samchain/econo-pairs-v1 huggingface dataset:
Money market risk premia rose sharply, from below 10 basis points to over 50 basis points, and even exceeding 100 basis points for some currencies. In this phase, we reacted flexibly to the volatile bank demand by providing generous amounts of liquidity at our repo auctions, and by increasing the frequency of finetuning operations. In October, there was a period of calm and risk premia retreated. In this phase, our patient – the market – was prescribed the usual remedies, although in higher doses and several times a day if necessary. The second wave arose out of concerns about refinancing shortages around the year-end, and reached its peak in December. To reduce uncertainty on the part of market participants, the Swiss National Bank increased its repo transactions at maturities of several weeks, or even several months, instead of the usual weekly maturity. These measures made it easier for banks to manage liquidity around the end of the year. During this second wave, European banks found it increasingly difficult to refinance in US dollars, and dollar rates were regularly higher in Europe than in the US. One reason for this was the structural dollar short position of the European banks and their concern that they would not have sufficient dollar liquidity at close of business as a result of poorly functioning money markets. For this reason, the Federal Reserve, ECB and SNB decided to take concerted action.

For today’s purposes shocks are new, unanticipated developments which are clearly distinguishable from more routine developments. As an MPC member I want to try and bring out how I’ve been thinking about each shock in terms of the impact on demand or supply in the economy and the time frame over which these impacts persist. Demand being what we actually observe in terms of output, income and expenditure. Supply being more about the capacity of the economy. In terms of inflation, if a shock pushes up demand relative to supply then inflationary pressures are likely to build. Similarly if an unanticipated development pushes up supply relative to demand then inflationary pressures will subside. Back in February I focused on Brexit, the coronavirus pandemic and energy prices as three major shocks which were working through the economy. Today I want to cover four developments since then: the Russian invasion of Ukraine, the fall in UK labour market participation, UK fiscal policy and financial market turbulence. All four of these shocks matter to differing degrees to the economic outlook and to our policy response. Four shocks My February speech was two days before Russia began its illegal invasion of Ukraine. Today is Day 225 of the ensuing war and over that period global energy prices (as well as food and other prices) have risen further and also been highly volatile, particularly in the case of wholesale gas prices.
We should continue to report a main scenario for economic developments and the repo rate in the coming three years, in which inflation approaches 2 per cent and resource utilisation approaches a normal level, but we should regard it as such – a potential scenario. We should also continue to analyse the consequences of other sequences of events. The base for monetary policy has improved gradually since the current monetary policy regime, with a floating exchange rate and inflation target, was introduced. A large number of models have been developed and the forecasts are now based on the Riksbank’s repo-rate path that can differ from the market’s forward rate curve. However, the base should be developed further. I have taken up some such areas in this speech:   The forecasts for the GDP gap and other measures of resource utilisation should be developed further and the description of the uncertainty in these forecasts should be shown in the same way as the uncertainty in the GDP growth and inflation forecasts.   The Riksbank should also take into account credit expansion and asset prices in its monetary policy. The forecasts for credit growth and asset prices should be developed and formally integrated into the materials on which the monetary policy decisions are based. In this case, too, it is important to show the uncertainty in these forecasts.   The Riksbank’s models should be developed to be able to handle the difference between the Riksbank’s repo-rate path and the market’s forward rate curve.

