samchain/econo-pairs-v1 huggingface dataset:
Structural reasons led domestic supply to fall resulting in a remarkable increase in livestock prices. This hike, in turn, had significant effects on both processed and unprocessed food prices (Figure 7). Thus, the contribution of meat and meat products to annual inflation reached 1.67 points by March. This reflects a situation mainly exclusive to Turkey. As a matter of fact, as illustrated in the slide, meat prices went up by 35 percent in Turkey within the last year, while no significant change was observed in meat prices in other countries (Figures 8 and 9). Along with the surge in meat prices, vegetable prices increased to relatively high levels and led the trend of increase in food prices to become more pronounced. As a consequence, in the first quarter, food group inflation realized above our projections presented in the January Inflation Report. Meanwhile, energy prices registered a significant increase in the first quarter of 2010 due to the January tax adjustments and the low base effect generated by plummeting prices in the same period of 2009 (Figure 10). We estimate that owing to the base effect, annual inflation in the energy group will continue to rise in the second quarter of 2010 as well. Accordingly, due to tax adjustments and price hikes in food, energy and tobacco, the contribution of food,  energy and tobacco products to annual inflation has reached 6.7 percentage points by the end of the first quarter (Figure 11).

However, it can be difficult to achieve the right balance In theory, balancing the need to achieve the inflation target and the need to stabilise the real economy seems relatively simple, even when there is a conflict between these objectives as in 2008. However, when it comes to conducting monetary policy in practice, achieving the right balance is not always so easy. One problem that I have probably underestimated in the past is that there are no simple and unambiguous measures of how much of the economy's resources are being utilised and what should be considered as a normal level for what we call resource utilisation. In theory it is relatively easy to define the so-called production gap. It is often defined as the difference between what is actually produced and what could be produced if the resources available were used to the full. But I do not really think that it is possible to measure this gap with any great degree of precision. One problem is that it is difficult to measure how much could be produced if all the resources were used to the full. This, which is sometimes called potential production, can not be observed directly but must be estimated. 1 At the same time, there is a great deal of uncertainty about the best way to perform such an estimate.
The cure in such cases is to achieve primary surpluses in the future, and this can be done in two ways: cutting fixed expenditures or raising taxes. We know, even from our own experience in the 1990s, that this process is painful. On the other hand, there is real danger of conflict between the objectives and directions of the fiscal and monetary policies. Tightened monetary conditions and loosened fiscal conditions have contrary macroeconomic effects, at least on demand. To this we could add the significantly delayed structural reforms which could have supported the resolution of supply-related problems, but have not yet been brought into the focus of the budgeting debate. The combination of these two factors would seriously hinder the endeavours to limit and keep inflation down; and what is more, it would create conditions for return to the macroeconomic imbalances of the recent past. Such a development, inter alia, would have a strongly deleterious effect on the businesses and banks in Bulgaria. Therefore, in terms of greater predictability of the macroeconomic environment dynamics, now one of the major economic policy tasks is to try to synchronise as much as possible the monetary and fiscal conditions in Bulgaria. In the language of  2/5  BIS - Central bankers' speeches  budgeting, this means accomplishing fiscal consolidation that can be measured by a concrete number: a budget deficit not higher than 3% of GDP.

