samchain/econo-pairs-v1 huggingface dataset:
The dilemma is solved, at the domestic level, by the provision of eligible collateral. This may prove very uneasy for international liquidity: transferring ownership of substantial amounts of sovereign assets between countries or to international institutions would meet with huge legal and political difficulties. This is the rationale for conditionality. But, of course, conditionality creates an uncertainty which is incompatible with the purpose of instant supply of liquidity. A conditional facility will never be a perfect substitute for reserves. Many countries fully eligible to the Flexible Credit Line (FCL) have used foreign swaps instead. Anecdotal evidence suggests that swaps are often perceived as carrying less of a stigma effect. One way to deal with moral hazard would be to distinguish explicitly between two different risks facing each country: on the one hand idiosyncratic risk, created by national policies and country specific shocks; on the other hand, “systemic” risk stemming from aggregate liquidity shocks occurring on a broader – global or regional – scale. At the moment, foreign exchange reserves are meant to cover both risks. Since systemic risk is not related to a country size or GDP level there is potentially no limit to the demand for self insurance. A the same time, if systemic risk is defined in such a way that it is truly independent from individual countries behaviour or policies, protection through a multilateral mechanisms would not create any moral hazard problem.

It would ensure regular supply of international liquidity, but could only provide partial protection against exchange rate volatility and valuation losses. There is an important trade off, there , which is the essence of a new “Triffin dilemma” and which cannot be avoided when looking at the public supply of international liquidity, whether by one nation or within a multilateral framework.   More fundamentally, a new currency which would provide a reliable store of value would, in fact, grant its holders a collective guarantee against exchange risk. That guarantee would benefit surplus countries and would be given by deficit countries. This issue was intensely debated when the substitution account was discussed and negotiated within the IMF, more than 25 years ago. It became clear, at the time that it would not be accepted by many countries unless some explicit, binding and symmetric rules on balance of payment adjustments were agreed upon simultaneously. Most likely, those questions would be raised again today and the creation of a new reserve currency would have to be part of a broader framework. Conclusion and provisional policy lessons Looking at the next decade, one can project two alternative – and polar – scenarios for the evolution of the international financial system. First, a scenario of progressive and partial fragmentation: no significant capital account opening would occur in many parts of the world.
Making greater use of simple, prudent regulatory metrics could restore faith, hope and clarity to the financial system to the benefit of banks, investors and regulators alike. 10  BIS central bankers’ speeches  Chart 1: Average risk weights(a)  Chart 2: Average risk weights and leverage(a)(b)  80 Per cent  80  70  70  60  60  50  50  40  40  30  30  20  20  10  Per Cent  94 96 98 00 02 04 06 08 10  35 30 25 20 15 10  Weighted average RW Weighted average leverage (RHS)  10  0  Leverage ratio  5 0  0 94  96  98  00  02  04  06  08  10  Source: The Banker and Bank calculations. (a) Weighted average risk weights of Deutsche Bank, HSBC, BNP Paribas, Barclays, Citigroup, UBS, BAML, BONY, Commerzbank, ING, JPM, LBG, RBS, Santander, State Street, UniCredit, Wells Fargo. Data are not available for the remaining G-SIBs. Source: The Banker and Bank calculations (a) Sample consists of Deutsche Bank, HSBC, BNP Paribas, Barclays, Citigroup, UBS, BAML, BONY, Commerzbank, ING, JPM, LBG, RBS, Santander, State Street, UniCredit, Wells Fargo. Data are not available for the remaining G-SIBs. (b) Leverage ratio is defined as Total assets / Tier 1 capital.

In Switzerland, this means that as long as the economic recovery remains on track, we should not postpone for too long the process of normalising monetary conditions. Otherwise, we would put medium term price stability at risk. 1/1
Norges Bank has also announced that the share of a bank’s borrowing facility that can be based on collateral in the form of bank bonds will gradually be reduced. Covered bonds will continue to be eligible as collateral. Mainland GDP increased in Q2 after two quarters of negative growth. Growth was somewhat higher than expected, reflecting solid growth in public sector demand and private consumption. In September, Norges Bank’s regional network contacts reported that activity had edged up in Q3. The main contribution came from industries providing goods and services to households and the public sector. Despite a moderate rebound in both domestic and international activity, prospects for manufacturing and the building and construction sector remain relatively weak. After falling for a long period, manufacturing production picked up again in July and August. The decline in new orders and order reserves, in the shipbuilding industry among others, nevertheless indicates a low manufacturing production level in the period ahead. According  BIS Review 139/2009  7  to the regional network, manufacturing production is expected to remain unchanged over the next half-year. Overall production in the building and construction sector is also expected to remain virtually unchanged, with increased activity in the construction sector underpinning production. Enterprises in the service sector expect production to pick up over the next halfyear. Regional network enterprises in the retail sector report that production is rising and expect continued growth ahead. The petroleum sector is having a stabilising effect on overall demand via new investment, maintenance and operations.

