samchain/econo-pairs-v1 huggingface dataset:
3 The Black-white unemployment gap, which had reached historical lows in 2019, widened considerably during the spring and summer, undoing much of the progress of the past decade. While the gap has narrowed some since, closing this gap further will be an important part of a full recovery. Black-owned businesses have also suffered disproportionately.4 A report released by the New York Fed in August found that Black-owned businesses have been almost twice as likely to shutter during COVID-19 as white-owned firms.5 A key area of our focus is to better understand what contributes to economic inequities and to finding solutions.6 Through our economic research and outreach efforts, we are working to understand how racial disparities play out in the labor market, and what can be done to change these outcomes. Now I’ll turn to inflation, the other half of our dual mandate. Although we have seen swings in some prices from the effects of COVID, overall the inflation rate has been running below our 2 percent goal. With our economy and the global economy still far below full strength, I expect underlying inflationary pressures to remain subdued for some time. An encouraging sign is that measures of longer-run inflation expectations have retraced earlier declines as the economic outlook has brightened and are now at levels seen a few years ago. As the economy fully heals and reaches maximum employment over the next few years, I expect inflation will sustainably move to levels consistent with our 2 percent longer-run goal.

We are the same people, speaking the same language and sharing the same customs, hence, there is no point for us to be held back by the absurd barriers of time. The completion of the new road and its stretch to the largest harbour in the country create the proper grounds to turn the Kukës town into an extraordinary transit point for passengers, goods, services, art and culture. Fourth, your district should make clever and great use of the presence of a university in this town. My call is just plain: invest in mobilizing a professional and specialized teaching team. Spend on education, on knowledge and the culture it produces. In this context, the local government could set financial stimuli. The final goal will be to establish a national educational centre, which serves to the local community living on both sides of the border. I honestly hope the future managers grow and be a product of this university. Fifth, I believe you should pay your utmost attention to the presentation and spreading out of information on the potentials your district has to offer. Pretending you possess something that is worth it is only one side of the coin. The other is how able you are to find buyers, to get them buy what you want to sell. In this context, the complete identification, regulation, presentation and promotion of these great potentials are of prime priority.
For instance, foreign direct investment does not usually jeopardise economic stability, while short-term movements and carry trade are riskier. It can be argued that Iceland had gone too far in financial integration in the years before the financial crisis. In part because of this, the Central Bank recommended, in its 2012 report entitled Prudential Rules Following Capital Controls, that before the capital controls are lifted, restrictions should be placed on financial firms’ foreign exchange risk and their ability to expand their foreign currency balance sheets with the associated maturity mismatches. Restrictions would also be placed on foreign-denominated borrowing by households, firms, and municipalities without income in the borrowed currencies. These ideas are being developed and honed, and some of them could be implemented with the entry into force of new liquidity and foreign exchange balance rules that the Central Bank intends to issue this year. It has been said that a reassessment of the monetary policy framework must take place before the capital controls can be lifted in full. This is perhaps not as critical as it might seem, however, as countries with unrestricted capital flows have various kinds of monetary policy framework. Nonetheless, it is necessary to review our monetary policy, and the Bank has published reports on this topic in the recent term, one entitled Monetary Policy After Capital Controls and the other entitled Iceland’s Currency and Exchange Rate Policy Options.

