samchain/econo-pairs-v1 huggingface dataset:
As foreseen in the central scenario of this MP Report, projected growth in the United States and Europe will be negatively affected by lower credit expansion and greater global uncertainty. This effect will be most visible in the second half of 2023 and early 2024. For these years, growth in those developed economies that are Chilean trading partners is expected to average 0.4%, which compares with the 0.7% forecast in December (figure 10). Emerging economies will face tighter financial conditions, which will also affect the external demand relevant to Chile. The better outlook for China after its reopening, together with the evolution of the copper and oil market balances, has been behind the improvement in our terms of trade, which are revised upwards from the last MP Report. This combines the better outlook for copper prices and lower projected prices for foods and fuels. For copper, our projected prices for this and the next two years are increased. We foresee an average price of 3.85 dollars per pound in 2023; 3.65 dollars per pound in 2024, and 3 and a half dollars per pound in 2025. Oil prices have been quite volatile due to the tensions in the financial markets in recent weeks and their possible implications for world growth. In addition, inventories have been accumulated and OPEC has recently announced production cuts. In the central scenario, the average Brent-WTI price is projected to gradually decline from 73 dollars per barrel in 2023 to 67 dollars in 2025.

The truth is that after several quarters have passed since these shocks occurred and the Central Bank has made a very significant adjustment in monetary policy, high inflation continues. Moreover, core inflation, the part that best reflects local trends and pressures, has stabilized at high levels and, I must say, bringing important surprises into our projections. The natural question that arises is why is this happening? and why is inflation taking so long to come down? 58. On the one hand, it is very clear that the string of shocks we faced was very unusual. They were very big in magnitude and had a concatenation that exacerbated their effects. On 9  the other hand, there were the accumulated cost pressures on companies, the volatility of different macroeconomic variables, such as the exchange rate, and a scenario where uncertainty was high for a long period of time. To these elements must be added indexation and other second-round factors that add persistence to the inflationary effects of the mentioned shocks, as has been highlighted in previous reports. This confirms that a very important element behind this stubborn inflation is that the economy has failed to reverse the impact of the spending excesses that accumulated in earlier years. As I said a while ago, the data for the end of 2022 and the beginning of 2023 show that private consumption is receding, but at a slower pace than expected.
Public interventions have been massive to contain the scale of the turmoil but in return have implied a cost and led to a transfer of risk out of the banking sector onto the public sector balance sheet. For instance, interventions from European governments amounted to about 1800 billion EUR or 14% of the European GDP. 13. Let me also underline that – like in many previous financial crisis such as the Latin American ones – financial markets ignoring the long term risks of their investments helped accommodate unsustainable financing requirements of many countries. A major assumption underpinning our fiscal governance frameworks in Europe has been that markets would impose discipline earlier on. Experience reveals that this has not been the case: the market discipline was imposed, far too late. 14. All this emphasizes that sound fiscal frameworks are essential to sound financial regulatory frameworks. Indeed, no longer will be raised the question of the importance of the Stability and Growth Pact and the role it plays in anchoring market confidence. 15. Let me add how fiscal problems in Europe have been addressed. First, the Greek adjustment package, relying on IMF financing and conditionality plus bilateral loans has been decided. Beyond Greece, the European Financial Stabilization Facility provided the Euro area with massive resources to fight contagion risk within the area. Elsewhere in Europe, governments have embarked into sizeable fiscal consolidation efforts and in many cases have frontloaded their efforts. 16.

