samchain/econo-pairs-v1 huggingface dataset:
Normally, there are several possible scenarios and there can be great uncertainty over which scenario monetary policy should be based on. There is also uncertainty over which target variables should actually be used. I shall return to this question in the next section. Nine suggestions regarding monetary policy Although it may be simple in theory to determine how to manage uncertainty in monetary policy, it is not at all simple in practice. So how should the uncertainty surrounding our forecasts affect the monetary policy decisions? How should we deal with the Catch-22 of monetary policy, that monetary policy must be based on forecasts but that our forecasting ability is almost non-existent? This is what this section is about. Be clear regarding the monetary policy objective We should be clear about the objective of monetary policy. There should be no uncertainty about what this is. The Riksbank has worded it as keeping inflation measured in terms of the consumer price index (CPI) at 2 per cent a year and the Government and the Riksdag (the Swedish parliament) have expressed support for this. But the CPI is affected by our own decisions on the repo rate in that mortgage rates are included in the CPI. If we raise the repo rate to subdue inflation in the long run, this leads to inflation temporarily increasing instead of falling. We therefore also follow and analyse a large number of other measures of inflation, such as the CPI with a fixed interest rate (CPIF).

It is quite simply impossible to make any reliable forecasts for two and three years ahead. My opinion is that it is normally fairly meaningless to have a firm opinion of what will happen in two and three years’ time. But there are exceptions, particularly in situations where resource utilisation is very low. During 2008–2009 we assessed that the repo rate would be at an exceptionally low level for one year and we backed this up by lending around SEK 300 billion to the banks at this low interest rate for one year. We should continue to report a main scenario for economic developments and the repo rate over the coming three years, a scenario where inflation approaches 2 per cent and resource utilisation approaches a normal level. But we should regard this merely as a potential scenario. It is important that monetary policy follows a predictable pattern. We endeavour to avoid surprising the market. This means that we normally change the repo rate and the reporate path in gradual small steps, where the steps are due to new information received since the most recent monetary policy meeting, and that we react in roughly the same way to the same type of changes in the new information. Such stability means that we can avoid causing problems on the financial markets, and that we can have a greater impact on the markets when an unexpected event occurs. We should also continue to analyse the consequences of various sequences of events.
This needs to be done in a way that combines deeper integration with good incentives and governance so that it can be broadly supported by both the core and  2  BIS central bankers’ speeches  peripheral countries. In this respect, it is important to recall that the architects of EMU from the outset defined it as a project of Economic and Monetary Union. I view the task of transitioning to a pan-European banking union with the ECB as the primary overseer of the European banking system as a critically important next step. Successfully moving to a pan-European banking union would generate a large number of benefits: •  It would demonstrate a commitment toward greater integration that would enhance the credibility that monetary union is indeed irreversible. •  It would help to sever the link between the fiscal position of individual governments and the health of their banks. •  By eliminating the scope for national bias, it would strengthen market confidence that large hidden losses are not likely to be buried within the banking system. •  It would move against fragmentation and promote re-integration of the European banking system. •  It would help to make monetary policy more effective in supporting activity in the peripheral countries.

But, a common resolution authority and integrated deposit insurance framework that is both credible and consistent with good incentives are likely to be required, as well. The task at hand will likely require each country to give up a small amount of sovereignty with respect to banking oversight so that the outcome is viewed as fully credible. In my view, this is a critical next step in the “one money, one market” project underlying the EU agenda. I’d now like to introduce Ambassador Vale de Almeida as our next speaker. The ambassador has been here in his current role since August 2010. Prior to his current appointment, he worked as a director general at the European Commission (EC) and has had a long and distinguished career at the EC dating back to 1982. So he is extraordinarily well-versed to speak on the issues of interdependence and the policy challenges we face. Welcome Ambassador Vale de Almeida. BIS central bankers’ speeches  3
The development of the labour market is also continuing to be strong, and unemployment has fallen somewhat more steeply than was anticipated at the monetary policy meeting in December. Furthermore, inflation has increased at a slightly faster rate due to higher energy and commodity prices. On the whole, growth abroad is also deemed to be strong. While it is true that developments in Europe are still uncertain due to the fiscal problems in several European countries, prospects in the United States are judged to have brightened somewhat. BIS central bankers’ speeches  1  As you are no doubt aware, on a number of occasions over the last year, I have entered reservations against monetary policy decisions, including the most recent one in February. One important argument for me has been that increased interest rate differentials in relation to other countries may have effects on the exchange rate. During the autumn in particular, my reservations have essentially been due to my scepticism of the assumption that foreign central banks will raise their policy rates at the rate specified by the Riksbank’s main scenario. In my opinion, this has meant that the main scenario’s repo rate path has given rise to a considerably larger interest rate differential in relation to other countries than has been assumed in the Riksbank’s forecast. This could lead to a greater appreciation of the Swedish krona than this forecast suggests, which, in turn, would dampen both inflation and resource utilisation.