in 2010–2012, and those foreign currency purchases were made at a considerably lower exchange rate than the recent sales. Furthermore, on 19 February the Bank concluded a forward currency swap agreement with Landsbankinn in the amount of 6 b.kr., which means that Landsbankinn will not need to accumulate foreign currency to comply with the Bank’s foreign exchange balance requirements. The Monetary Policy Committee is of the opinion that intervention of this type is justifiable in order to mitigate temporary exchange rate volatility that is addressed more effectively with  2  BIS central bankers’ speeches  instruments other than interest rates. In recent weeks, the foreign exchange market has been characterised by an unusual combination of features: weakening terms of trade, foreign exchange accumulation in anticipation of heavy foreign debt service, foreign exchange mismatches in the banks’ balance sheets and, in part, self-fulfilling expectations of a currency depreciation. Because these conditions are in part temporary and increased foreign exchange inflows are expected as the spring advances, limited one-off foreign currency sales by the Central Bank were considered appropriate to prevent excessive currency depreciation and stem the tide of these self-fulfilling expectations of market participants. This is consistent with the strategy outlined in the Bank’s report Monetary Policy After Capital Controls, published in late 2010. Capital controls were imposed early in the winter of 2008 as part of the Government’s IMF programme.
from 4.5% to 3.6% of GDP, with the deficit being predominantly financed by foreign borrowing, would slow down government demand for domestic borrowing. The growth in government demand for credit could decrease from this year’s 32.7% to about 6%. However, even with this relatively low growth rate, there will be little room for the rechannelling of banks’ domestic credit potential towards the private sector. The situation can be further aggravated by shipbuilding, which is not included in these estimates, but can nevertheless affect the budget and its borrowing in 2010. BIS Review 2/2010  1  (X) Under such circumstances, monetary policy will have to balance between reducing the current account deficit and providing for the aggregate domestic credit growth accompanied by exchange rate (foreign exchange reserves) stability. Consequently, we expect to continue implementing the existing instruments (foreign exchange interventions and open market operations), for now, without changing the reserve requirements (because of the favourable liquidity situation in the banking sector), or relaxing the prudential measures, as well as without raising regulation costs. We anticipate that total liquid assets, money supply and bank placements will increase by about 7%, 4.5% and 4.4% respectively.

In these three countries labour market institutions are currently assessed to be more flexible than in Luxembourg, Italy, France, Germany, Belgium and the Netherlands. This should help achieve a balance of employment protection that gives both stability – encouraging workers to invest in firm-specific skills – and mobility – allowing for reallocation between productive and non-productive sectors.1 These same countries have also introduced several measures to help connect wage levels more closely with actual productivity developments. The link between collective bargaining and economic conditions has been strengthened by the possibility for more firm-level agreements. In Greece, wage floors have been significantly reduced to boost youth employment creation; in Portugal, they have been frozen and overtime pay considerably reduced. Wage indexation has become less prominent in Spain and in Cyprus it has been abolished. In all these countries the labour market reforms have started to have an impact on private sector wages. Private sector compensation per employee has fallen significantly in Greece since 2011, correcting what was an unsustainable increase prior to crisis, and it has also started to adjust in Spain, Portugal and Cyprus in 2012–13. I fully recognise the difficulties this process creates, yet this has to be set against the need for wages to adjust to reduce unemployment and restore external competitiveness. We are expecting that that these positive effects will dominate going forward and help employment to begin recovering in the near future.
Second, we could see demand pressures on either side of the most likely outcome. Demand could be weaker if Covid continues to be a material health concern and prompts more caution in activity and spending habits. But there is also an upside risk that the substantial build-up of excess savings in the last year or so raises consumer spending to a larger degree than currently projected. Third, we could also see wage pressures arising if the number of people in work or seeking work does not return to pre-Covid levels, and inactivity remains at a higher level. A return of labour supply is therefore important. Fourth, a further challenge would arise if these temporary price pressures have a more persistent impact on medium-term inflation expectations, which shift to a higher level inconsistent with the target. As set out in the Minutes of the MPC’s June meeting, taking together the evidence from financial market measures and surveys of households, businesses and professional forecasters, the Committee judges that UK inflation expectations currently remain well anchored. It will be important to continue to monitor closely movements in measures of medium-term inflation expectations, however, and to adjust policy accordingly. The post-pandemic economy I want to look further forwards, to the second big question that will shape the performance of the economy. I have described the bounce-back of the economy from the Covid shock.

