samchain/econo-pairs-v1 huggingface dataset:
1 Second, in the 1970s, U.S. monetary policy tried to do too much to stimulate growth and reduce unemployment when unrecognized structural factors  1  Friedman and Schwartz (1963). BIS central bankers’ speeches  1  stood in the way. Overly accommodative policy led to soaring rates of inflation. Third, the Treasury Accord of 1951 reminds us that an essential feature of good monetary policy is an independent central bank – one that is autonomous enough to make tough policy decisions. But, democratically elected authorities don’t just grant autonomy to unelected central bankers, nor should they. The price of autonomy is accountability. In order to maintain autonomy, we need to say what we are trying to accomplish and then honestly evaluate our progress in a way that the public and their representatives can judge clearly. The FOMC has recently made great strides in this direction by explicitly expositing a strategy that reflects the three key lessons of its history. The Committee’s “Statement of longer-run goals and monetary policy strategy” 2 was first made in January 2012 and has been reaffirmed each year since (chart 2). In it, the Committee indicates that price stability is understood to mean 2 percent inflation in the long run as measured by the annual change in the price index for total personal consumption expenditures (what we refer to as the PCE price index.)

World output expanded at its fastest rate for 30 years in 2004, and this year growth looks like being as strong again. One obvious explanation is that both high oil prices and the strength in the world economy have reflected the rapid pace of development in  1  2  Data from OECD’s International Migration Outlook 2006. BIS Review 116/2006  China, where growth has been around 10% a year since 2004, and which last year was responsible for nearly half of the growth in total world oil demand. So the two have helped to offset each other. But the recent behaviour of oil prices has also reflected supply-side problems. The rapid growth in demand seems to have taken oil producers by surprise. The world is currently operating on a very thin margin of spare oil production capacity as a result of low investment in the 1990s. The result is that oil prices have also been volatile, as well as high, moving sharply in response to geopolitical and weather-related news, as well as changing expectations about world demand and supply. In time, both supply and demand will respond to higher prices, but the lead times for new production capacity are very long – around ten years to develop a new field. High and volatile oil prices pose a grisly challenge for monetary policy makers. But so far there has been no surge in inflation across the world as there was following the oil price increases in the 1970s.
The latter is also connected with globalisation through the increased competition and changes in production patterns. 8  9  However, the value of foreigners’ assets in the form of direct investment in Sweden is high from both a Nordic and a European perspective. Foreign direct investment in Sweden amounted to around 47 per cent of GDP in 2004, which can be compared with just over 30 per cent in the EU. ` SEB, ”Kronsyn”, 22 March 2006. 4  BIS Review 35/2006  Globalisation and imbalances in the world economy The deregulated international capital market has meant that countries have to a much greater extent than before been able to finance consumption and investment via borrowing abroad. This could indicate that trade imbalances are something we have to live with in a world with deregulated capital markets and a greater degree of free trade than before. At the same time, risks of rapid adjustments may be built up. In connection with the slowdown in economic activity in 2000-2001, US economic policy was shifted in a more expansionary direction. Income tax was lowered and public expenditure increased, at the same time as the key rate was cut to an all-time low. This entailed a strong increase in demand, which also stimulated exports in other countries – the United States acted as growth engine for the world economy. The consequence of this was that the US current account deficit increased rapidly; in 2005 it amounted to 6.4 per cent of GDP.

This should increase understanding among the population for implementing necessary measures and put pressure on governments to do so. Every other year, a special Globalisation report will be produced. This will contain a more in-depth version of the annual analyses of global financial and economic stability. One very important question for the Fund’s legitimacy and ability to act is how it is governed. Today the governance of the IMF to a large extent reflects the distribution of power in the world when the IMF was established. The question of influence and governance has gained a new explosive force through the economic developments in a number of large growth economies such as China, India, Brazil and Mexico, who now demand greater influence. If nothing is done to reform the IMF’s forms of governance, there is a risk that the organisation will lose legitimacy and relevance. It will most likely take time before a sustainable solution has been drawn up. Personally, I regard the regional principle as the most democratic and efficient in the long term. This would mean that the large regions – which are currently more or less well-organised - the United States, Latin America, Europe, Africa, Asia, etc. - reinforcing there regional platforms in order to shoulder global responsibility together. Thank you! 8  BIS Review 35/2006
Sweden has suffered a pure demand shock through exports, but the Swedish economy has no comparable structural problems in the financial sector or elsewhere in the economy. One might then claim that the level of potential production and perhaps also its growth may have fallen more in the other countries than in Sweden. In that case, the output gap is more negative in Sweden than in the other countries, with the possible exception of the United Kingdom. Using the output gap as a measure of resource utilisation, the situation in Sweden does not look too good. Unemployment has increased in Sweden, the eurozone, the United States and the United Kingdom (see Figure 4). Since the first quarter of 2008, unemployment has risen most in the United States and around the same amount in Sweden, the eurozone and the United Kingdom (see Figure 5). The unemployment gap, which is the difference between unemployment and equilibrium unemployment, is shown in Figure 6. For Sweden I am assuming that equilibrium unemployment is 5.5 per cent, and for the other economies I have used common conventional estimates. We see that the unemployment gap is biggest in the United States, next biggest in Sweden and lowest in the United Kingdom and the eurozone. If we assume that equilibrium unemployment in Sweden is 6 per cent instead of 5.5 per cent, we have the same ranking for the unemployment gap.

