samchain/econo-pairs-v1 huggingface dataset:
At this point, one specific question often arises: If we are so well integrated, why don't we peg the franc to the euro instead of pursuing an independent monetary policy? Wouldn't this help eliminate the exchange rate risk, without giving up monetary flexibility entirely? The answer is that there is no certainty that a peg would engender the foreign exchange stability that exporters sometimes dream of. We have learned from our experience with flexible exchange rates that any explicit foreign exchange target stimulates the appetite of speculators instead of calming the situation. And this would be especially true if our pegging decision were to be taken unilaterally, without the prospect of a full and permanent integration into the euro area. Today, with global markets and global speculation, it is an illusion to believe that a central bank can defend a specific exchange rate target. The only exception would be if the economy whose currency serves as the peg were strongly convergent with the domestic economy. BIS Review 85/2006  3  Furthermore, a nominal peg against the euro would do little to stabilise the real value of the Swiss franc – the only thing that matters for the international competitiveness of the Swiss economy – or to stabilise the franc vis-à-vis third currencies, especially the US dollar. Last but not least, Switzerland enjoys the lowest interest rates in Europe.

What it shows is that when there is a supply shock such that total inflation (including food and energy) exceeds core inflation, two years later total inflation tends to be lower – when supply shocks such as oil prices drive up total inflation relative to core, the total tends to come back down toward the core inflation rate. Figure 9 performs similar analysis but focuses on the future core inflation rate, instead of the total. It shows no strong relationship. When total and core inflation diverge, core inflation tends to stay put. In other words, in recent years, when something like an oil shock causes total inflation to diverge from core, there was no consistent implication for the future core inflation rate. The shock to total inflation did not become embedded in core inflation. Why is all this important? If supply shocks tend to have a transitory impact on headline inflation, and do not pass through to any meaningful extent into core inflation, then monetary policy need not respond to the price increases caused by the supply shock. Currently, we have experienced sharply higher food and energy prices. If the relationship we document over the last 13 years continues, we should expect the impact on inflation to be transitory – and that total inflation will converge back to core inflation, which remains well below 2 percent. To digress, it is likely the case that supply shocks have become transitory because of the way in which monetary policy has tended to respond.
Decomposing the forces that have weighed on wage growth3, we find two principal drivers: first, the still-high unemployment rate and its effect on wage bargaining dynamics; and second, a below-average contribution from past inflation in wage formation, caused by the last few years of exceptionally low headline inflation. As monetary policy has successfully supported demand and stabilised inflation expectations, both of these drivers should wane going forward. Their dragging 4/6  BIS central bankers' speeches  effect on wage growth, however, will take time to fade out. Labour market slack will lessen as unemployment continues to fall, but it is unclear how quickly this will feed through into wage dynamics – especially if the experience of other advanced economies is instructive. A strengthening labour market may attract “marginally attached” workers back into the labour force, or encourage those “underemployed” to seek more hours, causing the effective supply of labour to rise in tandem with demand. Domestic wage pressures may therefore only materialise later in the economic expansion. The influence of the second driver – low past inflation – should also dissipate given the recent recovery of headline inflation. But this may take some time since a number of factors might slow down the reaction of wages to higher inflation. First, wage negotiations in many countries and sectors have largely been concluded for this year, meaning any impact of higher inflation via negotiated wages is likely to be delayed.

News conference  15 December 2022, 10.00 am  Introductory remarks by Thomas Jordan Ladies and gentlemen It is my pleasure to welcome you to the news conference of the Swiss National Bank. I would also like to welcome all those who are joining us today online. After our introductory remarks, the members of the Governing Board will take questions from journalists as usual. Monetary policy decision  I will begin with our monetary policy decision. We have decided to tighten our monetary policy further and to raise the SNB policy rate by 0.5 percentage points to 1.0%. In doing so, we are countering increased inflationary pressure and a further spread of inflation. It cannot be ruled out that additional rises in the SNB policy rate will be necessary to ensure price stability over the medium term. To provide appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary. The SNB policy rate change applies from tomorrow, 16 December 2022. Banks’ sight deposits held at the SNB will be remunerated at the SNB policy rate of 1.0% up to a certain threshold. Sight deposits above this threshold will be remunerated at an interest rate of 0.5%, and thus still at a discount of 0.5 percentage points relative to the SNB policy rate. With this tiered remuneration of sight deposits and open market operations, we are ensuring that the secured short-term Swiss franc money market rates are close to the SNB policy rate.
One lesson was that short-term rates should be cut 13 2/4  BIS central bankers' speeches  aggressively when deflation or a severe downturn threatens.13 That is, do not “keep your powder dry.” A second lesson is that short-term rates should be kept “lower for longer” as the economy recovers.14 A third is that large-scale asset purchases (LSAPs) can complement conventional policy actions by making financial conditions more favorable for growth even when short rates are constrained by the ZLB.15 Armed with these insights, policymakers were prepared and able to act quickly and decisively when the financial crisis hit. A great deal was learned about the ZLB and unconventional policy tools along the way. 16 Indeed, another conference organized by the Boston Fed was held in October 2010 to assess lessons learned, and the proceedings of that conference were published in a special issue of the JMCB in February 2012. For me, the most interesting aspect of that conference was that participants took the ZLB as a defining feature of the landscape: what was once viewed as primarily theoretical had become grounded in practice and experience. The ZLB in 2019 This brings me to today. The Federal Reserve has embarked on a review of its monetary policy strategic framework. As was the case 20 years ago, the question is how to best achieve our monetary policy goals in the context of low inflation and the ZLB. Indeed, the policy questions we are grappling with today are exactly the ones laid out in Woodstock.

