samchain/econo-pairs-v1 huggingface dataset:
According to Friedman, it is therefore best for monetary policy to create the right conditions for a stable price level and to focus on the variables that a central bank can control, such as the money supply. In the 1970s and 1980s a number of countries applied a monetary policy regime that was based on steering the money supply. However, research has shown that there is no stable relationship between the money supply and inflation. The rapid financial developments and the use of new, alternative methods of payment have contributed to the money supply not functioning well as a target variable for monetary policy in our present society. Nor is the rate of circulation of money constant; it can vary substantially. It is therefore more natural to focus on trying to directly steer inflation and allow the money supply to remain one indicator among many. The past few decades’ research has pointed to the importance of inflation expectations. Although there is a relationship in the short run between unemployment and inflation, the central bank cannot make use of this in the long run, as companies and individuals will realise what policy is being conducted and adapt their expectations accordingly. For example, wage-earners may demand higher wages as compensation for coming inflation. This will in turn have a negative effect on employment. Monetary policy thus cannot have a lasting influence on real economic variables.

More broadly, the international Committee on Payments and Market Infrastructure (CPMI) has launched a task force to look into the security of wholesale payments that involve banks, financial infrastructure firms and other institutions. 16  I will return later to these themes of international cooperation and shared oversight. 15  Record of the FPC meeting held on the 23 and 29 November 2016 http://www.bankofengland.co.uk/publications/Documents/records/fpc/pdf/2016/record1612.pdf 16 http://www.bis.org/press/p160916.htm 9  All speeches are available online at www.bankofengland.co.uk/speeches  9  Prudential Risk  As I have noted, financial stability authorities are more used to managing prudential as opposed to operational risks. For many of the payment and settlement layers of infrastructure, prudential risks are small. Many FMIs employ no leverage, they typically do not take deposits or investments and they are not primarily engaged in either maturity or liquidity transformation. The main prudential type risk in the financial infrastructure world arises from the CCPs in the form of counterparty credit risk and liquidity risk. The development of CCPs for financial contracts is not an accident. It is one of the cornerstones of financial stability reforms that followed the crisis. The crisis revealed a huge and hitherto opaque network of financial contracts, particularly derivative contracts, held bilaterally between institutions. As the prices of the underlying financial assets fell and as confidence in counterparties evaporated, banks withdrew trading lines from some counterparties and began to demand increasing amounts of collateral (margin calls) from each other in order to protect themselves.
The euro area-wide unemployment rate has fallen to 8.7%, compared with levels close to 13% at the height of the crisis, although there are substantial cross-country differences, ranging from an unemployment rate below 4% in Germany to 20% in Greece and 16.5% in Spain. Moreover, a balanced pattern of economic growth can be seen. Adding more recently to the momentum of private consumption, the sole engine of growth of the start of the recovery, has been the dynamism of business investment. Low financing costs, the sound performance of final demand and high capacity utilisation are enabling investment to pick up to pre-crisis levels. However, factors persist that might restrict medium-term investment projects, including most notably low potential growth expectations, the adjustment of balance sheets and the correction of high corporate debt levels still under way, and the problems that are creating political uncertainty. Euro area exports, boosted by more buoyant global trade, are also contributing to the momentum of activity. And this despite the notable appreciation of the euro since last spring. Undoubtedly, a significant factor underpinning the recovery has been the maintenance of an expansionary monetary policy, which has allowed financing conditions to be relaxed, contributing to the upholding of both private consumption and the recovery in investment. Specifically, estimates by the Banco de España suggest that the series of monetary policy measures adopted since mid-2014 might account for close to half of the nominal GDP growth in the euro area from 2015 to 2017.

