samchain/econo-pairs-v1 huggingface dataset:
Villy Bergström: Forecasts and business cycles Speech by Mr Villy Bergström; Deputy Governor of Sveriges Riksbank, to the Elmateriel Leverantörernas förening (Association of Swedish Electrical Installation Material), Stockholm, 15 May 2002. *  *  *  Monetary policy no exact science During the 1990s many central banks formulated explicit targets for their monetary policy. Sveriges Riksbank formulated its target in 1993 as an annual inflation rate, measured according to the consumer price index (CPI) of two per cent with a tolerated deviation interval of +/- 1 percentage points. Deviations from the target level are the rule rather than the exception. Monetary policy is not an exact science and society is not a machine; it would be neither possible nor desirable to keep inflation at a precise level, particularly not in the short term. In recent years the Swedish economy has been subjected to relatively large disturbances. On the international front, both the Asia crisis and the Russia crisis, as well as severe fluctuations on the stock markets and in oil prices, have had an effect on us. In Sweden, the rise and fall of the IT sector, as well as deregulation of the electricity and telecommunications markets with ensuing price falls, have affected both prices and production. Such crises and changes of policy can rarely be predicted. This means that the Riksbank will always make “mistakes”, with the benefit of hindsight. However, this is self-evident and not particularly valid when assessing monetary policy.

However, the next monetary policy step depends, as always, on what happens and the analyses we make. There is always uncertainty and we have now tightened up monetary policy by 0.5 percentage points.
15  All speeches are available online at www.bankofengland.co.uk/speeches  15  Chart 10: With no monetary policy tightening, excess demand builds significantly and inflation remains above target May 2018 Inflation Report projections for inflation and growth Per cent / Per cent of potential GDP 4.0 3.5 Inflation projection market conditioning path  Inflation projection constant rate path  3.0 2.5 2.0  2% inflation target  Excess supply / demand projection - constant rate path  1.5 1.0 0.5 0.0  Excess supply / demand projection - market conditioning path 2012  2013  2014  2015  2016  2017  -0.5 -1.0 2018  2019  2020  2021  Of course, as the Committee has made clear before, its guidance about the likely gentle path of rate increases depends on the economy evolving broadly as expected – in particular, whether growth in demand exceeds that of supply. That might not happen. For example, the weakness in demand at the start of the year could reflect a worsening of the underlying economic climate, not the temporary effects of adverse weather as the Committee currently assesses. In particular, there is somewhat greater uncertainty about the near-term momentum in consumer spending at present, given recent weakness in consumer credit and the housing market across a range of indicators. Growth in consumer credit, particularly credit cards, slowed sharply in March. Retail sales volumes have been falling and profit warnings in the retail sector rising.

The interest rate expectations of households and businesses have remained in line with the MPC’s limited and gradual guidance (see Charts 3b and 3c). The MPC’s guidance has anchored expectations in financial markets that interest rates will rise at a gradual pace and to a limited extent (Chart 3a). Guidance has dampened the volatility of interest rates, consistent with the expected and actual path of policy rates (Chart 4). Guidance has reduced the impact of economic uncertainty on short-term interest rates (Chart 5). The responsiveness of market interest rates to economic data has generally been higher in the UK than in the US or euro area (Chart 8). While there have been occasions where financial market expectations diverged somewhat from upcoming MPC decisions, these should be kept in perspective. Divergences have generally been modest moves around the exact timing of a few rate increases over the next few years, as opposed to the launch of the sharp tightening cycles of days gone by (6 to 8 rate increases over 12 to 15 months (Chart 3)). Short-term interest rate volatility in the UK has been in line with that in other major economies and is very low relative to th  history, only in the 5 percentile of its historical distribution since 1997 (Chart 9). 13  All speeches are available online at www.bankofengland.co.uk/speeches  13  Inflation expectations have remained well anchored despite a series of major real and nominal shocks. And financial conditions have remained highly supportive, reinforcing the recovery.
Competitiveness and macroeconomic stability In international comparisons of competitiveness, Switzerland is regularly among the leaders. For example, it has headed the World Economic Forum’s (WEF) Global Competitiveness Index for years (cf. chart 1). So what are the factors behind Switzerland’s high degree of competitiveness? Let me make something clear right at the outset: competitiveness depends first and foremost on companies and their ability to innovate (cf. chart 2). Innovation helps companies to increase productivity, thereby lowering costs and prices. In addition, innovation leads to higher quality and greater exclusivity of products or services, which in many cases bestows price-setting power. BIS central bankers’ speeches  1  Switzerland is a case in point: its industries are highly competitive, precisely because our country is among the world leaders in innovation, as a number of indicators have shown. If, for example, we look at the number of registered patents relative to population size, Switzerland is by far the most active of the OECD countries (cf. chart 3, left-hand panel). Innovation indices, such as the Global Innovation Index and the Innovation Union Scoreboard, also place it right at the top. 1 A key factor behind this leading position is the level of investment in research and development (cf. chart 3, right-hand panel), which is above average by international standards. Firms that are innovative and willing to invest cannot develop and thrive in a vacuum. The scope for development is largely dependent on a country’s location-specific factors.