The net value of non-performing loans for the last 12 months decreased by over BGN 660 million. Their share represents 2.66% of the total net value of loans and advances, and their amount is fully covered by the capital surplus above the regulatory requirements and buffers; Profitability, measured by the amount of profit of BGN 1.7 billion, guarantees a return on assets and capital, and is a serious source of internal support for balance sheets if necessary. In this context, the main challenges facing the banking sector to date can be summarised along three lines: the dynamics of the macroeconomic environment, the pro-cyclical behaviour of banks, and the potential risks to their profitability. The macroeconomic environment, as I noted at the beginning, is characterised by high uncertainty and the potential for escalation of risk scenarios. This implies the continuation of stress tests for the banking sector with various hypothetical negative scenarios. The banks' pro-cyclical behaviour is associated with continued credit growth. Under upward credit dynamics, the capacity of borrowers to service their obligations is sometimes overestimated. That is why the supervisory policy will continue to aim at ensuring that credit institutions act conservatively. 3/5  BIS - Central bankers' speeches  The profitability of the banks is put at risk along two lines simultaneously. First, due to the need to set aside additional provisions under a growing probability of non-performing loans; and secondly, due to limitation of the banks' scope to generate income from core activities.
As the populations in the surplus economies of Asia age and begin to consume more, a structural factor contributing to the present imbalances will diminish in importance. But demographic transitions take time and it is in Asia’s, and the rest of the world’s interest to step up reforms to boost domestic demand. Policy-led efforts in China to reduce precautionary savings and spur consumption through pension reforms are a good start. Real exchange rates in Asia must appreciate, to spur resource allocation to the non-tradeable sector of the economy. Managing capital flows Second, Asia must learn to manage volatile capital flows. Low interest rates in the advanced economies since 2008 have prompted global investors to seek higher returns in emerging economies, especially Asia. Gross capital inflows into developing Asia during 2009–2010 amounted to some $ trillion, nearly 6% of GDP. Several Asian economies experienced record-high portfolio inflows. Capital inflows are unlikely to persist at the volumes seen in the last two years, as monetary policy settings in the advanced economies are eventually normalised. But there are longer term structural factors that will drive capital flows from advanced economies to emerging Asia, namely the superior growth prospects in Asia and a diversification in global portfolios towards higher yielding Asian assets. Advanced economies represent half of global GDP but three-quarters of global market capitalisation in equity markets. A reallocation of just 5% of advanced economy equity portfolios to emerging economies translates into a potential flow of $ trillion per year.

Ravi Menon: Asia – no room for complacency Keynote address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Paris Europlace Financial Forum, Singapore, 30 November 2011. *  *  *  Mr Christian Noyer, Governor of Banque de France, Distinguished guests, Ladies and gentlemen, Good morning. For those of you who are coming from abroad, a warm welcome to Singapore. Deleveraging out of a debt overhang Molière, a French playwright considered to be one of the greatest masters of comedy, once offered this sobering thought: “Debts are like children; begot with pleasure and brought forth in pain”. Today, the pain he described is palpitating throughout the world and keeping many leaders in government, business, and finance awake at night. The advanced economies are awash in debt. Governments, households, and banks must reduce leverage to restore economic and financial sustainability. But history tells us that deleveraging, while necessary, leads to a prolonged period of slower growth punctuated by increased financial market volatility. The gross government debt-to-GDP ratio is 80% in the UK and in the Eurozone, 100% in the United States, and 230% in Japan. Sovereign debt in aggregate is today at levels not seen since the Second World War. Financial markets, which had hitherto tolerated the build-up in debt, have turned merciless against the Eurozone economies, driving up sovereign spreads and dragging down the ratings of those who hold sovereign paper.
According to the forecasts and commitment made by the ECB Governing Council, inflation is expected to ease towards 2% in 2025 as current drivers weaken and the effects of monetary policy operate on the economy. Yet the impact of monetary policy on inflation raises two questions: with what delay does it take effect, and through which channels does it operate? As we know, monetary policy transmission is not immediate. The effects of rate hikes take time to affect supply and demand and hence price-setting decisions, with economic research suggesting that transmission takes place on average over one to two years. In the present case, the time taken will ultimately depend on the decisions by consumers and businesses, which are influenced by two policy transmission channels: 6  First, inflation expectations. Economic decisions depend both on current economic conditions and expectations on the future state of the economy, and in particular the future level of inflation. If expectations on future inflation go up, investment and consumption decisions, and hence prices and wages, will be modified. By enabling economic participants to coordinate their decisions around a shared and credible inflation target (2% over the medium term), central banks contribute directly to ensuring price stability; Second, financial conditions and demand. Monetary policy acts directly on interest rates and therefore on financing for supply and demand. Through monetary tightening, the Eurosystem allows real interest rates to rise at different time horizons.