A core motivation, for the quick actions taken by central banks during this crisis, has been to restore an orderly functioning of money markets. High volatility, high risk premia, impaired interbank and funding markets hurt the normal transmission of monetary impulses. Starting in the summer of 2007, Central Banks were confronted with major and unprecedented tensions. Increasing uncertainty led to liquidity hoarding by financial institutions. Banks severely limited the maturity, the scale and the number of their counterparties, severely affecting the functioning of the interbank market. These interventions were adjusted to the specific structures of the financial system in which central banks operate. In the US, where financial intermediation is heavily dependent on securitized credit markets, this involved significant asset purchases by the Central Bank. By contrast, in the Euro area, where financial intermediation occurs mainly through the banking system, ECB actions were aimed at providing banks with sufficient liquidity through repo operations to secure the flow of credit to the economy. 6. In the Eurosystem, we have entered the crisis with a large set of tools. From the outset, our operational framework was based on a broad list of eligible counterparties and collateral. So, we could adjust rapidly to the shocks in money and credit markets even if the environment in which we had to operate has changed profoundly. 7.
According to Banque de France calculations, the nominal CoE is still more than 9% for large listed companies in the euro area – compared with a risk-  4 free rate of around 0%. In other words, the risk premia have increased. The high CoE prompts companies to give priority to dividends and share buybacks over investment. In addition, it often goes hand in hand with a persistently high “hurdle rate”vii within companies, which results in an excessively severe selection of investment projects. The United States are a case in point (slide 9): since the early 2010s, share buybacks and dividends have increased sharply to more than 100% of reported earnings, while productive investment has significantly slowed down to an almost zero growth. 3. So what can be done to cure the investment dearth? First and foremost, we need a comprehensive therapy in Europe, both economic and financial. On the economic side, monetary policy is active and efficient; but it cannot remain the only game in town. Growth will be stronger in Europe if we combine structural reforms – including pro-business measures – where they are needed, such as in France, with greater fiscal support to help spur investment in the countries that have room to manoeuvre, such as Germany. But we also need to address the financial side of this investment dearth issue. The United States shows how crucial it can be in the long term.

Petar Goshev: Promotion of the European Fund for Southeast Europe – EFSE in the Republic of Macedonia Welcoming speech by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia, Skopje, 1 March 2007. *  *  *  Distinguished ladies and gentlemen! Allow me to express my pleasure, more precisely the pleasure of all employees of the National Bank of the Republic of Macedonia for being hosts of the first official presentation of the European Fund for Southeast Europe in the Republic of Macedonia. Therefore, I greet the representatives of the European Fund for Southeast Europe, wishing them a warm welcome to our country, where, I sincerely assure them, they could fully, equally, safely and more ambitiously offer their financial services to the market of the highly open Macedonian economy, also encouraged, of course, from their previous positive experience they acquired through their cooperation with the Export and Credit Bank, AD Skopje. I would also like to especially welcome all of you that responded to the invitation by attending this presentation, thus de facto showing respect and interest in yet another new financial initiative in the Republic of Macedonia. Certainly, there is a deep reason for such respect and interests.
As people try to move out of cash deposits and into typically higher yielding assets, QE will reduce liquidity and term premia, push up a range of asset prices and bring down interest rates at a wide range of maturities. All of that will benefit borrowers, increase wealth and help to stimulate nominal demand. Injecting money is actually not so different from cutting its price (Bank Rate). There are some very important caveats however and I will focus on three. First, monetary stimulus works by giving an incentive to businesses and households to spend now rather than in the future. That creates only a temporary boost to growth. To carry on influencing growth, the stimulus needs to get ever larger. But we know that ultimately, the sustainable growth rate in the economy depends not on monetary conditions but on real factors. I shall return to this point later. Second, and relatedly, a monetary injection can create extra nominal demand for goods and services, but the precise split between real growth and price inflation is unfortunately out of our control. Taking these two points together, the creation of extra  5  I will leave aside the issuance of banknotes, the quantity of which passively reflects demand by the public.

–  Export quantities continued to improve with the year-on-year growth rate in a high positive. This represents both the pick-up in our trading partners' purchasing power and our staying ability to compete. Another factor that continued to firm up the recovery process came from the fiscal front. –  During the first four months of fiscal year 2002, the budget disbursement rate accelerated compared to same period last year. This front-loaded fiscal stance will surely contribute to a sooner recovery. I must note here, however, that the jury is still out on what these early signs may portend. I believe the impassioned judgment on the speed of the recovery must await more data. Ladies and gentlemen, It is rather unfortunate that while economists are busy debating whether these early signs point to a tangible recovery, the recent strong boom in the stock market seemed to have overwhelmed that debate. On this point, let me say that we need to distinguish between the recent asset price performance and the economic fundamentals. It is true that the performance of the listed SET firms has improved. The improvement was led in part by better-than-expected profitability of listed companies. Corporate profits in general were also on the rise in 2001, compared to 2000. With this improvement, we are now more able to segregate the winners that is, the strong performers -- from those lagging behind. This presents a stark contrast to the previous pictures in which almost all sectors were judged to have performed poorly.
Annual return in the US Per cent 60  60  40  40  20  20  0  0 -20  -20  Equities  Fixed income instruments -40  -40  -60  -60 1925  1935  1945  1955  1965  1975  1985  1995  Sources: Ibbotson Associates and Datastream  An investor will only invest in high-risk vehicles if it is reasonable to expect compensation for the risk. The compensation for high risk in the stock market is a far higher average return for equities compared  2  For further details, see Hylland (1991) “Statens Reservefond - et forsøk fra politikerne på å binde sin egen handlefrihet?” (The State Reserve Fund - An attempt by politicians to restrict their scope for manoeuvre?). Unpublished paper, University of Oslo. with bonds. Since 1926, the annual return on US equities has on average been 4.8 percentage points higher than the return on bonds. Also in most ten-year periods, investing in US equities has been profitable, with the exception of the depression in the 1930s and the last half of the 1970s. Equity returns have been negative after ten years only in the years between 1928 and 1938, in other words on equity investments made the year before the 1929 stock market crash. It may also be worth noting that equities purchased during recessions - such as in the mid-1930s and mid-1970s - brought solid returns ten years later. This picture is the same for most other countries.

