samchain/econo-pairs-v1 huggingface dataset:
Although price stability was achieved, monetary policy in the United States was, in his view, inappropriately conducted, given the level of inflation and the size of the output gap, as attested by significant deviations from the “Taylor rule”, a benchmark he first proposed in 1993.5 The “Taylor rule” recommends that central banks systematically adjust nominal interest rates in response to macroeconomic developments and inflation movements, but, between 2002 and 2005, they were lower than the “Taylor rule” advised, as Slide 3 illustrates. According to Taylor,6 monetary policy may have been too expansionary, certainly in the United States and the Euro area. Taylor even suggests that, if central banks had set higher interest rates in this period, the subsequent housing bubble and the global financial crisis might have been avoided.7 According to this view, the crisis stemmed from a misapplication of the “inflationtargeting” precept. The underlying models may be unable to explain why an excessively accommodative policy would lead to a financial crisis. The episode does not, however, imply that the entire monetary policy paradigm has to be revisited, nor that financial stability is incompatible with price stability. 3  The SNB does not describe its approach as “inflation targeting” as it differs somewhat from classic “inflation targeting”. See http://www.snb.ch/en/iabout/monpol for further details. 4  Goodfriend and King (1997). 5  Taylor (1993). 6  Interpretations of the “Taylor rule” can be ambiguous. Interestingly, the formula produces quite different results depending on whether it includes core or headline inflation and how the output gap is measured.

In normal times, central banks cut their key rates, and this passes through to the yield curve. However, in order to deal with the financial crisis, the ECB like other central banks have brought their key interest rates to very low levels, around zero. This means that our traditional monetary policy tools had to be supplemented by other instruments, known as non-standard instruments, in order to reach our prices stability objective. I will return to this point later. b) What is more with regard to the challenges we currently face, these deflationary pressures create the risk of an unanchoring of expectations, which would make it harder for us to achieve our 2% target again. Indeed, if inflation stayed too low for too long, economic agents may revise downwards their inflation expectations, which would create second round effects. Lower inflation expectations influence economic agents’ price- and wage-setting behaviour, which in turn keeps inflation low. It can even raise the risk of deflation, defined as a cumulative process of falling prices, including those of assets, or even wages and production, as the world economy experienced in the 1930s or Japan partially underwent in the 1990s. Such deflationary dynamics are not at play today. But this risk is the BIS central bankers’ speeches  1  reason why our inflation target is symmetrical. We consider too low inflation to be just as costly as too high inflation. And, therefore, it is more risky for central banks to act too late than too early.
As in other parts of the world, the recovery has been complicated by the impact of the Russian war against Ukraine, which in many countries has been simultaneously inflationary and contractionary – threatening stagflation. In the case of Iceland, the impact of the war has been mostly inflationary, initially, much less so than in countries which before the war relied on imported gas from Russia and on fossil fuels for heating and electricity generation. As electricity generation and heating in Iceland is based on domestic renewable energy, its economy has not been directly affected by the spike in gas and electricity prices which most European countries have suffered greatly from. The energy crisis mostly bypassed Iceland  Iceland has been spared the most damaging negative consequences of the war in Ukraine on its economy. Firstly, the share of exports to Russia, Belarus and Ukraine, the three countries most affected by either the war or sanctions, is relatively small compared to many European countries. Only 1.7% of Iceland’s goods exports went to these countries in 2020. The weight of imports from these countries in Iceland’s  value chain is most likely insignificant and can easily be replaced by imports from other countries. Because Iceland is a very small economy and price taker in most export markets, the loss of one market can easily be replaced by shifting to other markets.