This was in the 70s. If you think of the iconic figures who have been on the Central Bank staff, they were legendary figures in this country. I don’t want to mention any names because I might miss some out but you just look back through the history of the Central Bank and you see some great names, people who have made massive contributions to this country. So I wanted to be part of that narrative and so I came back and started life as a probationary staff officer of the Central Bank. And I must tell you, when I was working for the Commonwealth Secretariat, almost for twenty years as Dr. Nandalal said, obviously one travels around. There are 54 members of the Commonwealth and I have been to many countries. And invariably there are various occasions when you are introduced. I was always introduced by saying I started my career in the Central Bank of Sri Lanka and that was a great source of pride, to be able to say that I started my working life in this institution, and I continue to be enormously proud that I was part of this staff of this great institution for fifteen years. So in a way, it is coming the full cycle. It’s like coming back home after a long absence. It is a great pleasure, privilege and an honour to be able to come back.
However, new market entrants can provide policyholders with a greater degree of choice of product and coverage options that may be otherwise unavailable, challenge existing business models and practices, and help to ensure that the insurance market remains efficient. An unnecessarily prolonged application process can itself be a barrier to attracting new entrants to the UK market. We are considering ways in which the process of obtaining authorisation for new insurers can be made more efficient whilst still ensuring appropriate prudential standards. One aspect of this work where we have already made progress is ensuring that we are clear on the information we require from applicants. However, to some extent our ability to authorise new insurers remains dependent on the openness of applicants to discussing their proposed business models and the speed and accuracy with which they provide information. We have shown through recent decisions that where an application meets our requirements we are capable of taking a decision quickly, with on average the total time taken to reach a decision now standing at seven months. There are also some specific barriers to entry for small start-up insurers in particular.

We foresee a transition period that will last until the end of 2018. Are you still worried about the capacity of certain countries, such as Ireland and Greece, to reduce their public debt levels? What is certain is that it is very important for all countries, and not just Ireland and Greece, to take measures to ensure medium-term fiscal stability. This is necessary in advanced economies, in the European Union in general and, of course, in the euro area in particular. A feature that is shared by the industrialised countries after the very significant recession triggered by the financial crisis is that they find themselves in a vulnerable fiscal position. The European Central Bank has always defended the Stability and Growth Pact, even when large countries such as France and Germany wanted to relax its rules. BIS Review 154/2010  1  The Federal Reserve System decided last week to inject massive amounts of dollar liquidity into the economic system, a decision which has the effect of reducing the value of the US currency. Has the currency war started? That is, of course, a totally inappropriate expression to use. There are two main topics that need to be tackled seriously. On the one hand, there is the relationship between the major floating convertible currencies of the industrialised countries, such as the dollar, the euro, the yen and the pound sterling.
Household credit has continued to grow  2  BIS central bankers’ speeches  in tandem with disposable income, although the increase in loans by non-bank suppliers – with a higher penetration in lower-income households – has been smaller than in previous periods. Corporate debt has grown somewhat above GDP, driven by strong local banking credit and external financing via bonds, in a context of favorable financing conditions in international markets. In turn, the banking system keeps robust indicators, with capital significantly above regulatory levels, a more diversified external funding base, and a stable liquidity position. Toward 2013, the Board estimates that GDP growth will be within the range of 4.25 to 5.25 percent. This range is above the one foreseen in September. In this scenario, domestic demand will increase 5.7 percent y-o-y, further amplifying the current account deficit to 4.6 percent of GDP. This projection supposes that macroeconomic conditions facing the Chilean economy will remain fairly unchanged in the near future, and that the economy will grow in line with trend rates, which the Board continues to estimate around 5 percent (table 1). Internationally, the baseline scenario foresees that in 2013 and 2014 the world economy and Chile’s trading partners will grow by averages of 3.6% and 3.8%, respectively, not far from those of 2011–2012. Important differences remain between the performances of the developed world and the emerging world. The recession in the Eurozone has settled and is expected to last some more time.

