samchain/econo-pairs-v1 huggingface dataset:
Such a communication would be reminiscent of the reverse situation, when the central bank is concerned about fiscal dominance – a situation where an unsustainable fiscal policy makes it impossible for the central bank to restrain inflation – and communicates this. 16 Personally, I do not think that an independent monetary policy presumes a total lack of dialogue between the Riksbank and the political system on such matters. The second question concerns the effectiveness of various measures and the risks they entail. For example, assume that the Riksbank can make monetary policy more expansionary by purchasing certain financial assets. This could increase the risks on the Riksbank’s balance sheet considerably and lead to future losses for taxpayers. Assume now that it had been possible to achieve an equivalent effect by means of mild fiscal policy stimulation measures. This would probably be possible in a situation where monetary policy is at its lower bound. The Riksbank would then not have to raise the interest rate as economic activity rises and fiscal policy would thereby become more effective than normal. 17 In this case, there should be conditions for holding a discussion over which policy mix would be most appropriate. In addition, Blanchard (2019) makes the point that, if the real interest rate is lower than the growth rate in the economy, the cost for debt-financed public investments will be very low.

Conference of the Haut Conseil des Finances Publiques Paris, 10 May 2022 The sustainability of French debt, between rising interest rates and European rules  Speech by François Villeroy de Galhau, Governor of the Banque de France  Page 1 of 9 Ladies and Gentlemen, It is a pleasure to be with you today, and I thank the first President Pierre Moscovici for inviting a central banker to conclude this predominantly fiscal conference. I am especially aware of this privilege because monetary policy and its relationship with fiscal policy are often subject to two suspicions. Firstly, accommodative monetary policy is believed to be responsible for the rise in public debt. This is not true: the unconventional policies conducted over the past decade to support inflation (and activity), which was weak at the time, have merely had the effect of reducing the cost of debt. Several countries, not only Germany, have, on the contrary, taken advantage of this decade to bring down their debt. And unfortunately we have to acknowledge that in France, government spending was already systematically higher than revenues long before the low interest rates and government securities purchases. The second suspicion is that because of this high public debt, monetary policy is now unable to raise interest rates sufficiently to combat renewed inflation. This is also untrue: the independence of the European Central Bank and of each national central bank, starting with the Banque de France, is notably designed to prevent any risk of "fiscal domination".
To be clear, the question here is not about whether CCP margin is to “blame” for the dash-for-cash. The question is did the system have enough liquidity ready in the right places to respond to derivative market volatility without adverse consequences for financial stability. Whatever we conclude, our policy response will need to take into account the whole story- including the essential role that margin played in preventing panic. We don’t want to return to the pre-Lehman world of a spaghetti bowl of counterparty credit risk. 4. Conclusion  So going back to my original questions. First, what has the experience of March and April told us about the reforms we put in place post-2008 to make the global financial system simpler? A: The headline answer is: It worked. When it comes to the crucial goal of preventing panic fuelled by a spaghetti bowl of bilateral derivatives exposures, the new system held up despite unprecedented stress. Second, where do we go from here? A: I have two recommendations:  First, we need global regulatory cooperation in order to avoid reverting to fragmentation and spaghetti. Trust based on proportionate, informed reliance. Second, if we want the simpler system to keep working, global regulators need to stay ahead of the curve and keep the system under review. We cannot ignore the fire the financial system experienced in March and April last year just because central banks did a good job putting it out. We need to look behind the walls and address any faults in the wiring.

