samchain/econo-pairs-v1 huggingface dataset:
20  Rajan (2005) argues that the “search for yield” was an important ingredient in the story of the crisis. 6  BIS central bankers’ speeches  long-term commitments (pension funds and insurance companies, for example) need to match the yield they promised on their liabilities, with the yield on their assets. When interest rates are high, they can invest in safe assets to generate the necessary revenue. When interest rates are low, however, they are forced to invest in riskier assets to continue to meet their target nominal rate of return. That tends to push down risk premia and lower the price of borrowing. Other investors too find it difficult to accept that in a world of low nominal and real interest rates equilibrium rates of return will not meet their previous expectations. 21 If these mechanisms are important, the financial cycle may be heavily influenced by monetary policy, especially when interest rates are low. That also creates the possibility of a trade-off between monetary and financial stability. All three examples suggest that the conventional analysis of the trade-off between the volatility of inflation and the volatility of output is likely to be far too optimistic. Does this add up to a case for “leaning against the wind” of rising asset prices rather than waiting to “mop” up after the bust? Certainly we have seen that monetary policy cannot fully offset the effects of financial crises for two reasons. First, crises may impact output before the response of monetary policy is felt.

30  Consistent with this, those on the MPC most worried about the high level of the exchange rate advocated lower, not higher, interest rates in order to bring about a depreciation, at the risk of making the imbalances more acute. 31  The strategy of not raising, and for some lowering, Bank Rate appealed to those who saw signs of an improvement in the supply performance of the economy. BIS central bankers’ speeches  9  Was there a better alternative to a strategy of higher interest rates? The natural first line of defence against financial crises is macro-prudential policy. In principle, such policies can shift the Minsky-Taylor curve closer to the original Taylor curve. With hindsight, before 2007 there should have been a cap on the leverage of banks (see Chart 9). And the cap should have tightened as asset prices increased and the likely exposure to losses increased. That is why we now have a macro-prudential policy regime in the UK. It will be overseen by the Bank of England’s Financial Policy Committee, which will have the power to direct, and make recommendations to, regulators about capital and leverage in the UK financial system. In my judgement, the big challenge to monetary policy before the crisis was a serious mis-pricing in long-term interest and exchange rates, and the imbalances that resulted. Much of this was outside the control of UK policy-makers and reflected developments in the world economy.
To contain growth of  12  BIS Review 148/2010  money supply within the programmed path, Bank of Zambia will continue to employ open market operations and auctioning of Government securities. This is expected to be complemented by prudent fiscal operations. BIS Review 148/2010  13

This initiative is experimenting a new coordinating mechanism between the European Union and our region, bringing together representatives from parent banks, subsidiaries, home and host supervisory authorities, international financial institutions and the European Commission. Moreover, the European Central Bank is assuming a new supervisory role for 130 systemic banks in the euro area, some of which operate in Albania or other countries of the region through their branches or subsidiaries. This role, which is expected to become functional in the field as of November this year, will be exercised in cooperation with national supervisory authorities and will have implications for Albania and other countries of the region, given the presence of euro area-based banks in our banking sectors. With the establishment of the Single Supervisory Mechanism, the European Central Bank will become the home supervisor for a number of banks operating in Albania. In addition to improving the quality of banking supervision, this mechanism has the potential to facilitate cooperation between home and host countries, hence fostering cooperation between the European Central Bank and central banks in the region on financial stability. Dear participants, the common challenges that lie ahead of us are numerous and should be solved within a short period of time. On behalf of the Bank of Albania, I would like to assure you that we will continue to be in close contact with the European Central Bank and Eurosystem central banks, furthering our existing open and sincere communication.
Indeed, it is unusual for any economy to experience a change in the production factors of the magnitude and speed that immigration has triggered in Chile in the last three years. It is also unusual for an increase in potential growth to be accompanied by a reduction in the neutral MPR, which in this case has occurred due to the magnitude and persistence of the fall in interest rates in the world. In previous episodes of CPI basket changes, we had not seen so important corrections to the inflation measurement as this latest one. Faced with this unusual configuration of circumstances, the Central Bank of Chile needed to be rigorous in its analysis, clear in its conclusions and quick in its response. It was helped by the research work and the updating of his models that have been progressing for some time. But once all the pieces of this puzzle have been assembled, the Board has preferred acting over postponing a decision. It is an unusual action in the face of unusual circumstances. Central banks today are not prone to surprising the markets and ours is no exception. We do not seek surprises for the sake of them, and certainly we have not concealed anything in our communications of recent months regarding the analysis that we have conducted, nor have we distracted attention away from it. However, after accumulating evidence and reaching a downright conclusion about its implications for monetary policy, we saw few advantages and many more costs in postponing.