As president Trichet explained in the press conference following the April policy meeting, there were arguments on both sides. We took the decision not to rewiden the interest rate corridor to its normal size at the April meeting. However, going forward, I would argue in favour of normalising the width of the corridor sooner rather than later. In my view, it is increasingly harder to justify the non-standard width of the corridor as time goes by. I don’t think there is any mechanical link between the decision as to when to phase out specific non-standard measures that have been introduced during the crisis. Q. On bond buying programme. What is your point of view with Greece, Ireland and Portugal being in the hands of the EU and IMF? Does it give rise to the need for the ECB to intervene? It is increasingly hard to justify the continuation of the SMP in light of the fact that it was introduced in order to alleviate some of the dysfunction in the monetary policy transmission mechanism in some markets, and I do not think that those conditions hold at the moment to the same extent. Q. Do you think it should be stopped completely or just be there in case the need arises again? The mere presence of the programme, even if no purchases at all are made for a very long time, can be a stabilising force in the markets in case additional tensions appear on the horizon.
However, this is no consolation - on the contrary, a poor development among our trading partners could cause further  2  BIS Review 17/2003  difficulties for our own economy. Moreover, it is our own ambitions in welfare policy that should be put in relation to our growth capacity. The future age structure has great significance for labour supply and production. This is because labour force participation varies in different age groups. It is higher in the age group 25-54 years (87 per cent) than in younger and older age groups. The age group 16-24 years studies more today than at the beginning of the 1990s. Labour force participation for the oldest age group has also fallen over the past decade. One reason is that the retirement age from the labour market has been lowered and now the actual pension age amounts to 62 years. The only group that has increased its participation in the labour force in recent years is older women. This could be because those who are reaching a more advanced age today have a higher level of education than their predecessors. The age structure accentuates the problems. According to Statistics Sweden’s forecasts, the age group 20-64 years will need to support an increasing percentage of younger and older age groups. While the number of elderly people increases, the number of those between the ages of 20 and 64 will become an ever smaller percentage of the population.

Wage costs are expected to increase this year by just over 4.5 per cent, which is higher than the Swedish economy can manage in a longer perspective. If the social partners do not succeed in accommodating the Municipal Workers’ Union’s wage demands, there is a risk of increased inflation. Another challenge for wage formation is the government’s employment target, which entails 80 per cent of the working population having a job. Achieving this requires reforms to increase the labour supply. Moderate wage demands could hasten the adaptation to the higher rate of employment. The explanation for this is that in a small, open economy like Sweden, the profit share of the value added is determined by international conditions and the prevailing production technology. In the short term, the labour market situation and negotiating strength can affect the relative profit shares and wage shares in the economy, but in the long term a high rate of wage increase will only lead to lower employment and production without affecting real wages and profit shares. More moderate wage demands, on the other hand, together with measures to stimulate the labour supply, will lead to higher 2 employment without a long-term decline in real wages. Conclusions Finally, as I mentioned at the beginning, monetary policy cannot directly affect production’s potential, long-term growth rate. The task of monetary policy is to stabilise the economy by changing the instrumental rate if inflation deviates from the 2 per cent target one to two years ahead.
There is this question: why has the developed world ended up where it is now? We know how a household or company would suffer under the pressure of excessive debt. Households or companies troubled by significant debt overhang have to curtail their spending or investment, which has huge negative effects. In the end, they have to go into bankruptcy if they cannot repay their debts when due. But there is a lot of misconception when it comes to a country owing excessive debt. It is true that a country cannot technically go bankrupt in the same way as a person or company. However, it does not mean that a country cannot go into default if it borrows more than it can pay back. Even if a heavily indebted country manages to survive a debt crisis with debt restructuring, just like Mexico in the 1980s and more recently Greece, the debt overhang will still impede its economic growth and inflict huge costs and pain on its people in the form of rising unemployment and sharp drop in living standards. So how can one explain the common trend in the last 30 years of the developed world spending beyond their means and incurring debts to levels that clearly cannot be repaid by the current generation of people? One answer that I can think of is that, until quite recently, many people in the developed world had taken prosperity for granted and regarded good life as their right.

