samchain/econo-pairs-v1 huggingface dataset:
The focus of that work was on operating regimes to target the fed funds rate. Basically, it considered several variants of corridor and floor systems. The financial crisis interrupted this work, and it was not completed as had been intended. The lessons from the crisis suggest that the implementation framework needs to be considered more broadly. For example, in the 2008 work, we did not think about the zero bound very much. 8  See Christopher Jackson and Joseph Noss, “A Heterogeneous Agent Model for Assessing the Effects of Capital Regulation on the Interbank Money Market under a Corridor System,” Bank of England Working Papers, no. 548, September 2015, as well as Morten L. Bech and Todd Keister, “Liquidity Regulation and the Implementation of Monetary Policy,” BIS Working Papers, no. 432, October 2013. See also Bank for International Settlements Committee on the Global Financial System and Markets Committee, “Regulatory Change and Monetary Policy,” CGFS Papers, no. 54, May 2015. 9  See Jim Clouse, Jane Ihrig, Elizabeth Klee, and Han Chen, “The Federal Reserve’s Tools for Policy Normalization in a Preferred Habitat Model of Financial Markets,” Board of Governors of the Federal Reserve System Finance and Economics Discussion Series, no. 2014–83, October 2014. 10  See Ben Lester and Roc Armenter, “Excess Reserves and Monetary Policy Normalization,” Federal Reserve Bank of Philadelphia working paper no. 15–35, August 2015. 11  For example, Marvin Goodfriend and Robert G. King argued in 1988 that “today’s financial markets provide a highly efficient means of allocating credit privately.

An analysis of inflation developments in terms of sub-categories reveals that the rapid decline in inflation was mainly driven by the waning base effects from unprocessed food, energy and tobacco prices and the favorable course of services prices (Chart 6). Meanwhile, the rapid increase in import prices and the depreciation of the Turkish lira caused prices of core goods to accelerate. Indeed, the rate of change across all subcategories of the CPI, except core goods, remained below past year averages during the first quarter (Chart 7). Chart 6. Chart 7. Contribution to Annual CPI Inflation  CPI by Subcategories (First Quarter Percent Change)  * Core Goods: Goods excluding food, energy, alcoholic beverages, tobacco and gold. ** Food and Energy: Food and non-alcoholic beverages and energy. *** Tobacco and Gold: Alcoholic beverages, tobacco and gold. Source: TurkStat, CBRT. While inflationary pressures by producer prices grew stronger in the first quarter, aggregate demand conditions provided less support for disinflation compared to previous quarters. Meanwhile, core goods inflation posted an increase, albeit remaining low (Chart 8). On the  4  BIS central bankers’ speeches  back of these developments, medium-term inflation expectations registered a limited increase in the first quarter (Chart 9). Chart 8. Chart 9. Core Inflation Indicators H and I  12- and 24-Month Ahead CPI Expectations*  (Annual Percent Change)  (Annual Percent Change)  *CBRT Survey of Expectations, second survey period results. Source: TurkStat, CBRT. Source: CBRT.
Monetary policy cannot and should not counteract changes in relative prices. But what central banks can govern in the long term is the way inflation develops. A change in relative prices can occur when there is low inflation as the price increases on the goods that become relatively more expensive are compensated for by low price increases or even falling prices on other goods. The same relative price change can occur with high inflation, when all prices rise rapidly but some more than others. But if commodity prices soar, this means that companies' costs will rise and inflation will be pushed up. For a central bank with an inflation target the task is then to use monetary policy to avoid secondary effects on wages and other prices and to counteract a rise in inflation expectations. If prices rise more quickly abroad  BIS Review 57/2008  3  then a credible monetary policy should also lead to a stronger domestic currency, which contributes to limiting the impact on domestic prices. Managing price increases in a longterm perspective is actually a question of making well-balanced interest rate decisions at each individual monetary policy meeting. The principles are simple… So how should a policymaker reason at each monetary policy meeting when rising commodity prices are pushing up inflation? Describing what should be done in principle is fairly simple.