When wage formation is decentralised, monetary policy will instead influence wage growth via market mechanisms, by stabilising aggregate demand. The existing monetary policy guidelines will function effectively whether wage bargaining is at a centralised, local or individual level. There is a fine balance in the division of roles between fiscal policy, wage formation and monetary policy. This balance will be disturbed if the objective of monetary policy is changed or broadened. Should monetary policy give particular weight to asset prices? House prices in Norway have risen sharply and probably excessively. The level of house prices in Trondheim in central Norway was an eye-opener for the American Nobel Laureate Georg Akerlof, who happens to be of Swedish ancestry. At a family gathering, he was told that a distant relative had bought a house in Trondheim at a price equivalent to more than USD 1 million, providing a source of inspiration for his and Robert Schiller’s book “Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism”. 5  4  OECD Interim Economic Outlook, (March) 2009. 5  Georg Akerlof and Robert Shiller (2009): “Animal Spirits: How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism”, Princeton University Press. BIS Review 119/2009  5  Self-reinforcing mechanisms in financial markets, which lead to slower credit flows and falling asset prices in downturns and the inverse in upturns, pose a challenge to monetary policy.
Elvira Nabiullina: Speech - OPORA RUS Governor SIA session Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the OPORA RUS Governor SIA session, 3 December 2020. * * * Good afternoon, I am happy to welcome you, whether you are now in the Kaliningrad Region or are video conferencing — this format is becoming quite common now. I hope that this meeting is attended by a large number of participants. Indeed, I was listening very attentively and I think that the approach the Kaliningrad Region is pursuing to develop small and medium-sized businesses is promising and comprehensive. However, we are all very well aware that a lot of projects depend on how accessible funding is — it would be impossible to implement a project when there is no access to funding. Today’s meeting is very important to me: although the Bank of Russia influences the economy through the financial sector, the ultimate goal of our work is to ensure that the financial sector helps the economy and people overcome hardships and develop. Of course, we have always been concerned about the issues related to the financing of small enterprises. We carry out regular meetings with OPORA RUSSIA President Alexander Kalinin several times a year to discuss the most topical problems and advance in both the regulation and other areas associated with the development of multiple projects.

As Hari Vittas, Alternate Executive Director for Malta’s constituency in the IMF aptly put it during a recent IMF Economic Forum, “The potential benefits of monetary integration may be large, but they are not automatic and can easily be wasted in the absence of good policies.”1 On balance, however, the benefits of participation in the euro area should more than outweigh the costs, such that over a sufficiently long time span the growth potential of an economy should be higher than it would have been outside the union. This expectation is supported by the results of recent research. An extensive study by Andrew K Rose of the University of California at Berkeley, for example, concludes that a currency union results in approximately a doubling of trade. Within the euro zone, moreover, it is estimated that trade volumes have increased by 15 per cent, beyond what can be explained by growth and other factors. Recognizing such benefits of EMU, many credit rating agencies foresee an upgrade in the ratings of those new Member States that are among the first to adopt the euro,2 although they generally emphasize that what matters is establishing a track record with respect to the implementation of reforms, especially fiscal consolidation.3  The broader macroeconomic challenge These observations notwithstanding, premature participation in a currency union is nevertheless associated with some potential pitfalls. These result from the loss of monetary and exchange rate policy as a tool for stabilisation purposes.
The result was higher cost and price inflation without the desired effect on competitiveness and employment. The Norwegian economy was lacking a nominal anchor during the devaluation period in the 1970s and 1980s, which fuelled inflation and instability. The ten-year period of devaluations is an example of how purely discretionary policymaking can lead the economy onto a suboptimal path, pointed out by Kydland and Prescott. The last devaluation came in 1986 after a fall in oil prices. Thereafter, the interest rate was used to keep the exchange rate fixed. The Norwegian economy had to undergo an extensive turnaround operation. Confidence in the Norwegian krone had to be restored in order to avoid persistently high inflation. This required very high interest rates. It took a long time for foreign exchange markets to gain confidence in the strategy shift in exchange rate policy. It was not until 1990 that Norwegian interest rates were on a par with external interest rates. By tying ourselves to a reaction pattern, monetary policy credibility was restored and the way was paved for more stable economic developments. In the wake of Kydland’s and Prescott’s recommendations, both fiscal policy and monetary policy have become more rule-based in many countries. Policy rules are useful in that they give weight to long-term objectives when faced with day-to-day economic policy challenges. Since the early 1990s, many countries have implemented institutional reforms, such as central bank independence in the conduct of monetary policy to reach government-defined objectives.

