I do not think we can say with confidence now that we could resolve a failing global giant. Getting agreement on international standards to end Too Big to Fail is perhaps the most important regulatory priority for the G20 Summit in Brisbane in November this year. When you stand back and look at the progress of this unprecedented programme of international financial reform, on the capital and liquidity framework, on inter-connectedness, on shadow banking and on too big to fail, a huge amount has been achieved. 4  BIS central bankers’ speeches  If we can get the progress that G20 leaders committed to this year by the Brisbane G20 summit in November we will have “completed the job” of agreeing most of the key international standards and rules. And, in many areas, we will have gone a substantial way to implementing them. And I am very pleased to say that the Bank of England has played a key role – and in many areas a leadership role – in moving this programme forward. And I hope we can continue to do this as, increasingly, we move into the implementation phase. IV. Have we succeeded?
The Producer Prices Index, which is calculated by excluding tax, indicates that manufacturing industry prices, comprising a significant part of the index, have become more susceptible to raw material prices and exchange rate developments compared to previous years (Graph 7). BIS Review 67/2006  5  Graph 7. Manufacturing Industry Prices and Exchange Rate Basket (0,5 USD + 0,5 Euro) (Annual Percentage Change)  Manufacturing Industry Prices  20  Exchange Rate Basket  10 0 -10  Mar-06  Jan-06  Nov-05  Sep-05  Jul-05  May-05  Mar-05  Jan-05  Nov-04  Sep-04  Jul-04  May-04  Mar-04  Jan-04  -20  Source: TURKSTAT, CBRT. The sector, in which the said effect is clearly perceived within the PPI, is the petroleum products sector that is subject to high taxes. Excluding the said effect, the annual rate of increase in manufacturing industry prices is maintaining its low-level trend, albeit its slight upward tendency (Graph 8). Graph 8. PPI and Manufacturing Industry Prices Excluding Petroleum Products (Annual Percentage Change) 12  Manufacturing Industry Prices Excluding Petroleum PPI  9  6  3  Mar-06  Feb-06  Jan-06  Dec-05  Nov-05  Oct-05  Sep-05  Aug-05  Jul-05  Jun-05  May-05  Apr-05  Mar-05  Feb-05  Jan-05  0  Source: TURKSTAT, CBRT. Distinguished Guests, Inflation expectations are determinant on inflation realizations in view of being the basis for both pricing behavior and wage adjustments.

textiles and apparels)  *Quarterly moving averages. Source: TURKSTAT. 10  BIS Review 67/2006  It is expected that the current account deficit will not pose any risk with respect to economic stability and the inflation target in the short-term. Along with growth in the share of foreign direct investments that have gained pace with privatization revenues, the increase in the share of long-term credits in the credit composition of the banking sector and the private sector eases concerns about the sustainability of the current account. It is predicted that foreign direct investments, which reached USD 8.6 billion in 2005 (2.4 percent of GDP), will prevail at high levels in 2006 as well due to the continuance of privatization revenues and company acquisitions. Moreover, the process of convergence with the European Union is expected to ensure the continuance of international capital’s interest in Turkey. Costs While productivity rose at a high rate in the private manufacturing industry, real unit wages dropped by 8.2 percent compared to the same period of the previous year due to the decline in real wages (Graph 16). The persistence of the drop in real unit wages became one of the leading factors in the continuation of the disinflation process. Graph 16.