samchain/econo-pairs-v1 huggingface dataset:
The result is lower activity and lower welfare. Norges Bank Economic perspectives 15 february 2018  In the distant past, the central bank was to safeguard the value of the country’s monetary unit in terms of a precious metal. This was later replaced by fixed rate regimes. Various forms of fixed exchange rate regimes are still in use in many countries. However, since 1990 an increasing number of countries have chosen to link monetary stability to a numerical inflation target. Since the financial crisis, all of these countries have maintained their inflation targeting regimes. This reflects their overall positive experience with this framework. It did not get in the way of a powerful response to the financial crisis. With a floating exchange rate and a credible inflation anchor, monetary policy could be geared to stabilising the economy. In Norway too, inflation targeting has functioned well. Inflation has remained low and stable since it came down in the early 1990s (Chart 13). We can now look back on a quarter century of stable prices. At the same time, employment variability has been lower since 2001 than in previous periods despite the shocks to the Norwegian economy. 1)  Chart 13 Inflation in Norway. Four−quarter change.

Percent 16  16  Consumer price index Five−year moving average Inflation target  14 12  14 12  10  10  8  8  6  6  4  4  2  2  0  0  –2 1973  1978  1983  1988  1993  1998  2003  2008  2013  –2 2018  1) Projection for 2018 Q1. Sources: Statistics Norway and Norges Bank  The formal monetary policy regimes remain intact, but lessons have been learned along the way. Initially, central banks had high ambitions to steer inflation to target within a clearly defined time horizon. But the experience with these regimes provided useful insight, and the ambitions were later adjusted. When confronted with shocks, small open economies in particular experienced that a rapid return to the inflation target could have undesired consequences for the real economy.11 Norges Bank addressed this concern by giving greater weight to output and employment. The inflation target horizon has been extended and monetary policy has gradually become more flexible. 11 See for example Wheeler G. (2014): “Reflections on 25 years of Inflation Targeting”, Reserve Bank of New Zealand, speech delivered on 28 November 2014 and Norges Bank (2017): “Experience with the monetary policy framework in Norway since 2001”, Norges Bank Papers 1/2017. 12  Monetary policy shall contribute to monetary stability. It does so by ensuring that inflation stays within a range somewhat above zero, while being kept under control.
16  11  Carney, M (2017) See Ng Kok Song, P (2014) Organisations with effective communication are over four times more likely to report high levels of employee engagement and 20% more likely to report low turnover according to a study by British Consultancy, CHA (as quoted in Kouzes, J and Posner, B (2010)) 14 As quoted in Kouzes, J and Posner B (2010) 15 Carney, M (2015) 16 Carney, M (2017a) 12 13  6  All speeches are available online at www.bankofengland.co.uk/speeches  6  When leaders get this balance right, the combination of purpose, hope and clarity inspires, unleashing the talent and energy of the organisation. Inspiration is essential because it is impossible for leaders to meet every challenge, see every opportunity, or manage every situation by themselves. The highest-performing organisations are those with the highest number of people who are empowered to think as leaders themselves. 17  During the financial crisis the need for clarity of mind, thought and communication was paramount. In its depth, panic took hold as, “Firmly held truths [were] no longer relied upon. Articles of faith [were] upended. And the very foundations of economies and markets [were] called into question.” The only goal in a panic is to stop it. 19  18  Leaders do this by, as Napoleon would command to his generals “[to]  march toward the sound of gunfire”. This requires mobilising quickly. In this spirit, Tim Geithner’s refrain was “Plan beats no plan”.

