samchain/econo-pairs-v1 huggingface dataset:
Both the economic literature and the experiences of the countries show that, it is impossible for central banks to keep both the interest rates and foreign exchange rates under control at the same time in the economies where international capital movements are free as in ours. Therefore, the Central Bank does not and will not have an implicit commitment regarding the level of the foreign exchange rate, or a policy towards rendering the Turkish Lira valuable. When we look at the period starting from 2001 in which the floating exchange rate regime was embarked on up to now, we see a number of fluctuations in the foreign exchange rates, the most recent of which was observed in the May-June period. Similar fluctuations may be experienced in the future. The course of conduct of the Central Bank regarding the foreign exchange markets is quite clear. The risk of foreign currency is borne by the market players. The fluctuations that are experienced clearly display that these types of risks may arise any time and that they should be managed effectively. Economic units should ensure the required protection against the risks regarding their balance sheets in the modern sense within the scope of the risk management principles. Remarkable attainments were obtained in the banking sector within this context. The private sector also should need to adopt a similar approach in this respect.

Inflation figure of 12.9 percent in transportation services is another important factor that determines the inflation rate in the services group. Distinguished Guests, Consumer prices increased by 0.23 percent on monthly basis and remained below the expectations in the last month of 2006 and the year 2006 ended with an annual inflation of single digit as 9.65 percent. This figure is well above our end-year target of 5 percent. Although divergence from the inflation targets is experienced in the countries implementing this regime, it is very upsetting for us to observe such a great divergence from this target in the first year that we embarked on full-fledged inflation targeting regime. As a requisite of the principle of accountability, the detailed “Open Letter” elaborating the reasons of this divergence together with the policy measures to be taken will be sent to the government as soon as possible and be made public. Dear Guests, Due to the rapid increase in inflation in the first seven months of 2006, its being quite higher than expectations especially in April and May, fluctuations experienced in the financial markets and the uncertainty perceptions created by political developments, inflation expectations diverged from the inflation target. Inflation expectations of 12-months increased to 8.1 percent in July from 5.5 percent in April; while that of 24 months increased to 6.1 percent in July from 4.7 percent in April.
It is necessary to reduce general government debt both to lessen the vulnerability of public finances to any potential tightening in financing conditions and to restore scope for a fiscal policy response to any future adverse shocks. However, even in the current favourable environment of economic growth and low interest rates, the probability of the level of Spanish general government debt standing below the euro area reference level of 60% of GDP in the next decade is low. Factors conducive to public sector deleveraging are higher economic growth in real terms, the prospect of higher inflation, limited interest rate movements and a reduction in the deficit. I shall focus on the last two factors: the interest burden and budgetary consolidation. Evidently, a high level of public debt involves a likewise-high interest burden. While general government interest expenditure has eased owing to the effects of monetary policy, its level, at close to 3% of GDP, is above the average recorded since the launch of the single currency, in 1999. Moreover, the opportunity cost of this expenditure is very high: we might recall, for instance, that the volume of resources assigned at present by overall general government to nursery, primary and secondary education is similar to the cost of covering debt service. Further, we should bear in mind that public debt financing conditions may become less favourable than at present.

As you will have so many other matters to discuss, apart from the economy and the euro, you must forgive me for dedicating so much time to my own specific subjects. To conclude, I am sure these present Tertulias will, as in all the previous meetings, be successful, that the participants will enjoy themselves, and that our British friends will have very good memories of this visit to Madrid. Thank you. 2  BIS central bankers’ speeches
BIS Review 38/1997  -5-  The level of unemployment to which an economy returns when inflation expectations have been adjusted to actual inflation is usually referred to as equilibrium unemployment. It is immune to monetary policy and determined primarily by structural factors such as demographic changes, technology and the institutional conditions in the labour market. What I have just described is the textbook model for the long-term Phillips curve. The message is that an economy has a path for long-term growth that is determined by underlying, structural factors. Under certain circumstances, fiscal and monetary policy are capable of influencing fluctuations in activity around this trend, though one should not expect to be able to fine-tune demand. A basic idea behind a monetary policy focused on price stability is that the economy is capable of sustained growth along this long-term path. If this path accommodates a rapid increase in production, growth will be high; but if potential output rises slowly, actual growth will be weak even if monetary policy were to be very expansionary and possibly affect the situation temporarily. A very important conclusion from this is that permanently low unemployment cannot be achieved by accepting permanently high inflation. In other words, sustained employment cannot be generated by implementing an expansionary monetary policy and disregarding unemployment’s equilibrium level or the potential level of output.