During several of the initial years of the inflation-targeting regime, the Riksbank used an MCI in its monetary policy analysis.3 Its intention during this period was to demonstrate very clearly that, in a small, open economy, the exchange rate influences inflation and resource utilisation. Today, the Riksbank no longer uses any such index as a summarising measure. One reason for the abandonment of MCI was that it could be interpreted in an excessively mechanistic way: when the exchange rate weakened, MCI tended to be used in a simplified manner as an argument for a higher interest rate, and vice-versa. Considering the wide fluctuations that can take place in the exchange rate over short periods, an MCI in which a large weight is placed on the exchange rate means that very large changes to the interest rate may be demanded to compensate for exchange rate fluctuations.4 The exchange rate pass-through on import and consumer prices is uncertain The price of imported consumer goods is partially determined by the exchange rate. If the krona is weakened, importers must generally pay more in Swedish kronor for goods bought overseas. Importers must choose how to handle this. Should they increase their prices to compensate for the increased purchase prices or should they reduce their margins? The answer to this question depends on a number of factors. In the short term, importers may avoid price changes, as far as this is possible.
Responses by European authorities As noted, banks with international operations have to develop local products, also to comply with different legal systems, which implies significant costs. Important steps are being taken by EU authorities to overcome the obstacles of segmentation. However, legal aspects are only one element hindering the integration of the retail markets, since proximity to the customer is still an important factor. Even though it is likely that the retail markets will maintain local features at least for some time to come, any unnecessary burden on the cross-border expansion of activities should be lifted to the maximum extent possible. At the regulatory level, the European Commission is generally striving to finalise the Single Market programme via the so-called Financial Services Action Plan. The higher cost of cross-border retail payments, as compared with domestic ones, has been a very topical issue, and it has been taken as a sign of a lack of integration. In July 2001, the European Commission proposed a draft Regulation to close the gap between domestic and cross-border payments. In the draft now being examined by the Council and the Parliament, banks would be obliged to equalise prices for cross-border and domestic payments. The ECB has stated that the Eurosystem shares the general objective of the Regulation. However, the Eurosystem has expressed reservations about the chosen method, because it gives too little time to the banking industry to adjust in a rational way.

This is the case irrespective of whether we have pan-European banks, or whether discrepancies remain in local retail markets. The case of the United States is illustrative. Even when strong inter-state banking limitations were in place – restricting retail banking activities to small local markets – the US banking system was, nevertheless, commonly viewed as a single system. Illustrative facts The progress made with integration in wholesale activities has been rapid and remarkable. First, a common euro money market has been in place since the early days of the euro. A large number of financial products can be traded easily with minimal price distortions, small enough to prevent arbitrage across countries. Likewise, data on cross-border trade flows provide a strong indication of market unification. In the case of the predominantly used unsecured interbank contracts, the share of counterparties from other euro area countries has more than doubled after the introduction of the euro. In addition, a large proportion of the activity in euro is conducted with counterparties outside the euro area, especially in London. The share of cross-border transactions is somewhat lower in the case of repo transactions, because of remaining legal and tax barriers and settlement difficulties. All in all, less  BIS Review 91/2001  1  than 40% of all interbank market activity is now conducted with domestic counterparties. In 1998, the share was still over 60%. Second, the wholesale payment infrastructure for the euro area – including TARGET, Euro I and Euro Access Frankfurt – is already very unified.
Various ideas are being explored – such as systemic surcharges and counter-cyclical capital buffers, and the viability of a more structured and rule-based framework for such measures. We should certainly explore new approaches and better tools. But let me make a few points on this. 14. First, unlike monetary policy, research on macroprudential tools of a more structured, rules-based nature is at an early stage. There are no simple targets like an inflation target, or clear measures of success built on detailed analysis of a long data series, since tail risks do not, by definition, materalise frequently. This makes the task inherently harder. Nor are there many rule-based tools that have proven their efficacy at the global level. Much more analytical work is needed. 15. Second, we now have a better understanding that the systemic risk posed by a bank depends on its size, interconnectedness and substitutability. It does not come from just “toobig-to-fail”, though sometimes these terms are used interchangeably. Many small banks  2  BIS Review 121/2010  pursuing similar business models can build up large correlated positions. There can be systemic impact if these banks unwind their positions at the same time. 16. In the coming years, we will be focusing on some new tools such as countercyclical capital. Their effectiveness will need to be assessed over time, and against other options. We need to agree on the right set of policy tools to deal with systemic risks with the least unintended consequences. 17.