On the domestic front, the risks associated with the political situation in Catalonia remain. The baseline scenario of our December projections included the negative effects of the increase in uncertainty relating to political tensions. Specifically, on that occasion it was considered that the scope of the events already observed would be relatively limited and temporary, albeit not negligible. So far, the information available appears to confirm that recent economic developments are not far removed from the scenario anticipated, with effects that appear to have been confined to Catalonia. Specifically, since summer 2017, the performance of the Catalonian economy appears to have been relatively worse than that of the rest of Spain in terms of the figures, for example, on domestic spending and tourism. Elsewhere, the indicators measuring the degree of economic and financial uncertainty suggest a reduction in this variable. The incidence of this source of risk will depend on the intensity and persistence of the tensions. An easing in these tensions might lead to higher growth than that considered in our December projections. Conversely, a hypothetical rebound in tensions might lead to an increase in uncertainty resulting in a more pronounced impact on agents’ spending decisions. Conclusions I shall now conclude, setting out once more our main challenges. As I said, the resilience of the Spanish economy to future adverse shocks has increased following the crisis. But we cannot be complacent.
Bandid Nijathaworn: Risk management and Pillar II implementation Opening address by Dr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the FSI-SEANZA Regional Seminar on the Implementation of the Supervisory Review Process (Pillar II) of Basel II, Bangkok, 21-24 April 2009. *  *  *  Distinguished Speakers; and colleagues from SEANZA central banks and regulatory authorities, Let me begin by extending a warm welcome to all of you to Bangkok, and on behalf of SEANZA members, I would like to express our appreciation to all the speakers, as well as the FSI, for their contributions to make this FSI-SEANZA Regional Seminar on the Implementation of the Supervisory Review Process possible. This is all the more so as this seminar had to be rescheduled from last year, and in this regard, let me express our commitment that the Bank of Thailand stands ready to facilitate you and ensure that your experience here will be a fruitful and enjoyable one. Ladies and gentlemen, The current global financial crisis underscores the need to strengthen risk management and risk-based supervision, so that we can deal more effectively with the increased complexity arising from both financial product innovation and increased interconnectedness between financial institutions. As for the current crisis, while many causes have been identified, what has become very clear is that financial institutions, capitals were not adequate given their risks, and this had allowed over-leveraging by financial institutions as well as by their customers, leading to over-indebtedness and asset price bubbles.

If the shift continues, the price-dampening effects of increased imports from low-cost countries in Asia and Central and Eastern Europe will persist longer than assumed. The change in China’s exchange rate regime and the revaluation of the Chinese currency will probably not cause noticeable changes in price developments for imported consumer goods. Partly due to very high growth in demand for oil, the average price of Brent Blend rose to almost USD- 40 per barrel in 2004. Strong economic growth, particularly in the US and China, has resulted in high energy consumption. In the first half of this year, the price of Brent Blend has generally fluctuated between USD 45 and USD 55 per barrel. Oil prices have risen further this summer and have been more than USD 60 per barrel in August. Prices for oil futures have also increased. Rising or persistently high oil prices may gradually dampen growth among our most important trading partners. The slowdown may occur gradually, and will not necessarily be particularly pronounced. As long as oil prices remain high and there is robust growth in other parts of the world, as in China, other commodity prices and shipping activity will remain buoyant. Activity may then remain high in key sectors of the Norwegian economy, such as petroleum-related industries and the shipbuilding industry. At the same time, higher oil prices and lower external interest rates may, other things being equal, lead to an appreciation of the Norwegian krone, which will contribute to keeping domestic inflation low.
Let me now move on to the next question, which concerns the actual size of the risks linked to household debt in Sweden. It is true that there are estimates suggesting that the housing market in Sweden is not overvalued. Some of these estimates have been made by the Riksbank itself. This could mean that the high level of debt among Swedish households is not such a large problem, either. But there are also estimates that suggest an overvaluation.17 And when there is so much at stake, there are good reasons, as I see it, to be particularly cautious. After all, it was not the case that the corresponding estimates prior to the crisis showed any impending problems in the countries that have now been hit so hard. As Stefan Gerlach, Deputy Governor of the Central Bank of Ireland, noted recently, it is always easy to gain support for the opinion that housing prices are currently correctly valued – even if this soon proves to be incorrect.18 In Ireland, the opinion immediately prior to the crisis was that housing prices were not abnormally high and that the banks were stable and wellconsolidated. I am convinced that this was how most countries, which have suffered problems, viewed their situation.19 Nor does the size of household wealth appear to have had any decisive significance for the impact of the crisis. The countries that have been hit hardest include ones with both stronger and weaker wealth positions than Sweden (see Figure 8).

