samchain/econo-pairs-v1 huggingface dataset:
In a number of recent events, central banks have had to intervene in size, using public money, to remove the threats to financial stability. Providing backstop liquidity insurance when tail risks to financial stability crystallise is a core part of central banks’ job. And the FPC has discussed the importance of examining whether central banks should have facilities to provide liquidity to a wider set of financial market participants in stress. But central banks cannot be a substitute for the primary obligation of market participants to manage their own risk, or for internationally co-ordinated reforms that enhance the resilience of the non-bank financial sector. For that reason, such facilities must be carefully targeted on the financial stability vulnerability at hand, and designed in ways that incentivise the right private sector behaviours, incuding reducing incentives for excessive risk taking in the future. [24] My colleagues in our Markets area have been considering these issues,[25] including with colleagues internationally[26] – and a number of these principles were implemented in our LDI interventions. Conclusion Events of recent weeks, months and years have once again reminded us of the systemic risks posed by poorly-managed leverage in the non-bank financial system. All too often excessive risk taking alongside improper liquidity risk management has threatened conditions in the real economy - an issue that feels especially pertinent in the current environment of high volatility and tightening financial conditions.

In this connection, guidance for financial institutions to classify economic activities that contribute to climate change objectives is provided through our work in developing a principles-based taxonomy. This would be the start to build deeper understanding in climate risk, for financial institutions to better identify, assess and manage the risk. The Bank is now working to finalise the Climate Change and Principles-based Taxonomy, which is expected for issuance next year. The Bank also collaborates with the financial industry to accelerate initiatives to build the required capacity and expertise relating to green and sustainability. Through the Value-based Intermediation Community of Practitioners (VBI CoP), various guidance documents have been developed to spur adoption of VBI, which considers the triple bottom line of people, planet and prosperity. In August this year, the Value-based Intermediation Financing and Investment Impact Assessment Framework (VBIAF) Sectoral Guides on Palm Oil, Renewable Energy and Energy Efficiency were issued to guide financial institutions in implementing VBIAF on these sectors at a more granular and transactional level. Work is also in progress to develop the next VBIAF Sectoral Guides on Manufacturing, Oil and Gas, Infrastructure and Construction, targeted for issuance in 2021. Furthermore, greater climate disclosure by financial institutions is in the pipeline; as we are progressing plans to further encourage financial institutions to adopt the TCFD recommendations for climate-related disclosure.
The cost level with the current krone exchange rate is close to 15 per cent higher than in the mid-1990s and about 6 per cent higher than the average for the past 30-35 years. Norwegian businesses are losing market shares in domestic and foreign markets partly because of the strong real krone exchange rate. In the face of major restructuring as a result of shifts in the international division of labour, it is a disadvantage for Norwegian business and industry that costs are high. Reports from Norges Bank’s regional network confirm the picture of an expanding economy. In the September round of interviews, our contacts throughout the country reported continued growth in all the main industries. Our contacts here in western Norway report continued recovery in all industries. Suppliers to the petroleum sector report solid growth, while the export industry reports somewhat lower growth now than before the summer. Growth is picking up in the building and construction sector. New developments include activity in commercial construction, which has also increased this time. Growth in retail trade is solid, and reports of increased willingness to invest apply primarily to this sector. Signals from the regional network indicate some increase in employment in retail trade and the building and construction sector. Manufacturing now reports no change in employment after a moderate rise in the last couple of rounds. Directorate of Labour figures show that unemployment in Region South-West is a little lower than in the country as a whole.