Their efforts, together with those of commercial banking institutions and government mandated micro-financing agencies, have resulted in a significant expansion of micro-financing. Micro-financing has increased from RM151 million in 2000 to RM1.7 billion in 2008, representing an annual average growth rate of 35%. Early this year, Bank Negara Malaysia celebrated its 50th anniversary. The Bank has taken the opportunity to review our existing legislation; the Central Bank Act to take into account the dramatically changed domestic and international economic and financial environment. The work on this proposed new legislation has spanned two years. In articulating with greater clarity the mandate of the Bank, the objective of financial inclusion, not explicitly mentioned in our existing Act, but undertaken in practice is now explicitly articulated in the proposed Act. This is to ensure that going forward, the future generation of central bankers at Bank Negara Malaysia will continue with the unwavering commitment to the building of an inclusive financial system. Conclusion Let me conclude my remarks. In this current environment of great uncertainty, financial intermediation has a vital role in supporting an economic recovery. As regulators, the focus is placed on ensuring the soundness and stability of the financial system, and thereby provides the platform on which the role of the banking sector in the economy can be enhanced. It is the continued functioning of the financial system that will be a vital element in the economic growth and development process.
But leverage has started to creep back up in the past year or so as we have seen the return of more leveraged investors. That is not to say that there is no macroprudential interest in the UK CRE market at the moment. A rapid fall in CRE values could affect the UK economy through other channels. About 60% of lending to SMEs and smaller corporates is secured on property collateral so a fall in values could well constrain investment. And there are important initiatives in train to develop a database of CRE debt and to explore the use of “through the cycle” valuations1. In my view, the overall picture of the credit cycle in the UK suggests that it is entering into a more normal phase. Credit terms remain easy for both households and corporates and credit is readily available. At an aggregate level, credit in the economy is growing below pre-crisis levels though to me that might well be a misleading metric. Aggregate indebtedness is considerably below pre-crisis levels though it remains high. At a more granular level, credit is  1  4  See Brazier, A (2015) “Nurturing resilience to the financial cycle”. BIS central bankers’ speeches  growing fastest in the areas of unsecured lending to consumers and lending to buy to let housing investors. The stock of credit in each of these areas is reasonably material at around 10% of GDP. But it is a relatively small component of the overall stock of credit.

José De Gregorio: Exchange rate and export development Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, at the Special Session on Exchange Rate at the Chamber of Deputies and the 23rd National Meeting of Fruit and Vegetable Producers, Santiago de Chile, 6 October 2010. *  *  *  Chile has prospered during recent decades thanks to globalization. Having tried various strategies, we can say we have reached consensus on this matter. For an economy of our size and characteristics, opening up to the rest of the world is essential for creating the competition and efficiency that will stimulate development. Four decades ago, this idea was a voice in the desert in developing economies, but today it is the accepted norm. There is also consensus that monetary and exchange policy should be conducted by an autonomous central bank, and that fiscal policy should be governed by transparent, predictable and sustainable rules. After much trial and error, our country adopted an institutionality that has allowed us to walk through complex international situations with relative stability. Today I would like to discuss how we at the Central Bank of Chile view the challenges facing export development, in particular with regard to monetary and exchange-rate policy. Let me open by explaining the four principles guiding our decisions, so I can clarify some misconceptions with respect to the Central Bank and the exchange rate.
Roger Farmer for example argues that the statistical evidence for a natural rate of unemployment, an equilibrium to which the labour market returns is unconvincing. Rather, he argues, there are multiple equilibria for the labour market. Which unemployment rate prevails depend on investors’ animal spirits, captured by a ‘belief function’ comprising expectations of future economic prospects. 23  The policy implications of a very different framework for the relationship between demand and supply would be fundamental. Given the success, in my view, of inflation targeting frameworks over the past few decades, policy makers should be rather cautious here and set a pretty high evidential bar – in both theoretical and empirical terms – for assessing radically different frameworks. Current UK monetary policy  These issues are particularly relevant now given the current conjuncture in the UK. Inflation is currently above target as a result of the post referendum depreciation of sterling and forecast, for that reason, to remain so over the next three years. The Monetary Policy Committee’s (MPC’s) remit requires the MPC to meet the inflation target, which is forward looking, at all times. The remit recognises that in exceptional circumstances a large and persistent shock to the economy could present the MPC with a significant trade-off between the speed at which it brings inflation back to target and the impact on jobs and economic activity. The post referendum depreciation of sterling is precisely such a shock.