I also think that in this context it is useful to look at the international debate. Although the general view is that macroprudential instruments are normally preferable for counteracting this type of imbalance, there is also a lively debate on what role the policy rate should play.15 In this debate, it is not assumed that the policy rate is entirely ineffective and insignificant, and "the jury is still out". A dubious counterfactual experiment I would like to give an example from the Swedish debate, where I believe one has taken the potential of monetary policy to influence expectations too lightly. As I mentioned earlier, it has been claimed that up to 60,000 more people would have had jobs if the Riksbank had conducted a different monetary policy after the crisis and kept the repo rate at the level of 0.25 per cent to which it was cut in July 2009.16 When the Riksbank began to raise the repo rate in the middle of 2010, the situation was such that the Swedish economy had recovered surprisingly quickly from the crisis. Growth was record high, about 6 per cent in annualised terms in the first quarter, and basically all leading indicators of economic activity were pointing upwards. Household lending, which had increased at double figures in terms of annual changes prior to the crisis, had begun to slow down, but the increase in credit was still 9 per cent, far above the increase in disposable income.
Two of these do not concern me today. They are, first, the provision of intra-day liquidity under the RTGS system and overnight liquidity through the Discount Window, the main objective of which is to ensure the smooth 3  BIS Review 77/1999  functioning of the interbank payment system on a day-to-day, short-term basis; and, secondly, and at the other extreme, longer-term liquidity support or capital support to a probably insolvent bank, the failure of which would have wider implications for the stability of the monetary and financial systems of Hong Kong. The role of lender of last resort which I am addressing today is neither of those, but comes somewhere between the two. It involves the provision of support to banks that are basically solvent but are troubled by short-term funding difficulties. The immediate purpose of such support is to provide some breathing space to allow the institution to implement corrective measures. The overall aims would be, first, to prevent illiquidity in that particular institution from precipitating a situation of insolvency and, secondly, to prevent the contagion to other banks and hence a crisis for the system as a whole. The Legal Framework This crucial consideration, the effect on the system as a whole, brings me to the question of the resources available to the HKMA, and the legal and other limitations placed on the HKMA, in the exercise of its role as lender of last support.

The thrust of the recommendations in the Consultancy Study is greater competitiveness through liberalisation, deregulation and simplification. But an equally important message is that greater competitiveness should not be achieved at the expense of the safety and soundness of the banking system. The challenge is how best to exploit future opportunities while containing the risks. Recognising that the global trends it has identified are likely to increase the level of risk to which banks are exposed, the Study makes a number of recommendations designed to enhance the safety and stability of the system as a whole. You are aware of the details of the recommendations. You may also wish to be aware of the fact that the internal deliberation within the Government, after the threemonth public consultation period earlier this year, is drawing to a close, and an announcement on the Government’s decision on the recommendations will likely be made shortly. I would like to take this opportunity to thank HKAB again for the very helpful views expressed on them. I would also like to take this opportunity to deal specifically with one of the recommendations that has been widely supported in the comments received during the consultation period, although the subject matter itself may involve a certain degree of controversy both in theory and practice. This is the recommendation that the HKMA should clarify its role as lender of last resort.
What a difference a century makes. A century ago, the Bank issued one speech a year. In 2016 alone, it issued 80 speeches, 62 working papers, close to 200 consultation documents, just under 100 blogs and over 100 statistical releases - in total, over 600 publications. That is around 9,000 pages or around four and a  17  Monetary Policy Committee (2013). Stockton (2012), McKeown and Paterson (2014). Warsh (2014), Bank of England (2014). 20 See Williams (2016a) for a discussion of one of these initiatives. 18 19  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  half million words. It would not be over-egging this pudding to call this a genuine revolution in central bank transparency. And this revolution has taken place, in central bank terms, at warp speed. The Benefits of Central Bank Communication  In lockstep with this evolution-cum-revolution in central bank transparency practices has emerged an academic literature seeking to understand, explain and assess the implications of this shift. This literature has been growing fast. Chart 7 plots the percentage of mentions of the words “central bank” followed by “communication” in English-language publications over the past 70 years. 21  It shows an exponential  increase. This literature provides a useful starting point for assessing the progress made so far by central banks in boosting their openness, the advantages this may have conferred and where future transparency efforts might best be directed. In theory, transparent communications confer two high-level benefits.

