samchain/econo-pairs-v1 huggingface dataset:
To achieve its goal, the SNB strives to provide the most appropriate monetary conditions, not to achieve an exchange rate target. The primary indicator of the success of interventions is the inflation chart. Conversely, the more significant gauge of the potential cost of interventions is not found in the central bank’s balance sheet. Our foreign exchange interventions will be revealed to have been costly if they result in serious inflationary pressures two to three years from now. As the subsequent speaker, Dewet Moser, will explain in further detail, since June 2010 the SNB has been setting up and using instruments that allow us to adapt the conduct of monetary policy to the new excess liquidity situation. We are convinced that these instruments, reverse repos and SNB Bills of various maturities, which are now fully operational, constitute an efficient toolset for the times to come. They place the SNB in a sound position to steer the Libor rate at the level required to maintain price stability. 11  The Swiss Confederation also had public surpluses both in 2009 and 2010 (+0.5% and +0.4% relative to GDP, respectively) and a debt level of around 20% relative to GDP. 12  See, for example, Hildebrand, Philipp (2010) “Monetary policy challenges: Swiss exports in a globalised world”, Brussels, November 2010.

The results of this appropriate policy mix, which placed the burden of the response to the crisis on the shoulders of the SNB, can be seen in the remarkable accounts of the Swiss general government: public surpluses in both 2009 and 2010 (+0.8% and +0.2% relative to GDP, respectively) and a reduction of the debt level to less than 40% of GDP.11 One reason for the misperception is probably the view, propagated by the academic literature on the subject, that central bank interventions in foreign exchange markets are geared to achieving an exchange rate target and that they are generally unsuccessful at doing so. As has been repeatedly emphasised, this was not the objective for the SNB in 2009–2010.12 The SNB’s objective was to provide appropriate monetary conditions to the Swiss economy. A given exchange rate level in that context may be maintained for a limited time period, but it is subject to review as macroeconomic conditions evolve. And as the SNB’s experience in 2009 demonstrates (illustrated in Chart 7), influencing the exchange rate level temporarily is feasible and makes sense at the zero lower bound when the traditional monetary policy instrument is exhausted. III. Conclusion: how to judge whether interventions were successful? All actions by the SNB have to be considered in the light of its mandate. The primary goal is to ensure price stability, while taking due account of the overall economic situation. In this way monetary policy contributes to creating an environment that fosters prosperity and economic growth.
The countries of the euro-area periphery have also made progress in restoring competitiveness and rebalancing the composition of demand, though there is still quite a way to go. Member states are working towards the creation of a functional banking union, which has the potential to break the link between sovereigns and banks. And in preparation for becoming the euro-area banking supervisor, the ECB is planning a rigorous review of the quality of banks’ assets, to be followed by a set of stress tests and, if necessary, recapitalisation. Provided these carry credibility with the market, this could do much to restore confidence in the euro-area banking system. But while some headwinds are abating, others remain. The need to restore the public finances to sustainability means that fiscal consolidation will continue for some years yet. And, for some households, the past accumulation of debt may weigh on spending. Finally, even though the cloud of uncertainty may be lifting, businesses are likely to remain cautious about increasing their investment spending until it is clear that the recovery in demand will be sustained. So the pace of the recovery is likely to remain fairly modest by historical standards. That will mean that it is likely to be some time before the economic slack that built up during the recession has been brought back into use. I will say a little more about that later.