Against this background, we stressed last March that we would use the flexibility of our PEPP to increase purchases in the following months, with the aim of preserving favourable financing conditions and thus preventing a tightening of these conditions that is inconsistent with countering the downward impact of the crisis on the inflation path. A fourth aspect worth highlighting is that of the complementarity of the ECB’s action to that taken by the fiscal and prudential authorities. We all concur that fiscal policy should be the first line of defence against this crisis. It has the most suitable instruments for mitigating the effects of the crisis on households and firms, in particular in a setting in which these effects are proving uneven and of uncertain duration. That said, the monetary policy decisions adopted by the ECB, and especially those relating to the PEPP, are particularly significant from this perspective. Indeed, they have provided the fiscal authorities with space to extend and maintain their support measures for the economy. Hence, net asset purchases under the PEPP in 2020 have risen to an amount equivalent to over 90% of the euro area countries’ net public financing needs that same 5  year (and almost 30% of gross needs), according to preliminary estimates. This is particularly important in countries such as Spain which, as I mentioned, has been particularly affected by the COVID-19 crisis and whose initial deficit and public debt levels were high.
This is all about reducing the cost of resolution and thereby the risk to the stability of the system. Just like recovery plans, resolution plans need to be there to be used, and I can assure you that the Bank of England, in its role as a resolution authority, will be placing great emphasis on the existence of credible and useable resolution plans. They will be a tool for the authorities rigorously to ask  2  BIS Review 156/2009  the question, “With this structure and business model, could I achieve a resolution at an acceptable cost”. This will be true for domestic banks and for those operating across borders, and in the case of the latter there is a large amount of work to be done to ensure both complete coverage of resolution regimes and that they can work together. I have emphasised that I see RRPs as a device to enable tough questioning of structures and business models. I want finally to illustrate the sorts of questions that should arise by referring briefly to a couple of well known cases of the last two years or so. Let me start with Northern Rock, the first casualty in the UK and use this case to illustrate the role of a recovery plan.

This situation will not last much longer, certainly not in the UK, because the authorities are very keen to see real implementation of RRPs, alongside the continuing international work on them. One thing is for sure – you will hear a lot more about Recovery and Resolution Plans. Thank you. BIS Review 156/2009  3
Several safeguards are in place to minimise potential distortive effects on market functioning and price formation (such as the issuer limit and the issue share limit of 33%). There has been a prominent financial stability dimension in all unconventional measures taken, but the existing institutional framework ensures that monetary policy is the last line of defence with respect to preserving financial stability. The establishment of the European banking union, in particular the Single Supervisory Mechanism (SSM) and the Single Resolution Mechanism (SRM), has taken monetary policy one step further away from financial stability issues. Progress has been made to ensure that regulatory capture and forbearance are minimised and that shareholders bear responsibility and face the consequences of failure. But we are not there yet. These mechanisms need to be complemented by a common system of deposit protection, which would further bolster financial stability by reducing the risk of bank runs in crisis times. Conclusion To conclude, unconventional policies have been complicated to implement and to communicate. But they have been effective in enhancing our ability to deliver on our mandate in a medium-term perspective. Our measures have been designed to complement each other and have proved adaptable to and effective against the series of shocks which have buffeted the euro area economy. The complex nature of unconventional measures has repercussions for the transparency and accountability dimension of central bank independence. But they were a sine qua non for our mandate to be respected.

Regional banks would also be prohibited from making cross-border transactions; neither would they be able to open branches / structural subdivisions outside the region wherein the bank is registered and outside its adjoining regions. We deem it appropriate to discuss with the bank community the possibility to considerably streamline regulation for such banks so they are exempt from compliance with technically complicated international standards. Importantly, this suggestion is not about softening the regulation for regional banks – it is about its simplification. Concerning the other banks (save for systemically important) which we call banks of federal importance, the plan is to increase the minimum required capital to 1 billion rubles, with international standards to be rolled out subsequently. By the way, from the slide here you can see that minimum capital requirements in our EurAsEC partner countries are higher than in Russia. And even once the billion-rule is implemented, in three countries they will still be above this one billion. The introduction of proportionate regulation comes with a transition period of up to two years, in which time banks would be able to decide how they see their future; a similar transition period will certainly be required to implement the increased minimum capital requirement. We propose to discuss details at the congress. Now with regard to consolidated supervision. The current supervision and inspection extend to more than individual credit institutions and cover banking groups.
There is, however, a simple explanation for the apparent looseness relative to the estimated reaction function in the United Kingdom, namely the change in the policy regime associated with the adoption of inflation targeting and the subsequent credibility gain from giving operational responsibility for monetary policy to the Bank of England. This represented a sharp change in regime after a somewhat chequered history of inflation control and probably contributed to a lower equilibrium real policy rate because of the associated reduction in the inflation risk premium. Second, those monetary policy deviations can explain only part of the excess credit growth and house price inflation in the two countries over 2002–5. In the United States, the monetary policy shocks are associated with, on average, an extra 0.6 percentage points on annual real credit growth and an extra 1.5 percentage points on annual real house price inflation. That is to be compared with average actual annual real credit growth over the period of 5.6 per cent and average annual real house price inflation of 5.8 per cent. For the United Kingdom, the corresponding figures are an average 1.3 percentage points on annual real credit growth and 6.0 percentage points on annual real house price inflation, compared with average annual real actual credit growth of 8.9 per cent and average annual real house price inflation of 13.0 per cent.