Just suppose for a moment that, for the rest of this year, the level of average earnings is flat – what would be the peak rate of growth of the series? The answer would be 7% due to the sizeable base effect, and then it would fall back quickly, other things equal. Needless to say, 7% is a chunky growth rate for earnings, but on its own it would tell us nothing of real substance about the future. That is not where we should place most of our focus on the labour market. Our focus should be on whether, and how rapidly, people return to the labour force, and in what degree, a point I will come to in a moment. The risks to the outlook for inflation Let me now turn to what could cause things to turn out differently, and thus what we must watch very carefully. First, so far, we have seen a pick-up in import prices which has extended beyond energy prices, and we have observed these increases pass through into producer output prices, 3/5  BIS central bankers' speeches  and now into consumer prices, to some extent. In some cases these increases reflect prices returning to pre-Covid levels, and in part they also reflect bottlenecks in supply chains as we experience a rapid but uneven recovery. There are good reasons to interpret this as a temporary feature, but we must be on the lookout for the risk that these features are more sustained.
To be able to assess monetary policy during a certain year, it is important to remember that such considerations also lie behind the decisions. In order to gain a picture of the initial situation for a certain year, it is necessary to study the course of inflation in earlier years. The fact that inflation has been allowed to deviate from the target may be due to poor monetary policy decisions. But it may also have been part of a deliberate strategy by the Riksbank to be able to balance production and employment. If we do take such considerations, we shall however have clearly explained this in connection with our decisions. So how did it turn out? After this general discussion, allow me to conclude with a very brief description of the considerations that monetary policy faced during the assessment period. The development we envisaged in 2005 and 2006 was that economic activity would continue to strengthen. Cost pressures and resource utilisation were expected to rise gradually, but a strong development of productivity was nonetheless assumed to hold back inflationary pressures. The most important consideration was the rate at which the repo rate should be raised. It was a question of the low inflation rate initially rising towards the target, but in a way that did not involve a risk of an overly rapid increase in the rate of inflation later on. At the beginning of 2006 we began a phase with increases, which continued in 2007.

In fact, the stabilizing role of the euro is a general phenomenon, allowing third currency exchange rates to stay closer to their fundamentals, as dollar fluctuations often incorporate strong and persistent unexplainable components. After the introduction of the euro in January 1999, the dollar first appreciated and later fell against most currencies. As the euro was the major counter-weight to those fluctuations, most countries experienced offsetting movements of their currencies with respect to dollar and the euro. First, while third currencies depreciated against the dollar, they appreciated against the euro. And later, when they started to appreciate against the dollar, they fell against the euro. These offsetting movements have been observed, among other currencies, for the Swiss franc, the British pound, the Japanese yen, the Canadian dollar, and the Norwegian krona. By absorbing exchange rates shocks, the euro thus contributes to stabilizing external payments of countries trading with both the EU and the US. (b)  The autonomy of Swiss monetary policy  Financial market developments over the past 5 years have also demonstrated that the monetary autonomy of the Swiss National Bank has not disappeared. The amplitude with which the SNB has reacted to changes in the economic environment since the end of 2000 lies in between the reactions of the Federal Reserve and the European Central Bank, with more aggressive interest rate cuts by the Federal Reserve and a relatively modest reaction by the European Central Bank.
My conclusion from this discussion of Figures 5 and 6 is that the estimate of Sweden’s potential GDP is not reliable and that the output gap is thus not a reliable indicator of resource utilisation. 2  The Federal Reserve Bank of San Francisco has a forecast for the potential GDP of the United States that is very similar to the CBO’s forecast, see Rudebusch (2011). 3  The figure shows the Riksbank’s forecast for the United States’ GDP, but it is very similar to the CBO’s forecast for the United States GDP. BIS central bankers’ speeches  3  I believe instead that the unemployment gap is the most appropriate measure of resource utilisation. There are several reasons for this. Unemployment is measured often and is not revised. GDP on the other hand is measured less often and is highly uncertain, and major revisions are made. Unemployment is also directly related to welfare – one of the worst things that can happen to a household is that one of the members of the household loses his or her job. Unemployment is also the indicator of resource utilisation that is best known and easiest for the public to understand. The preparatory works for the Sveriges Riksbank Act state that the Riksbank should support the objectives of general economic policy. One of the main objectives of economy policy in Sweden is to limit unemployment, for example by improving the functioning of the labour market and increasing the incentives to look for work.

