samchain/econo-pairs-v1 huggingface dataset:
For instance, structural factors such as slowing of crop yield growth, fast population growth and higher income elasticity for food in developing countries would continue to support higher food prices. Policy markers would therefore need to pay attention to these developments in calibrating the appropriate degree of monetary tightening. 7. Thirdly, there is also a need to diversify the sources of growth for the region, in order to generate sustainable growth and redress global imbalance. In this regard, it is worthnoting some encouraging developments that are underway in the region. The first one is the deepening intraregional trade and increasing orientation towards domestic consumption. The robust economic growth of the regional economies over the past year has mainly been propelled by strong domestic demand, while the contribution from net exports was either small or negative. In fact, the aggregate trade balance of the region has been gradually declining since 2007, and if intra-regional trade is excluded, it has declined notably from about 4% of the regional GDP in mid-2007 to less than 2% at end-2010, the lowest in more than a decade. This gradual change in trade pattern, with regional economies shifting their export markets from deficit countries like the US to surplus countries in the region, has also been contributing to global rebalancing. 8. We also should not overlook the positive attributes of capital flows. While challenging to manage, capital inflows present important opportunities for boosting broaderbased growth. The key is to channel the capital flows into good uses, and particularly towards productive investments.

In this regard, promoting capital market development is important to open up additional channels of funding for long-term investments such as infrastructure. The good news is that the region is already taking steps in the right direction by improving the financial infrastructure of bond markets and expanding the investor base. Meanwhile, many economies are also making greater use of public-private partnerships to promote critical infrastructure investment projects. 9. In the face of these significant uncertainties and challenges ahead of us, IMF’s assessment of the prospects and risks, as well as advice on policy response for the region is particularly important at this juncture. We look forward to the presentation by IMF and the dialogue during the panel discussions. 10. 2  Thank you. BIS central bankers’ speeches
As monetary authorities in these countries, we have greater challenges before us in rebuilding our nations. I hope we could effectively face these challenges with active cooperation of all central banks in the region. We live in an era of rapid globalisation. Enriched by vast advances in information and communication technology, the process has facilitated the free flow of trade and investments across the borders. This has also posed burgeoning management challenges to central banks in the form of how to plan for the future in a scenario of multiples of objectives and targets entrusted to them. In order to overcome these challenges, the central banks world over, are called upon to review their objectives and restructure their activities. Such review processes encompass re-examining legal frameworks, accounting practices and policies, organisational structures including the change in the composition of Boards, supervisory and human resources standards, to mention but a few of the new tasks. Having realised this need, the Central Bank of Sri Lanka recast its objectives in December 2002 into two core objectives, namely, economic and price stability and financial system stability with a view to encouraging and promoting the development of the productive resources of Sri Lanka. The change has enabled the Central Bank to free itself from multiple objectives for pursuing its core objectives. The theme of this seminar is Central Bank Governance and how such governance is related to strategic planning in central banks. These issues are not a novelty in a private sector organisation.

Sunil Mendis: Central bank governance and how such governance is related to strategic planning in central banks Opening remarks by Mr Sunil Mendis, Governor of the Central Bank of Sri Lanka, at the 3rd SEACEN EXCO Seminar and Meeting, Colombo, 28-29 January 2005. *  *  *  Deputy Governors and Heads of Delegations of SEACEN member and observer countries, Mr Gavin Bingham, Head of International Liaison of BIS, Dr Subarjo Joyosumarto, Executive Director of the SEACEN Centre, distinguished invitees, ladies and gentlemen. It gives me great pleasure to inaugurate the 3rd SEACEN EXCO Meeting and Special Seminar to mark the Meeting. As a founder member of SEACEN, the Central Bank of Sri Lanka is honoured and delighted to host these two events in Colombo, Sri Lanka. On behalf of the Central Bank of Sri Lanka, I extend a warm welcome to all the delegates from the SEACEN member and observer countries, our special guests, and of course, the officials of the SEACEN Centre. The gathering of several distinguished Central Bankers today demonstrates the emphasis and importance placed by them on the need for co-operating with each other to resolve issues of mutual interest. We host these two events just a month after the deadly ‘Tsunami’ hit some of our countries causing unprecedented and unimaginable destructions to the life and property. We are still recovering from this severe blow. Tsunami, indeed, brought all of us even closer. Our thoughts and prayers are with those who lost their beloved ones, property and suffered injuries.
The few of us involved received a lot of criticisms as a result, and some of these were not pleasant, particularly the accusations that we betrayed the free market. But I hope the way the matter has played out, and the handsome book profits that we are making, will serve as a vindication of our decisions. And, in case it has crossed your mind, luck has had very little, if any, to do with it, although I do not mind luck being on my side. The whole explosion of international finance has simply gone too far. If it were not the default by Russia, some other event would have caused yield spreads to widen sharply. If it were not LTCM, then some other hedge fund would have needed the massive de-leveraging that, had it been allowed to take place, threatened dislocation even in the largest market in the world. Some event, large or small, would have triggered all that. As some of you may remember, the sharp correction in the stock market in Hong Kong in 1973 was triggered by the Fire Brigade being sent in to inspect overcrowding on the then rather small trading floor of one of the stock exchanges before unification. Incidentally, the widening of the yield spreads that caused problems for LTCM last year actually started when we entered the market in August, according to a chart prepared by Stanley Fischer of the International Monetary Fund (IMF). It gathered momentum as Russia defaulted.