Prices rose by around 3 per cent annually for a long period, but since 1995 they have been falling by about 6 per cent annually. This kink point coincides with the dismantling of the restrictions on textile trade and it coincides with a period of rationalisation in retail trade in Norway. China’s membership of the WTO has subsequently pushed down prices further. The Internet facilitates price comparison, and price margins in all sectors are under pressure. World financial markets are also in flux. Technological advances, increased trade and liberalisation have increased cross-border capital flows. Foreign ownership of businesses has increased considerably. At the same time, savings are increasingly being invested in foreign countries. The home bias for investment has diminished. In recent years, long-term interest rates have declined. Low and stable inflation in many countries has made a contribution. Investors have less of a need to hedge against high inflation. There is a strong tendency to save among Asian and oil-exporting countries, while the willingness to invest is limited in many industrialised countries. This is pushing down interest rates. Low long-term rates probably also reflect low short-term interest rates and ample liquidity. Interest rate developments and buoyant growth have led to a sharp rise in equity prices in the past few years. At the same time, property prices are rising sharply in many countries. Low interest rates, sharply rising equity and property prices, high commodity prices and high energy prices are probably linked to cyclical developments and may therefore be transitory.
Philipp M Hildebrand: Is Basel II enough? The benefits of a leverage ratio Speech by Mr Philipp M Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the Financial Markets Group Lecture, London School of Economics, London, 15 December 2008. * 1. *  *  Introduction  It is a pleasure to be at the London School of Economics this evening. I am very grateful to Professor Goodhart for his generous invitation. As many of you know, Charles is a kind of godfather to an entire generation of central bankers. His 1988 book, The Evolution of Central Banks, remains a classic and is still required reading for aspiring central bankers. Let me take this opportunity to thank Charles for tonight’s wonderful platform and, more importantly, for his long-standing contributions to the art, science, and craft of central banking. Recurring financial crises have become a hallmark of the modern financial system. It would seem that, every five years or so, a 100-year event destabilises the system. Moreover, each crisis appears more violent than the previous one. With the current crisis as my showcase, I will argue that excessively high leverage has been a key factor in making banks and ultimately the financial system much more fragile and vulnerable than most observers, regulators, or market participants ever imagined. Based on this diagnosis, I will argue in favour of restricting the leverage of core financial institutions, i.e., banks. Needless to say, banks have a tendency to oppose regulation.

Gent Sejko: Statement - press conference with IMF Mission Chief Statement by Mr Gent Sejko, Governor of the Bank of Albania, at the joint press conference with the International Monetary Fund (IMF) Mission Chief for Albania Minister of Finance and Economy, Tirana, 10 October 2022. *** Dear media representatives, In the last two weeks, the Bank of Albania and the Albanian government have been engaged in intensive discussions with the IMF Mission, which visited Albania in the framework of the regular Article IV consultations. Discussion focused on current challenges for the Albanian economy, as well as structural reforms that would enable a faster and more sustainable development of the country in the long term. Allow me - first and foremost - to extend my thanks to the IMF Mission for the open share of views in addition to the fruitful and transparent discussions. Overall, the Bank of Albania and the IMF share similar opinions on the developmental challenges that lie ahead. The swift upsurge of prices in the global markets following the unprovoked military aggression of Russia over Ukraine, have triggered serious economic and social challenges for the economies and citizens of all countries around the world, including Albania. Inflation hit 8% in August, increasing at a rapid pace and having a broad base. Based on our judgement, we have previously stressed out that the high inflation is the main threat on the macroeconomic stability and both the stable and long-term growth of Albania.
Asia is at a different starting point from Europe – millions of people still do not have access to electricity. Fossil fuels are still the cheapest way to generate energy in many parts of Asia. Yet, there is scope for energy-efficient technologies and renewable energy solutions. Asia’s transition to sustainability will be progressive – through deeper shades of green. Let me describe three ways in which Singapore aims to support Asia’s transition towards greater sustainability: Asian Carbon Credit Market Green Finance Action Plan Green FinTech  Asian Carbon Credit Market Given Asia’s continued dependence on fossil fuels, an Asian carbon credit market must be part of the strategy to achieve both development and sustainability in Asia. Carbon credits are increasingly seen as a complement to firms’ de-carbonisation efforts. 6 / 10  BIS central bankers' speeches  Global demand for voluntary carbon credits is expected to grow 10 times over the next 10 years, from 100 million tonnes of CO2 equivalent in 2019 to over 1 billion tonnes in 2030. But today, carbon credit markets are fragmented, liquidity is thin, and carbon prices vary across markets. We need global coordination to scale up the voluntary carbon credits markets. We need more high-quality carbon credits and more trading of such credits across borders to drive convergence towards a global price on carbon. We need to put in place infrastructure and data connectivity to ensure environmental integrity and avoid double counting of credits.

