samchain/econo-pairs-v1 huggingface dataset:
My hope is that governments are recognising that accommodative monetary policy and low oil prices, rather than removing the need for reforms, creates the perfect environment to do them. Research suggests that reforms can be more costly in a weak macroeconomic environment and, in particular, when there are serious credit constraints. With our successful credit easing policy we are progressively removing each of those barriers. More generally, however, I would question how much monetary policy decisions should be based around reform incentives. Applying again the Tinbergen rule, this creates two objectives to be attained with one instrument – and just as for financial stability, in the current environment those objectives conflict. The ECB has to prioritise price stability rather than acting as the censor of governments. Euro area governments as a community must ensure that each economy meets the requirements of membership. And it is in this context that I and other ECB Executive Board members have recently called for a stronger Economic Union in the euro area with improved common governance of structural reforms. Conclusion Let me conclude. The diminishing price pressures over recent years have required the ECB to act forcefully and repeatedly to fulfil its mandate. This culminated in January 2015 with our decision to expand our asset purchase programme to stave off deflationary risks and stop the fall of inflation expectations. In doing so we have sent a strong signal that we will safeguard price stability no matter what. This is our mandate as enshrined in the Treaty.

This is  BIS central bankers’ speeches  3  because the longer such measures persist, the greater the risks that can come with it. And in the euro area context there are two main risks that can in principle arise: first, greater financial instability (and let me stress here I am talking only about the situation in the euro area and not in other jurisdictions); and second, the delay of much needed structural reforms. To provide a framework for how to think about these risks I find it useful to invoke the wellknown “Tinbergen rule”, which states that a macroeconomic authority must have at least as many instruments as it has objectives. In terms of the first risk – financial stability – one has to distinguish between conflicting and complementary objectives. In normal times, it might be appropriate for monetary policy to take financial stability into account in its assessment of the appropriate level of interest rates. The reason is that, especially if one extends the concept of the medium-term, raising rates to choke off excessive credit developments will actually contribute to our price stability objective. It helps to prevent deflationary episodes emanating from large financial crises. And the symmetrical argument is also true: lowering rates in a downturn to support the financial sector will safeguard the transmission of monetary policy and hence support the achievement of our mandate. In this sense, I am supportive of the “leaning against the wind” argument in both directions, provided instruments and objectives are consistent.
Erdem Başçi: Financial stability and Turkey’s achievements to date Welcome speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, for the 17th International Conference of Banking Supervisors, Istanbul, 13 September 2012. *  *  *  Distinguished Deputy Prime Minister, Esteemed Guests and Distinguished Members of the Media, Welcome to Istanbul and to the 17th International Conference of Banking Supervisors jointly hosted by the Central Bank of the Republic of Turkey and the Banking Regulation and Supervision Agency of Turkey. In my speech, I will try to summarize the importance we attach to financial stability and the achievements we have made up to date. Dear Guests, There are three essential factors that determine the growth potential of a country; these are price stability, financial stability and productivity. Any weakness in any of these three factors may cause considerable damage to growth. The history of economics is teeming with examples of this. The social costs of loss of price stability are now very well known by economists. Academic studies indicate that an inflation rate that is on average higher by 10 percentage points leads to a reduction in the GDP growth rate an average of a quarter point.1 Meanwhile, the loss of financial stability has deep and long-term impacts on growth and employment.2 The cost of preventing a financial crisis is much lower than the cost of the crisis itself. Turkey’s recent history is a very good example of this statement.