Under the influence of anonymity that cultivates “collective irresponsibility”, the temptation of “spend now and not having to repay” mind-set can easily overwhelm common sense in favour of populist policies with unsustainable fiscal consequences in the medium to longer run. How to get out of a government debt crisis: Painful deleveraging and resolute structural reforms 16. It seems clear enough even to people without training in economics that the solution to a crisis caused by excessive level of government debts is not through borrowing more money and piling up more debts. The solution must be through deleveraging over time in the overly indebted sectors. At the national level, three things must be done at the same time. First, the government must implement a credible fiscal consolidation programme to reduce public spending and increase revenues. Second, the government should, within the reduced budget, strive to allocate resources to infrastructural and other productive investments that could facilitate the return of healthy economic growth in the medium to long term. Third, the  4  BIS central bankers’ speeches  government must pursue structural reforms that would enhance the flexibility and capacity of the labour, product and services markets that would raise the productivity and competitiveness of the economy and its workers. 17. Of course, I appreciate that these three things are very hard to implement. However, I don’t think there is any short cut or easy way out. The adjustments after any financial crisis triggered by excessive debt are by nature very painful.
This mechanism which uses crude palm oil as the underlying commodity will facilitate Islamic financing applying the concept of murabahah or tawarruq. BNM commodity murabahah acceptance As part of these efforts to promote development of products to meet the diversified requirements of investors, Bank Negara Malaysia is pleased to announce the introduction of a new Islamic monetary instrument, Commodity Murabahah Programme (CMP) as part of its diverse range of policy instruments in managing the short-term liquidity in the Malaysian Islamic inter-bank money market. Unique to Malaysia is that the CMP is designed to be the first ever commodity-based transaction that utilises the Crude Palm Oil based contracts as its underlying asset. The Bank has executed CMP master agreements with the eight Islamic banking institutions including the three foreign owned banking institutions to promote the use of the instrument for liquidity management. Several CMP transactions have now been conducted between the Central Bank and the respective Islamic Banks. As commodity murabahah is widely used in other Islamic centres, it is envisaged that this CMP will promote increased linkages between Malaysia and these centres. BNM Sukuk Murabahah/tawaruq short-term securities The Central Bank also intends to diversify the issuance concept of the existing Islamic monetary notes from being based on Bai Inah and Ijarah into murabahah. Currently, the outstanding amount of the respective notes is RM 8 billion. This initiative is the continuation from the commodity murabahah acceptance initiative as the issuance involves the securitisation of the acceptance facility.

According to preliminary national accounts figures, mainland GDP grew by 2.2% from 2009 to 2010. Norges Bank’s regional network contacts expect solid growth to continue in the coming quarters. Unemployment is low. There are prospects of  BIS central bankers’ speeches  1  fairly strong growth in the Norwegian economy ahead, driven by solid income growth and an increasing population. Chart: Population growth In 2010, the population grew by 1.3 per cent. With the exception of 2008, this is the highest rate of population growth since 1920. A high birth rate has contributed, but strong population growth primarily reflects high inward migration. This is boosting demand for goods and services, including housing. Nonetheless, it is likely that a high proportion of labour immigration will enable the economy to grow faster without fuelling price and wage pressures, even though bottlenecks may arise in some areas. Chart: Consumer prices 2010/11 The rise in consumer prices slowed through 2010, and in recent months inflation has been fairly low. Inflation has varied from month to month as a result of wide fluctuations in electricity prices. Overall CPI inflation rose by 2.5 per cent in 2010. If we exclude fluctuations in energy prices, the rise in prices has been low. In 2010, CPIXE inflation was 1.7 per cent. Chart: Interest rate forecasts Norges Bank raised its key policy rate to 2 per cent in May 2010. Through 2010 the Bank’s interest rate forecast was adjusted down, and further increases were deferred.
It must be cautioned that the true equity risk premium is unobservable, and so estimates may well be wide of the mark. But there is a possible story, related to changes in the global distribution and management of savings. The managers of the now massive official foreign exchange reserves in Asia have a clear preference for fixed-income securities, both absolutely and relative to say the US household sector. And in the West, defined-benefit pension fund trustees and managers have been placing greater weight on matching the duration of their quasi-fixed income liabilities with holdings of bonds. In both cases, there may have been a de facto shift in global demand from equities to fixed-income securities of various kinds. That would tend to alter relative risk premia9. All told, this seems to reduce the candidate explanations for Rogoff’s puzzle. For equities, fluctuations in equity risk premia may have been a factor, driven by the dotcom/telecom fad and shifts in global investor preferences. For financial assets more generally, perhaps the best provisional view is that volatility in asset returns may have been elevated for a while by the effect on prices of the reductions in default-free rates, term premia and credit-risk premia associated with the Great Stability. As well as adding to volatility temporarily, that will also have raised ex post returns, in which case it would be important that market participants did not act on the basis that they were easily sustainable.