In any case, as a breach of the threshold becomes imminent, it seems likely that the Committee will wish to provide further guidance on the future determinants of policy in order to reduce any uncertainty surrounding our reaction function. Can we say anything yet about the effectiveness of the introduction of forward guidance? As already noted, the primary objective is to give confidence to business and households that policy will not be tightened until there is a material reduction in economic slack (assuming that neither price nor financial stability are threatened) and to prevent an excessive snapback in market interest rates taking place simply because a recovery is under way. As far as the broad message to businesses and households goes, contacts of the Bank’s Agents suggest that businesses have got the message that the MPC will only begin to tighten policy once the recovery is entrenched and slack has been materially reduced. And in the period after the MPC’s announcement, the Markit Household Finance Index suggested that households expected Bank Rate to rise later than before, although the date has since come back in again, perhaps reflecting the continued flow of positive data. At first sight, the evidence from market interest rates is more equivocal. Chart 5 shows the instantaneous forward yield curve in May, August and today. Yields have risen substantially since May. On the face of it, that appears to suggest that the guidance has not been very effective at influencing the expectations of market participants.
I don’t know, and I do not have to know, national initiatives in a national context in this respect. On the central bank side we have sanctions at national but also at European level. You’re referring to the case of the Latvian bank ABLV... The Latvian subsidiary. I read in the media that the supervisory side of the ECB informed the 2/5  BIS central bankers' speeches  national authorities of what happened and suggested to them to use the tools they have at their disposal. Since the way the national tools were used is now the subject of a court case, I cannot comment further on it. Let the court decide. The national central bank for its part took its own measures. And they suspended the bank. The ECB did not suspend the whole group [from monetary policy operations] until later. The Banque centrale du Luxembourg (BCL) suspended the group before the ECB because they have the possibility to do so at national level. Would you have another example? There are some investment funds which ought to provide information and statistics to the national central bank, which then reports to us. But some funds don’t do it. We have asked the BCL several times to initiate sanctions because we consider that the local authority has clear knowledge of the matter. I think they are now ready to do it. I would not say centralisation is better per se. Sometimes proximity leads to higher efficiency.

If we have to contact 25 different regulators or supervisors in order to get a picture of who and what in the single market is allowed and under what conditions, it would be extremely cumbersome. From that point of view, we welcome an increase in efficiency at European level. We consider the completion of the banking union important for the single market and the single currency, in other words, one market, one banking supervisor and one security supervisor in the medium term. That should be accompanied by one deposit insurance system as well. But I understand those who say, “Let’s first clean up all the remaining negative elements from the past before we accept a sharing of responsibility at European level. That is exactly what we are doing now by pushing for the resolution of non-performing loans. We’re trying to put supervisory standards on the same level. It is not enough to assign only the responsibility to the European level, we also need a level playing field in terms of the tools and their implementation. The Commission de Surveillance du Secteur Financier1 (CSSF) has recently expressed its concern about its sanctioning powers. What do you think of Director General Claude Marx’s statement? I don’t know this statement. According to European law, the authority for criminal cases is still a national affair. When it comes to administrative sanctioning, that’s another issue. Some propose setting up a sanctioning authority that does nothing but sanctioning.
In the second half of last year, it was already growing at an annualized rate of 6 percent. Indeed, we were forecasting that 2010 growth would be around 5 percent as early as last September. The figures up to February 27 – as shown in a box in the Report –, indicated that the midpoint of the growth range could be closer to 6 percent than to 5 percent. Compared with our trading partners or with the average growth forecast for Latin America, this figure is around two percentage points greater. Expansionary monetary policy has played a key role in our economy’s strong performance. Nonetheless, our country was then hit by another shock. On February 27 we suffered one of the worst natural disasters in history that took a tragic toll on our country, causing loss of life, numerous injuries, forced displacement of large numbers of people, and huge material damages. Although the prospects of our country’s progress have not been compromised, this  BIS Review 61/2010  1  new scenario poses important challenges in every aspect of national life, including the conduct of monetary policy. The immediate reaction of an economy to a natural disaster is highly uncertain. Historical evidence tells us little because such events are, luckily, very rare. Therefore, the evaluation of data released since the disaster must be done with extreme caution. In fact, output data for March and April will reveal very poor performance. The reaction of the economy to a natural catastrophe in the medium term is somewhat clearer.