This will contribute to fairly high growth in the Norwegian economy without the emergence of constraints on the supply of labour or productive capital. The high rate of growth in output nevertheless implies that the output gap will approach zero towards the end of 2004. The output gap is a measure of the difference between the actual level of output and potential output. Developments in the output gap provide a basis for assessing cyclical developments and can thus shed light on domestic price and cost pressures in the economy. It is difficult to know how high capacity utilisation is at any given time. Output and employment figures are often revised and do not therefore always present an accurate picture of the current economic situation. Norges Bank therefore also uses a number of other indicators to gauge the temperature of the Norwegian economy. Fiscal policy in 2004 appears to be somewhat more expansionary than assumed in the Revised National Budget. The Government estimates that underlying nominal spending growth over the central government budget will be close to 11 per cent between 2003 and 2005. Local government revenues  BIS Review 67/2004  3  are estimated to rise by slightly more than 11 per cent in nominal terms during the period. which is more than nominal growth in mainland GDP. Employment has picked up. The number of persons employed in the second quarter of 2004 was 0.2 per cent higher than in the same quarter of 2003.
It is in this context where the topic of this year’s conference falls right into the core business of central banks: understanding inflation dynamics, and how they influence monetary policymaking. 1  Central Bank of Chile October 2018  Indeed, throughout the post crisis period we have observed a puzzling behavior of inflation in many developed countries, as standard Phillips curve approaches have done a rather poor job predicting price pressures. During this period, the unemployment rate has reached historically low levels, but inflation has remained low. Economists have referred to a “twin puzzle” in inflation dynamics and several explanations with different policy implications have been put forward. Some have pointed to the existence of “hysteresis” as causing a drop in potential output and, consequently, smaller gaps in the economy after the crisis. Others argue that the weakening of the relationship between activity and inflation responds to structural changes, like globalization forces pulling wages down, or technological innovation prompting changes in industrial organization. Another alternative, a sort of “catch 22” for central bankers, is that the flattening of the Phillips curve may be the consequence of the success of central banks in targeting inflation. Measurement issues should not be ruled out either. Measuring a common movement of prices throughout the economy has never been a straightforward task, but this may be getting harder as standardized goods take a smaller and smaller share of household consumption compared to services and to goods that are subject to fast change.

Ardian Fullani: Overview of Albania’s latest monetary and economic developments and outlook Speech by Mr Ardian Fullani, Governor of the Bank of Albania, on the Monetary Policy Decision of the Bank of Albania’s Supervisory Council, Tirana, 30 May 2014. *  *  *  Today, on 30 May 2014, the Supervisory Council of the Bank of Albania reviewed and approved the monthly Monetary Policy Report. After discussing the recent economic and monetary developments and their outlook, the Supervisory Council decided to lower the key interest rate by 0.25 percentage point, to 2.50%. The key rate decrease aims at creating more favourable conditions for inflation to return to our target in the medium term. The decision reflects our assessment and projections for low inflationary pressures in the quarters ahead, in response to the weak aggregate demand and the downward trend of inflation in Albania’s trading partners. This move contributes to boosting domestic consumption and investments, aiming at a fuller utilization of production capacities and a faster return of inflation to our target. (Let me now proceed with an overview of economic developments and key issues that were discussed at today’s meeting.) *** Annual inflation rate was 1.7% in April, slightly down from the average rate recorded in the first quarter of 2014. In the last months, the dynamics of inflation have been largely determined by the performance of food prices.
Fluctuations in output are also reflected in changes in the share of the working age population that are employed. This share of employment has shown a rising trend since the early 1970s, and has been above trend since 1996. This year, it appears that the share of employment will be at about trend level. The exchange rate fluctuates Fluctuations in the krone exchange rate have become more pronounced since 1996 and are now more on a par with fluctuations in the currencies of other small economies with a floating exchange rate. The krone has fluctuated between 9.24 and 7.22 kroner to the euro/ecu since 1997. Norges Bank has not set a specific target for the level of the exchange rate. However, changes in the krone exchange rate are, of course, important in interest rate setting because they affect inflation and developments in activity. The response to a change in the exchange rate will depend on its expected impact on inflation, output and employment. This requires an evaluation of the reasons for and the duration of the change. Very short-term fluctuations in the krone exchange rate tend to have very limited effects on economic developments, while more long-lasting changes can have an impact. However, it is difficult to determine whether exchange rate changes are permanent or temporary. Long-term relationship between exchange rate and prices In the 1980s, the rise in prices in Norway was considerably higher than among trading partners.