Economic performance The economic numbers that came out in the past few months seem to convey a clear message, and this is that the economy has, since the second quarter of this year, been slowly but steadily recovering from the painful recession, which had lasted for about eighteen months. The growth rate of GDP moved back to positive territory in the second quarter of this year, having been in negative territory, year on year, for six quarters. The unemployment rate has peaked. Asset prices have recovered. Retail sales have picked up. Tourist arrivals have increased. Exports have started to grow again, with the external trade account at the same time moving into surplus. The fall in consumer prices, adjusting for the effects of the generally welcome rebate of rates and lowering of rentals, has stabilised. Monetary conditions have remained stable, although we could do with lower interest rates. The overall quality of bank assets, and the mortgage portfolio in particular, has improved. On the fiscal side, although I am not privy to any information that has not been made public, I have the fullest confidence in the skills of the Financial Secretary in his management of the public finances. As the economy recovers, the fiscal position should quickly move back into overall balance. An 18-month period of sharp recession and painful adjustments is, of course, very tough for everyone.
The loss function can be written as  , is the forecast where π is the forecast for inflation, π* is the inflation target and deviation between actual resource utilisation in the economy and the long-run sustainable, or  BIS central bankers’ speeches  1  “normal” level of resource utilisation.1 The first term represents the central bank’s target of stabilising inflation and the second its ambition to stabilise the real economy. The parameter λ represents the importance the central bank gives to stabilising the economy in relation to stabilising inflation. If λ were zero, this would mean that the central bank does not care at all about developments in the real economy, but merely tries to bring inflation as close to the target as possible. If λ is large, this means that the central bank places great emphasis on stabilising the real economy in relation to stabilising inflation. The term loss function comes from the fact that the larger the deviation, or “gap”, the further away we are from where we want to be, and thereby the greater the “loss”. In this theoretical description the central bank’s task is described in slightly more detail than the general wording of “finding a suitable balance between stabilising inflation and stabilising the real economy”.

It should be added, however, that agreements are still pending in many cases and the degree of wage drift in various industries also has to be considered. Still, the probability of the report’s alternative scenario with higher inflation should have decreased. Rent costs account for 11 per cent of the CPI and are the largest main item. For 1998 and 1999, final agreements are in place for about 65 and 25 per cent, respectively, of the stock of rented dwellings. They give average increases of just over 2 per cent for 1998 and almost 3 per cent for 1999. The 1998 figure is somewhat lower than expected. There are signs, moreover, that rents for 1998 may be re-negotiated, which has some downward implications for the assessment of inflation this year. No reason at present to alter the repo rate All in all, then, in the period of relevance for monetary policy, global economic development will probably be somewhat weaker than estimated earlier. For this reason the outlook for inflation is somewhat more favourable. To some extent, stronger competition from imports has a similar effect. Somewhat lower inflation in 1998 may also result from a lower increase in rents. For the construction of monetary policy it is equally important at present to consider the altered spectrum of risks. The probability of an outcome for wages that is appreciably above the main scenario has diminished. At the same time, the effects of the Asian crisis are highly uncertain. Much depends on how the crisis is managed.
AI/ML is driven by what seems to be objective historical data – but that itself may reflect longstanding and pervasive bias, as the example I used in the introduction showed. So there is a need to understand carefully the assumptions built into underlying algorithms, and how they will behave in different circumstances, including by amplifying potential and/or unintended human prejudice. This implies the need for a strong focus on understanding and explaining the outcomes generated by AI/ML. In my introductory example, the hidden flaws were only revealed over time by the outcomes. The focus of 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  governance, therefore, should not only be on the role of testing in the design stage, before AI/ML is approved for use, but also on testing during the deployment stage, as well as the oversight needed to evaluate outcomes and address issues when they go wrong. This includes in certain cases the ability for a human or other override – the so-called ‘human in the loop’, for example – and to provide feedback to minimise gradually the risk of adverse unintended consequences. The second challenge posed to boards by AI/ML concerns the role of people – in particular, the role played by incentives. This may seem somewhat paradoxical, because the role of AI is often thought of as automating tasks formerly done by people. Machines do not have human characteristics. But they do what they are told by humans.