Moreover, there must be additional efforts to induce the entities in charge of clearing and settlement services to become more effective, as well as to popularize the use of electronic payment instruments, which will gradually reduce the use of paper instruments. The area of financial system regulation and organization will increasingly be focused on the following aspects: •  improvement of prudential rules and practices, aiming at maintaining the soundness of the financial system as a whole;  •  improvement of the analysis of several authorization processes related to financial institutions and alike;  •  creation and improvement of financial instruments and activities, including those intended to broaden and cheapen credit;  •  adoption of international standards and practices. Additionally, it is a priority to improve the regulation of mechanisms that broaden the population's access to the financial system, as in the case of “banking correspondents,” credit cooperatives, and credit concessions to small and micro firms. I would also like to acknowledge the employees of the Central Bank for their competence, “esprit de corps” and qualification. I have a human resources goal of qualifying and offering even more opportunities for this outstanding group of public servants. I thank President Luis Inácio Lula da Silva and Minister Palocci for their confidence in myself.
(c) Percentage responding that labour shortages are a limiting factor for their production. For the United States, data is gathered from the QPC, United States Census Bureau, and for the remainder data is gathered from the ESI, European Commission (d) Per cent, for the euro area, Germany and Finland the ECB's policy rate is referred to. Nordic countries include Denmark, Finland and Norway, except for Figure (c), where Nordic countries include Denmark and Finland. Sources: National sources, the OECD and the Riksbank  Two economists at the Riksbank have studied how the changes on the labour market that I described may have affected prices and wages following the financial crisis. 11 They illustrate in an economic model that the developments on the labour market could have been a contributory factor to the low outcomes in prices and wages. In more concrete terms, they show that increased labour force participation, lower compensation levels and weaker negotiating strength among employees may have dampening effects on prices and wages. If labour force participation increases, it will become easier for companies to find new competence. This reduces recruitment costs. Payroll costs also decline as increased competition for jobs dampens wage demands. All in all, lower costs lead to a downward pressure on prices. Another mechanism that my also mean that the rising labour force participation has contributed to lower prices and wages is discussed by two economists at the Bank of International Settlements.

21 In other words, monetary policy decision-making is surrounded by various different types of uncertainty. At the Riksbank we grapple with issues such as: Which shocks are currently the driving force behind the business cycle? Which forecasting model gives the best forecasts? How large is the effect of a change in the interest rate on inflation? What characterises well-balanced monetary policy? How should the risk of low inflation be balanced against increased risks for financial instability? Is the data correct? Should special attention be given to really negative scenarios? Figure 13. The Riksbank's forecasts on labour force participation and GDP growth (a) Labour force participation  (B) GDP growth  Note. Thousands of persons, aged 15-74 and annual percentage change. The figure shows the Riksbank’s forecasts for labour force participation and GDP growth 2013–2019 (February). Sources: Statistics Sweden and the Riksbank  There has been greater interest in how to take into account uncertainty in the monetary policy decision-making process since the financial crisis. This has often been about finding a structured way to take into account the uncertainty in the monetary policy decision. Unfortunately, I must say that the answer to this question is not exactly easy and that it can probably be best summarised as “it depends”. In practice, there are three approaches a policymaker can take with regard to uncertainty. He or she can act more forcefully, more cautiously or as if the uncertainty did not exist.
The first of these measures consists of a permanent increase in the risk-weighting11 for the loan tranche exceeding the 80% loan-to-value ratio. The second  9  Taxonomy as proposed in De Nicolò et al (2012). For an overview on macroprudential instruments and international experiences, cf. CGFS (2010). 10  Over the past three years, annual real growth amounts to, on average, 4.4% (houses) and 5.5% (apartments). Annual real mortgage growth over the past three years amounts to, on average, 4.8%. 11  The risk-weighting is increased from 75% to 100%. 4  BIS central bankers’ speeches  measure requires a 100% risk-weighting for new mortgage loans which do not meet tighter minimum requirements stipulated in the banks’ revised self-regulation guidelines.12 The CCB, for its part, is a pre-emptive measure that allows authorities to temporarily raise capital requirements in the banking system as imbalances in the credit market develop. When activated, banks will be required to gradually build up an additional capital buffer of up to 2.5% of total domestic risk-weighted assets during the upswing in the credit cycle. The CCB requirement is a supplement to other capital requirements. Once risks have materialised, or if the intensity of risk is subsiding, the capital buffer generated from the CCB is released, either immediately or gradually. The key features of the CCB The CCB combines several key features that directly address the problem of cyclical risks to financial stability. In particular, when activated, the CCB should help reduce the amplitude and the consequences of imbalances for financial stability.