Although quarterly growth rates of GDP may soon turn positive in the United Kingdom, unemployment is likely to remain high. Fortunately, it has not increased to the 10% rate now experienced in both the United States and the euro area. But at just under 8%, it is markedly above the level to which we had become accustomed during the period known as the “Great Stability”. The sharp monetary squeeze resulting from the efforts by banks to contract their balance sheets is still casting a shadow over the future path of output and employment. Over the past year, broad money growth has slowed sharply to a virtual standstill in the United States, and it turned slightly negative in the euro area. In normal circumstances, we might expect annual rates of increase of between 5% and 10%. At home, annual broad money growth has slowed somewhat less sharply, and remains positive. The unprecedented actions of the Monetary Policy Committee to inject £ billion directly into the economy – described by some as “quantitative easing” – have averted a potentially disastrous monetary squeeze. The headline in the Racing Post of 29 December said it all: “Quantitativeasing Maintains Perfect Record”. Its Newbury correspondent reported that “Quantitativeasing started as a red-hot favourite and had little trouble maintaining his unbeaten record. Ridden with plenty of confidence his task was made easier when Tail of the Bank came to grief at the second last. His trainer said ‘I was delighted with the way he went through that testing ground’”.
A process was therefore initiated in November that amounts to successively taking our foot off the monetary “accelerator”. As the after-effects of the Asian crisis and the financial market turbulence in the autumn of 1998 subsided, a strong economic stimulus from monetary policy was no longer required. In November 1999 and February this year the repo rate was therefore increased by a total of 0.85 percentage points. The analytical and monetary policy challenges that confronted the Riksbank during 1999 were not minor. The strong growth of demand in recent years has been accompanied by paths for underlying and trend inflation that have been weaker than earlier relationships seemed to suggest. A number of reasons have been put forward as to why these relationships may have changed. One reason may be that when inflation has been brought down to a low level, price and wage setting behaviour is different. Households as well as firms in Sweden count on inflation remaining low. Another reason may be increased competition, for instance due to deregulations, globalisation and IT commerce. A third reason may be that our assessments of resource utilisation are faulty and the actual level is lower than we have assumed to date. Economic growth can then be higher for a time, without generating increased price pressure. A fourth reason may be a higher productivity trend and an ability to produce more goods and services without generating increased prices; in other words, a higher potential growth rate.

Because of the long lag before monetary policy changes elicit effects, parrying this impact from import prices would have required the Riksbank to identify the Asian crisis’ damping consequences for commodity prices long before they actually occurred. But the weak development of import prices is not the only explanation. Inflation in this period was lowered still further by changes in interest expenditure as well as in indirect taxes and subsidies. On several occasions I have shown the Committee how monetary policy exerts direct effects on CPI inflation through house mortgage interest expenditure. Reducing the interest rate, in order to stimulate demand and thereby hold inflation around the target, has the initial effect of lowering the CPI because house mortgage interest expenditure decreases. This effect continues until after households have renewed the loans at the new, lower interest rate. The greater part of the difference between the CPI and UND1X in Diagram 1 is due to this interest rate effect. The Riksbank has considered the possibility of using some other index for targeting monetary policy but we concluded that there are grounds for continuing with the CPI as the overriding policy target. Among other things, the index is well known and relatively comprehensive. In the light of the problems I mentioned and the ensuing discussion, the Riksbank has chosen to present a clearer description of how the CPI target is to be interpreted.
At the time, it was unclear just how significant the innovation would be or how successful the companies would be that sought to take advantage of it. On the one hand, there were companies such as Cisco, which sold the “shovels” – the routers that enabled the Internet to work – that were very successful. On the other hand, there were companies such as Webvan, which sought to use the new technology to revolutionize the delivery of grocery supplies and services, and that failed miserably. Similarly, the recent housing boom was driven by two innovations: (1) in housing finance, where subprime lending made mortgage credit available to households that were much less creditworthy, and (2) in structured finance instruments such as collateralized debt obligations (CDOs). The first innovation significantly broadened the availability of mortgage credit to households. The second innovation reduced the cost of this credit. Cash flows from the underlying mortgage assets were apportioned among senior and junior tranches. These tranches, which had been rated by the rating agencies, were then distributed to a wide range of investors. This structured finance innovation, in turn, was supported by innovations in the shadow banking system. Securities lenders, structured investment vehicles and conduits bought the highly rated tranches of the structured financed products and financed these assets in the wholesale short-term funding markets. The second element common to many asset bubbles is a surge in economic activity in the particular sector associated with the innovation.