BIS Review 53/2003  3  Negative events such as the accounting scandals in large US companies, fears of terror, war in Iraq and the spread of SARS contributed to weak growth and low inflation in other countries. Developments in the international equity markets and the risk of higher oil prices also contributed to strengthening the krone. Changes in the economic outlook abroad are clearly reflected in developments in interest rate expectations. Interest rate expectations in the US have been adjusted downwards considerably since summer 2002. The same applies to Europe. Developments in interest rate expectations were a reflection of an ailing world economy. The situation has changed somewhat since the summer. A slightly more rapid rise in interest rates abroad is now expected. Fluctuations in the exchange rate and monetary policy easing Interest rate developments abroad have had substantial influence on the effect of interest rate setting in Norway. About 40 per cent of the appreciation of the krone from May 2000 to January 2003 can be explained by the increase in the interest rate differential between Norway and other countries. When the equity bubble burst in 2000, capital was moved from equities to interest-bearing securities, affecting capital flows and exchange rate movements. This shift in themes can explain 55 per cent of the appreciation of the krone. A third reason may have been high oil prices and fears that war and terror would disrupt the oil supply.2 While growth in the Norwegian economy stalled last winter, wage growth has moderated more rapidly than expected.
And, the Committee made a conscious decision to signal that in view of the likely path of growth and inflation further tightening of monetary policy was necessary and could be achieved at a relatively gradual pace. We are now in the process of emerging from this rather exceptional period, and this provides us with an interesting context in which to reflect on uncertainty and how it affects the conduct of monetary policy and communications about monetary policy. The degree of confidence in the sign and shape of the near-term path of the fed funds rate we've seen in recent years is unlikely to be a common feature of monetary policy in the United States or in other countries. The simple reason for this is that the economic circumstances that precipitated the policy were also not typical. There are likely to be times when incoming data deviates substantially and persistently from our forecasts. In those situations, policymakers have to examine whether they have significantly misestimated certain fundamental features of the economy, such as the NAIRU or the trend productivity growth rate, that might alter the appropriate course of monetary policy. Central banks everywhere conduct policy in a state of limited knowledge about the economy and how best to achieve their objectives. The sources of uncertainty they confront are many and varied. Sometimes, what we think we know about how the economy works turns out to be wrong, either because certain features of the economy have changed, or because our understanding was not right in the first place.

Central banks have adopted different approaches to this challenge, even as there has been broad convergence toward the model of independent central banks, with explicit mandates that include price stability and greater disclosure and transparency. The central banks that publish quantitative forecasts for growth and inflation now typically show the confidence bands around their forecasts. In some cases, these forecasts use, as a conditioning assumption, financial market expectations for the path of short-term interest rates. In others, the central bank publishes a forecast that includes the central bank's assessment at that time of the likely path of monetary policy over some horizon. In the former case, the implications of the forecast for monetary policy are left implicit. In the latter case, the likely path of monetary policy is made explicit, but that path is heavily qualified or conditioned to make it clear that that expected path of short-term interest rates will change as conditions change. The FOMC's approach to communication differs in interesting and important ways from these other models. Although the Committee has introduced a gradual but marked increase in the degree of communication over the past two decades, it provides information about its forecast in quantitative terms less frequently and with less detail than has become typical of many other central banks.
Miguel Fernández Ordóñez: Presentation of the 2010 Annual Report Testimony of Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, to the Parliamentary Committee on Economic and Financial Affairs, on the occasion of the presentation of the 2010 Annual Report, Madrid, 21 June 2011. *  *  *  Ladies and gentlemen, I appear before you today on the occasion of the presentation of the 2010 Annual Report. As was the case last year when I gave testimony, the circumstances surrounding us remain complicated. It would not be overstating the case to say we are at a crucial crossroads for the future of the economic and monetary union and for the anchoring of the recovery in Spain. The crisis that broke in the summer of 2007 has gone through various phases and is bringing major consequences to bear. A year back, before this Committee, I spoke of the events that had shaken the euro area in the spring of 2010, with the emergence of the sovereign debt crisis, the response of the authorities with the approval of the financial assistance programme for Greece, and the first steps towards the reform of the euro area governance mechanisms. The effects of the crisis on the Spanish economy were very serious, but economic policy responded with an ambitious fiscal adjustment plan, fresh impetus to the financial restructuring process and the launch of structural reforms in various fields.

