samchain/econo-pairs-v1 huggingface dataset:
When home owners renew mortgage loans at lower interest rates we get a transitory downward effect on inflation. It is important to distinguish between CPI changes and underlying inflation. Transitory effects, for example changes in interest rates or in indirect taxes and subsidies, may cause the general price level to jump up and down. In the conduct of monetary policy it is BIS Review 47/1997  -3-  therefore important to keep an eye on underlying inflation; the transitory effects are of secondary significance as long as they do not affect inflation expectations and thereby trend inflation. Given the time lag that applies to monetary policy, a central bank that targets inflation has to monitor the various factors which determine inflation one to two years ahead. In a simple analysis of inflation’s determinants one can start from the familiar augmented Phillips curve. The rate of inflation is determined by two factors: the relationship between supply and demand in the economy - the output gap - and inflation’s expected rate. Note, however, that while the output gap is a useful starting point for an inflation analysis, there is no simple way of measuring it. This makes it necessary to go into more detail and study a variety of indicators in order to analyse any tensions between demand and supply. Still, the output gap is a suitable starting point for my present purpose. The simple model tells us that when the output gap is closed, inflation is constant and equal to the expected rate.

Another indicator of a slower increase in private consumption could be the weak labour market. In summary it can be said that, on the one hand, exports seem to be doing somewhat better than expected, though the differences are not all that great. On the other hand, the signals about private consumption point either to agreement with the main scenario or to a somewhat weaker course. The conclusion in the latest inflation report was that monetary policy is well balanced. That conclusion still holds true. BIS Review 47/1997
During the upturn that preceded the crisis, when risks were low, banks were able to expand their balance sheets and present good capital adequacy figures, despite the fact that they held relatively little capital. When the downturn then began and the risks increased, more capital was required to reach the stipulated minimum level of capital. With the increase in risks and the loss of confidence between the banks, the markets’ capital adequacy requirements also increased. In order to meet these requirements, banks in many countries were forced to reduce their balance sheets. This led to a fall in lending to companies and private individuals. This in turn triggered a downward spiral with a fall in demand and in investment capacity, which reinforced the downturn in global economic activity. When you list the problems in this way it becomes pretty clear that we need to revise the existing regulations. The Basel Committee has done a lot of hard work to correct these shortcomings and I welcome their proposals on a new international regulatory framework for banks. Basel III – what is new? Basel III comprises global minimum regulations and aims to strengthen the banks’ ability to manage losses and reduce the probability of new financial crises. To achieve this, the banks will be required to hold more and better-quality capital. An important task for the decisionmakers involved has thus been to increase the international capital adequacy requirements But Basel III is not just about capital.

And as major financial crises do not, I am glad to say, occur so often and the banks’ data is often limited, there is actually a risk that they will underestimate the risks in their lending. A gross solvency requirement as a complement to the standard capital adequacy requirement thereby acts as an extra safety measure. In response to the criticism from the Swedish banks there is another factor that I would like to take up. In Sweden, the banks can lend money to households with very little risk. This is because the historical losses for mortgage lending in Sweden have been at very low levels. This in turn can be explained by a number of factors. One explanation is that in contrast to many other countries we do not have a speculative housing market on which households buy several houses or flats for investment purposes and thus take a high risk. Another is that we have a legal structure in which private individuals have to live with their debts until they are repaid. In general, people cannot get rid of their debts by filing for personal bankruptcy. A third reason is that we have a social insurance and benefits system that means that people who become unemployed, for example, do not lose their entire income. The likelihood of borrowers not wanting or not being able to make the interest and amortization payments on their loans is therefore relatively small.
In that the inflation assessments are published, we are forced systematically to appraise all the relevant information about future price tendencies. This is done in internal processes, with our staff playing a decisive role initially, after which the Executive Board is free to discuss the material that has been prepared. There are other strong reasons why the Riksbank should be open. As I mentioned earlier, it means we have had to tighten the analysis. It also makes it easier to follow what we do and enforce various forms of accountability. In the public debate it is sometimes argued that we are too bound by our established principles. I hope it is clear from what I have already said that that is not the case. We are free to extend the target horizon, take any risks of problems in the financial sector into account or take timely action to avoid a marked economic slowdown further ahead. But before doing so, we require good, clear grounds for our actions that really will stand up to scrutiny. I am sometimes exhorted to be more pragmatic and less tied down by our intellectual framework. The US Federal Reserve is often cited as a good example. That is a little surprising, mainly because in the United States the academic discussion advocates the opposite - that a clearer target for price stability would perhaps be preferable.