However, towards the end of the upturn the economy was facing labour shortages, higher wage growth and a sharp increase in household consumption and debt. Interest rates had to be kept at a high level in Norway. Chart 9. Cyclical divergence Short-term interest rates in the US and Norway 10  10 8  Norway  8 6  6  4  4  US 2  2  0  0 1995  1996  1997  1998  1999  2000  2001  2002  2003  Source: EcoWin  The turnaround abroad took place two years ago, but the Norwegian economy continued to show a high level of activity. This led to a widening of the interest rate differential against other countries. The main explanation for the wide interest rate differential is not that interest rates are high in Norway, but that interest rates are at a historic low abroad. Interest rates in the US have not been at such a low level since the 1960s. 1  Measured by the monthly average of the import-weighted exchange rate against 44 countries, the krone was at its weakest level in May 2000 since May 1994. Measured by the monthly average of the trade-weighted exchange rate index, the krone was at its weakest level in May 2002 since the series was started in January 1971. Measured by both indices, there were a few days in autumn and winter 1998 when the krone was weaker than in May 2000.
Anyway, they cannot offer as good financial services as commercial banks or credit card companies! (c)  Monetary autonomy  The last fear we had was related to the potential loss of monetary autonomy. Could Switzerland, a country completely surrounded by the euro zone, possibly hope to implement an interest rate policy different from the one of the European Central Bank? With the loss of its monetary identity, Switzerland would have seen its interest rates, traditionally below German rates, converge to higher European interest rates causing severe pains to the Swiss economy. Fortunately, we did not experience this outcome. First, in the months following the introduction of the euro, it became apparent that markets were not anticipating a pegging of the franc to the euro. An expected peg would have generated a convergence in interest rates, which simply did not happen. Second, and as could have been expected, the monetary needs of the Swiss economy differed from those of the euro zone: •  As an open economy strongly oriented towards global markets, the Swiss economy felt more deeply the slowdown in global trade than the euro zone. •  Furthermore, the Swiss franc kept playing its role - although to a smaller extent - of safe haven in tense international situations. •  Finally, Swiss inflation was considerably lower than inflation in the euro zone, where adjustments and catch-up phenomena occurred.

In the euro area, the economy depends on the banking system for more than two-thirds of its financing. Any lasting disruption to credit flows would cause considerable harm. Regulators could jointly decide on the following sequence. In the immediate future, priority should be given to capital conservation. As I mentioned, most of the current banking profits are, in fact, by-products of public policies and there is a good case for requesting that they should be kept inside the banking system and used to strengthen balance sheets and finance credit to the economy. This would require some restraint in dividend distribution and, of course, in the overall amount of variable compensation. In parallel, all possibilities to issue new equity should be exploited. This would be a first step. As a second step, a progressive schedule of capital strengthening could be precisely defined and published for the future. It would be crucial that this schedule be made explicitly contingent on the state of the world economy. Again, we want the direction and the path to be clear. But it is important to avoid any negative procyclical effects. The same approach could apply to the new liquidity regime when it is introduced. Let me conclude by mentioning one broader and fundamental issue. We don't know yet what kind of financial system will emerge from the crisis. We need to think about this. We want to reduce or eliminate moral hazard, but the definition of a systemic institution still eludes us.
While the overall macroeconomic stability is sound, pockets of risk remain. In response, the Bank of Thailand took on a number of actions including implementation of new limits on credit card and personal loans to address problem of household debt; establishment of debt clinic to help restructure debt for individuals with multiple creditors; and tightening up of mortgage loan underwriting standards to curb speculation in the housing market. Along the same line, on the back of strong economic performance and ample liquidity, the Monetary Policy Committee raised the policy rate in December of last year largely to preempt potential build-up of financial vulnerabilities from investor’s “search-for-yield” behavior and underpricing of risk during prolonged period of ultra-low interest rate. Ladies and gentlemen, Let me now turn to the resilience supported by having diversified growth engines, which in turn enable the Thai economy and its agents to mitigate adverse events. While I previously stated at the beginning of my talk that drivers of growth have become more balanced, structurally—being a small open economy—export performance still plays an important role as the main growth driver. But, looking closely at our export portfolio, you would find that it is well-diversified and can provide cushion against marketspecific or product-specific risks. This is because Thailand has established export ties with over 80 countries; and exporters have become less reliance on major economies. Just over ten years ago, exports to G3 economies made up around 40 percent of total export value while those to ASEAN economies stood at 21 percent.