Considering the issues described above, the Board believes that the balance of risks for inflation and growth is unbiased. However, on this occasion, the earthquake and tsunami introduce unusual uncertainty, particularly regarding economic activity data for March and April. Thus, the Board considers that the balance of risks for growth is biased downwards in the very short term. Accordingly, the Board will continue to use its policies with flexibility so that projected inflation stands at 3% over the policy horizon. Conclusions I would like to wrap up this presentation with some brief reflections. Fifty years ago, in May 1960, our country was also hurt by a big catastrophe. The earthquake in Valdivia caused the destruction of a large area in central-southern Chile, comparable only to the recent disaster. Human and material losses were aggravated by a severe macroeconomic maladjustment following the disaster. Weak fiscal accounts and monetary management led to neglect control of inflation, which soared in the following years. Our current situation is certainly different. Fiscal accounts are in order, and our monetary policy scheme, as I have already mentioned, has the virtue of allowing us to accommodate shocks without compromising the inflation objective. Although so far we have no statistics and preliminary data will be known in the coming days, it is possible that the immediate reaction to this tragedy will include a temporary increase in inflation and a sharp deceleration of economic activity, both as consequences of the major disruptions in productive processes and commercialization channels.
What is required is a constant monitoring of the economic system, how its various parts are integrated and what possible risks there are that problems in one sector or country will spread to other sectors or countries. On a more comprehensive level, it can also be concluded that the internationalisation of recent decades has given the financial markets greater opportunity to contribute to global economic development. Savings can now be channelled with relative ease into the sectors and countries where they will be of most use, while financial innovations facilitate risk management in economic life. Together, these advances have meant that more investments could get off the ground and improve the welfare of millions of people in both rich and poor countries. At the same time, the strength of the recurring international financial crises has shown that these markets do not always function entirely without problems. At times, there has also been considerable criticism of the players on the international financial arena. Although this may sometimes be warranted, unfortunately it all too often stems from the opinion that financial operations are a bad thing. I have therefore tried to describe today the tasks carried out by the financial system in society. These not only make our daily life easier, but also provide a crucial contribution to economic development. It is therefore important that our solutions to the problems we see in the financial system do not destroy these welfare-creating mechanisms, but instead contribute to reinforcing them.

In addition, the critics often speak of this sector as though it did not play any productive role, but was more or less disengaged from the rest of society. This is not the case. The financial sector is very much an integrated part of society. We participate in it ourselves when we, for instance, choose between different pension funds, when we withdraw money from an ATM, when we pay our bills or borrow money to buy a house or apartment. To begin with, therefore, I shall briefly discuss the fundamental tasks carried out by the financial sector in society. When we economists try to mediate knowledge in this field, we usually talk about three tasks or roles, namely mediating payments, channelling money from those wanting to save to those wanting to invest, and facilitating the management of economic risk. Easier payments and more investments The financial sector as a mediator of payments is possibly the role where the sector's significance for society is easiest to understand. Try to imagine an economy without the type of payment system offered by, for instance, postal giro and bank giro. In a world like that we would need to carry large amounts of cash around with us in order to make our daily transactions. We would have to rush off to the landlord once a month to pay rent, visit the telephone company to settle the telephone bill and queue in front of the TV building to pay our TV licence.
BIS central bankers’ speeches  1  The financial crisis hastened the pace of these changes. The global economic downturn in the wake of the crisis was marked in many countries and regions. For the OECD area as a whole, GDP fell by 3.5 per cent in 2009. Chart: Growth in 2009 Emerging economies, on the other hand, sustained a high level of activity despite a sharp fall in demand for their exports. As shown in the world map, countries in South-East Asia and some countries in South America and several parts of Africa continued to grow when the rest of the world was struggling with the aftermath of the crisis. To enable poor countries to grow more rapidly, international trade is vital. It allows countries to specialise, while giving them access to goods and services from other countries. But specialisation necessitates readjustment. Over the past decades, western countries have encountered strong competition from low-cost countries, particularly in manufacturing production. As a result, firms, and virtually whole industries, have closed down and new industries have emerged. Norway has also had experience of losing industries that have become commercially non-viable, as when the textile and clothing industry almost completely disappeared in the 1970s. Chart: Current account Imbalances in world trade have built up over the past decade. Large and rising deficits in the US economy have been driven by high consumption and a strong appetite for credit among US households. Consumption has outstripped production in the US for a long period.