Thus, for instance, only 77% of the hotel establishments that had opened in August 2019 did so in the same month in 2020, and only slightly over 40% of hotel rooms offered were taken up. On the information available, it is even possible that tourist activity may have worsened in September, given the high level of cancellations of prior reservations, the step-up in the year-on-year decline in air traffic and the downturn in spending using cards issued by non-residents. And, evidently, the latest pandemic-related developments in Spain do not contribute to brightening the outlook for these sectors of activity in the coming months. 2  Beyond the short term, the outlook for the Spanish economy, as for other countries, is shrouded in uncertainty, linked to how the pandemic evolves. This is why the Banco de España opted, in its publication dated 16 September,2 to present more than one scenario in relation to the possible course of the economy over the next two years, as it had already done last April and June. In this case, two scenarios were released. They share a common assumption about an effective medical solution being found and widely distributed among the population as from the second half of 2021. That is in line with the time horizon which, despite the high uncertainty, epidemiologists appear to be tentatively viewing as most realistic. The difference between the two scenarios lies in the assumptions made about the course of the epidemiological situation in the coming quarters.
As for the claim that the decision to enter ERM II was hasty and premature, that suggests recklessness! No, there was no rush. The decision was made after thorough consultations with the EU Commission and the European Central Bank (ECB) in the light of the progress achieved by Malta in fiscal consolidation and structural reforms. Their agreement was contingent on a firm undertaking by the Maltese authorities to continue to implement the Convergence Programme. A related objection is that before adopting the euro Malta should first satisfy tests similar to those set for the British economy by Chancellor Brown. This argument betrays an insufficient familiarity with the Chancellor’s five tests. They are, in fact, not so different from the Maastricht criteria, which Malta, together with the six other new Member States currently in ERM II, is seeking to satisfy. The five tests relate to convergence (like the Maastricht criteria); flexibility of labour, product and capital markets (being addressed in Malta’s Convergence Programme); investment, i.e. whether euro will encourage more inward FDI (the British Treasury’s 2003 report suggests that it does); financial services (this applies to the special case of the City of London); and growth, stability and employment. Malta’s strategy document, published jointly by the Government and the Bank last year, argues that the euro would be beneficial in this respect (and so does the Treasury report). The case for adopting the euro sooner rather than later is set out in the strategy document.

It enables us to create long-term stability. And this in turn is an asset for the whole economy and the financial sector in particular. 5  Cf. SNB annual Financial Stability Report, in which the SNB presents its yearly assessment of the Swiss banking sector’s stability: www.snb.ch/en/iabout/pub/oecpub/id/pub_oecpub_stabrep. BIS central bankers’ speeches  3  Due to Switzerland’s stability, domestic and foreign investors find it attractive to invest or have their wealth managed here. Of course, high-quality services provided by banks are an additional factor making Switzerland attractive for investors. Price stability is also an advantage. It makes the future more predictable and decreases the uncertainty of investments. Customers of Swiss banks are not investing exclusively in Swiss assets or Swiss francs. But part of the reason why they want to have their wealth managed here is because of the stable political, economic and monetary conditions. These stable conditions have supported the development of a strong and globally attractive financial sector. Swiss banks are global leaders in managing cross-border assets and wealth management. At the end of 2014, roughly half of the assets under management at banks in Switzerland were foreign customer assets. 6 The Swiss franc plays an important role in the international financial system. Measured by foreign exchange turnover, the Swiss franc was the sixth most important currency worldwide in 2013. 7 The banking sector is also an important part of the Swiss economy. The Swiss banking sector currently generates about 6% of GDP (cf. chart 3).
Preparatory work in the EU The preparatory work is in full swing in all the EU institutions as well as in the member states. The EMU project will not founder on technical aspects. In May 1995 the Commission presented a green paper on the practical arrangements for a changeover to the single currency. At the Madrid meeting that year the European Council adopted the scenario for the changeover, specifying dates for the central decisions. The Council confirmed that Stage Three of EMU is to start on 1st January 1999. The decision on which countries will participate in the euro area is to be made as early as possible in 1998 (probably February--April) on the basis of which countries fulfil the convergence criteria in respect of statistics for 1997. Euro banknotes and coins are to be in circulation by January 2002 at the latest. BIS Review 14/1997  -3-  The preparatory work last year was dominated by two issues: one was what is now called the growth and stability pact and the other was the nature of the relationship between the euro and the currencies outside the euro area. A common factor in these matters is the question of maintaining stability once EMU has been established. 1. Growth and stability pact Without specific restrictions, participation in the euro area would make it easier for a country to implement an expansionary budget policy.

The picture of employment is nevertheless rather divided. The number of jobs in the manufacturing industry has declined markedly, while jobs in the public sector and the service industries have increased. Given this, the situation on the labour market is of particular interest. It appears to be relatively constrained, considering that we are at the end of an economic downturn and wage increases have also been slightly higher than expected, particularly in the construction sector and the service industries. As the level of employment has been retained, despite the decline in demand, productivity has shown a weak development, particularly in the services sector. To some extent, the effect of companies' higher costs has not had an impact on prices, but instead led to falling profit shares. However, it now appears that the demand situation has enabled companies to shift a larger part of the cost increases onto consumers. So, how come wage increases have been higher than expected? One possible explanation may be that the resource utilisation in the economy has been higher in recent years than we had earlier believed. A strained resource utilisation means quite simply that the total demand is high in relation to the production capacity of the economy. This is usually revealed, for instance, in rising wage increases and higher underlying inflation. In the Inflation Report presented on 19 March 2002, we have made a slight upward revision for resource utilisation.