The difference between the red and blue yield curves shows what would happen to interest rates for various maturities if the repo rate path were to become credible. This would cause the blue yield curve to shift upwards to the red one. A three-year interest rate would thus increase by approximately 60 basis points, and a five-year interest rate would increase by closer to 90 basis points. Normally, the Riksbank’s wish and endeavour is that the repo rate path is credible, and incorporated into market expectations and market pricing. In this way, monetary policy has the largest possible impact. This time, it seems to be less desirable. If the repo rate path were to become credible, long interest rates would rise drastically, which would mean a substantial tightening of monetary policy in relation to the present situation. In my opinion, the repo rate path in the main scenario should be one that we want to immediately become  6  I have extended the repo rate path beyond the three-year horizon so that the repo rate rises steadily up to a long-term level of 4 per cent. BIS Review 158/2010  7  credible, if it is not already credible. That is, the repo rate path of the main scenario should be chosen such that is best stabilises inflation and resource utilisation when it is credible. Why such a modest krona appreciation in the main scenario? The main scenario includes a fairly modest appreciation of the krona. Why isn’t it bigger?
Moving Thailand Towards a New Business and Financial Landscape Speech by Dr. Veerathai Santiprabhob Governor of the Bank of Thailand European Association for Business and Commerce (EABC) Dinner Event 23 January 2017 Your Excellencies, EU Ambassador Jesus Miguel Sanz, Ambassadors of EU Member States, EABC President, Mr. Rolf-Dieter Daniel, Distinguished Guests, Ladies and Gentlemen, A very good evening. It is a great honor for me to be here this evening and I would like to thank the European Association for Business and Commerce (EABC) for the warm welcoming arrangement of this event. I am very delighted to address this prestigious group of audience including ambassadors and leading businesspersons, among which many are Thailand’s beloved and longtime friends. I would also like to acknowledge the EABC Board of Directors and the President, Mr. Rolf-Dieter Daniel, for ongoing efforts and hard work to improve ThailandEU economic relationship. I hope this dinner has provided opportunity for all of us to exchange ideas and share perspectives. For myself, there is much to learn from the business community and I am grateful for all the feedbacks I received. Business partnership with foreign investors has always been important to Thailand’s economy. In fact, not only has Thailand gained much benefits from international trades and investments, including ones with the European Union (EU), we also have benefited from the “needs” to meet standards and requirements set by the international community.