For my part I also considered it important to focus the difficult forecasting work on the time perspective that was deemed to be the most essential for monetary policy and not become too involved in discussions about a more uncertain future. This argument was strengthened in my opinion when the Riksbank’s decision-making process became a collective undertaking. With a less explicit rule and an entirely flexible time horizon our discussions would have risked focusing – more than would have been desirable – on the choice of time perspective, at the cost of a discussion about what we actually know about the present and what we believe about developments over the coming two years. Consideration of real developments Allow me also to say a few words about the background to the clarification of the principles for monetary policy that the Riksbank decided on at the start of 1999. When the inflation target was established in 1993 we understood even then that it couldn’t be applied mechanically. That was intimated, among other things, in a statement that the target was not to begin to apply fully until 1995, in order thereby to cushion the effects of the inflationary impulses that were predicted during 1993 and 1994 following the krona’s fall and the change in indirect taxes. There were also several occasions during the latter half of the 1990s when policy was not conducted slavishly on the basis of CPI forecasts. That was because it was obvious that it could result in absurd consequences.
While the costs of the global financial crisis are still being counted, it seems likely they will be the largest since at least the Great Depression. Two approaches are typically used to gauge these costs of crisis: the cumulative loss of output relative to its trend and the cumulative fiscal costs of supporting the financial system.1 Let’s take these in turn. Chart 1 looks at the path of output relative to a simple measure of its pre-crisis trend in the US, UK, France and Germany after the Great Depression of 1929 and the Great Recession of 2008. In either case, it is debatable whether estimated “pre-crisis trends” were sustainable, as they may have been artificially inflated by credit booms. Nonetheless, it is clear that the output losses from both crises, relative to pre-crisis trends, have been extremely large and long-lasting. In the US, the level of output is currently around 13% below a continuation of its pre-crisis trend. Ten years into the Great Depression, output was around 28% below its pre-crisis trend. Even if not quite on the scale of the 1930s, the global financial crisis has imposed a huge opportunity cost on US citizens. In the UK, the losses since the Great Recession, currently at around 16% of pre-crisis GDP, are larger than in the US and indeed larger than those that followed the Great Depression.

Institutions supplying such services are quite simply too important to fail. Everyone knows it. So, highly risky banking institutions enjoy implicit public sector support. In turn, public support  4  BIS Review 140/2010  incentivises banks to take on yet more risk, knowing that, if things go well, they will reap the rewards while the public sector will foot the bill if things go wrong. Greater risk begets greater size, most probably greater importance to the functioning of the economy, higher implicit public subsidies, and hence yet larger incentives to take risk – described by Martin Wolf as the “financial doomsday machine”. The failure in the crisis was not one of intellectual imagination or economic science to understand these issues. Economists recognised that distorted incentives, whether arising from implicit public subsidies, asymmetric information or a host of other imperfections, will cause a market-based outcome to be sub-optimal from the perspective of society. This idea has been at the centre of modern economics since the extraordinary series of papers written by Arrow and Debreu in the 1950s (Arrow, 1951; Debreu, 1951; Arrow and Debreu, 1954). The real failure was a lapse into hubris – we came to believe that crises created by massive maturity transformation were problems that no longer applied to modern banking, that they belonged to an era in which people wore whiskers and top hats.
Most important among these are: improper lending to related parties if directors or senior management; improper lending to influential personality to maintain the goodwill and relationship, improper lending to clients in exchange for the right to equity participation or to benefit sharing from their businesses; and the improper profiteering by management from large procurement projects. The directors should be alert and on the look out for such situations. Sixth, the long-term future of a bank rests on continued acceptability from clients and society at large. Therefore, the directors must pay special attention to ensure that clients are treated in a fair manner. Of even more importance is the social perception of the bank. If there is a social perception that the bank has not conducted its business in high moral standings, or fails to look after the interest of the country, then social mistrust and sanction can lead to reputational risk, and the damage may have far reaching implications and difficult to restore. The directors can play a very important role here. Typically, high-flyer managements tend to aggressively pursue growth and profits, often at the expense of social perception. Directors, on the other hand, tend to comprise more eminent personalities, who are relatively more mature and broadly experienced than management who may have been in one profession all along. Seventh, this principle applies to the person performing the role of Chairman.

The strengths within Asia has been most evident in the recent global financial and economic crisis. Asia has demonstrated remarkable resilience in the face of the unprecedented international financial crisis. Most regional economies have seen positive growth since the second half of 2009, with prospects for a sustained recovery. The region has benefited from strong fundamentals and the financial reforms undertaken in this recent decade which has enabled the region to recover faster with a stronger performance. BIS Review 43/2010  1  Several other factors have contributed to this early recovery. First, the region had policy flexibility to respond to the consequences of the international financial crisis. Strong fiscal positions, including relatively low public debt levels, have allowed many Asian governments to implement larger fiscal stimulus. Second, the financial sector in the region is in good health. Disruption to credit flows to the private sector have been avoided. Third, households and the corporate sectors in Asia are not over leveraged, and thus are in a better position to resume consumption and business activity once confidence had returned. Fourth, Asia is also not plagued with wide scale unemployment. Fifth, increased intra-regional trade has contributed significantly to the resumption of international trade in most of the regional economies. The strong surge in exports in the regional economies in the recent months is due primarily to the significant rise in intra-regional trade. Strengthening of regional integration Regional integration will become an increasingly important factor in sustaining the future growth in the region.
In the bank’s drive for excellence and customer satisfaction, the Bank of Sierra Leone has continued and will continue to create the enabling environment for safe and sound banking. For instance, in collaboration with other stakeholders, the Bank of Sierra Leone is putting in place measures to implement all provisions of the Anti-Money Laundering Act so as to prevent money launderers using our financial system for their criminal activities. A recently concluded workshop organised by UNODC/GIABA//Bank of Sierra Leone succeeded in drafting a National Anti-Money Laundering Strategy with the aim of providing a framework for an Anti-Money Laundering regime that will ensure effective crime prevention and detection, and at the same time avoid creating excessive burden on the financial system and its users. The workshop attracted various stakeholders, including the Association of Commercial Bankers in Sierra Leone to which GTB is an active member. The Bank of Sierra Leone shall continue to maintain the open door policy and encourage dialogue in the process of ensuring a sound and stable financial system. BIS Review 79/2006  1  Mr Chairman, Distinguished Ladies and Gentlemen, allow me to close this brief remarks by once again congratulating the Board, Management and staff of the Guaranty Trust Bank (SL) Limited for another step taken to enhance the public image of the bank. I thank you for your attention. 2  BIS Review 79/2006