Richard W Fisher: Policies needed to restore American prosperity Concluding remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Dallas and Fort Worth chapters of Financial Executives International, Dallas, Texas, 11 February 2014. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Related slides can be found on the Federal Reserve Bank of Dallas’ website: Slides (PDF). For far too long, the greatest obstacle to the nation’s economic prosperity has resided here:  An editorial in today’s Financial Times encapsulated in 11 words an argument I have been making repeatedly: “Fiscal policy is still not an ally of U.S. growth.”1 I’ll conclude by making the argument once more. Earlier I showed you the gaping hole in the heart of our prosperity: If you remove the jobcreating machine of Texas from the U.S. economy, the nation has experienced job destruction that has occurred over the past 12 years in the middle-income quartiles. Let me show you that chart again:  1  See “Yellen must not be bullied by Congress,” Financial Times, p. 8, Feb. 11, 2014. BIS central bankers’ speeches  1  I never refer to “classes”; I do not believe status in a democracy should be defined by the hidebound concept of “classes.” But no matter: The most vital organ of our nation’s economy – the middle-income worker – is being eviscerated.
The Rt Hon Sir Edward George: A brief review of economic and financial developments in the UK Speech by The Rt Hon Sir Edward George, Governor of the Bank of England, at the Finance and Leasing Association Annual Dinner, London, 24 March 2003. *  *  *  Mr Chairman, my Lords, Ladies and Gentlemen, I must confess that I was surprised when I discovered that it was seven years since I last spoke at this Finance and Leasing Association Annual Dinner. I'm delighted to be with you here this evening. On that earlier occasion - in 1996 - I emphasised the corrosive and debilitating effect of high and variable inflation that we had experienced in this country over much of the previous 50 years. I stressed the damage that this had done to our economy - the pervasive uncertainty and unpredictability, and the short-termism that it induced, in personal and business as well as financial behaviour, the incentive to borrow and spend rather than save and invest, the masking of real price signals as the guide to efficient resource allocation, and the masking, too, of productive inefficiency that was too easily covered up by generally rising prices and earnings. But I suggested that the tide had already then finally begun to turn. I drew attention to the growing constituency in support of stability in this country - as a necessary condition for sustainable growth after our particularly bitter experience of boom and bust in the late 1980's and early 1990's.

I was able to point to the preceding four years - during which inflation had averaged just under 3¼%, compared with almost 10% over the previous 20 years. I was able, too, to point to sixteen consecutive quarters of positive economic growth. And I was able to point to a continuing, relatively steady fall in unemployment from its peak - in terms of the claimant count measure - of almost 10% in 1993. Then I held out to you the prospect of continuing stability - with low inflation and sustained economic growth - as far ahead as I could see. You didn't believe a word of it! You listened - very courteously, as I would expect from the members of your very professional association - but you listened with a good deal of scepticism, which, I confess, I could perfectly well understand. As I left that evening, one of your members said to me "I do hope you're right, Eddie, but we've heard it all before. We'll believe it when we see it!" I suspect he spoke for most of the rest of you. Well, tonight I can tell you that inflation - on the Government's target measure - has averaged just 2.5% over the past 10 years. We have now had 42 consecutive quarters of positive economic growth which is much the longest period of continuous growth since quarterly data became available in 1955.
This one does not need to end – not because we are due Basel IV, or another raft of reforms, but because we will continually adjust as the industry itself innovates. Adjustments will be based on improved engagement with the industry about what’s necessary and conversations with a much wider range of people. Buried in your iPads, under the financial regulation section, is a list of all the current work streams of the FPC, FSB, BCBS, EC, CMU, et cetera – it’s all in there. Of course, there are very few people who know what all those acronyms are and what they mean – and shame on them if they do! This reinforces the point about comprehension, one of the most important takeaways from today. As Jon Cunliffe noted just a short while ago, rather than burying people in acronyms, the responsibility of the official sector is to explain what’s going on, why certain things are being done, and what else is necessary. In other words, as a senior banker once told me early on in my career in the private sector, “If it doesn’t make sense, it doesn’t make sense”. I asked him to repeat it because it didn’t make sense to me at first. If someone in finance explains something and it doesn’t make sense, and if when they repeat it still doesn’t make sense, it’s very likely that they don’t understand it themselves, which is quite often the case, or that, actually, it doesn’t add up.

Macroprudential policy – car loans and property loans While monetary policy is focused on overall price stability, macroprudential policies target specific areas to promote economic and financial stability. The two key macroprudential measures taken in recent years relate to the property market and car market. In the property market, MAS has implemented prudential limits on loan-to-value, loan tenure, and debt service ratios while the Ministry of Finance has implemented stamp duties on buyers and sellers. This collection of measures is the so-called property cooling measures. In the car market, MAS has implemented limits on loan-to-value and loan tenure. MAS eased the limits on car financing in May this year. But it is not time yet to ease the property cooling measures. The considerations and circumstances in the two markets are quite different. The restrictions on car financing were imposed in 2013 – at a stringent level – primarily to restrain the strong demand for cars and COEs, and consequential pressures on inflation. The objective of curbing inflationary pressures has been achieved. The contribution of private road transport (excluding petrol) to headline inflation has eased from +1.3% points in 2011– 2012 to –0.5% point in the first quarter of this year 2016. MAS therefore reset the car loan restrictions in May this year at a level that would continue to promote financial prudence and support the move towards a car-lite society over the long term.
The Riksbank, along with other official observers and market forecasters, has revised its assessments in the light of the increasingly widespread effects of the international crisis. •  Last autumn most observers counted on a strong economic trend, both in Sweden and in the rest of the world. The crisis that had erupted in Southeast Asia was expected to lead at most to a welcome easing of international price pressure. In the Swedish economy, some indicators last autumn pointed to rising inflationary pressure. In particular, a gradual increase in capacity utilisation was judged to lead in time to inflation above the Riksbank’s target. Inflation expectations, moreover, were tending to move up, having previously stabilised after a falling trend for a number of years. In the December Report it was judged that inflation would exceed the target in 1999. The Riksbank raised the repo rate 0.25 percentage points. At the same time, the Riksbank underscored that, due to uncertainties in the assessment, the outcome might differ from the main scenario. On the one hand, an exacerbation of the crisis in Asia could result in weaker inflationary pressure; on the other, there were risks that high wage increases and weak productivity growth would fuel the rate of inflation. These two alternative scenarios were judged to be equally probable. •  During the spring the picture of inflation changed by degrees. In the March Report, inflation prospects had altered somewhat in connection with the mounting crisis in Asia and low import prices.