[6] The entire monetary and financial sector would be deprived of its anchor – central bank money – and would be exposed to potential instability. [7]  It is also conceivable that non-European digital payment solutions and technologies operated abroad might dominate our payments market, as we are already seeing in some segments like cards and online payments. This risk would be exacerbated by the expansion of means of payment offered by big techs, which could use their very large customer base to their advantage. This would raise questions about our autonomy and privacy in payments. It could even endanger European sovereignty. [8] Moreover, the international monetary system may see the emergence of central bank digital currencies (CBDCs) in large economies. Such CBDCs would offer benefits in terms of efficiency, scalability, liquidity and safety that would support their attractiveness internationally. And they would have the potential to facilitate cross-border payments, which may enhance their role as a global payment unit. [9] In such a context, not issuing a digital euro could undermine the international role of the euro and create additional risks to sovereignty. This scenario is not imminent, but it could potentially materialise in the future if we do not start acting today. And if we don’t act, we will also see increasing confusion about digital money. Crypto-assets are a case in point. [10] Unbacked crypto-assets, for example, cannot perform the functions of money. They are neither stable nor scalable. Transactions are slow and costly.
Of course, the authorities must stand firm about the figure 2½ if the inflation target is to anchor long-term expectations and if we shall reap the long-term benefits of this conduct of monetary policy. Monetary policy affects the economy with a lag. The current level of inflation does not provide an adequate basis for determining the level at which interest rates should be set today. Our analyses indicate that a substantial share of the effects of an interest rate change occurs within two years. Two years is thus a reasonable time horizon for achieving the inflation target. Economic agents can act on the assumption that the inflation rate will be 2½ per cent. If it appears that inflation will be higher than 2½ per cent with unchanged interest rates, the interest rate will be increased. If it appears that inflation will be lower than 2½ per cent with unchanged interest rates, the interest rate will be reduced. There is symmetry here. It is equally important to avoid an inflation rate that is too low, as it is to avoid an inflation rate that is too high. The global economy has experienced a slowdown during the last year. The downturn in the US has had contagion effects on European and Asian economies through its impact on world trade and the financial markets. Capital markets are global, and when revenues decline in the US, enterprises with operations in many countries also reduce investment and operating expenses in Europe and Asia.

While BAME representation at senior levels has increased from 2% to 5% since 2013, we still have some way to go to meet our ambitious target of 13% by 2022. The Bank’s experience is consistent with that of other organisations as documented by “The Middle” (a thorough, evidence-based research report on progressing BAME Talent in the Workplace commissioned by the Black British Business Awards).3 This study concluded that across organisations the challenges were greatest in retaining and promoting ethnic minority professionals from middle management to senior executive roles. We’re pleased that the changes the Bank is already making are consistent with the report’s recommendations. To maintain momentum, the Bank recently created a BAME Diversity Taskforce, chaired by Deputy Governor Sir Dave Ramsden and attended by members of both Court and our BEEM network. This Taskforce is now focusing on: First, supporting the progression of BAME colleagues to leadership roles by rolling out inclusive leadership training for all colleagues and having all senior management including the Bank’s Governors participate in our Sponsorship programmes and mentoring schemes. Second, supporting our ethnic minorities network (BEEM), which has achieved much since its foundation in 2012. This includes implementing reciprocal mentoring of 150 of our BAME colleagues each year. BEEM has also set up, with HR, the Bank's African/ African-Caribbean scholarship programme. Launched in 2015, we have awarded 10 scholarships and 8 bursaries to talented students studying a range of subjects from Chemical Engineering to Politics and International Relations.
If the offices cannot be let, this income does not materialise and the company that made the investment may be forced into bankruptcy. A household, instead, pays its interest with income from other sources. Moreover, in the early 1990s the prices of commercial properties had been pushed up over a long period without any corresponding increase in rental income. The price rises were obviously driven by expectations of a continued strong upswing in prices in the future. When it eventually became clear that these expectations were not going to materialise and it became more difficult to let the premises as economic conditions weakened, the prices fell dramatically. Today, though, the situation in the commercial property market is significantly different. There has not been a prolonged price upswing of the kind seen in the housing market. In connection with the equity market decline in 2000, demand for office premises weakened again and rents and prices in the market for office properties began to drop. The price fall appears today to have moderated and in some regions prices of office premises have risen. Vacancy levels are still high, though, which has contributed to restraining a more general upswing in rents and prices. At the same time, property companies’ earnings and ability to pay are good. Our assessment therefore is that the commercial property market does not either pose a threat to the stability of the financial system.