The idea here, is not to view the insurance industry’s stability in isolation, but to be seen within the wider context of preserving social and economic value of insurance systems. A new paradigm on ethics Technological advances and scientific breakthroughs have opened new possibilities to operate and deliver products to customers. Technological innovations will make customers better off but insurers on the hand, may be confronted with some fundamental ethical issues. For insurance companies, this requires a rethinking of professional and ethical standards. Thus, a need for a new paradigm on ethics. For example, with greater ability to aggregate and analyse more data from multiple sources, questions arise on the extent insurers should consider using genetic and social preferences in underwriting. Or whether it is acceptable to commit someone to a long-term financial undertaking when they may not fully comprehend the implications of their choices even though insurers might truly believe it is ‘good’ for them. And then, there is always the dilemma and trade-offs in directing more resources toward social impact investments, in cases where it lowers risk-adjusted returns for policyholders. As advancements in technology brings about various unknowns and a blurring of business lines, professional and ethical standards need to be embedded into our DNA to ensure the integrity of 3/5  BIS central bankers' speeches  our industry. When it comes to ethical values and conduct, we must move beyond conceptual discussions to practical applications. Time and effort must be undertaken to raise the standards of competence and developing well-defined codes of behaviour.
As I see it,  3  See “Hedge Funds Regulation in Europe – A comparative study”, European fund and asset management association, November 2005 and “The regulation and distribution of hedge funds in Europe – Changes and challenges”, Pricewaterhousecoopers, June 2005. 4  In Italy the minimum limit for investment is EUR 500 000, in Ireland it is EUR 250 000 and in Spain it is EUR 50 000. 6  BIS Review 116/2006  such regulation could result in liquidity disappearing from the markets where the hedge funds operate just when it is needed most. Increased disclosure of funds’ risks, on the other hand, could help the market to function efficiently. If the hedge funds’ risk positions can be assessed externally, market discipline ought to improve. I consider that both LTCM and Amaranth are good examples that transparency rather than regulation is the problem. As I have already mentioned, LTCM was a very large fund and at the same time had heavy loans. The fact that the banks concerned accepted such a high level of indebtedness is in itself remarkable – one explanation was probably confidence in the prominent figures behind LTCM, who included Robert Merton and Myron Scholes. However, the banks did not have any overview of the fund’s size and total risk position. In their own interest, they should have required greater disclosure, and the authorities should have required this of the banks. With regard to the positions in Amaranth, there are similar questions.

BIS Review 116/2006  Figure 1  g g Sweden and the percentage of capital managed Per cent  30  4  20  3  10  2  0  1 Jun-06  Jun-04  Jun-03  Jun-02  Jun-01  Number of funds (left scale)  Dec-05  5  Jun-05  40  Dec-04  6  Dec-03  50  Dec-02  7  Dec-01  60  Percentage of capital managed (right scale) Source: Fondbolagens förening  Figure 2  Market index 400  300  200  100  S&P 500  Jan-07  Jan-06  Jan-05  Jan-04  Jan-03  Jan-02  Jan-01  Jan-00  Jan-99  Jan-98  Jan-97  Jan-96  Jan-95  Jan-94  0  CSFB/Tremont Hedge Fund Index Source: Reuters Ecowin  BIS Review 116/2006  3  Figure 3  Nordic Hedge fund index (NHX) Sweden and the Affärsvärlden general index 200  160  120  80  40  0 Jan-02  Jan-03  Jan-04 NHX Sweden  Jan-05  Jan-06  Jan-07  AFGX  Sources: Reuters Ecowin and Hedgenordic  Initially, the investors consisted almost exclusively of wealthy individuals. Gradually, institutional investors such as pension funds, foundations and insurance companies have also begun to invest in hedge funds. Some time back the market also opened up to small-scale savers, as a number of hedge funds now have lower minimum requirements for the capital invested.
Also, we estimate that indirect effects from a gas price shock are quite persistent, peaking after one year.9 Thus, even if gas prices have returned to levels close to those at the start of the war in Ukraine, the upward effects of gas prices on core inflation could still be significant in the short term. Moreover, the transmission of inflationary pressures reflects specific demand and supply-side factors linked to the pandemic and the lifting of mobility restrictions. For 4  See F Borrallo, F, L. Cuadro-Sáez, M. Pacce and I. Sánchez. (2023). “Consumer food prices: recent developments in the euro area and Spain”. Economic Bulletin - Banco de España, 2023/Q2, 01. 5  See Alonso I, L. López, D. Santabárbara and M. Suárez-Varela (2022) “The EU economies’ natural gas inventories in 2022 and 2023 under two hypothetical scenarios”. Box 2, “Quarterly report on the Spanish economy”, Economic Bulletin 4/2022, Banco de España. 6  See Costain J, A. Nakov and B. Petit (2022), “Flattening of the Phillips curve under state-dependent prices and wages”, Economic Journal 132 (642), pp. 546-581. 7  See González Mínguez, J., S. Hurtado, D. Leiva-León and A. Urtasun. (2023). “The spread of inflation from energy to other components”. Economic Bulletin - Banco de España, 2023/Q1, 02. 8  Borrallo, F., L. Cuadro -Sáez and J. J. Pérez (2022). “Rising food commodity prices and their pass-through to euro area consumer prices”, Analytical Articles, Economic Bulletin 3/2022, Banco de España. 9  López, L., S. Párraga and D. Santabárbara (2022).