The final tool available to the central bank is monetary policy. This tool is not likely to work as well as macroprudential tools because it is too broad. Typically, monetary policy will not address specifically the sources of the changes in supply and demand that are driving the bubble and, obviously, monetary policy will have big effects elsewhere. Some argue that monetary policy should “lean against” incipient asset bubbles. The notion is that by pursuing a slightly tighter monetary policy, the central bank would take out insurance against the risk that the rise in asset prices is a bubble and that its busting would be disruptive. Although this sounds attractive, it critically depends on how expensive the insurance is relative to the losses that the insurance protects against. It is not clear to me that a modest tightening in monetary policy beyond that needed to achieve full employment and price stability in the absence of a bubble would represent a favorable cost-benefit tradeoff. The costs of the deviation from the optimal monetary policy in terms of lost output and  10  However, in the recent crisis, the different outcomes in the United States and Canada might be instructive. Canada had a tougher regime in terms of mortgage underwriting standards. Also, Canada had imposed an overall leverage limit on its banks, which helped to limit the amount of gearing in the financial system.
The main tool to monitor those commitments is surveillance. The surveillance activities of the IMF have been criticised because they pay insufficient attention to spillover effects and instead examine in unnecessary detail microeconomic issues. For example, the sharp rise in oil prices over the past two years has posed a risk to economic stability in many countries. But there is no reference in the IMF’s Article IV report on China to the role that Chinese demand may have played in pushing up world oil prices. And the report on the United States this year singled out the electricity sector and competition among auto manufacturers and airlines as areas warranting special examination by IMF staff. It would be better if those microeconomic issues were examined within the OECD, and, in turn, issues of macroeconomic spillovers and global “imbalances” were left to the IMF. But even when IMF surveillance has been well-focussed, as in the analysis of Thailand’s exchange rate policies in 1996, it has not always carried sufficient weight to influence countries’ policies. 4  BIS Review 126/2006  These short-comings must be remedied in two ways. First, the focus of IMF surveillance should be on spillover effects and the consistency of macroeconomic policy frameworks. By the Spring Meetings of the IMF in Washington in April, we shall know whether this is likely when we see the results of the current review of the 1977 decision on exchange rate surveillance. Second, IMF surveillance should be more independent of member countries.

But as we strengthen international regulation, we must not lower our guard in terms of ethics. Ten years later, this would generate the opposite imbalance to that of 2007–08. In other words, there's a risk that the pendulum could swing back the other way. 2. Ethics must permeate the day-to-day practices and culture of financial institutions. Over and above the good intentions, declarations and codes of conduct, which did nothing to prevent the excesses that caused the 2008 crisis, the challenge now is for all actors from the bottom to the top of these organisations to adopt an ethical approach. As the "Banking Conduct and Culture" report of the Group of Thirty, which brought together private and central bankers and academics, asserted, the "tone from the top" must have an "echo from the bottom". This begins with the Boards of Directors and the management teams, who must always be exemplary, and who need to realise that their behaviour is scrutinised at all times for indications of what is acceptable and what is not, irrespective of their declarations of intent. Actions speak louder than words. It then requires employees to be trained and informed on ethical standards on a regular basis and not only on their first day on the job. Situations change; new developments can be an opportunity to reconsider existing practices; stakeholder expectations evolve. Ethics – just like technical issues – must be subject to constant communication and ongoing training. And this is no easy task.
To grow out of the crisis and survive the shocks from outside, Thailand must look within and unleash domestic engines of growth. Long-term investment in productive infrastructure is one key engine of growth. Another is domestic structural change spurred by two drivers of change in the region. The first driver of change is growth in China and the attendant rise of the Chinese middle class and demand for a broader range of imported goods and services. Chinese exports will also grow in sophistication. The second driver of change is trade liberalization in the region – such as free trade agreements with China and India as well as the ASEAN Economic Community, or  2  BIS central bankers’ speeches  AEC. AEC, in particular, goes beyond free trade and also has the potential to foster not only goods and services integration but also cross-border labor and investment flows. Because of the sheer size of these markets – China, India and AEC – the regional pattern of production will change considerably to cater to new demands while leveraging on new comparative advantages and supply chain synergies. Uncompetitive firms have to either upgrade themselves, or close down and free up labor resources to more competitive firms. This reallocation process implies that the country makes better use of labor resources and achieves higher productivity. Ongoing financial sector reform will also build financial sector resiliency. Thailand’s Financial Sector Master Plan, now in its second phase, continues, and focuses on liberalization through increased competition, raising efficiency, and strengthening the financial infrastructure.

If the talent requirements of the financial sector are to be effectively addressed and managed, the industry cannot be a spectator. It is acknowledged that there are already many practitioners who are already serving on the Accreditation Technical Committees and the Board of FAA from different parts of the world, who have committed their valuable time, experience and knowledge to this important initiative. These will be important contributions as the industry continues to develop and mature. On that note, let me once again congratulate the Board and management of FAA on this occasion of its official launch. Bank Negara Malaysia together with the Securities Commission fully supports the FAA in its important role. I am confident that the FAA will have a significant impact in the efforts to sustain a strong talent pipeline for the financial sector in this more dynamic and challenging environment ahead. 2  BIS central bankers’ speeches