Philipp M Hildebrand: Financial Stability and Hedge Funds: Effective and Ineffective Supervision Speech by Mr Philipp M Hildebrand, Member of the Governing Board of the Swiss National Bank, Diskussionsforum «Nachbarn Deutschland-Schweiz: Impulse für die Zukunft», Berlin, 9 November 2005. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The hedge fund industry has grown rapidly over the past few years and it has become an important segment of global financial markets. The possibility to use leverage and a high degree of flexibility are key elements of a broad range of investment strategies which have made the hedge funds industry very profitable. Hedge funds have been an important source of innovation in the traditional asset management industry and they have rendered financial markets more liquid, more efficient and more flexible. Nonetheless, the rapid growth of the industry and the excessive use of leverage may result in potential systemic risks which are relevant to central banks, unlike prudential matters. Overall, industry leverage is difficult to measure. However, several studies suggest that it is lower than at the time of the near collapse of LTCM in 1998. Even so, temporary excessive levels of leverage with single hedge funds can not be ruled out completely. A crisis in the hedge fund industry might therefore spill over to their primary trading partners, the major investment banks.
Therefore, the banking sector failed to fulfill its core function as a provider of resources for the economy. At the same time, risk management principles were not put into practice in the banking system and the consequences were apparent in the 2000-2001 crises. Another unfavorable impact of high and chronic inflation on the economy in our country is that economic units became used to operating in a highly inflationary environment. To put it more clearly, backward indexing behavior became common in pricing activities. Thus, wall of inertia evolved in inflation, which was difficult to break. Here “inflation inertia” simply refers to the situation of, yesterday’s inflation designating today’s inflation and today’s inflation designating future inflation. Hence, as inflation increased, inflation expectations increased with it and a self-nurturing inflation cycle began. In a period of high and chronic inflation, consumers were not inclined to control price and quality less and were also less concerned about diversity in selecting products. At the same time, producers were less concerned with cost and efficiency while pricing and were willing to determine profit margins freely, and invest less on increasing product diversity. As a result of this behavior created by the inflation process, goods and services could be sold at any price since consumers did not control prices, while producers did not control cost. Thus, this attitude provoked a resistance against anti-inflationary policies that were introduced at intervals and significantly slowed down the decline of inflation.

Portfolios of loans can be easier for the Bank to assess from a risk perspective, as they do not embed the complex structures sometimes present in securitised assets. And securitising loans into asset backed securities – such as RMBS – is both complex and expensive for the firms, and generally only available to those large enough to have an existing securitisation programme. The ability to accept raw loan collateral means that smaller counterparties, without securitisation platforms, are not disadvantaged when positioning collateral at the DWF. Since financial instability can start with smaller banks just as easily as larger ones, expanding the universe of possible Discount Window counterparties could lead to significant financial stability benefits. Alongside the expansion of eligible collateral to loan portfolios, we have been encouraging banks to “pre-position” their collateral. Pre-positioning involves the commercial banks identifying, and the Bank of England assessing, various types of collateral ex ante, so that it need not be assessed at short notice in the event of a sudden and unexpected need to borrow at the Discount Window. Assessing varied pools of illiquid collateral can be extremely complex and time consuming. The Bank may not be able to lend much, if at all, against collateral where it has not had time to conduct sufficient due diligence. As a result, it is vital that such collateral is pre-positioned well ahead of any need to draw. One of the benefits from having a more public and transparent facility is that such due diligence is much easier to carry out.