Its strong fiscal position is exemplary, and the population is relatively young, well educated and quick to adapt to technological and scientific innovations of all kinds. A strong pension system has been built up and – unlike other countries that have great fears about the future of their pension systems and their sustainability – it is clear that Iceland’s pension system is becoming increasingly stronger. Admittedly it is still not mature enough to have begun to pay out a representative proportion of its owners’ lifetime earnings, but this proportion is growing every year and all the pointers indicate that, for the foreseeable future, it will be highly sustainable. Thus the pension system is going from strength to strength in Iceland, at the same time as significant weaknesses are coming to the fore in many comparable economies. Real incomes in Iceland rank with the highest in the world, and unemployment with the lowest. Large-scale investments have recently been made which will generate  BIS Review 42/2007  3  handsome export revenues. Traditional sectors currently enjoy secure markets and high product prices. Undeniably this picture looks very bright and many more positive signs could be cited. But this does not alter the fact that, as I said earlier, the foundation has been precarious in many areas and the medium term will have a decisive significance for the outcome. Uncertainties abound and many households in Iceland thread a narrow path of debt and wages, where if they lose their footing, the fall could be heavy.
And, granted, there are many tasks ahead, we are a role model for many countries. In this conjuncture we must also set an example resolving urgent and critical problems and continuing building an ever more prosperous country for all. Thank you. 6  BIS central bankers’ speeches  Figure 1 World activity (*) (index, IV.07=100, quarterly series) 125  125  120  120  115  115  110  110  105  105  100  100  95  95  90  90  IV.07  IV.08  IV.09  Emerging  IV.10  Developed  (*) Regions weighted at PPP. Developed economies include: Australia, Canada, Denmark, the Eurozone, Japan, New Zealand, Sweden, Switzerland, the U.K. and the U.S. Emerging economies include Argentina, Brazil, Bulgaria, Chile, China, Colombia, the Czech Republic, Hong Kong, India, Indonesia, Israel, Latvia, Malaysia, Mexico, Peru, the Philippines, South Korea, Russia, Singapore, South Africa, Taiwan, Thailand, Turkey and Venezuela. Source: Central Bank of Chile based on Bloomberg, the IMF and statistics bureaus of respective countries.

But the current stage of development of economic capital modeling - the differences in model construction, assumptions and coverage - limit our ability to make comparisons of the results across institutions. More generally, economic capital models clearly remain in an early evolutionary stage, most particularly regarding operational risk. Their early stage of development can also be seen in the relative paucity of disclosed economic capital estimates by banking firms. Only very recently have we begun to see that some bankers have sufficient confidence in the quality of their economic capital estimates, even of credit risk, to disclose them publicly. Basel II: Effects on comparability This brings me to Basel II. The new Accord links risk taking to capital adequacy in a meaningful and consistent way. Its systematic quantification of risk will give market participants new tools for viewing banks’ capital positions - providing a strong basis for making comparisons across institutions and over time. While relying to a considerable extent on a firm’s internal systems for generating credit risk and operational risk capital charges under the more advanced approaches, the new Accord establishes strong preconditions for firms to meet in using those methodologies. In doing so, it also puts a strong measure of responsibility on the supervisors to ensure that each firm is in fact adhering to those requirements - we cannot simply accept the legitimacy of such an important element of financial condition as capital adequacy without extensive and critical reviews of the processes that generate the numbers.
It could be for France even slightly higher than forecasted (1.6%), if we look at our Banque de France forecast for Q4 published this morning – at 0.5%. It will be sustained in the next two years thanks to strong investment and increased convergence among countries. These forecasts, including a positive but still subdued inflation, confirm the adequacy of the gradual normalisation of our monetary policy we are engaged in. There is a risk, however, that the debate will continue to revolve around two long-standing divisions: “German rules” vs “French expenditure” and “community methods” vs “intergovernmental methods". Too many fears and suspicions have been inherited from the past, but we are living in a new era – which is also thanks to the acceleration of reforms in France – and in a time of unique historic opportunity. In Rome, on 25 March of this year, the Member States all expressed their clear will for “the completion of the Economic and Monetary Union". We are in agreement on the “why": greater stability, to counter the risk of a new crisis befalling an unprotected euro area; and greater growth, to catch up our past lag on the United States and finally treat the fatal disease of mass unemployment in Europe. But how can we achieve this shared objective?

Minimum conditions would be first that Member States actually abide by common rules – the Stability and Growth Pact and the Macroeconomic Imbalances Procedure – and second that they actually conduct policies consistent with the euro area collective economic strategy. However, contrary to the ESM instruments that have been used so far, access to the SLI should not be conditional on the implementation of an adjustment program. Its design would be such that it does not involve a stigma for Member States. The issue of governance brings me to a broader reflection on the idea of a European Monetary Fund (EMF). An EMF would only make sense if its scope of action and its governance went beyond those of the current ESM. Otherwise, why would we give it a different name? The scope of action of a potential EMF should not be limited to crisis management. We should entrust it with the role of crisis prevention in a broad sense, including contingent lending through the SLI. This would require decision-making processes that would not be tied up by veto-based governance. 2/4  BIS central bankers' speeches  As President of the Eurogroup and Member of the European Commission, the Finance Minister of the euro area would logically chair the Board of Governors of an EMF and play a stronger role in situations that require Board level judgement.
The interlinkages between financial institutions amplify risk in the financial system. In our assessments, it is important to be aware of any build-up of systemic risk. Residential mortgages provide a good illustration of the difference between the individual risk for a bank and systemic risk. Even during the 1990s banking crisis, Norwegian banks’ losses on residential mortgages were low. Today’s low risk weights for residential mortgages provide strong incentives for banks to extend these mortgage loans. However, housing market fluctuations, which go hand in hand with shifts in saving behaviour, are nonetheless a source of business cycle fluctuations and substantial losses when banks have to write off loans to firms selling goods and services to households. 8  BIS Review 131/2009  The Norwegian housing market is vulnerable. Both a high level of tax incentives for house ownership and a large volume of adjustable-rate mortgages contribute to wide fluctuations in activity and prices. 8 The rise in house prices in the past two decades has also been very strong compared with countries where housing bubbles have burst. To finance strong growth in residential mortgages, banks have to rely to a great extent on borrowing, thereby increasing their vulnerability to a liquidity squeeze. Thus, low risk weights for residential mortgages also lead to higher liquidity risk in the banking system as a whole. It is important to be aware of the similarities between developments in the Norwegian housing market and bank lending and developments in the countries most severely affected by the crisis.