How should we structure the decision-making process in order to take account of the nexus between monetary policy and financial stability? It seems clear that the central bank should have some role in setting macro-prudential policy but that precise role may differ depending on the regulatory structure preferred by different countries. For example, responsibility for macro-prudential policy could be given to a committee in which a representative from the central bank would sit (like in the United States) or it could be given to the central bank (like in the UK). And central banks can adopt different internal governance approaches: some have a separate board for monetary policy; others also have a separate board for financial stability. Most central banks have the same board for both, but may have separate Deputy Governors responsible for each of the two strands. What matters, as I see it, is that “the buck stops somewhere”. There must be a decision at some high managerial level which balances the interests of monetary policy and financial stability as well as other central bank responsibilities. The organisation and processes of the central bank must also be structured so that there are analytical tools and resources available to help policy makers take a balanced view in their decisions concerning both monetary and financial stability policy objectives. For instance, there should be interdepartmental working groups. It is also important to remember that systemic risks can quickly spread between countries and reducing the build-up or impact of such risks will require coordinated international actions.
These usually say that it is enough to raise short-term interest rates significantly for a short period of time, which will correct inflation expectations, and we will return to the inflation target fairly quickly. This is a nice idea, but for me personally it is one that is more from the world of faith than science. In reality, monetary policy transmission is complex and highly variable over time. We have to recognise that in the real world we are not able to sensitively manage inflation by making small adjustments to short-term interest rates in order, for example, to offset a previous undershooting of the inflation target by overshooting it for some period of time, or vice versa. In reality, such efforts, represented, for example, by romantic notions of targeting average inflation, can get out of hand. As for the conduct of monetary policy in the future, I think we need to get back to some of the original ideas about inflation forecast targeting. In central banks, we will have to rethink what we mean by "inflation" and how to assess whether imbalances are being generated in the economy that may eventually manifest themselves in inflation or deflation. We need to focus more on the inflationary or deflationary potential arising from medium and long-term fundamentals, not just on estimates of what inflation will look like in two years' time in a forecast generated by a macroeconomic model of one type or another.

The current inflationary wave will undoubtedly give a new impetus to this debate. How did one rather narrow and quite technical approach come to dominate macroeconomics? It's hard to say. Personally I think it mainly reflects psychological factors. From my experience of more than 30 years in both the academic and financial sectors, I see a rather strong conflict between the exact scientific thinking in the ideal of the natural sciences and the excessive uncertainty associated with the unpredictable behaviour of social systems. I have met many very smart people, including winners of what is inaccurately referred to as the Nobel Prize in Economics, and I have observed that even extremely intelligent people tend to simplify situations dramatically in the face  2/5  BIS - Central bankers' speeches  of high levels of uncertainty. They simply cling to a highly stylised economic model, abstract from many theoretical and practical inconveniences, and then offer a clear answer that can be claimed to be "scientifically" derived. Without this, they would probably have to say, "I don't know, it depends on this, that and the other". Trying to simplify things through highly stylised models would not matter in itself if their users were fully aware of this and understood that they were dealing with a partial presentation of the economy that needs to be complemented by other modelling or analytical approaches. But my experience is that even top economists tend to be timeinconsistent.
In welfare terms, the biggest gainers from the MPC’s monetary loosening have been the young, though every age cohort benefits overall. The same is true looking along the income distribution, where every cohort gains in welfare terms, even though the same was not true of purely financial gains. Policy Implications  Where does this leave us? Let me summarise the key empirical conclusions before turning to policy lessons. I take the key empirical conclusions to be:   The material loosening of UK monetary policy after 2007 has had a significantly positive effect on employment, income and wealth, without which average living standards in the UK would be materially lower.   These gains have been shared right across the distribution of income and wealth, age and region, though the precise scale and nature of these benefits does differ across cohorts. Very few households across the UK are likely to have been net losers in financial terms from the MPC’s monetary loosening, once all of its effects are take into account.   This conclusion is reinforced if we consider the impact of monetary loosening on people’s well-being. In addition to the financial gains from higher income and wealth, many people have benefitted significantly from greater job security and reduced financial anxiety. In welfare terms, these benefits may have been as large as the financial gains. The number of households who have lost out in welfare terms from looser monetary policy is only 12%.