10  Speech by Andrew Hauser, From Lender of Last Resort to Market Maker of Last Resort via the dash for cash: why central banks need new tools for dealing with market dysfunction, 7 January 2021. 11 Bank of England calculations. 7  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  7  But it also undoubtedly contributed to the liquidity stress some participants faced. At least some of those scrambling to get their hands on US dollars may have been doing so in order to meet their obligations at CCPs . As a priority for 2021, the Financial Stability Board (FSB) is looking at the role of margin in this episode, as part of its broader work plan to strengthen the resilience of non-bank financial intermediation.12 The Bank is closely involved. This is crucial work – we need to understand the role margin played as part of any thorough look behind the walls. This means we will need to look beyond aggregate numbers and build up a full and detailed picture to assess what role CCP margin played  For example:   We need to look at why all CCPs turned out not to be created equal. What drove variation across firms and are there any lessons learned. 12  FSB Holistic Review of the March Market Turmoil, 17 November 2020. 8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8    We need to distinguish between variation margin and initial margin.
1 Furthermore, in 2018, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, the equivalent of the Nobel Prize in economics, recognised William Nordhaus for his work on integrating climate change into long-run macroeconomic analysis. 1  Nordhaus, W.D. (1977), ‘Economic growth and climate: The carbon dioxide problem’, American Economic Review 67(1), pp. 341–346. Page 2/12  It may seem obvious, but it is worth reminding ourselves that our planet has undergone numerous climatic changes throughout history. However, in the past, these changes have essentially been the result of natural forces. Today, global warming is largely attributable to human activity – and the rate of warming is faster than it has been in the past. 2 Climate change is a negative side-effect of economic activity – what economists call a ‘negative externality’. The externality arises because the costs caused by the emission of CO2 and other greenhouse gases are not borne by the emitters. When economic agents emit CO2, they do not internalise the effect of these emissions on the planet or on future generations. This is a classic ‘tragedy of the commons’ scenario: 3 the atmosphere – a shared or ‘common’ resource that is available to us all but belongs to no one – is being overexploited and degraded. The mechanism underlying the ‘tragedy of the commons’ is well understood and documented by economic theorists. Yet, in the case of global warming, several factors are in play that make the phenomenon difficult to grasp and remedy.

This achievement should be saluted as citizens of both  BIS Review 15/2009  1  countries will now be able to pay for goods originating from the other country with the currency of that country, hence eliminating the need for currency conversions by citizens. Distinguished Ladies and Gentlemen, this agreement is also a step towards further strengthening trade and financial cooperation between the two countries. It provides the legal basis for commercial banks, bureaux de change and other financial institutions to freely accept each country’s currency and repatriate it through the banking system with full accountability. The agreement will not only enhance trade cooperation but will also increase cooperation between our two central banks. Furthermore, the agreement provides a platform for sharing information on the bank notes in use by the two central banks. This information exchange initiative should not only end at central banks, but be extended to all economic entities that will use and benefit from this development, especially our hard working farmers who should be paid genuine currencies when they sell their produce. Once again, Governor, let me thank you most sincerely for initiating this agreement. Indeed, the signing of this agreement is a testament of the cordial relationship that has existed between Mozambique and Zambia since the days of the liberation struggle. I must add here that, for us, it marks a key milestone towards enhancing regional integration and macroeconomic convergence. As you are aware, Governor, this is our main goal as member countries of the Southern Africa Development Community.
I would note this is something the Committee was able to anticipate before the referendum, the minutes of the MPC’s May 2016 meeting stating that “[t]he implications for the direction of monetary policy will depend on the relative magnitudes of the demand, supply and exchange rate effects.” And my colleague Ben Broadbent has recently set out in more detail what this means in the particular context of Brexit. True to this statement, the MPC has set monetary policy since the referendum on the basis of its assessment of how those effects are interacting. This is made difficult by the large, uncertain and sometimes offsetting implications of the decision to leave the EU. So it is not surprising that even though all Committee members sign up to the framework I have laid out, their individual assessment of the economic outlook has differed along the way. Decide Which brings me to the second phase of ‘end to end’ monetary policy: Decide. In the MPC’s meeting at the start of this month, a majority of its members thought that the evolution of supply and demand was such that the margin of slack in the economy now seemed fairly limited, and that underlying inflationary pressures had shown some signs of picking up. As a result, they judged that this reduced the degree to which it was appropriate for the MPC to tolerate an extended period of above-target inflation, and that a small reduction in stimulus was warranted.