In Norway, the lead-up was similar with rising house prices, accelerating credit and consumption growth and lower saving. Interest rate setting managed to stabilise developments somewhat. Economic policy was perhaps more successful in Norway and the government had larger buffers. But the soft landing in the Norwegian economy so far is also attributable to a good measure of luck, not least as oil prices rapidly rebounded after falling from USD150 per barrel to 35. Stricter requirements for systemically important banks The bankruptcy of the US investment bank Lehman Brothers rapidly led to a general crisis of confidence in the financial system. Central banks and government authorities implemented extensive measures to mitigate the impact of the crisis. At a meeting in Washington on 10 October 2008, the G7 countries stated that they would protect their systemically important institutions. 9 This was a decisive measure. 8  See Van den Noord, Paul (2005): “Tax Incentives and House Price Volatility in the Euro Area: Theory and Evidence”, Économie Internationale 101, pp.29-45. This study shows that house price volatility is higher in countries where tax regimes favour owner-occupied housing. See also IMF (2004): World Economic Outlook, September, p.81. The article shows that house price volatility is higher in countries with predominantly adjustable-rate mortgages. 9  IMF (2008): “Communiqué of the International Monetary and Financial Committee of the Board of Governors of the International Monetary Fund”, 11 October.
Regulatory arbitrage  I have spoken extensively about the steps we have taken, especially over the past few years, to build a robust regulatory framework and maintain a fit but lean army of supervisors to ensure it is implemented. It is worth noting here that we are not pig-headed about the specific way in which all elements of the regulatory framework fit together. Where we see something is not working as well as intended, we are prepared to make adjustments as long as we do not jeopardise financial resilience as a consequence. Take the modification the PRA made last year, in which central bank reserves were excluded from the exposure measure in the UK leverage ratio. This change was made to ensure the effective transmission of 19  All speeches are available online at www.bankofengland.co.uk/speeches  19  monetary policy was not impaired and was recently followed up with a proposal to increase the minimum leverage ratio requirement from 3% to 3.25% to maintain the resilience of the standard overall. Where it makes sense to make a design improvement to better align with policy intent, we will do so. But on the whole, my sense is that we have the right shape of regime. So with reforms to the regulatory framework almost complete, how do we as supervisors remain vigilant in defending it? I mentioned that the PRA’s supervisory approach relies on a healthy dose of judgement.

These ingredients of the single mechanism – a single authority and a common fund – are as essential as the existence of uniform rules and regulations to ensure that holders of bank liabilities in any jurisdiction are treated the same and to severe the link between bank risk and sovereign risk. At the same time, the creation of a genuine single resolution mechanism is essential so that the single supervisory mechanism can operate effectively. Otherwise, it would have to deal with complex interaction arrangements with a constellation of national resolution authorities – each managing its own funds – which would make its task notably more difficult. In this context, the legislative proposal submitted last July by the European Commission is a good starting point. The EC proposes the creation of a single resolution agency or authority, ultimately reporting to the European Commission, which would manage a common fund fed by contributions from the industry. It is common knowledge that the Commission’s proposal is currently subject to intense debate. In particular, apart from the assignment of resolution powers to the European Commission, three matters are prompting most discussion. First, the legal basis of the proposal – anchored in Article 114 of the Treaty – is being questioned by some countries, which even raise the need for a reform of the Treaty. This is despite the favourable opinion on the proposed legal basis of the Council’s legal services, the European Commission and most Member States.