International economic activity may result in inflation being even lower than in our main scenario, at the same time as a lastingly weak exchange rate that has no counterpart in poorer economic fundamentals could lead to upward pressure on prices. Increased financial unrest Financial unrest has grown since the September Report was published. It is difficult to foresee to what extent the crisis that began in Thailand almost a year and a half ago will affect the real industrialised economies in the West. The direct real economic effects via foreign trade will probably be relatively small. For economic activity and inflation in Sweden, the effects that could arise from decreased general confidence are more important. Share prices in Sweden have gone on falling since the September Report was published, wiping out not just the gains during 1998 but also a part of last year’s increase. Since the high in July, the Stockholm Exchange1 has dropped nearly 30 per cent, giving a fall of about 8 per cent from the level at the beginning of the year. Since the Inflation Report was published, share prices have fallen nearly 6 per cent. 1  Affärsvärlden’s general index. BIS Review 81/1998  -6Continued unrest and falling asset values would affect the behaviour of firms and consumers. If households and firms postpone investment and consumption decisions, economic activity will be lower.
This correction had a considerable cost in terms of GDP and employment, directly affecting the losses the financial system would have to address and which had only been but partly expected in the prior expansionary phase. 3  The second is the cross-sectional dimension, through the various intermediaries making up the financial system. This dimension derives from specific structural characteristics of the financial system that may amplify the impact of any shock to it. Indeed, the financial system is made up of highly heterogeneous institutions, in terms both of size and complexity. In turn, these institutions are very closely interconnected, both through direct exposures in the interbank market and indirect exposures: exposure to the same economic sectors or even to the same agents (firms or the public sector). Both the diversity of the players and their close interconnectedness notably improve the efficiency of the system, since they provide maximum specialisation in risk management. But they are also a cause of vulnerability, since the potential difficulties of one institution can swiftly pass through to the rest. This is particularly the case for banks of greater systemic importance, whether because of their size, their complexity or their central position within the system. One of the best examples of the importance of this dimension for systemic risk is also to be found in the global financial crisis. The US insurance company AIG had not been a major originator of sub-prime mortgage loans.

Against this backdrop we have, at the Banco de España, monitored different indicators during the crisis that measure the presence of systemic tensions in financial markets, which prove useful for identifying the start of a systemic crisis. These indicators showed, in fact, a very pronounced increase in the opening months of the pandemic, but an improvement subsequently. In any event, our benchmark indicator in the current situation has been the output gap, i.e. the difference between the actual and potential level of output, which reflects the persistence of the impact of the crisis on GDP. This output gap has stood at very negative level since the crisis began; accordingly, given that the objective of macroprudential policy is to act countercyclically, it does not seem reasonable to activate the macroprudential instruments, despite the fact that the credit-to-GDP gap may be above 2 pp. At the European and global level – in different agencies such as the ECB, ESRB, EBA, BCBS and FSB, among others – various coordinated decisions in this economic policy area have been taken. One notable example was the introduction of recommendations for restrictions on the distribution of dividends by banks and on variable remuneration. Their uniform application to all banks, by financial system sector and country, conferred a significant macroprudential dimension on this action, by contributing to preserve the capital of banks 17  as a whole.
Reserves in emerging Asia recently passed the $ trillion mark, double their size at the end of 2003. Given the levels that have been reached in many countries, it may no longer be appropriate to view rising reserves as a source of increasing strength against future volatility. They are, increasingly, signs of the allocative distortions that result from the exchange rate regime. And they are in a sense too much of a good thing. Conclusion The economic and financial transformation of the crisis economies has been extraordinary. The policy reforms adopted in the wake of the crises have made those economies less vulnerable and more resilient. And these changes justify substantial confidence about Asia’s economic future. Asia’s success fundamentally changes the international economic and financial system. It is no longer tenable to view the world as divided between a dominant core of mature industrial economies and a smaller periphery of emerging economies. Asia is now so closely integrated with the rest of the world, so large in relative terms, and growing so rapidly that the policy choices made in this region will have a much greater impact on the rest of the world. And it means that Asia will need to prepare for a future in which it relies more on the strength of growth at home rather than on the strength of growth in the rest of the world.