While this may be a legitimate view, technology will nevertheless have an important impact on the kind of services that brokers are offering their corporate clients and what clients are prepared to pay for such services. In many emerging markets, the technology revolution is starting to gain more traction in the delivery of financial services, including insurance, following greater stability in internet connections, advancements in security and payments infrastructure and strengthened data protection frameworks in these markets. Correspondingly, brokers need to strategically review the strength of their value propositions in this changing environment and actively seek to lift their own services by leveraging on technology. These four reasons are just a few that should prompt the insurance broking community to reevaluate their business and operating strategies going forward. All of them – the fallout from the global financial crisis, Asia’s growth trajectory, the focus on climate risk, and more entrenched technological revolution in the delivery of financial services – are converging to re-define expectations, possibilities and risks in the insurance broking sector in a profound way that will determine if a firm will thrive or be marginalised in the coming decade. Going forward, brokers will be expected to play a far more significant role in delivering innovation and choice by developing deep knowledge of the industries that their clients operate in, and working with insurance providers to bring new products into the market that are meeting the changing needs of businesses.
William C Dudley: Important choices for the Federal Reserve in the years ahead Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at Lehman College, Bronx, New York City, 18 April 2018. * * * It is a pleasure to have the opportunity to speak here today at Lehman College. In my remarks, I will focus on the economic outlook—both over the near and longer term—and I will discuss some of the important monetary policy issues that will be considered in the years ahead, after my tenure at the Federal Reserve Bank of New York is (sadly) over. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee (FOMC) or the Federal Reserve System.1  The economic outlook Over the near term, the economic outlook remains quite favorable. I anticipate that the economy will continue to grow at an above-trend pace in 2018 and 2019, which will put sufficient pressure on the nation’s resources to push up inflation to the FOMC’s longer-run 2 percent objective. There are several reasons to be confident in this growth outlook: Monetary policy remains accommodative, financial conditions are still easy, and the global economy is in the midst of a synchronized expansion. Moreover, significant fiscal policy stimulus from tax cuts and increased federal spending will boost real household disposable income and corporate profits, which should support further gains in consumption and capital spending.

15  Table 1 Domestic scenario  2021  GDP Domestic demand Domestic demand (w/o inventory change) Gross fixed capital formation Total consumption Private consumption Goods and services exports Goods and services imports Current account (% of GDP) Gross national savings (% of GDP) Nominal gross fixed capital formation (% of GDP)  11.7 21.6 18.0 17.6 18.2 20.3 -1.5 31.3 -6.6 18.8 24.0  2022 (f) 2023 (f) Jun.22 MP Sep.22 MP Jun.22 MP Sep.22 MP Report Report Report Report  2024 (f) Jun.22 MP Sep.22 MP Report Report  (annual change, percent) 1.5-2.25 1.75-2.25 -1.0/0.0 -1.5 / -0.5 2.25-3.25 2.25-3.25 1.4 1.2 -3.4 -4.7 2.5 2.2 1.0 0.9 -3.4 -4.6 2.5 2.6 -4.8 -3.3 -2.2 -4.7 3.0 2.9 2.8 2.2 -3.7 -4.6 2.4 2.4 2.1 1.4 -4.1 -5.7 2.5 2.5 1.3 1.3 5.7 5.5 3.0 3.0 0.0 -1.4 -3.0 -5.5 2.3 1.2 -6.6 -6.3 -4.5 -3.6 -4.0 -3.3 18.4 18.9 20.0 20.0 20.1 19.9 23.3 23.5 22.8 22.2 22.4 22.2  (f) Forecast. Source: Central Bank of Chile.
It is well known that the strong growth of household and corporate demand has been accompanied by a notable rise in borrowing and in their debt ratios. Although this has not led to any deterioration in the financial position of these sectors (because their assets have also risen in value) or to rises of the same magnitude in their debt burden (thanks to lower interest rates), their higher indebtedness has made them more vulnerable to adverse changes in economic and financial conditions. Household debt cannot grow indefinitely at the rapid pace of recent years. The higher indebtedness and the increasing weight of floating rate loans, along with the rising share of equities and real estate in households’ asset portfolios, have made their spending decisions more sensitive to interest rate and asset price movements, in a situation complicated by the limited disposable savings remaining after debt service. The property market is particularly significant in this respect because most household indebtedness is linked to house purchases. Although the supply of housing has responded fairly flexibly to the increased demand and the price trajectory has not departed substantially from the pattern seen in previous upturns, a certain degree of overvaluation of these assets is detectable in Spain. This overshoot, which was not corrected in 2003, makes it particularly necessary for buyers and sellers in this market to act cautiously. A gradual absorption of the overvaluation would establish a frarmework of greater financial stability for households and forestall interference in their consumption decisions.