There is thus some forecasting performance for GDP growth and CPI inflation up to one year ahead, but  5  S. Öberg, “The Riksbank’s forecasting performance”, 26 November 2007 and M. K. Andersson, J. Svensson and G. Karlsson, “An evaluation of the Riksbank’s forecasting performance”, Economic Review, 2007:3, Sveriges Riksbank. 6  See D. Kjellberg and M. Villani, “The Riksbank’s communication of macroeconomic uncertainty”, Economic Review, 2010:1, Sveriges Riksbank. 7  The calculations are based on forecasts from 1999 to 2010. 2  BIS central bankers’ speeches  no forecasting performance in the longer run. At two and three years ahead we had on average made equally good forecasts if we had used the average growth or inflation rate instead of our own forecasts.8 Unemployment – better forecasting ability than for GDP and inflation Unemployment is more sluggish than GDP growth. If unemployment is very high to start with, it is probable that it will also be high in a year’s time. This should mean that the forecasting ability for unemployment, and other measures of resource utilisation, are better than for GDP growth and inflation. Our forecasting performance with regard to unemployment is quite rightly slightly better, with a forecasting error one year ahead that is 30–40 per cent lower than the forecasting error for the naïve forecast (see Figure 7).9 However, there is still no forecasting ability two and three years ahead.
This is mainly because it is necessary to give time to the transmission mechanisms of the monetary policy to work, so that the consequences of decisions already made can be seen in practice. Final remarks I would like to end with some lessons about monetary policy conduct which have stemmed from the great inflation rise that has taken place since mid-2007, into our current international situation. In the first place, many times it had been noted that Chile was one of the countries where the highest increase in inflation – more than tripling the target – was observed, with the interest rate rising less than in other economies with lower inflationary pressures. As I have already argued, our policy response was completely consistent with a flexible monetary policy framework. As the price shock became stronger and more persistent, monetary policy became more restrictive. This same flexibility in managing monetary policy enables us to react quickly to the strong deterioration of the external conditions today. Fortunately, our economy is solid enough to absorb significant changes in the course of monetary policy, without this being a threat to stability. In the second place, inflationary dynamics are highly complex and cannot be linearly mechanized based on historical evidence. Early this decade, when inflation was consolidating at low levels, we saw that persistence of inflation had dropped substantially, thereby reducing the impact of propagation via indexation and other phenomena that were characteristic of our high-inflation past (García and Valdés, 2005).

The higher the participation of non-residents in the bond market, the more vulnerable the market is to volatile portfolio outflows. So it is said that with history, if we learn it well, will not repeat itself. Nevertheless, sometimes lessons in history are cloaked in apparent success. The 2008 Global Financial Crisis and corresponding policy responses by major central banks caused risks not seen before. In the periods after, unconventional monetary policy and a prolonged period of low interest rates had negative spillovers to emerging markets. This was notably evident through the waves of volatile capital flows in large magnitude. These flows were drawn by the search for yields, and ironically coincided with a significant expansion and development of our financial markets, a key reform measure following the AFC. The region was once again at the mercy of global easy money, flattered with an overvaluation of asset prices and domestic financial market exuberance. As these capital inflows mainly originated from the advanced economies, regional financial markets became increasingly exposed to their vagaries. Take the Taper Tantrum for example, which exemplifies how fragile the region’s fate is when just a hint of the US Fed possibly tapering its asset purchases was sufficient to trigger massive 2/5  BIS central bankers' speeches  capital outflows from the region. Time and again, a clear policy lesson has come to the fore – the importance of diversification and the need to reduce reliance on the de facto reserve currencies to manage negative spillover effects.
However, if the repo rate path becomes credible, the long market interest rates will increase substantially and actual monetary policy will be much tighter. This risks cutting off the recovery. Higher long market rates would also lead to a much stronger krona. A stronger krona would lower inflation and in particular affect exports, entailing a further tightening of monetary policy, in addition to the increase in long market rates.   In my opinion, the krona appreciation that would ensue if the repo rate path is credible is underestimated in the main scenario of the Riksbank’s Monetary Policy Report. This appears to be because it is assumed in the main scenario that long market rates abroad are much higher than the observed market rates. Alternatively, it is assumed that the long market rates abroad will rise gradually in pace with Swedish long interest rates. However, these questions have not been properly analysed. Behind this is an assumption that certain central banks, namely the US Federal Reserve, the European Central Bank (ECB) and the Bank of England, will begin to raise their policy rates long before what is indicated by market pricing. These assumptions appear unrealistic, given the statements and signals from these central banks regarding continuing low policy rates.