30  BIS Review 111/2010  Chart 2 Macroeconomic Volatility Measures  United States 7  6  5  4  3  2  1  0 1966  1970  1974  1978  1982  1986  1990  1994  1998  2002  2006  2010  United Kingdom 7  6  5  4  3  2  1  0 1966  1970  BIS Review 111/2010  1974  1978  1982  1986  1990  1994  1998  2002  2006  2010  31  32  Chart 3a Impulse Responses for United States United States  Volatility shock Supply shock  Demand shock Credit demand shock Credit supply shock  BIS Review 111/2010  Monetary policy shock House price shock  Macrovolatility  Inflation  GDP growth  Change in bond spread  Real credit growth  Policy rate  House price inflation  Chart 3b BIS Review 111/2010  Impulse Responses for United Kingdom United Kingdom  Volatility shock  Supply shock  Demand shock Credit demand shock Credit supply shock Monetary policy shock House price shock  Macrovolatility  Inflation  GDP growth  Change in bond spread  Real credit growth  Policy rate  House price inflation  33  Chart 4a Historical Decompositions: United States Real credit growth (ann %)  Real house price inflation (ann %) 15  15  10  10  5  5  0  0  ‐5  ‐5  ‐10  ‐10 ‐15  ‐15 1970  1974  1978  1982  1986  1990  1994  1998  2002  2006  2010  1970  1974  1978  Federal Funds rate (%)  1982  1986  1990  1994  1998  2002  2006  2010  GDP growth (ann %) 20  10 8  15  6 10  4 2  5  0 0  ‐2 ‐4  ‐5  ‐6 ‐10 1970  1974  1978  1982  1986  1990  1994  1998  2002  2006  2010  ‐8 1970  1974  1978  1982  1986  1990  1994  1998  2002  2006  2010  Legend:1 Trend Aggregate demand and supply shocks Credit market shocks  Macro volatility shock Monetary policy shock House price shock  1  Aggregate demand and supply shocks” is the net impact of the aggregate demand shock and the aggregate supply shock.
Without doubt, the exchange rate risk is now our most significant risk. While fluctuations in annual earnings running into the billions have also occurred in the past, they are likely to be even more pronounced in the future owing to the greater size of the balance sheet. In this context, I would like to point out two factors in particular. First, experience has shown that losses on foreign currency positions decline over time. On the one hand, strong currency fluctuations are often followed by corrections, since markets tend to overreact, while on the other, interest and dividend payments help to reduce losses on foreign currency investments. Second, the SNB has, for a long time now, placed a great deal of value on a robust balance sheet. Established mechanisms for the steady build-up of provisions and smoothing of profit distribution have helped build up an equity capital buffer over the years, and this makes it possible for us to carry losses. Owing largely to this foresighted approach, the level of equity capital on our balance sheet is, by international standards, still above average, in spite of its current size. A gratifying reduction in the balance sheet risk was achieved in 2010 for the stabilisation fund. Given that the market situation improved considerably this year, holdings of some USD 3 billion were sold and a number of derivative positions were closed. In addition, interest payments and repayments on investments amounted to approximately USD 3 billion.

Overall, the SNB’s loan to the StabFund at the end of November 2010 was down to just roughly USD 13 billion, compared to almost USD 20 billion at the end of 2009. At the same time, the overall risk for the SNB decreased from USD 24 billion to USD 16 billion. This USD 16 billion corresponds to the maximum possible loan. This upper limit exceeds the current loan, since part of the StabFund’s portfolio does not require any financing at present. Owing to the continued favourable market situation in the fourth quarter, the value of the fund’s assets is now considerably higher than the value of the loan. The risk of the SNB suffering a loss upon liquidating the fund has thus decreased further. As long as we have to maintain high levels of foreign exchange reserves for monetary policy reasons, the currency risks in our balance sheet will not be easy to reduce. We have, however, taken two measures in an effort to strengthen our balance sheet further. First, we decided back in 2009 to double the annual allocation to provisions over the course of five years. Second, in recent months, we have reduced risk concentrations in currency holdings and borrower categories – which arose from the interventions – through diversification. My colleague, Jean-Pierre Danthine, will discuss this in greater depth. As previously mentioned, the higher level of risk will be evidenced by greater fluctuations in the SNB’s annual earnings.