In addition, the strength of the transmission of our monetary policy actions to the economy is highly uncertain, due to the extraordinary pace of our rate hikes as well as changes in the euro area macro-financial landscape that could accelerate or delay the policy pass-through. Recent financial tensions originating in the banking sector add an element of uncertainty and reinforce the importance of a data-dependent approach. Thank you very much. 24  Huennekes, F., and P. Köhler-Ulbrich (2023). “Box 7 What information does the euro area bank lending survey provide on future loan developments?”, ECB Economic Bulletin, Issue 8/2022. 9
BIS Review 140/2009  13

There are repeated shocks from extreme weather events, followed by reflexive and abrupt but ultimately insufficient policy actions. The scenarios are at best indicative but they have helped us to think of investment actions that could protect the portfolio from large, volatile shifts in asset prices. 14/16  BIS - Central bankers' speeches  Among the four scenarios explored in our study, the failed transition has the worst GDP growth rates and financial market returns over a 20-year horizon, followed by the too-little-too-late transition. The scenarios have helped us better understand the risks from exposures to companies that are dependent on fossil-based carbon intensive products or production methods. Our approach to climate portfolio actions is to start small, learn fast, and scale up as new data provide greater clarity. For a start, MAS has allocated about 2% of our portfolio, or slightly over $ billion, to a climate transition programme. We have done this by tilting part of the equities portfolio towards less carbonintensive companies that are more aligned with the low-carbon transition, rather than by excluding any entire carbon-intensive sector. This approach strikes a balance between reducing the portfolio's carbon intensity while continuing to support companies which are transitioning to lower carbon intensity. We will scale up our climate transition programme as we gain confidence in the effectiveness of the climate indices we have used to tilt our equities portfolio.
While this reduces inflationary pressures in the economy as a whole it has 24  contributed to a long and painful period of adjustment for lower-skilled workers. The secular disinflationary  effects from this steady integration of additional workers into the global labour market need to be taken into account in addition to the cyclical inflationary pressures from changes in labour market slack. The various channels through which globalisation affects the relationship between domestic slack and inflation can be illustrated using the Phillips Curve (Figure 1). 18  See ‘Understanding the downward trend in labour income shares’, Chapter 3 of IMF WEO April 2017. These effects – an example of factor price equalisation (Samuelson, 1948) – have been well documented for example by Autor, D, Dorn, D and Hanson, G (2015), ‘Untangling Trade and Technology: Evidence from Local Labour Markets’, The Economic Journal, Vol. 125, No. 584, pages 621-46. Bank staff analysis, using OECD data, suggests this mechanism has operated widely, with a range of countries seeing strong growth in non-tradeable employment compensate for declines in sectors most exposed to international labour substitution. 20 This channel also increases the role of the exchange rate in determining inflationary pressures, since it will affect the home-currency value of the wage workers from abroad would earn by relocating and therefore their willingness to move.