We should not mix up the question of whether Greece will meet the requirements of the third financial assistance package with the refugee issue. It is in the interest of the Greek people that their economy becomes stronger, irrespective of the refugee issue. For example, Greece must in any case sustainably reform its pension system. What is your view of the progress made on reforms in Greece? The experts from the European Commission, the ECB and the International Monetary Fund (IMF) had productive discussions in Athens, but we are not yet where we want to be. It is no longer about the fundamental aims, it is about the implementation. On this, Greece must stick to the agreement reached in August 2015 on the third assistance package. And at the ECB we want the International Monetary Fund to continue to support this initiative. When will the Greek crisis be over? The Greek crisis is over provided that everyone sticks to the commitments made last summer. BIS central bankers’ speeches  3
Consumers themselves would be more risk averse and prefer to stick with simple transactions and products. As mentioned already, regulatory framework would be strengthened, especially the use of macroprudential oversight that focuses on system-wide stability. As such, closer supervision of systemically important financial institutions, including non-banks, would be required. Finally, the microprudential oversight would also be strengthened to rectify previously identified shortcomings, particularly the Basel II framework, corporate governance, and incentive misalignment. Though it looks as if we could be in the process of creating a “new world order”, given what we have done so far in strengthening our financial sector resilience, I believe that this transition would be a smooth one and add further strength to our financial system. Needless to say, a strong financial system is the backbone of sustainable economic growth in the longterm. Thank you for your attention. 4  BIS Review 131/2009

Jean-Pierre Roth: Monetary policy and credit markets Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the University of St Gallen, St Gallen, 22 January 2004. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The economic slump of the past two years has affected the credit markets. Corporate loans declined, and on the capital market redemptions of shares and bonds of private borrowers exceeded new issues. In this speech, a few general points concerning credit financing and monetary policy will be discussed. The financing opportunities and, concomitantly, a borrower’s expenditure behaviour depend on the value of capital assets eligible as collateral or, more generally, on the borrower’s balance sheet structure. Due to the major significance of real estate as security, the situation on the real estate market in turn has a considerable bearing on credit conditions. The Swiss National Bank thus keeps a careful eye on price development in the real estate market. Monetary policy influences the prices of investments and thus impacts on the economy via the borrowers’ balance sheets. This is not the only channel - and certainly not the most important one through which monetary policy exerts an influence; it may, however, be relevant under certain circumstances. Since corporate balance sheets differ considerably from one enterprise to another, monetary policy has distributive effects.
21 The new Instrument of Government in 1809, which also gave the government and the Riksdag a greater role in relation to the Crown, therefore stated that the Riksdag would have the sole right to issue banknotes as legal tender via the Riksbank. About one hundred years later, in 1904, the so-called banknote monopoly came into force, which led (again) to the Riksbank obtaining the sole right to issue cash. The competition this time came from the savings and commercial banks that emerged during the 1800s and that had begun issuing their own banknotes. 22 The banknote monopoly can be seen as an expression of the fact that banks and the Riksbank started to refine their roles at this time. The Riksbank ceded regular banking operations to the emerging banking sector, and started itself to take on  19 The reasoning below strictly applies only to banknotes. The right to manufacture and issue coins was transferred from the government to the Riksbank as late as in 1986. 20 1809 was also a critical year in Sweden for many other reasons. The King had been deposed in a coup d’etat, the country was involved in three wars and had just lost the eastern part of its kingdom, Finland, to Russia. It was important to install a new monarch and have a new Instrument of Government in place as quickly as possible, not least in order to be able to negotiate urgent peace agreements.