There was a lack of confidence that the expansionary trend could continue without generating higher inflation. Inflation expectations moved up--more and more people began to count on rising inflation. All this was manifested in, for example, rising long-term interest rates, a weak exchange rate, rising producer prices and accelerating wage increases. The Riksbank therefore tightened interest rate policy, beginning in August 1994. The restrictive turn was criticised in some quarters because inflation had not yet started to accelerate. But our intention was precisely that. If monetary policy measures are taken in time, the inflationary process can be checked before it has taken off. Once inflation has got going, more pronounced monetary policy measures are needed for a return to low inflation. Vigorous efforts have also been made over these years to tackle the central government financial deficit. With its six-monthly control stations, the convergence programme enables people to keep an eye on the political system’s determination to complete the consolidation of the budget and fulfil the goal of balance in 1998. Government representatives have also expressed an ambition to achieve a surplus after that. With the improvement in central government finance, confidence in economic policy grew appreciably and inflation expectations fell back notably in the autumn of 1995 and during 1996. This in turn is a fundamental prerequisite for lastingly stable growth. During 1996 the Riksbank was in a position to reduce the repo rate by degrees to the lowest level for more than thirty years.
The simpler regime will, of course, only apply to firms which are not internationally active because internationally active firms will remain subject to Basel standards. We therefore also ask for views about how we should identify which firms are not internationally active. Decisions about scope will be important because, speaking generally, the more alike the firms in scope are, the simpler the regime can be. For example, 40% of the existing rules and technical standards for credit risk relate to the internal ratings based approach.3 If just those firms which only use the standardised approach were eligible for the simpler regime, these rules could be entirely removed. But, on the other hand, too restrictive a scope will mean fewer firms are able to benefit from the simpler regime. That is why we want to receive comments about where we should draw the line for a first step which delivers meaningful simplification for a worthwhile number of firms. These choices will determine which banks are affected by the simpler regime. As I say, these are likely to be smaller non-systemic banks as we focus on taking the first step towards building a strong and simple framework. But before moving on I would like to draw your attention to two other important reviews that the Bank aims to consult on this summer.

Research, including the PRA’s own analysis of survey responses from UK firms, suggests that the fixed costs of implementing new requirements can be proportionally higher for small firms than for large ones when measured as a fraction of a firm’s assets.7 What this tells us is that there are economies of scale when it comes to compliance costs and that some costs fall relatively heavier on small firms than on large firms. At the same time, separate research by Bank staff shows that prudential requirements that are well-matched with the risks that cause large banks to fail are not so well-matched with those that cause small banks to fail.8 Putting this evidence together, we can ask whether there are requirements which are relatively more costly for small firms to implement but which deliver fewer benefits than when they are applied to large firms. And that is what we do in this Discussion Paper. Having identified requirements which do not make a material  6  Amadxarif et al.
In carrying out the regulatory and supervisory function, the Central Bank's focus is primarily to promote the development of sound and robust DFIs capable of performing their mandated roles effectively. Seven DFIs are currently placed under the purview of the Act. Recognising the unique characteristics of each DFI, regulations and policies have largely been tailored-made to suit the different roles and functions of each DFI with the view of facilitating and strengthening their operations. In general, the DFIs are required to ensure that their operations and activities are in line with their mandated roles, underpinned by good corporate governance and best practices. They are required t o operate with transparency, especially with regard to information disclosure on their corporate performance, in order to enhance credibility and to harness greater confidence from the public that they serve as well as from the Government. Strategies formulated have also been focussed on enhancing the clarity in the roles and functions of the DFIs, with a view of minimising the overlapping of functions and increasing DFIs' effectiveness in serving the targeted sectors. This has led to a number of initiatives to realign and enhance the strategic focus through the restructuring of selected DFIs. One is the merger of the EXIM Bank and MECIB to enhance their synergy in export promotion. The  4/5  other important initiative is the rationalisation of Bank Pembangunan and Bank Industri, which will result in the establishment of an SME Bank.