Inflationary pressures are stronger than expected and are spreading across expenditure items, exacerbating the loss of purchasing power Inflationary pressures in the euro area have been more intense and more persistent than expected throughout the year. Euro area inflation stood at 9.1% in August. Higher energy prices are the main factor behind these high inflation levels. Indeed, it is estimated that, between their direct impact on energy goods in the consumption basket and their indirect effect through other goods and services, they are responsible for somewhat more than 60% of the growth in inflation. Yet the increase in food prices is also very significant; in fact, food prices are directly responsible for almost 25% of the increase in inflation. In any event, inflationary pressures have gradually spread to the less volatile prices in the consumption basket. Higher production costs have passed through to consumer prices  2  faster than expected, against a backdrop of manufacturing bottlenecks and demand pressures associated with the economic reopening. Underlying inflation in the euro area was over 4% in August, and over 3% in all euro area countries. Moreover, inflation was over 4% in more than half the underlying inflation components (in 41% of them in Spain).
Specifically, high indebtedness could deprive an economy from reaching its potential growth, as a high and rising debt burden could impair economic growth due to the so called "crowdingout" effect. More specifically, when private debt is high, consumers and businesses have to divert an increased portion of their income to paying interest and principal on that debt. Consequently, the ability to consume and invest is reduced. Similarly, when governments increase borrowing, through issuing new debt to finance their policies, they compete with everybody else in the economy who wants to borrow the defined amount of savings available. As a result of this competition, the real interest rate increases and so private investment could be crowded out. Also, if general debt rises excessively, debt sustainability issues may arise. It is, therefore, important for an economy to grow faster than its debt so as to avoid falling into a situation where low growth co-exists with increasing debt payments that unavoidably lead to falling confidence and a negative impact on financial stability. A certain level of indebtedness is essential for an economy to grow fast enough so as to reach its potential through a sustainable level of consumption, investment and production, that are financed by borrowing. As the World Bank indicates, "debt financing is critical for development, but unsustainable levels harm growth and the poor. Debt can be a useful tool if it is transparent, well-managed, and used in the context of a credible growth policy. But, too often, this is not the case.

Since 2016, it follows a downward trend with the exception of the second half of 2018, due to the fiscal impact of the measures related to the Cyprus Cooperative Bank, and in 2020 due to the outbreak of the pandemic. The public debt-to-GDP ratio dropped below 90 percent at the end of 2022 due the reopening of the economy and the recovery that followed. However, risks remain elevated due to Russia's war in Ukraine and the deterioration in the global economic environment. At the current juncture, preserving fiscal space is crucial, as government intervention is important to support the digital and green transition, improve competitiveness and promote social cohesion. The NextGenerationEU, which allocates around EUR 1.2 billion to Cyprus in grants and loans, can support these goals and will have a favourable impact on real growth. The successful implementation of structural reforms and the green and digital agenda will be key for transforming our economy to a sustainable and more resilient one. Turning now on the private sector debt in Cyprus, this includes both legacy loans built up prior to the domestic financial crisis in 2013 and new origination loans thereafter, granted to households and non-financial corporations. The granting of new loans after the financial crisis in 2013 was done in adherence to stricter supervisory guidelines and tighter credit standards, and as data shows, the default rate of these new loans is quite low. However, the domestic private debt levels are still burdened with legacy loans that are more difficult to tackle and require special attention.
First, the major public financial institutions were at the forefront of this movement. This is the case for the European Bank for Reconstruction and Development or the Caisse des Dépôts, with its subsidiary CDC-Climat. The European Investment Bank estimates that it currently grants 25% of its loans – over EUR 20 billion per year – to “green” projects. Second, under the aegis of the United Nations, projects were launched such as the UNEP finance initiative, a partnership between the United Nations Environment Programme and 200 financial sector institutions, which make environmental sustainability a collective responsibility, share best practices and establish principles for green financing. Thanks to the Montreal climate change protocol, or to the Portfolio Decarbonization Coalition, signatory investors commit to measuring and disclosing the carbon footprint of their portfolios. The objective is ambitious: reduce investment in carbon-intensive projects by several hundred billion dollars. Lastly, financial institutions are now making more direct commitments. French banks and insurance companies have recently announced that they have withdrawn their support for the coal industry and increased their financing of renewable energies. Paris Europlace called for the creation of an energy transition fund, which would be invested in by French banks, insurers and asset management companies, and which could in turn invest EUR 10 billion by 2020, with a view to financing projects to improve energy efficiency or promote renewable energies. This is a commendable initiative. II/ To best align these private initiatives with the fight against global warming, which is a public good, public intervention is nevertheless necessary.

We need to ensure that any new requirement provides the right incentives to financial institutions, gives a certain degree of flexibility to the authorities and does not create disincentives to make headway in the energy transition process. Modest, adaptable, yet determined. Because there is a battle to be won and because the current market signals – overly low carbon prices and an overly short time horizon – are insufficient to ensure full mobilisation. There are a large number of private initiatives. But there is also a need for a public framework to ensure the general and lasting alignment of interests. We are determined to play a full part, from Basel to Paris and elsewhere. Thank you. 4  BIS central bankers’ speeches