Overall, the outlook and the balance of risks suggest that the key policy rate should be gradually increased in the period ahead. The projections are uncertain. New information may reveal aspects of economic developments that suggest the Norwegian economy is following a different path than projected. Higher capacity utilisation or a weaker krone may, on the one hand, result in higher-than-projected inflation. On the other hand, inflation may be lower than projected if the krone remains strong or productivity picks up more rapidly. Should the krone appreciate considerably more than projected, the interest rate may be increased to a lesser extent or later than currently envisaged. The key policy rate should be in the interval 1¼-2¼ per cent in the period to the publication of the next Monetary Policy Report on 24 March 2010 unless the Norwegian economy is exposed to new major shocks. Thank you for your attention. BIS Review 139/2009  15
As the Thai economy is getting stronger, returning fiscal and monetary policies gradually to pre-crisis normal levels will not obstruct the recovery path. Rather, it is essential to enhance our economic resiliency and save the policy space for the medium term. For our monetary policy, it has been extra-eased for quite some time and there is less need now. Although the domestic inflationary pressure has been kept in check and we have not observed asset price bubbles at this time, the central bank is well aware of the risks associated with the interest rates that are kept too low for too long. The crisis in the United States was a clear demonstration of how this can lead to a build up of bubbles. And, once bubbles burst, the cost to the economy is devastating. Central banks always face a tough decision, whether and when to take away the punch bowl before the party gets going. That said, we will put our best effort in considering the timing of interest rate increase carefully. On the fiscal policy, normalization is also important. As the economic recovery strengthens, actual revenue collection has already surpassed the target by as much as 2.9 percent of GDP, and fiscal deficit has started to shrink. However, as several new spending plans to enhance social distribution and build new infrastructure appear to be in the pipeline, the fiscal policy challenge is how best to preserve adequate fiscal policy space for future cyclical and structural spending needs.

In closing, I would like to wish all of you successful and fruitful discussions during this two-day conference. I hope that the speakers and participants will reflect upon what Thailand has done right and what we can do more for the Thai economy. In particular, I believe it is equally important for the private sector, as much as the public sector, to play the role in strengthening Thailand’s long-term economic fundamentals, especially the priority areas I mentioned. Having done some of the right things does not mean that we can be complacent, since the economic challenges will not get any easier in the current and future global environment. Thank you. 4  BIS Review 94/2010
Like most other bank supervisors I’ve spent most of my career looking at banking system soundness mainly from an individual bank perspective. However, as a career central banker, I also have had to spend a good deal of time looking at financial stability from the macro prudential perspective as well. For much of my career we didn’t call it macro surveillance but it was very much in our minds when, for example, in the late 1980’s the U.S. banking system suffered from the collapse of a number of sectors of the economy episodically resulting in a very unhealthy and unstable banking system as a whole. Over 1,500 banks failed and public confidence in the industry was understandably threatened. In fact, on two occasions during that period the system was so close to collapse that major banks were unwilling to settle transactions unless the physical documents were in hand. At that time public policy was being directed toward eliminating weak and unstable banks so that trust and confidence could return – a necessary precursor to turning around a weak economy. That’s why – to use the title of my speech – I wonder whether the trend toward macro prudential surveillance isn’t just a new name for something we, as supervisors, have been doing all along. An interest in macro prudential policy is part of what Tomasso Padoa-Schioppa has called the “genetic code” of central banks.