Respectively, they refer to the clear specification of the objectives of monetary stability; the setting of policy appropriately to meet those objectives; and the implementation of monetary policy through the Bank’s operations in financial markets. Define Let me start with Define. The Bank’s responsibility for monetary stability dates back to at least the Bank Charter Act of 1844 when it was given a monopoly on issuing notes in England and Wales. In the intervening period the Bank’s monetary policy objective has taken many different forms that have varied in their degree of formality, clarity and success – including the gold standard, membership of Bretton Woods, monetary targets and the Exchange Rate Mechanism. For much of that period, the Bank’s monetary stability aims lacked definition. As the Governor has recently 1  noted , this changed with the Bank of England Act of 1998 which clarified – for the first time in three centuries – the Bank’s responsibilities. The ‘end’ for monetary policy was defined as maintaining price stability (specified in subsequent Remits as the pursuit of a symmetric 2% CPI inflation target) and, subject to that, supporting the economic policy of the government including its objectives for growth and employment. The means for getting there is the independent setting of monetary policy by the MPC. This represented a major step forward for the clarity, accountability and efficiency of monetary policy, as assessed by the 2013 review of the monetary policy framework by the Treasury.
The cost would have been 3½% in foregone output and a rate of inflation more than a percentage point further below target. In a more recent study, Aikman et al. (forthcoming) come to similar conclusions. They find not only that monetary policy has relatively weak effects on financial stability, at least in the UK, but also the converse – that, partly because they’re directed more at mitigating tail risks, rather than affecting the most likely path of the economy, macro-prudential policies do not have very large effects on demand and inflation. Chart 6 is a summary of their results. The impacts of the two policies on growth and inflation are on the left-hand side, with the effects on measures of financial stability on the right. The responses to a change in monetary policy are in white, those to macro-prudential policy in blue. It’s very clear in this paper, at least, that the 7  All speeches are available online at www.bankofengland.co.uk/speeches  7  comparative advantage of monetary policy is in  Chart 6: The impacts of monetary and  stabilising growth and inflation with financial stability  macropru policy  best left to macro-prudential policy10.

While Global R* affects the level around which equilibrium real interest rates fluctuate over the  Page 4  longer term, it abstracts from the shorter-term cyclical forces at play. So let me be very clear that nothing I say today is intended to be a signal about the near term path of the equilibrium real interest rate in the United Kingdom or indeed Bank Rate over the MPC’s policy horizon. Even if the trend global real rate remains low, we may still see a rise in nominal policy rates and equilibrium real interest rates in the short to medium term. In other words, Global R* is an important underpinning, but it is not a useful guide to real-time policymaking. Since real interest rates are an important determinant of investment, in today’s speech I will also consider the extent to which investment has responded to movements in the trend real rate. As I will discuss in more detail later, the determinants of, and prospects for, investment have important implications for another equilibrium concept that helps us to understand the policy landscape: potential output, which is the hypothetical level of output that could be produced if all resources were fully employed. Global R* To illustrate the context, Chart 1 shows the UK ten-year real interest rate, measured directly from index-linked bond prices, plotted to the end of June of this year. Two things stand out immediately.
Low demand of businesses and households for bank loans and tight lending standards led to poor performance of credit to economy. Its annual growth dropped to 2.4% at year-end. Poor credit performance was present in all its segments, by purpose of use. Meanwhile, foreigncurrency loan continues to shift to lek loans. Shifting household savings from bank deposits to public debt securities was a striking financial development over the past year. This trend led to increase in financing the budget deficit by households and decline in this financing by the banking system. Financial market liquidity position and risk premium performance conditioned the passthrough of easing monetary policy to financial markets. Key interest rate cuts were immediately reflected in the interbank market and in lek deposit market, but their passthrough to government securities markets and to lek credit was more limited, mainly due to developments I mentioned earlier. However, lek intermediation cost dropped in 2012 and increase in lek intermediation created grounds for better transmission of monetary policy signals to economy during the current year. Finally, the foreign exchange market and the exchange rates were generally calm due to a balanced ratio of the foreign-currency supply and demand. In operational aspect, the Bank of Albania upgraded the infrastructure of its role as a lender of last resort to commercial banks. Due to this work, the Regulation “On the liquidity supporting loan” was reviewed and approved, stipulating an appropriate framework to support banks that are temporarily illiquid.