In such a world, by adjusting the level of the federal funds rate, the FOMC could be fully confident that it could generate the appropriate financial conditions necessary to support achievement of full employment and price stability. In fact, the response of financial conditions to changes in short-term interest rates is not rigid and predictable. Instead, as we shall see shortly, the linkage between the federal funds rate and financial conditions changes over time, as it is influenced by a whole host of other factors. Recent evidence suggests that even the relation between short-term and long-term rates has shifted substantially over the past 15 years.4 Moreover, at times, we have observed cases in which financial conditions did not move in the same direction as the monetary policy stance. Let me highlight two recent divergences which indicate that we need to keep a separate eye on the evolution of financial conditions. The first occurred in the mid-2000s. In June 2004, the FOMC decided to begin raising the federal funds rate target in order to remove policy accommodation. It raised the target in 25-basis-point increments at 17 consecutive meetings, pushing the rate up from a starting point of 1.0 percent to a peak of 5.25 percent. Despite this tightening of monetary policy over two years, financial conditions failed to tighten in a similar manner. This can be seen by looking at the behavior of well-known measures of financial conditions during this period (Exhibit 1).
Cost growth is subdued in many economies, reflecting continued slack as illustrated by the comovement of an estimated world output gap with world core inflation – a glimpse of a “global” Phillips curve (Chart 8). 15 The impact of these forces on domestic inflation depends crucially on movements in the exchange rate. In the face of purely nominal shocks, for example if foreign monetary policy were excessively tight, disinflationary impulses from abroad could be expected to be dampened by an exchange rate depreciation acting as a buffer. But today, in the UK, the exchange rate is reinforcing disinflationary impulses from abroad, with sterling appreciating by around 20% since early 2013. While the appropriateness of moves of this scale in sterling and of a similar magnitude in the dollar may be subject to debate, directionally they suggest real forces at work. One possible driver could be the speed of adjustment of different economies to the financial crisis, with those more flexible economies that took the more decisive action to fix their financial systems seeing the fastest recoveries and largest appreciations. For very open economies like the UK, with a high proportion of imports invoiced in foreign currencies, persistent, sizeable moves in exchange rates matter for the inflation outlook.

As far as economic growth is concerned, there have been repeated setbacks over the past few years. Geopolitical uncertainties such as Brexit and the threat of protectionism are currently weighing on economic sentiment. That is also why inflation remains subdued. Moreover, it has taken a long time for the decline in unemployment to be reflected in higher wages. The number of people who lost their jobs in the crisis but never registered themselves as unemployed has been underestimated. When the economy revived, these people returned to the labour market. A great many people, above all part-time workers, began to work longer hours when the upswing set in. In brief, the labour supply was underestimated. It’s only when the labour market has thoroughly cleared that 1/3  BIS central bankers' speeches  wages start to climb more steeply. We’re seeing that in Germany for example. One serious criticism of the ECB’s programme is that it is effectively only subsidising the southern crisis countries. The central bank has pushed interest rates down. Without this life-saver, Italy would have gone bankrupt long ago and the euro would have been history. Hold on a moment. All have benefited from the measures. The savings for taxpayers resulting from lower interest rates were nowhere as high as in Germany. But isn’t it also true that the ECB is indirectly financing governments here? Any creditor who invests in Italian or Spanish government bonds knows that the ECB will buy these bonds off them in the future.
in the area of the provision of professional services, meaning we cannot consider the single market to be complete. In addition, the creation of the single currency has been another key transformation on the road to greater integration. The euro constitutes the world’s most ambitious economic integration process since the Second World War ended. It was in Maastricht, in 1992, just before the entry into force of the single market, when 12 Member States decided to exceed this initial economic objective and plan a monetary union. Like the single market, the euro was also the result of lengthy debates, negotiations and preparatory phases, which were not always fully successful. Indeed, opt-out clauses from the Economic and Monetary Union had to be provided for the United Kingdom and Denmark. Despite these difficulties, the euro was introduced in 1999 and, following the euro banknote and coin changeover in 2002, it has since been a tangible reality for all citizens. Indeed, according to the latest Eurobarometer, its popularity is at a height in the 19 euro area countries.1  1  74% of citizens are in favour of the euro. 4/10  Creation of the SSM and the SRB. But while the introduction of the euro was deemed a success, its institutional design evidently had specific problems which the crisis that broke a decade ago clearly highlighted. Twenty years ago, Christian Noyer said that the introduction of the euro should act as a catalyst for new reforms and greater integration.

Analysis of any of the main achievements of the Union, such as the creation of the single market or the euro, tells us that it is often better to be pragmatic and adopt less ambitious solutions instead of persisting with an impasse because a perfect agreement cannot be achieved. The Banking Union is a major step in this direction and it has been pivotal in helping us withstand the euro crisis. That said, the absence of any European deposit guarantee scheme is a reminder that the process is unfinished. Further, specific regulatory and institutional elements must be added to obtain economic benefits resulting from an increase in crossborder banking activity, thereby achieving a true “Financial Union”. As the Five Presidents report indicates, “Economic and Monetary Union today is like a house that was built over decades but only partially finished. When the storm hit, its walls and roof had to be stabilised quickly. It is now high time to reinforce its foundations.” This quote illustrates very clearly how the EU reform process often is. It is amid the storm that political pressure rises to undertake reforms that help avoid the house come crashing down; but we agree that the best time to carry out this type of work is when the sun is shining. When assessing our capacity to face future financial crises, we should not forget that the institutional framework is not yet complete. Admittedly, the foundations are not fully and firmly in place, and we should avoid lapsing into complacency.