By its nature, trend following amplifies the imbalance that may at some point affect a market, potentially leading to vicious circles of price adjustment and liquidation of positions. Moreover, increasing numbers of participants are able to access financial markets directly, while the expertise to deal with a wide range of technical information is not evenly distributed. This may also reinforce the role of “gurus”. Index management, as a fund management technique, has proven very popular on equity markets and may have contributed to exacerbating fluctuations in financial asset prices. Because their goal is to mimic the performance of indices, “passive managers” constantly strive to match the composition of their benchmark. They thus help to amplify market trends, buying more as the market rises and increasingly liquidating as the market drops. It can be argued that index funds distort the prices of the targeted indices and that, as a result, the indices end up creating rather than measuring performance. The impact of risk management techniques on market dynamics is particularly enlightening with regard to the question of asset price overshooting. Value-at-risk calculations have become a crucial element  13  Leading indicators of currency crisis in emerging countries - BURKART, COUDERT - Notes d’Etude et de Recherche Banque de France - 2000. 6  BIS Review 2/2003  of the standard approach used by market participants to evaluate the risk inherent in their market activities and to set up exposure limits. Of course, central banks and financial institutions should continue to encourage the use of these instruments.
But, the slow process of decision making in Europe, the difficulties of policy implementation and the debate around the burden-sharing of the crisis have limited the positive effects of those policies on confidence and credibility. In this setting, the ECB and the Eurosystem have played a central role. While safeguarding their paramount objective of price stability, their actions have been directed to re- establish the proper functioning of the transmission mechanism of monetary policy, as shown by the recent decisions by the Governing Council on the O[utright] M[onetary] T[ransactions] initiative. Some big steps have been taken on the institutional front at the European level. Fiscal rules have been strengthened and refined, governance reinforced and, in the financial sphere, great progress is being made to establish a common supervisory framework. In parallel, national constitutions have been adapted in several countries – Germany, Spain and others – to comply with these new requirements. This overview of the problems and challenges in Europe may be compared with the evolution of Latin America during the crisis and its aftermath. The Latin American performance during the crisis shows that these countries have drawn the lessons from the similar episodes they went through in the late nineties and early 2000’s. In particular, I would highlight two characteristics of the economic setting that has made the region so resilient to the external shock this time: the improved macroeconomic framework – underpinned by price stability – and the reinforcement of financial stability.

Fixing the Fault Lines of the Global Financial Crisis Let me begin with the regulatory and supervisory responses to the Global Financial Crisis. The advances over the last 20 years can be broken down into three broad phases. The era of regulatory reform (2008 to 2016) The first eight years following the Global Financial Crisis of 2008 saw the most wide-ranging set of reforms ever in the history of financial regulation. The destruction that the Global Financial Crisis had unleashed on our economies and societies galvanised action on an unprecedented scale. The Global Financial Crisis revealed some deep fault lines in the financial system that had been masked by fortuitous growth. Many financial institutions had leveraged themselves to the hilt – some of them by as much as 40 dollars of debt to 1 dollar of equity – unthinkable these days. Many banks had severe mismatches in liquidity. An opaque OTC derivatives market led to rapid contagion when liquidity suddenly dried up. Moral hazard grew as some financial institutions were seen as too-big-to-fail. 1/9  BIS central bankers' speeches  The Financial Stability Board, or FSB, was strengthened and tasked to oversee reforms to address each of these vulnerabilities. The way the international regulatory community came together and forged a consensus on the necessary reforms was exemplary. Between 2008 and 2016, the FSB, working closely with the Basel Committee, IOSCO, and other standard-setting bodies, put in place the basic building blocks for a new regulatory architecture that continues to serve us today.