And the ECB’s transparency, ethics and good governance frameworks have been harmonised, strengthened and extended to all members of the Governing Council and Supervisory Board.3 But it is important to me that our focus on connecting with the people we serve continues and grows stronger – in particular by improving the ways in which we communicate with the general public. And this is why your role in the Parliament is so important: you make sure that the people’s voice is heard by the ECB and the ECB’s voice is heard by the people. Communication is a two way street and it is vitally important for democracy, a founding principle of Europe. It is in this spirit that I will approach this hearing – and those we will have together in the future. The current economic situation and monetary policy Let me start by looking at the current economic situation in the euro area, before moving on to the longer-term questions for monetary policy about which you have enquired. Euro area growth remains weak, with gross domestic product growing by only 0.2%, quarter on quarter, in the third quarter of 2019. This weakness has been mainly due to global factors. The world economy outlook remains sluggish and uncertain. This lowers demand for euro area goods and services and also affects business sentiment and investment. As the sector most directly exposed to these global developments, the manufacturing industry has been suffering the most.
Suhaimi Ali: Future-proofing talent for a dynamic and resilient workforce Opening remarks by Mr Suhaimi Ali, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the MyDigital and Tech Roundtable Kuala Lumpur, 17 January 2023. ***  Introduction Distinguished guests, ladies and gentlemen. A very good morning and thank you to the organisers of this MyDigital and Tech Roundtable for inviting me to deliver the opening remarks We are here today to discuss issues and ideas to spur digital-ready talent and futureproof the workforce for Malaysia. I believe this conversation is timely. As leaders in our fields, I'm sure all of us agree that staying relevant amid a shifting and competitive landscape is a top challenge for today's employees and employers. The pandemic exposed deep-rooted labour market fragilities and structural inequalities. In Malaysia, as in other countries, vulnerable segments such as low-income workers, the youth, women, ethnic minorities, informal and fixed-term workers were among the hardest hit by the crisis. Some are still finding their footing. More importantly, we are facing several structural shifts that continue to reconfigure our economy, with resulting implications on the future of work. Among the key ones that may resonate with us here today are: First, the digital and sustainability revolution. Increased adoption of technologies such as AI and IoT, coupled with rising urgency on the sustainability agenda will reshape industries. This will demand new skillsets and unlock opportunities, but also create challenges for businesses and employees. Second, shifting work preferences.

At its core, attracting and nurturing the right talent is crucial for any organisation of the future. Thus, it is critical to begin thinking beyond policies for short-term recovery and start the task of building a future of work that is safer, fairer and greener. "Building back better" calls for increased policy coherence, particularly between economic employment and social policies, and a whole-of-society approach. My remarks today seek to explore three strategies on how we may futureproof our talent workforce: 1) equipping the workforce with the right skills; 2) employing a "good jobs strategy"; and 3) strengthening collaboration among ecosystem partners. Equipping the workforce with new skillsets that are relevant and practical for future needs With greater adoption of technology, in-demand skills across jobs in Malaysia will shift over the next few years. The skills gaps will continue to widen. By 2025, half of all employees will need reskilling. Even for workers who remain in existing roles, 40% of core skills will need to change to remain relevant. A sizeable number of jobs will be replaced or become obsolete. This means individuals need to continuously learn new skills to be indispensable and grasp new opportunities. This means access to comprehensive upskilling and learning infrastructures are essential, whether at an individual, organisation or industry-wide level. And this means, lifelong learning is a must for everyone in the workforce. In the financial sector, we too face this challenge.
The today initiative is a significant event, to sustain the growth of financing for this vital part of the economy and it will help to soften the negative impacts of the world economy slowdown. I encourage the banking system and the other players of the market to undertake similar initiatives in order to not impede the financing of small projects, which owns the possibility to be transformed into profitable enterprises. At the same time to maintain a stable and long-term progress of the country, in line with its European aspirations, the banking system should go on the way toward the perfection of service versus the clients, the intensification of communication and public education. Bank of Albania believes that the sources of the stable growth for the mid-term and long-term period consist not only on the encouragement of the work productivity increase or of the investments in industry and construction, but also in other strategic sectors. For the Albanian economy as a developing economy, domestic investments and foreign direct investments in strategic sectors as tourism and infrastructure shall be a real foundation to the economic growth. The positive chain effects are expected to be reflected on the preservation of the steady growth rhythms. Hence, the overall macroeconomic stability will be seen as a precondition in promoting the further intensification of the domestic and foreign investments.