With hindsight, the “original sins” of Economic and Monetary Union, an otherwise carefully thought-through and consistent project, were weak fiscal institutions, tolerance of economic imbalances and the lack of an integrated mechanism to supervise and resolve banks. As a matter of fact, financial fragmentation has led to a “two-gear” monetary union, in which the marginal cost of borrowing for banks varies according to the jurisdiction. 4  BIS central bankers’ speeches  1. Banks belonging to jurisdictions considered by markets as financially sound can generally access the interbank money market and get overnight financing at the EONIA rate, which is currently as low as 0.10%. 2. Banks in jurisdictions where risks and uncertainty are elevated generally have limited access to the interbank money market and rely to a large extent on central bank liquidity, charged at the MRO rate, currently 0.75%. The distressed funding conditions faced by banks in some parts of the euro area, compounded by expectations of a worsening macroeconomic outlook, have in turn resulted in fragmented credit conditions for households and firms, again along national borders. For one thing, credit supply standards applied by banks in their lending to the real economy have diverged across euro area countries. A similar message comes from the cross-country comparison of bank lending rates.
BIS Review 148/2010  1  Total domestic credit, comprehensively defined to include foreign currency loans, increased by 3.1% at end-September 2010 compared with 10.1% growth registered in the second quarter of 2010. This was mainly due to a 4.4% rise in net claims on central government. Similarly, lending to the private sector (including public enterprises) grew by 2.2%. On an annual basis, domestic credit growth at 13.5% in September 2010 was 10.1 percentage points lower than the 23.6% recorded in June 2010. This largely reflected a slowdown in credit to the private sector, including public enterprises to 0.7% compared with the 25.9% growth recorded in June 2010. However, lending to the government increased by 41.7% from 108.9% in June 2010. On a sectoral basis, households (personal loans category) continued to account for the largest share of outstanding credit, accounting for 26.3% (26.2%) 1 in September 2010. The agricultural sector was second at 17.1% (18.5%), followed by manufacturing 13.4% (13.0%), wholesale and retail trade, 12.0% (11.7%), transport, storage and communications, 5.3% (5.4%) and real estate, 5.4% (5.2%). Interest rates Demand for Government securities remained strong although it was relatively lower during the quarter under review. Therefore, yield rates trended higher across all tenors. In the Treasury bills market, the composite weighted average yield rate increased by 2.5 percentage points to an average of 7.4% from 4.9% recorded in the second quarter.

Preserving the credibility of our commitment to price stability is vitally important, not least because of the flexibility it affords us to confront future shocks that have the potential to cause damage to the financial system and the economy. Second, it is important that the United States work to build more confidence that it will act on the fiscal front to achieve a better balance between our commitments and our resources, both with respect to the medium term and the longer term. Given the inherent uncertainty surrounding long-term growth forecasts, the formidable rise in costs associated with providing for an aging population with longer life expectancy, and a potentially protracted elevation in national security costs, it makes sense to build a stronger financial position into our fiscal future. The present fiscal trajectory entails an uncomfortable scale of borrowing and little insurance against possible adverse outcomes in an uncertain world. Building a stronger fiscal cushion can help reduce the risk of adverse outcomes - those that might come in the form of a decline in the willingness of foreigners to acquire claims on the United States on the present scale, as well as those that might take the form of a reduction in private investment and lower future productivity gains. Strengthening confidence in our fiscal management and fiscal sustainability is critical to reducing the risk in the size of our external imbalance. Third, the U.S. and the major economies have an important role to play in encouraging further evolution in the international monetary system.
But I firmly believe that if we had cooperated better, our countries would probably not have been as severely affected by the global repercussions of the credit crunch. To avoid this kind of cooperation failure, you need a clear division of roles and responsibilities. You need to share information and coordinate your actions. And to manage a crisis effectively, you need to be prepared. This requires planning ahead. By establishing, in normal times, what is usually referred to as a Domestic Standing Group – bringing together the supervisory authority, the central bank, the finance ministry and perhaps certain other relevant authorities – you can enhance preparedness by developing suitable crisis management tools and routines. Creating recovery and resolution plans together with the banks is another productive approach. By conducting crisis simulation exercises, you can also test these tools and plans on various possible crisis scenarios. However, as banking is becoming increasingly internationalised, merely cooperating within your own country will not be enough. Cooperation must also be extended across borders. This is particularly true for countries whose banking sectors have a high degree of crossborder activities. Spain and Sweden share this characteristic, despite the fact that banks in our countries run their cross-border activities in very different ways. But cooperating across borders is difficult. There are all sorts of reasons for this. To mention a few, legal barriers, political pressure or even language and habits may all prevent fruitful exchanges between countries from taking place.