The capacity of policymakers to restore stability was constrained by the depth of the balance sheet problems. In some cases, where the scale of external borrowing was less acute, policymakers had more room to act. But in most cases, policy options were very limited. Initially, governments were reluctant to let exchange rates move too far, because of fears that this would force banks and companies that had borrowed in dollars or yen into default on a scale that could further damage growth. At the same time, the authorities were reluctant to tighten monetary policy as a way to help stabilize the exchange rate because of concern it would hurt growth and perhaps exacerbate the flight from domestic assets. This dilemma made the initial policy response in the crisis countries look halting and tentative. And, uncertainty about the strength and continuity of political leadership further hampered government efforts to recover credibility. In the countries hit hardest by the crisis, looming issues of succession and elections compounded the problem of confidence. The crises prompted a searching reassessment of the conventional economic wisdom and a new appreciation of the challenges that come with financial integration. The classic measures of macroeconomic stability and policy prudence, in fiscal positions and measured inflation rates, could mask substantial structural weaknesses, and these same structural weaknesses could ultimately undermine the achievements of otherwise reasonably conservative macroeconomic policy management. Partial capital account liberalization, which encouraged the accumulation of short-term debt obligations, brought substantial risk, magnifying weaknesses in domestic financial systems.
The deposit rate forms the floor for the shortest money market rates. Transparency about intentions, strategies and the implementation of monetary policy makes it easier for economic agents to assess monetary policy. If monetary policy is predictable, an important source of uncertainty is reduced, and – other things equal – the interest rate required to achieve the inflation target will be lower. If economic agents are to have confidence in monetary policy, transparency regarding the central bank’s response pattern is probably a precondition. The interest rate affects inflation through a number of channels. An increase in the interest rate will normally contribute to reducing inflation by curbing demand for goods and services and by strengthening the krone exchange rate against other currencies. An interest rate reduction has the opposite effect. Monetary policy influences the economy with considerable and variable lags. Our analyses indicate that a substantial share of the effects of an interest rate change occurs within two years. Two years is therefore a reasonable time horizon for achieving the inflation target of 2½ per cent. Interest rates are set with a view to achieving an inflation rate of 2½ per cent two years ahead. Norges Bank’s views on the inflation outlook are presented three times a year in the Inflation Report. Our projection for inflation in the period ahead is presented as well as our assessment of the balance of risks surrounding this projection. The Executive Board’s updated assessments are presented in connection with the monetary policy meetings every six weeks.

An increase in unemployment that is due to a higher rate of increase in labour costs than implied by productivity growth cannot be offset by low interest rates or higher public spending and tax cuts, but requires changes in the functioning of the labour market. The planned use of petroleum revenues implies that the sheltered sector will lay claim to a larger share of the labour force. This will probably cause a decline in manufacturing employment. The ensuing deterioration in competitiveness may lead to restructuring. In the long run, monetary policy cannot influence overall employment or its distribution across industries. Norway’s terms of trade flucture widely. This is largely attributable to variations in the oil price. However, a substantial portion of petroleum revenues is invested in foreign equities and bonds through the Government Petroleum Fund. Changes in the oil price influence the size of the Fund, but have little effect on the domestic use of petroleum revenues. The Petroleum Fund acts as a buffer against fluctuations in the oil price, which stabilises the krone exchange rate. The Norwegian economy may nevertheless be exposed to disturbances of a type that cannot be absorbed by the Petroleum Fund. We have to be prepared for fluctuations in the value of our currency that are more in line with the fluctuations observed in other countries. The exchange rate will vary. This means that economic agents cannot assume that the krone will be stable against the euro, the US dollar or a weighted average of foreign currencies.