Caleb M Fundanga: Framework of cooperation between the Bank of Zambia and the University of Zambia Opening remarks by Mr Caleb M Fundanga, Governor of the Bank of Zambia, at the signing ceremony of the Memorandum of Understanding between the Bank of Zambia and the University of Zambia, Lusaka, 30 June 2010. *  *  *  The Vice Chancellor, University of Zambia – Prof. Stephen Simukanga The Deputy Governor – Administration and University Council Chairperson – Dr Tukiya Kankasa-Mabula Distinguished Professors and Lecturers from UNZA Colleagues from the Bank Members of the Press Distinguished Ladies and Gentlemen; It gives me great delight, on behalf of the Bank of Zambia, to welcome you all to this important signing ceremony of the Memorandum of Understanding between the Bank of Zambia and the University of Zambia. The MoU that we are about to sign today provides a framework for the support to the Economics Department and Research activities in the Department. Ladies and Gentlemen; the Bank of Zambia continues to view the University of Zambia and the Copperbelt University as strategic partners in the economic development of Zambia. It is for this reason that the Bank has for several years now been involved in the support of various capacity building programmes at the two tertiary learning institutions.
The conundrum for consumers is a simple one: if consumer spending growth is to exceed 2 percent annualized on a sustained basis at a time when real disposable income growth is below 2 percent then this would require the household saving rate to decline persistently. But there is little reason to expect such a decline given that the current saving rate is at a level consistent with current level of household wealth relative to income. We have a chicken-egg problem. If the saving rate remains stable, then stronger consumption growth will require a pickup in income growth. But for income to rise, demand must increase. This suggests that there may need to be an impetus to growth from other sectors of the economy to generate a boost in consumer spending growth. One possible source is the housing sector. As noted earlier, housing starts are still quite low relative to what the country’s demographics should support in the long run. But there are two difficulties here. First, the strength of the housing recovery may be blunted by the recent rise in mortgage rates. For example, before last week’s partial reversal, the 30-year fixed mortgage rate had risen by about 120 basis points since May to more than 4½ percent.

These developments have spurred the necessity of our having to better understand and perform more analysis on banking risks. After all, banks do live and prosper by accepting risks, but these risks have to be managed with proper care. As we have all seen, well-managed banks have tended to stay resilient to the banking crisis and provided a backbone for restoration of financial stability. We must therefore, continuously adopt new techniques and technologies in risk analysis to ensure appropriate risk management of all financial institutions in the future. Of course, prevention is always better than the cure. As financial regulators, one of our main tasks is to provide a prudential framework ensuring the overall improvement of risk management of financial institutions. In the case of Thailand consolidated supervision as well as prompt corrective action will be introduced under the new Financial Institutions Act. Study is also on the way to prepare ourselves for the implementation of the BIS New Capital Regime, and we look forward to their conclusion for an explicit framework that will complement our current practices where we ask the Board to understand the nature of their organization’s business activities and risk appetite in order to provide an adequate internal control system to monitor and mitigate risks. Risk-based supervision represents yet another endeavor to tackle the effectiveness of risk management of financial institutions as transaction testing may no longer be an effective approach to examine the ever-more complex financial institutions of today.
The latest projections by international agencies place GDP growth for the euro area countries as a whole at around 1% in 2014 and 1.5% in 2015, with this naturally against a background of price stability. With specific regard to the Spanish economy, two positive indicators have just been released. First, on the flash estimate available, GDP is expected to have grown by 0.1% in the third quarter compared with the second quarter. This is the first positive figure after nine consecutive quarters of contraction. The primary explanation for this figure lies in the contribution of the external sector, underpinned more by the export performance than by the containment of imports. As to the composition of domestic demand, some changes are appreciable: private consumption spending is estimated to have grown slightly, albeit still against a backdrop of great weakness, the result of the decline in disposable income, the loss of household wealth and high household debt. BIS central bankers’ speeches  1  The second positive indicator stems from the latest Labour Force Survey, with a reduction in the number of unemployed, an increase in numbers employed and a significant fall in the rate of increase of unemployment, at 2%, compared with 16% a year ago and almost 5% in the second quarter. These signs of a possible change for the better in our economy must be placed against the background of the correction of the serious imbalances built up during the previous expansion.

In general, Czechs despise inflation, and the central bank needs to explain repeatedly why it uses the worldwide standard of a 2% inflation target instead of targeting literal stability of the CPI level, or 0% inflation. Already many decades before the era of independent monetary policy, in the early 1920s, Czechoslovakia pursued a strategy of deliberately strengthening the national currency. This policy resulted in deep deflation, in strong contrast to the hyperinflations seen at that time in neighboring countries (Austria, Germany, Hungary, and Poland; see Sargent, 1982). So, it comes as no surprise that the Czech National Bank is rarely applauded for cutting interest 1/2  BIS central bankers' speeches  rates, while hikes are often welcomed by a majority of the population. An important publicrelations test arose for the Bank in 2013, when interest rate cuts proved insufficient to return inflation to the target. Inspired partly by one distinguished member of today’s panel, the Czech National Bank adopted an exchange rate commitment to keep the currency from appreciating. The commitment was terminated a year ago. Since then, studies by the IMF and academics alike have pointed to large benefits of the policy in terms of reducing unemployment, lifting GDP growth, and preventing deflation. Within two years after the commitment’s enactment, the Czech Republic – at least in part thanks to the commitment – turned from a de facto sick man of Europe to one of the fastest-growing economies with the lowest unemployment rate in the entire EU.