Figure 3: Actual MPR versus Taylor rule (†)  2.0  2.0  1.5  1.5  1.0  1.0  0.5  0.5  0.0  0.0  -0.5  -0.5  -1.0  -1.0  -1.5  -1.5 2010  2011 Lag  2012 Inflation  2013 GDP  2014 2015 Shock  2016 D(MPR)  2017 2018 Taylor rule  (†) Source: Central Bank of Chile. Figure 4: MPR Chile vs US (†)  9  9  8  8  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0 2000  2002  2004  2006  2010  2008  2012  2014  2016  0 2018  CHL: Monetary Policy Rate US: Fed Fund Rate (†) Sources: FRED and Central Bank of Chile. Some key factors supporting the roles of ER as a shock absorber of financial and commodity price shocks A flexible ER regime is not a form of snake oil to alleviate any sort of global ailment. ER volatility can, of course, generate major wealth shifts, and even solvency problems to agents with large balance sheet mismatches—including government. They can induce major losses in competitiveness, which may harm overall activity if winners fail to capture benefits as fast as 6  losers realize costs. Constituencies around fixed prices—including the ER—are very concentrated and powerful.
The letter also expressed that further monetary accommodation would depend on the factors affecting the medium term inflation outlook. Food and energy prices and global uncertainties have continued to rise since then, feeding into inflation expectations and core prices and thus increasing the risks regarding price setting behavior and the degree of inflation persistence. Consequently, the MPC decided to suspend the rate cuts in the March meeting and announced in the April meeting a clear tightening bias to be exercised when deemed necessary. 3. Inflation outlook  Distinguished Guests and Members of the Press, Now that I have summarized inflation and monetary policy developments, I would like to share with you our evaluations of the inflation and monetary policy outlook. Current supply and demand conditions support the downward trend in inflation. Data on consumer credits suggest that monetary conditions continue to be non-accommodative. Annual growth rates in automobile and housing loans are at lower levels compared to the periods of vigorous domestic demand (Figure 8). Although consumer credits displayed signs of recovery in 2007, the cautious monetary policy stance and the tightening in global credit conditions are likely to restrain credit expansion in the forthcoming period.

At this point, global perceptions regarding the persistency of the increases in agricultural commodity prices in the medium term have become stronger. In this conjuncture, the analysis of the forecasts for world food prices and their impacts on domestic food prices bears great importance. In this respect, we included the summary of a particular study in the Inflation Report. The said study analyzes in detail the price developments observed in food products, determines their relative impacts by excluding the determinants of domestic food prices and accordingly makes assessments for the future. As stated in the study, the reinforcement of global perceptions regarding the persistency of the increases in agricultural commodity prices in the medium term indicates that upward risks on domestic food prices and especially on processed food prices will continue in the foreseeable future. In this framework, we revised our forecasts for medium term inflation to incorporate more conservative assumptions on food prices and we have raised our assumptions for food inflation to 13 percent for the year 2008 and 8 percent for the year 2009. These changes have led to upward revisions in our inflation forecasts, by about 1.2 points for 2008 and 1.1 points for 2009. The assumption on oil prices in the January Inflation Report stood at USD 85 per barrel. However, oil prices averaged about USD 100 in the first quarter of 2008. Considering the most recent developments, we have revised our assumption for oil prices to USD 105 per barrel.