In this respect, it should further be borne in mind that the maintenance over a prolonged period of time of a strong expansion in domestic demand, driven by substantially generous monetary and financial conditions, entails pressures which, if they build up, may emerge precisely when some of the factors upholding growth begin to show signs of petering out. The foregoing comments indicate that the favourable growth prospects for the coming years cannot be taken as guaranteed over the longer term. The Banco de España has been signalling the fact that the prevailing growth pattern harbours certain risks that may emerge in the form of a deterioration in competitiveness and financial imbalances in the households and non-financial corporations sector. Although the trajectory of the Spanish economy has not yet been hampered by the emergence of these risks, any future deterioration could impair further progress in real convergence. Competitiveness can be undermined on several fronts. The first of these is the maintenance of a persistent inflation differential with the euro area. This differential is partly related to the fact the Spanish economy is ahead in the cycle, but it has also to do with the presence of elements of inertia in wage and price formation in Spain associated with structural shortcomings in certain markets for factors, goods and services. Another significant front is limited productivity growth, which is not only lower than in the United States but also than in most of the European countries.
If, on the other hand, the real interest rate is below the natural rate, the monetary policy stance is expansionary, which may lead to the generation of inflationary pressures and, normally, for a time, higher economic growth than the economy can sustain without the emergence of imbalances. The intrinsic difficulty of this conceptual framework is that its central feature, the economy’s natural rate of interest, cannot be observed in reality, but only, in the best of cases, estimated indirectly. Accordingly, the central bank needs to analyse a broad range of indicators in order to infer the state of the economy, so as to be able to determine the appropriate monetary policy stance. This conceptual framework worked satisfactorily during the 1990s and the early years of the current century, a period known as the “Great Moderation”, characterised by stable growth in the advanced economies and relatively low levels of inflation. However, the economic and financial crisis that began in 2007-2008 forced central banks to adopt innovative policies and, on occasion, to navigate “uncharted waters”. This is the subject I wish to talk about in the final part of my speech. The monetary policy challenges arising from the crisis The magnitude of the crisis that began in 2007-2008 led the central banks of the main developed economies to design and implement expansionary monetary policies of unprecedented magnitude and scope. The crisis had a significant effect on banks and other financial intermediaries, leading to a contraction in credit and, therefore, in economic activity.

This led the main central banks to introduce various measures to provide liquidity to their banking systems at times of market malfunctioning. In addition, asset purchase and medium and long-term financing programmes were launched that avoided a systemic crisis which would have led to the failure of a large number of banks and, undoubtedly, to an enormous crisis in the real economy, as during the “Great Depression” in the 1930s. Even so, the severity of the recession led to a very sharp contraction in demand, and ultimately to inflation rates that were too low and incompatible with the mandate of the central banks of the main advanced economies. This situation forced them to reduce the interest rates determined by monetary authorities to historic lows. Some central banks, such as the ECB and those of Japan, Sweden, Denmark and Switzerland, reduced rates to negative levels. 5/7  In fact, one of the factors that has influenced the actions of central banks most in recent years has been the difficulty of reducing interest rates when they are already at very low levels. Interest rates that are too low may mean that there is no incentive for financial intermediation, since, for example, it is more profitable to store money in cash than to deposit it in the banking system. What should we do then when rates are very low and the economy still requires greater monetary stimulus? Central banks have made two main proposals in this respect.