Another is that, in an environment where investors are chasing yield, collecting the premium income from writing options has become a prevalent way of sustaining returns in the hope that nothing too bad happens; and that if it does, today’s liquid capital markets will contain the volatility anyway. In other words, they base their explanation on what has been going in the financial system. Financial system uncertainties Big, perhaps fundamental, changes have been underway in banking and capital markets for a few years now, with implications for how we gauge money and credit conditions, and assess the resilience of the financial system as a whole. Discussions typically jump to the second, financial stability issue. But I want to look first at some monetary indicators in the light of these structural changes. Broad money growth As has recently attracted a good deal of attention, UK broad money is up around 15% on a year ago, and more than 25% since the beginning of 2005 – much more than elsewhere in the G7 (Chart 6). Of this increase, almost half – or around £ – is accounted for by the money holdings of so-called Other Financial Corporations13. Central bankers have to ask whether that represents a threat to inflation and stability or, rather, a shift in the demand for money that is a symptom of structural change in the financial system.
With such abundant reserves, even quite large unexpected variations in reserves holdings need not threaten monetary control (‘Zone A’ in Chart 7). That may change as central banks unwind their QE holdings.11 As the aggregate level of reserves falls, the chances of a sudden reserves drain pushing up on market rates increase (‘Zone B’ in Chart 7). Of course no-one knows with any certainty where this inflection point lies. So central banks must either aim to stop asset unwind well before that point is reached (the approach announced by the FOMC), or have tools in place ready to allow banks to replace the reserves depleted by asset sales/redemptions as and when they need to (the approach we expect to take in the UK).12  In the UK, the Bank’s Monetary Policy Committee (MPC) voted to begin balance sheet unwind in February 2022 – see Monetary Policy Report - February 2022 | Bank of England – and gave further detail on its approach in its May Report: Monetary Policy Report - May 2022 | Bank of England. 12 See Waiting for the exit: QT and the Bank of England’s long-term balance sheet - speech by Andrew Hauser | Bank of England 11  Bank of England  Page 11  None of this fundamentally changes the nature of the challenges facing central banks in maintaining monetary control. But it does underscore the importance of reflecting operational needs in the design of potential future digital currency frameworks.13 5.

The size of these effects will depend heavily on the eventual design of any systemic digital currencies, their attractiveness relative to bank deposits, the availability and price of alternative funding sources for banks, and borrowers’ ability to substitute between types of credit. It is not a foregone conclusion that these effects will necessarily be large. Indeed, an illustrative scenario published by the Bank of England in 2021 suggested that the steady state impact could be quite modest, with lending rates rising only slightly, and credit provision falling by a little over 1% – though varying the assumptions can generate somewhat larger results (Chart 5). 6  See for example, ‘Money creation in the modern economy’, Bank of England Quarterly Bulletin 2014 Q1. Bank of England  Page 8  Source: Bank of England Discussion Paper: “New Forms of Digital Money”  More serious disruption to credit supply could occur if deposits transferred into digital currencies in an unexpectedly rapid or disorderly way, for example during a stress event. But a range of design choices, including potential holding limits, could in principle be deployed to deal with such situations. And banks suffering sudden deposit outflows may also, as now, draw on market-wide central bank liquidity insurance facilities7 – though the pricing of such facilities, and their implications for encumbrance, make them less well suited to providing long-term structural support. A particularly sensitive question is whether central banks may seek to use CBDCs, or other forms of digital currency, to enhance monetary policy implementation – e.g.