The first relates to the institutional relationship between the central bank and the government and the second to the multiple objectives assigned to the central banks. All the evidence points to improved long-term inflation performance when monetary policymakers are freed from institutional constraints that hamper their freedom of maneuver and given full operational independence. Such independence is best achieved by enshrining it in an institutional framework that provides for legal independence from the government, with accountability for achieving a clearly defined mandate focused on price stability. Few Asian central banks yet enjoy full legal independence, though most now have greater de facto independence than they once had. Fixed, or partially fixed exchange rate regimes, of course, also constrain the independence of monetary policy. As capital accounts become progressively more open, few countries can sustain over time a commitment to exchange rate stability without risking price stability. Eventually central banks will run up against limits on their capacity to sterilize the effects of exchange market intervention designed to limit the pace and extent of appreciation of the exchange rate. Although measured inflation in emerging Asian economies remains relatively low, the pace of credit growth and the behavior of asset prices provide some evidence of a growing tension among competing objectives. The longer this policy conflict persists, the greater the distortions building up in the economy, the greater the risk of future inflation and the greater the risk of a bumpy future.
The future increase in the cost of debt Particularly during the Covid-19 crisis, monetary and fiscal policies, while remaining independent, were aligned and mutually reinforcing: as long as inflation remained weak, key rates remained low, reducing the costs of an expansionary fiscal policy which itself supported activity and ultimately inflation. Clearly, this economic context has changed since last autumn: faced with rapidly rising inflation, including inflation excluding energy and food (core inflation in the euro area was up by 3.5% in April), we must normalise monetary policy.iii In addition, financial markets have incorporated a risk premium in the face of this return of inflation: incidentally, this now greatly undermines a popular belief that inflation lowers the debt and its burden. Rates have therefore already risen significantly (the 10-year OAT climbed from 0.1% a year ago, in early May 2021, to 1.6% today) and should continue to do so, particularly in the short-term segment. Any rate increase is gradually passed on to the debt issued or reissued, at a pace of about 15% of the debt outstanding per year in France. According to our estimates, each 1% rise in interest rates will lead to a 1 point of GDP increase in the annual interest burden after 10 years, and a 5½ point of GDP increase in debt compared to a situation without rate increases. Each 1% rise in interest rates therefore represents an additional annual cost of close to  Page 5 of 9 EUR 40 billion each year, i.e.

This would make it possible to bring the debt ratio down by about fifteen points over ten years. The point here is not to call for a general cut in spending, but rather a slower increase in spending: this is far from the famous "austerity" that we French people are so keen to criticise without ever having experienced it. This would be fully compatible with the functioning of automatic stabilisers, to take account of the economic situation. Of course,this implies no further tax cuts, which we can hardly afford to finance. Page 4 of 9 The Cour des Comptes stated it loud and clear, and rightly so:ii we must therefore stop indefinitely postponing fiscal consolidation. It is not an arbitrary question of threshold or narrow-minded ideology. Our solidarity with future generations is at stake: we do not have the moral right to leave them, in addition to a climate debt that so rightly worries them, a financial debt whose share of GDP has already almost doubled in 20 years. And our political credibility in Europe is also at stake, as well as our ability to inspire lasting confidence in investors. If any doubts as to the sustainability of the French debt were to arise, we could always borrow, but the financial conditions would be different: take a look around, including at several of our European neighbours. And this brings me to the second illusion, that of cost-free debt. 2.
Work on the Riksbank's other main objective - financial stability - has been characterised to a great extent by the experiences of the financial crisis that shook Sweden in the early 1990s. The Riksbank has been something of a pioneer, being the first central bank in the world to publish reports on financial stability. There is also reason to make a fresh effort in this field. We are in the process of appointing a group of experts, which includes a couple of international experts, who will evaluate our work and present suggestions for improvements. The evaluations we make will be followed up with open seminars, where we can discuss the future direction of our operations with economists from the academic world as well as actors in the financial sector. The Riksbank is currently one of the world's most open central banks, but we can certainly become better. Our work will in future be aimed at ensuring that the Riksbank reaches a broader general public than is currently the case. Our ambition is to create even broader support for our operations and thereby greater understanding of what we do and why we do it. Personally, I intend to travel around  BIS Review 44/2003  1  the country before the autumn and spring monetary policy meetings to talk and listen to representatives of local industries and regions. The inflation perspective It was observed in the June Inflation Report that for some time there had been gradual downward revisions to the forecasts for the world economy.

This gives me reason to underscore the worrying signs that I perceive, especially at an opportunity like this, when I before you in the Riksdag Committee on Finance speak about how I see monetary policy and the Swedish economy in the future. This does not mean, however, that I am going to embark on a discussion of different concrete solutions to the problems. I don't believe that this is a natural task for us at the Riksbank. Over the last ten years, the task of monetary policy has been to safeguard price stability, that is to say, a low and stable inflation rate. This has worked fairly well; inflation has been largely in line with our target. In turn, this has contributed to relatively good economic growth, in clear contrast to the 1970s and 1980s. However, this is not enough. No matter how well stabilisation policy functions, it does not provide higher long-term economic growth. In reality, growth potential and thereby our welfare is determined by how much we work and how productive we are. Nothing can change this. The amount that we work depends on many different factors, for instance, how many people are of working age, how many of theses are employed, absenteeism, etc. Labour productivity, measured as GDP per hour worked, depends partly on the level of education and on technological progress or the prevailing conditions for businesses and investment. To this can be added productivity changes resulting from the labour force moving over from less productive to more productive sectors.
With multiple policy objectives and a challenging economic environment, macroprudential tools have given additional degrees of freedom to Asian policymakers who want to avoid a build-up of financial imbalances and unsustainable asset prices, but do not want to give up domestic monetary sovereignty, allow excessive exchange rate appreciation, or impose capital controls. 43. While these targeted interventions have achieved a measure of success, macroprudential policies in Emerging Asia have been deployed in a relatively eclectic and even ad-hoc manner. As these countries return to more normal times, there is a need to  BIS central bankers’ speeches  5  formalise and institutionalise the modus operandi of these policies, for greater transparency and policy effectiveness. Reforms to strengthen the underlying potential of economies 44. Let me now turn to the last, and perhaps most important, set of policies that will determine how successfully the global economy secures a return to normalcy. These are the structural reforms needed to strengthen the underlying potential of economies. Let me highlight those which I think are most important. Advanced economies: labour reform, tax reform, pension reform 45. In the advanced economies, I would put labour market reform, tax reform, and pension reform at the top of the list. 46. Labour markets need to become more flexible, especially in Europe. Even in the US, production patterns are changing rapidly, increasing skills mismatches and generating structural unemployment.