It is now high time that these other aspects of banking union are also completed. Otherwise, we would make the same mistake that was made when the euro was introduced. Back then the consequences of having a single currency were not fully reflected in the Union’s institutional design. Internal inconsistencies made our union much more vulnerable than it needed to be when an external shock hit it. If the SSM is of great importance to the singleness of money, it is also greatly important to the singleness of the market. The single market is, as the euro, a central and irrevocable creation of the European Union. But, as is the case for the euro, its irrevocability, to remain unquestionable, needs being buttressed by appropriate and credible institutions. BIS central bankers’ speeches  1  The SSM is one such institution. And that is why it was – and remains – open to participation by countries which are not in the euro area. Before the crisis, the free passporting of banking services across borders relied on the principle of home supervision, host recognition. This principle, however, requires equal standards of supervision across borders, and mutual trust in the quality of supervision. That trust did not always stand the test of the crisis. A single supervisor, applying homogenous methodology across institutions, internalises mutual trust. Its establishment was thus one answer, and certainly an effective answer to this challenge.
In 2006 foreign currency deposits rose by about 29.4 percent. The higher growth rate of foreign currency deposits versus the money supply growth rate led the ratio of foreign currency deposits to M3 to about 29 percent. The share of foreign currency deposits to total deposits rose to 38.5 percent, against 35.5 percent in 2005. 4. Demand for money  The increase in the demand for money reached its peak in December, by an annual rise of 16.7 percent. The main contribution to the increased demand for money throughout the year was rendered by credit to the economy. This contribution recorded its maximum in June, being mitigated during the coming months due to growth of public borrowing. Foreign currency position has maintained a relatively steady weight in establishing monetary assets during the year. Credit to the economy The banking system developments and the increased role of banks as financial intermediaries, have led to significant expansion of lending activity during the recent years. The loans portfolio amounted to ALL 191.2 billion or 21.3 percent of GDP at end of 2006. The loans portfolio for the economy constituted 31.3 percent of total banking system assets and about 37.4 percent of the banking system deposits. During 2006, credit to the economy increased by ALL 69.3 billion in absolute terms, compared to ALL 52 billion in 2005.

Because of a high household debt burden, the effect of an interest rate rise will likely be stronger than earlier. Chart: Policy rate The monetary policy assessments through 2018 attached weight to the fact that the monetary stance is expansionary. The policy rate increase is intended to prevent a rise in pressures in the economy that would trigger an acceleration in price and wage inflation. A higher interest rate also mitigates the risk of a renewed, rapid rise in property prices and debt. High price and wage inflation and a further build-up of financial imbalances would increase the risk of a sharp economic downturn further out. The plan is to move gradually to a more normal interest rate level. Our assessment in March was that capacity utilisation was slightly above a normal level. At the same time, underlying inflation was a little higher than the inflation target of 2 percent. Our projections implied that the policy rate would be raised in the course of the next half-year. There were also prospects that the policy rate would rise to 1.75 percent by the end of 2022. This means that the average residential mortgage rate could increase from 2.6 percent in March to 3.5 percent in the course of the same period. We therefore believe that interest rates will not be as high as in previous upturns. With that path for the policy rate, inflation is projected to be close to target in the years ahead, at the same time as unemployment remains low.
The policy rate is currently 5.3%. The exchange rate of the króna was fairly stable from last spring and until the winter, then strengthened again towards the end of the year and in the beginning of this year, to reach its highest point for two years. Undoubtedly the expected power-intensive industrial project in east Iceland is a contributing factor. The new monetary policy framework was introduced in a fairly tough climate of a sliding exchange rate and mounting inflation. It is fair to say that the tight monetary stance is the main reason that inflation went back down so quickly. Experience has shown that the monetary policy passed its initial test with flying colours and no one should have any doubts now about the value of monetary policy in the Icelandic economy. It works in Iceland, just as it does everywhere else. On February 10 the Central Bank published its quarterly Monetary Bulletin. As usual, this contains a new inflation forecast along with the Bank’s latest national economic forecast and a new assessment  of economic and monetary developments and prospects. The bulletin also contains an evaluation of the impact of the proposed power-intensive industry and hydropower development projects in east Iceland, which were incorporated into the inflation forecast and national economic forecast. The forecast assumes that inflation will be below the Bank’s target over the next two years. On the basis of this and the new economic forecast, the Governors announced a cut of 0.5 percentage points in the Bank’s policy rate last Monday.

21 However, there are some leading indicators that point to a modest pick up over coming quarters. For example, job-to-job flows have been increasing (Chart 11) and some surveys of pay growth have picked up more sharply in the last year. Although the relationship between these surveys and average wage growth has become less robust in recent years (Chart 12), they do offer encouraging evidence of better wage prospects for those changing or finding new jobs. Of course, the pay of existing employees needs to pick up as well. After all, what matters for economy-wide inflation is the average wage relative to economy-wide productivity. 22 To that end, we will be closely monitoring pay settlements that are bunched around the turn of the year and taking a steer from the pay of new hires as a potential leading indicator of broader pay pressures. Some observers have discounted the implications for inflation of the recent weakness of pay growth because it stems from the types of jobs being filled – a “compositional effect”. However, these are real jobs being performed by real people, and an increase in lowerskilled lower-wage jobs is one consequence of working-off the labour supply shock. We also  20  See Broadbent (2014). 21  According to the ONS AWE measure, pay excluding bonuses for employees in the economy as a whole was 0.6% higher than a year earlier. Including bonuses, pay growth was –0.2%. In the private sector, the equivalent figures were 0.9% (excluding bonuses) and –0.1% (including bonuses).
And it would also allow non-viable firms to fail faster, supporting reallocation to more productive ones. This is the message of a recent analysis from the European Commission, which finds that a good insolvency framework is associated with speedier adjustment of non-performing loan ratios.12 Symmetrical rebalancing That said, it is also clear that sustainable rebalancing cannot only involve measures in crisishit countries. Rebalancing has to be somewhat symmetrical, i.e. surplus countries also have a contribution to make. Such a contribution is partially about strengthening domestic demand, though we know that spillovers to crisis-hit countries through higher imports are likely to be small.13 But what is more important, in my view, is the role of surplus countries in supporting euro area price stability – i.e. an inflation rate of below but close to 2%. This would allow the remaining relative price changes within the euro area to take place against a higher nominal bar. And that would in turn avoid deflationary nominal adjustments that raise real interest rates.14 So how could this be achieved? As I already mentioned, wages have been rising more robustly in surplus countries, which is welcome and consistent with rebalancing. Yet some argue that more is still needed in terms of demand-side policies. Such measures would no doubt support euro area price stability. But they would have very limited impact on potential output and the permanent income of households. One can therefore question how much they would, in isolation, contribute to a sustainable rebalancing over the medium term.