In general, the young are borrowers with a stock of debt, the old are savers with a pool of assets. 18  Bunn et al (2018). We also use the Family Resources Survey (FRS) for household incomes. 20 See https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/debt/methodologies/wealthandassetssurveyqmi 21 As discussed in Vermeulen (2016), for example. The ONS Wealth and Asset Survey is probably the UK household survey with the best coverage of the tails of the distribution. 22 The measure of wealth used is net total wealth, comprising financial, property, physical and pension assets, net of debt. There is a question about how much households are aware of pension wealth, and therefore value it. The distributions are not especially sensitive to whether pension wealth is included. 19  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  If we overlay the income and wealth distributions in 2007 and 2013 (the end-date for our exercise), these are pretty-much identically-shaped (Charts 5 and 6). On that basis alone, there has not been any clear shift in income or wealth inequality since the crisis. Standard summary measures of inequality, such as the Gini coefficient, confirm that conclusion: for both income and wealth, the Gini is largely unchanged. 23  On the face of it, then, this does not strongly suggest that the relaxation of monetary policy since the crisis has significantly worsened inequality. Unless, that is, other factors have more than counterbalanced the effect of monetary policy.
SPEECH  Monetary policy and inflation Speech by Governor Ida Wolden Bache at the Centre for Monetary Economics (CME) / BI Norwegian Business School on 20 October 2022. Introduction Good afternoon everyone, and a big thanks to the Centre for Monetary Economics, which has held this event for more than 20 years. As I recall, it was first held just two months after Norges Bank had been assigned an inflation target for the conduct of monetary policy. Since then, the way we practice inflation targeting has evolved. But the primary objective of monetary policy has always remained firm, which is to ensure low and stable inflation. Chart: High inflation in many countries Up until fairly recently, inflation was indeed low and stable. If anything, many central banks worried that inflation would remain too low. Now they have the opposite concern. Both in Norway and in many other countries, inflation is higher than seen in several decades. The increase in inflation raises a number of questions: Why is low and stable inflation an objective of monetary policy? Which prices should monetary policy stabilise? And how do we strike a balance between the aim of low and stable inflation and the aim of high and stable employment in the current environment? These questions are the theme of my lecture here today. But first, let me say a few words about how we got here.

In our region, these institutions are typically banks. In my view, these banks should become subject of a more stringent regulatory framework, in terms of capital and liquidity requirements, business and risk profile, including contingency plans. The supervisory authority should always be prepared for the worse and make sure that crisis management procedures are complete and tested. In this process, valid recommendations of international organizations will be closely followed for adequate implementation over time. It is important to have close coordination with other public authorities in the country, including government. 3. Anchors of macro-prudential policies  The role of anchors in monetary policy is well known. I mentioned before that an important lesson from the crisis for authorities would be to rigorously pursue countercyclical policies. I would like to stop a bit here and focus on this issue. I believe that Albania was prepared for the crisis because IMF programs have played an important role as a credible foreign anchor for economic policies. The IMF programs and similar EU membership process have played a similar role in all CEE and SEE countries. However as the countries have matured out of these programs or joined the EU, the political incentives to continue fiscal consolidation have been fading away. Current events show that the symptoms have spread to other older members of EU, where such policies become the reason behind instability. Therefore the role of anchors is very important for preserving and safeguarding financial stability. Sound, clear and enforceable fiscal rule would be an important step.