They will benefit all member states in the single market. However, they will take time to design and longer to implement, and they will have no impact on the burden of the debt overhang that already exists. For complete solutions to both current and potential future problems the sharing of fiscal risks is required. It is no coincidence that effective currency unions tend to have centralised fiscal authorities whose spending is a sizeable share of GDP – averaging over a quarter of GDP for advanced countries outside the euro area (Table 1). I have already discussed how parts of the UK have benefitted from fiscal risk sharing. The euro area also stands out from federal systems like the US, Canada and Germany. In those systems, the impact of localised shocks to income is reduced by between one tenth and one fifth by centralised fiscal transfers (Chart 6). Without this risk sharing, the euro area finds itself in an odd position. As the Presidents of the European Council, European Commission, Eurogroup and European Central Bank argued in their report, European Monetary Union will not be complete until it builds mechanisms to share fiscal sovereignty. Possible options for sharing fiscal risks range from a transfer union to a pooled employment insurance mechanism. The latter would appear to be an opportunity to combine the current enthusiasm for labour market reform with the longer term imperative to build elements of an efficient transfer union. And it would ensure risk sharing was based on cyclical, rather than structural, labour market positions.
This played a vital role in fostering the euro area recovery that is currently under way. Financial sector policies The greater awareness of the costs of financial instability and of financial frictions has also resulted in a revamp of financial sector policies. First, financial sector regulation and supervision are much stricter. The quality of regulatory capital has improved and its quantity has increased. In the euro area, banks have materially bolstered their capital positions, with the average common equity Tier 1 ratio of significant institutions rising to 13.5% by end-2016 from 7% in 2008. The establishment of a new stress testing framework lends a further quantitative dimension to the process of ensuring that, even in a pre-defined “stressed scenario”, financial institutions should remain well capitalised and able to continue lending to creditworthy borrowers. Second, policymakers have acquired new macroprudential tools to mitigate the effect of financial cycles on the economy. Across the globe, authorities have imposed measures such as loan-tovalue and loan-to-income ratios, to reduce the endogenous link between credit and house prices. This new macroprudential approach to regulation aims to safeguard not just the solvency of individual banks but also the systemic integrity of the banking system and its ability to continue providing finance to the non-bank private sector. In addition to the overall global move to stricter regulation, there have been also a number of institutional improvements. In the euro area, banking supervision is now carried out by the Single Supervisory Mechanism, composed of the ECB and the national competent authorities.

and Manzano, C., “Trade disclosure and price dispersion”, Journal of Financial Markets, Vol. 8, No 2. pp. 183–216. 8  See Goldstein, M., Hotchkiss, E. and Sirri, E., “Transparency and Liquidity: A Controlled Experiment on Corporate Bonds”, The Review of Financial Studies, Vol. 20, No 2, pp. 235-273, and Edwards A., Harris, L. and Piwowar, M., “Corporate Bond Market Transaction Costs and Transparency”, The Journal of Finance, Vol. 62, No 3, pp. 1421–1451. 9  See Naik, N., Neuberger, A. and Viswanathan, S., “Trade Disclosure Regulation in Markets with Negotiated Trades”, The Review of Financial Studies, Vol. 12, No 4, pp. 873–900. 4  BIS central bankers’ speeches
Zeti Akhtar Aziz: Three trends and their post-crisis implications Speech by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Inaugural Official Monetary and Financial Institutions Forum (OMFIF) Global Lecture, Frankfurt, 1 March 2010. *  *  *  It is my great pleasure to be here in Frankfurt to participate in this inaugural OMFIF meeting, and to speak at this evening’s inaugural lecture at the Goethe University. These are significant times for policymakers and the financial industry. As we come out of the worst international financial crisis in decades, there still remain some unresolved issues that need to be addressed. The recovery has prompted focus on exit strategies and on the search for more permanent solutions that will put the financial system on a more solid foundation. These issues are however being considered during a period of exceptional conditions. Of concern, is that this might significantly influence the direction of the reform agenda with its medium and long term implications which could be counter to solutions that would lead us to a path of stability and sustainable growth. My remarks this evening will focus on three trends that are gaining significance in the global economy and the international financial system and their implications as we progress forward in this post crisis era.

The emerging economies, in general, and the Asian region in particular, have emerged with stronger growth. Several key factors have enabled this faster and stronger rebound. Firstly, is the policy flexibility to implement the monetary and fiscal stimulus. Strong fiscal positions and relatively low public debt levels have allowed many Asian governments to implement larger fiscal stimulus measures. Second, the financial sector in the region is in good shape, avoiding any disruption of credit flows to the private sector. The region has benefited from the decade long of financial reforms and development of the domestic financial infrastructure. The financial systems in Asia have remained resilient throughout this global financial turmoil. This will be an important factor in sustaining the economic recovery to support domestic private sector economic activity when the fiscal measures are gradually withdrawn. Third, households and the corporate sectors are not over-leveraged, and thus better positioned to sustain consumption and investment activity. Fourth, increased intra-regional trade in Asia  BIS Review 24/2010  1  has supported the recovery in regional trade activity. This has been reinforced by the strengthening of the domestic demand in the region. While domestic sources of growth have gained significance, trade will continue to be important but with a distinct change in the pattern of trade. Trade among the emerging economies has already increased, with this trend being most evident among the emerging economies in Asia. Intra-regional trade in Asia has already risen from 32% of total exports in 1995 to an average of 50% in 2008.