Direct impact of this shock on financial markets, and especially on government securities market was about 2% of GDP. However, their indirect impact was even greater. As in other countries of the Central and Eastern Europe, banks originating from  BIS central bankers’ speeches  1  the euro area countries adopted a more conservative behaviour, manifested in further slowdown of lending during the year. As a result, the Albanian economy slowed further over the past year, leaving spare capacities in the labour and capital markets. This development was associated with low increase in wages and producer costs and was reflected in slightly increased consumer prices. Supply shocks were few and of low intensity over the past year, inflationary expectations remained anchored and liquidity position was favourable to keep inflation in check. This balance of factors was materialized in low annual inflation rates and the annual consumer price rise eased to 2.4% at end-2012. Low inflationary pressures and lack of fiscal stimulus made room for further easing of monetary policy in 2012. The Bank of Albania cut the key interest rate three times, to 4.0%, from 4.75%. The monetary conditions were eased to stimulate the domestic demand and create better conditions for meeting the medium-term inflation target. Also, the Bank of Albania increased significantly the liquidity-providing operations in the banking system to calm down financial agents, control the rising interest rate trends and ensure the smooth functioning of markets.
When one thinks about the distant future – that is, the period beyond the influence of the current set of cyclical factors – one tends to think that interest rates will tend toward a level that reflects the rate of return on investment, and hence the potential output growth of the economy. Potential output growth matters a great deal for monetary and macroprudential policy. In the long run it determines the rate at which the economy can grow without generating abovetarget inflation, and it determines the rate of income growth in the medium term, and hence the sustainable level of debt today. During the financial crisis, we rediscovered the fact that recessions accompanied by financial crises tend to be followed by a sustained fall in the level of potential output. 13 The only silver lining was that although the level of potential output tended to be permanently lower, the growth rate could be expected to recover. However, if the current yield curve can be interpreted as an indicator of financial market participants’ expectations of the return on investment in the long term, it suggests they are  11  Barro (2006) shows that the potential for rare economic disasters can explain low risk-free rates  12  This can be broadly defined to include the higher cost of financial intermediation  13  IMF (2009)  4  BIS central bankers’ speeches  sceptical that potential output growth can even return to pre-crisis norms.

16 The Bank of England is playing its part to in the wider effort to ensure that productivity growth can resume, by taking steps to ensure that the financial system will be well placed to facilitate the implementation of these ideas, and the allocation of resources across the economy more generally. For example, much of the work of the Financial Policy Committee (FPC) in the years since the financial crisis has been focussed on ensuring that the banking system is resilient and well-capitalised. And the FPC is pursuing a medium-term objective to ensure that there are diverse and resilient sources of market-based finance to complement the banking sector. This is borne out in the improvement in the availability of credit to companies such as yours, which our agents tell us has been easing across the board (Chart 8). The combination of an impressive stream of ideas, and a financial system stable enough to facilitate their implementation means I am reasonably confident that productivity growth will return at some point. Moreover, I think it is reasonable to expect that resumption in productivity growth to come over the next year or so as the continued narrowing of slack in the labour market raises the incentive to increase output by increasing output per worker. But – as many a forecaster of productivity has learned – picking exact inflection points for macroeconomic variables can be difficult, so the degree of uncertainty around the timing of this is high. 5.
But if we look ahead, it is likely that the picture will be further complicated by the changes that will follow in the wake of the financial crisis. What I am mainly thinking about here is the increased focus on macroprudential policies. After the financial crisis we have learnt two main lessons. The first is that the central banks’ interest rate-setting must take into account financial stability to a greater degree. The second is that we need new regulation in the financial market that focuses on systemic risk. But the macroprudential policies may have effects that are in many ways similar to the effects of monetary policy – particularly if the tools are varied over time. This increased interaction between monetary policy and macroprudential policies is another circumstance that means that the connections between the simple theoretical framework and practical monetary policy become twisted. Of course, it is not the case that monetary policy and regulation were two entirely independent policy areas prior to the crisis and that after the crisis they will be fully integrated. But I nevertheless believe that monetary policy and regulation will come closer to one another in the future. When I was here a year ago, I spoke at length on how monetary policy can contribute to maintaining financial stability and how different types of regulations can affect monetary policy and its transmission mechanism. I will not go into this again today.

Caleb M Fundanga: The role and operations of the Bank of Zambia Closing remarks by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the end of the Bank of Zambia lecture series to members of the University of Zambia Business and Economics Association (UNZABECA), Lusaka, 24 November 2004. *  *  *  Chairperson Bank of Zambia Directors Members of UNZABECA Distinguished Ladies and Gentlemen As we come to the end of the series of lectures presented by the Bank of Zambia, it is my sincere hope that UNZABECA members have now gained a better understanding and appreciation of central banking, in general, and the role and operations of the Bank of Zambia, in particular. Ladies and Gentlemen, as it has been amply explained during the course of the Lecture Series, I would also like to reiterate that a central bank plays a critical role in the monetary and financial operations of any country. Through these Lectures, you have learned that the primary responsibility of a central bank includes, among others: •  issuance of currency;  •  acts as banker to the Government;  •  banker to commercial banks;  •  management of a country’s foreign exchange reserves;  •  lender of last resort;  •  management of public debt. Although some central banks do not carry such responsibilities;  •  collection and interpretation of statistics, in particular, financial and monetary statistics; and  •  implementation of monetary and financial systems policies.