As of 2011, fiscal deficits in the region have narrowed once more to an average of 1.1% of GDP. 35. Asian economies must continually recalibrate their monetary and fiscal policies, as external demand conditions and domestic cost pressures pull in opposite directions. Maintaining flexibility in macroeconomic policies must go hand-in-hand with reforms to strengthen domestic demand. Breaking new ground in macroprudential policies 36. The de-synchronisation of global macroeconomic cycles between the advanced economies and emerging market economies poses more challenges for the latter than the former. As long as monetary conditions in the advanced economies remain easy, emerging market economies face the risk of misallocated resources and disruptive capital flows, which in turn can affect both price stability and financial stability. 37. Low interest rates and abundant liquidity have contributed to asset price accelerations in some Asian countries, especially in real estate markets. Residential property prices in Korea, Taiwan, Hong Kong, and Singapore, for example, have increased by 35% on average since 2009, while nominal wages have risen by only 13%. 38. No doubt, increased capital flows to emerging market economies reflect the superior growth prospects of these economies. There is a structural rebalancing of global investment portfolios towards emerging markets in general, and Emerging Asia in particular. A multi-pronged policy response is needed to ensure that inflationary pressures remain contained in the face of this “wall of money” – including a gradual appreciation of nominal effective exchange rates.
A lively discussion is also underway at present on whether central banks should use policy rates to a greater extent to correct imbalances on individual markets. For example, the Riksbank has been encouraged in the media to prevent a bubble developing on the housing market. We naturally take house prices into account in our macroeconomic assessments, and the Riksbank’s interest rate policy has in turn, through its effect on the households’ interest expenses, a considerable impact on the development of prices on the housing market. But the repo rate is not a suitable instrument for the fine tuning of individual markets. It affects, positively or negatively, demand in the economy in a very broad sense. At present, we are conducting the policy that we believe is necessary to meet the inflation target and support the recovery of the Swedish economy. When it comes to preventing systemic risks such as a prolonged unbalanced development of the housing market, the repo rate is too blunt an instrument to do the job on its own. The repo rate should only be considered if the systemic risk is such that it affects our possibility to meet the inflation target and support the stabilisation of the real economy and the financial markets. There are instead other and probably more important factors than the repo rate when it comes to avoiding an unbalanced development of the housing market. This perhaps relates above all to effective regulation and supervision.

But there is still considerable scope for its development: •  Islamic finance presently forms less than 1% the global financial industry. •  For a large number of countries, even in jurisdictions with substantial Muslim populations, Islamic finance currently constitutes less than 5% of their financial sector. 1  •  And despite a record level of sukuk issuance in 2012, the industry as a whole is still largely concentrated on the banking sector. 2 There is much ahead in the journey to develop Islamic capital markets and the takaful (Islamic insurance) industry. I believe the next 10–15 years offer significant opportunities for the growth and diversification of Islamic finance. Let me highlight the reasons to be optimistic about its prospects:  1  Based on surveys of the Islamic Financial Services Board (IFSB)’s members. 2  The Islamic Finance Mar 2012 report by the UK Islamic Finance Secretariat, a private sector industry body, estimated that the banking sector accounted for 93% of the global Islamic finance industry, with capital markets at 5% and Takaful at 2%. BIS central bankers’ speeches  1  •  First, Islamic financial institutions have in the main escaped significant damage in the global financial crisis. They are well-placed to grow, at a time when many of the global banks, especially the European banks, are deleveraging or focusing on consolidating their balance sheets. •  Second, Islamic finance has much potential to diversify into new growth areas such as trade and infrastructure financing in Asia and the emerging markets.