We developed an organisation that provided strong careers for individuals and ensured they worked as teams. It’s been a very important effort, this organisational development. And the third thing I want to mention that is very important to the MAS is its growth of professional expertise. MAS is a little different from some other parts of the government because it requires greater depth of expertise. We need serious specialists – people who spend years developing expertise and in particular fields of our responsibility. That too is behind our credibility, because you need some expertise to have credibility. Through the years we have developed outstanding professionals – Ng Kok Song, Mrs FooYap Siew Hong, who served us for 39 years, Ms Teo Swee Lian and many others. Our present Managing Director, Mr Ravi Menon, is another example, someone who grew up as a professional within the organisation. We have to keep developing professional expertise in each of the areas that we engage in. When you add it all up, MAS is now one of the best regarded central banks and financial regulators in the world. And it is because of our people. Our people are very well regarded 2  BIS central bankers’ speeches  internationally and as an organisation we punch above our weight. That comes from years building up our organisation and building up our people. Finally I want to thank all the staff – our pioneers as well as current staff, in all the roles that you perform in, in various areas in MAS.
Rachel Lomax: Inflation targeting in practice - models, forecasts and hunches Speech by Ms Rachel Lomax, Deputy Governor of the Bank of England, to the 59th International Atlantic Economic Conference, London, 12 March 2005. I am most grateful to Jens Larsen, James Bell, Fabrizio Zampolli and Robin Windle for research support; and to Charlie Bean, Peter Andrews, Spencer Dale, Phil Evans, Laura Piscitelli and other colleagues at the Bank of England for helpful comments. *  *  *  Introduction Five and a half years ago in his Monnet lecture Charles Goodhart1 was able to talk with some confidence of the features that particularly distinguished the UK’s approach to inflation targeting. Today with over 20 countries, in every habitable continent, formally operating some variant of inflation targeting and many more adopting some parts of the framework, all actively sharing experience and best practice, I suspect that most aspects of our approach would find a counterpart somewhere else in the world. But Charles’s focus on the Monetary Policy Committee’s (MPC) personal engagement in producing a published inflation forecast still seems to me to capture the essence of the UK’s approach. Today I want to talk about the role that forecasting has come to play in helping the MPC to take and communicate its decisions. In what sense does the Committee really ‘own’ the published forecasts that go out under its name? How much use do we make of models, and what models do we use?

While underlying inflation is still low, rising capacity utilisation will probably push up price and wage inflation further out. Core inflation is now projected to rise to a little above 2 percent in 2021. Chart: The Executive Board’s assessment and interest rate forecast At its monetary policy meeting in March, the Executive Board gave weight to the sustained upturn in both the global and the Norwegian economy. The Executive Board decided to keep the key policy rate unchanged at 0.5 percent. The Board’s current assessment is that the key policy rate will most likely be raised after summer this year. The March Monetary Policy Report is the first report since the new regulation on monetary policy came into force. Although the new regulation will not result in significant changes in the conduct of monetary policy, the interest rate outlook is to some extent affected by the lowering of the numerical inflation target. Chart: Factors behind changes in key policy rate since MPR 4/17 The effect on the key policy rate from the new inflation target is summarised in this chart. The black line shows the change in the key policy rate forecast since the previous meeting in December. The contribution from the new inflation target is shown by the red bars, while the other bars show the effect from other factors. Over time, lower inflation owing to a lower inflation target will result in a correspondingly lower nominal interest rate, so that the long-term real interest rate is unchanged.