Swiss economic outlook What does the economic outlook for Switzerland look like, given a baseline scenario with a world economy on a weak growth path as described above? After two years of fairly robust recovery, we expect the Swiss economy to slow considerably in 2012. The situation remains very challenging for Switzerland. On the one hand, the still very strong Swiss franc is weighing on export performance. Firms are suffering from compressed margins. If the difficult exchange rate situation persists, companies may consider relocating production capacity to other regions. On the other hand, the slowdown in external demand, as expected in our global baseline scenario, will likely weigh on investment spending and labor demand in the quarters to come. Although some recently released indicators point to a slight stabilization, we project the Swiss economy to grow only weakly over the next few quarters. Moreover, as mentioned before, there is a very high degree of uncertainty regarding the global outlook. This is also true for the Swiss economy, which depends particularly on economic conditions in the euro area. If the risk scenario of a further escalation of the debt crisis were to materialize, economic activity in Switzerland would suffer a much more pronounced slowdown than just described. Such a development would lead to a severe risk of deflation. Current Swiss monetary policy Given this highly uncertain outlook, the SNB is – more than ever – committed to enforcing the minimum exchange rate with the utmost determination at any time.
14 I doubt, however, that bankers and investors would share this particular view of the philosopher, especially in the light of developments over the past few years. Let me conclude, however, on a reassuring note and a wish concerning the exit from the current crisis on the basis of the logic of Heraclitus that led him to the conclusion that “out of discord comes the fairest harmony” (έκ τῶν διαφερόντων καλλίστην άρμονίαν) – which, in the context of the discussions in this conference and in relation to our policy aims, would be translated into achieving sustainable growth in an environment of price stability and financial stability. Thank you very much for your attention. 14  8  See Kahn (1979). BIS Review 65/2009  References European Commission (2009), Spring Economic Forecast, May. Heider, F., M. Hoerova and C. Holthausen (2008), “Liquidity Hoarding and Interbank Market Spreads: The Role of Counterparty Risk,” available at http://ssrn.com/abstract=1362113. International Monetary Fund (2009) “Global Financial Stability Report”, April. Kahn, C. (1979) “The Art and Thought of Heraclitus: Fragments with Translation and Commentary”, London: Cambridge University Press. Papademos, L (2009a). “The dual crisis: economic impact, policy response and exit strategy”, speech at the High-Level Panel Debate on “Europe in the Economic and Financial Crisis: How to bring back prosperity for everyone?”, Brussels, 4 May. Papademos, L (2009b). “Monetary policy and the ‘Great Crisis’: Lessons and challenges”, speech at the 37th Economics Conference “Beyond the Crisis: Economic Policy in a New Macroeconomic Environment” organised by the Österreichische Nationalbank, Vienna, 14 May 2009.

In sum, the Asia-Pacific region needs more co-operation and exchange of ideas in the monetary and financial sphere, and to achieve that it needs stronger links between economists working in this area in central banks, international institutions and universities. This is exactly what the Australasian Macroeconomics Workshop is all about, and I am delighted that we could tempt you to come to Hong Kong for this year’s meeting. Thank you and let the fun begin. 2  BIS Review 42/2003
This, for example, can be done by refraining from rolling over short-term loans. The spillover effects of unexpected events may therefore be more substantial for bank loans than for securities debt. c)  A well developed debt securities market provides the financial system with two legs to stand on  Financial crises are normally related to the banking system. The crises have partly been the result of a very high concentration of risk in banks. In crisis situations, we have seen that financial institutions and securities markets can be complementary and prevent a credit crunch. One example is the crisis that followed the collapse of the US hedge fund LTCM in 1998. For a period during the crisis, there were substantial problems in the private bond market in the US. Financial institutions increased lending and prevented a more extensive credit crunch. Conversely, we have seen that when there have been problems in the banking sector, securities markets have replaced bank loans. BIS Review 48/2002  7  Changes are now taking place, which I think will contribute to strengthening the Norwegian bond market. Proposed legislation changes will for example provide for the sale of housing loans to a separate entity that finances the purchase by issuing bonds. The proposed legislative amendments would permit a wider range of issues in the bond market. In general, a larger number of issuers and investors would enhance liquidity in the secondary bond market. This could also directly or indirectly strengthen banks’ position.

Not only its monetary policy, and not only in Germany. We will keep explaining to our critics in Germany – and also to German savers – that their country is one of the main beneficiaries of the euro. A stronger euro area, with inflation of below but close to 2%, would be good for Germany. As for the debate we may have from time to time with some academics in Germany, I would say there is a certain irony in them taking us to task because we are focusing on our inflation target, since it is at Germany’s insistence that the ECB was given that mandate – and that mandate only – in the euro’s founding treaties, and in my view rightly so. 2  BIS central bankers’ speeches  Did the euro’s jump after your announcement on March 10 disappoint you? It doesn’t help your return-to-inflation goal… The ECB, as you know, doesn’t have a foreign exchange target. What I saw is that financial markets in general understood what we did, which is more important than the instant reaction of forex operators. The dollar/euro exchange rate is mostly driven by different monetary policies in the United States and Europe. What would be more worrisome for us would be a further decline of emerging countries’ currencies, and increased volatility of the pound sterling due to the EU referendum debate in the United Kingdom. Does the ECB have a plan for a possible “Brexit”?