Comments at the Institute of Regulation & Risk, Hong Kong, 30 March 2010. IMF 2011: Global Financial Stability Report 2011. Grappling with Crisis Legacies. Swiss National Bank 2012: Implementing the countercyclical capital buffer in Switzerland. Concretising the Swiss National Bank’s role. Fact sheet, June 2012. White, William 2009: Should Monetary Policy “Lean or Clean?” Federal Reserve Bank of Dallas Working Paper No. 34. 8  BIS central bankers’ speeches  BIS central bankers’ speeches  9  10  BIS central bankers’ speeches  BIS central bankers’ speeches  11  12  BIS central bankers’ speeches  BIS central bankers’ speeches  13  14  BIS central bankers’ speeches  BIS central bankers’ speeches  15
3 These requirements were further tightened in 2014 and 2019, in response to increasing vulnerabilities in the mortgage and residential real estate markets. Furthermore, Switzerland has a flexible regulatory framework that allows for both a broad and a sectoral application of the CCyB. In 2013, the Federal Council decided to activate a sectoral CCyB (SCCyB), following a proposal by the SNB. We deemed it to be the most costeffective response, given that vulnerabilities at the time – and even now – were concentrated in the residential real estate and mortgage markets. 4 The SCCyB was increased in 2014, deactivated at the onset of the pandemic, and has just recently been reactivated to a higher level. The SCCyB increases capital requirements associated with domestic residential mortgage loans while leaving those for other exposures unchanged. The sectoral focus therefore helps to minimise potential side effects on other credit segments and at the same time ensures an increase in overall banking sector resilience, since mortgage claims are the largest asset on Swiss banks’ balance sheets. 5  Experience with macroprudential instruments so far All the instruments we have been discussing have become part of the macroprudential toolkit in many economies since the GFC. Now over ten years on, we can draw first conclusions about their effectiveness, which is a prerequisite for their correct implementation. Let me note, however, that the assessment is still ongoing.

Economica, 85: 735-770; B. Richter, M. Schularick and I. Shim (2019), The costs of macroprudential policy, Journal of International Economics, 118: 263282; Ampudia, M., M. Lo Duca, M. Farkas, G. Perez Quiros, M. Pirovano, G Rünstler, and E. Tereanu (2021), On the Effectiveness of Macroprudential Policy, ECB Working Paper Series 2559. Behncke, S. (2022), Effects of macroprudential policies on bank lending and credit risk, Journal of Financial Services Research. Ibidem. banks (cf. slide 2). As a consequence, banking sector resilience to shocks is now much larger than before the GFC. Stress tests conducted by many central banks indicate in fact that bank capital is likely to be sufficient to cover potential losses under severe stress scenarios. 9 At the SNB, we also regularly conduct stress tests for the Swiss banking sector. Results, reported in our annual Financial Stability Report, suggest that most banks have adequate capital buffers to absorb losses under adverse scenarios, in particular also in the event of an abrupt and steep interest rate rise combined with declining real estate prices. This implies that banks could withstand the shock, and still fulfil their key role as credit providers to the real economy. The coronavirus pandemic has highlighted the importance of banking sector resilience. Despite the elevated uncertainty prevailing at the onset of the pandemic, market participants remained confident in the banks’ ability to absorb potential losses resulting from the pandemic and to continue at the same time to fulfil their role as credit providers.