The restructuring and recapitalisation of the banking system has been accompanied by a significant drive to write down the balance sheets of Spanish deposit institutions which, since January 2008, have recognised and assumed asset impairment losses totalling € billion, equivalent to 9% of GDP. Lastly, I should like to stress the progress made in transparency and the significant role this tool has played. In particular, I should remind you that the Europe-wide coordinated stress tests conducted last year were subject in Spain to substantially higher coverage than in other countries. Indeed, the results of all savings banks and all listed commercial banks were published. Consequently, analysts and the public at large have all the information they need to evaluate and assess the situation of even the smallest Spanish institutions, something which cannot be done in other countries. Moreover, the Banco de España required all institutions to publish in detail their exposures to the most troubled assets, along with their volumes of wholesale funding and their liquidity situation. Lastly, another area in which the degree of transparency in Spain is comparatively greater is that relating to provisioning since, unlike standard practice in other countries, the methodologies for provision-measurement and provisioning requirements are public. Transparency is a most useful tool in financial system restructuring because it helps dispel doubts about the soundness of the Spanish banking sector, it enables public opinion to better understand the need to overhaul the savings banks sector, and it encourages managers and the attendant authorities to promptly undertake the necessary restructuring process.
In this regard, the Eurosystem welcomed the ambitious Financial Services Action Plan (FSAP) launched by the European Council in Lisbon in 2000. This plan is aimed at harmonising and improving the conditions under which issuers, investors and intermediaries conduct their activities in the European Union. The European Council set a tight timetable so that this plan can be implemented by 2005, and even sooner, by 2003, as regards the measures relating to the securities markets. At present, 30 out the 42 FSAP objectives have already been brought to a successful conclusion, allowing significant breakthroughs in various crucial areas. All these objectives involve far-reaching reforms, such as, for instance, introducing a single passport for issuers, with the planned Prospectus Directive, setting up an adequate framework for the oversight of the activities of financial conglomerates or harmonising rules concerning the use of collateral in financial transactions, especially in a cross-border context. The Eurosystem also supports the strategic conclusions of the Committee chaired by A. Lamfalussy on the integration of the European securities markets, ratified by the European Council meeting in Stockholm in 2001 and approved by the European Parliament in early 2002. We are convinced that the implementation of these broad guidelines and the new cooperation structures at the European level will help make it possible to take full advantage of the introduction of the euro.

Since last year, the evolution of Stock Exchanges has shown that the euphoria associated with the concept of a totally new economic era has vanished, but what remains true is that a remarkable potential of economic changes remains for the future. It may help to boost labour productivity significantly on a recurring basis, and, in so doing, to boost production while preserving the economy’s competitive edge. That strategy should be pursued whilst increasing the overall competitiveness of Europe’s economy. If I refer to what we observed in the past, the French economic strategy, based on a moderation in the increase of unit costs of production, gave us an important advantage: the considerable improvement in the cost competitiveness of the French industrial sector from the mid-1980s has contributed extensively to the growth of our economy. The French economy grew faster than the other major euro area economies in recent years, while repeatedly recording a large current account surplus. This was largely because, from early 1987, production costs, measured by unit labour costs in the industrial sector, have risen significantly less in France than in the euro area as a whole. That improvement in our overall cost-competitive situation has progressively materialised into growth, into job creations and into solid external accounts. This ongoing drive to keep prices and costs in check has been accomplished thanks to the economic and monetary strategy pursued over a long period.
The Financial Sector Master Plan (FSMP) will move onto its second phase, with the review of the plan and emphasis on increased competition and consideration on potential entry of new players to further enhance efficiency and resiliency. As a tool, the macro-prudential and risk assessment framework which includes development of an early warning system model to bolster our financial stability analysis in order to make pre-emptive policy responses when appropriate has also been put in place. With regards to real sector reform, significant attempts have been made to raise real sector productivity, promote transparency, and strengthen governance. Nevertheless, there remains more to be done on this front. The most important issue here is to keep pressing on with the reform effort and not to let reform fatigue get into our way. The adoption of a full-fledged inflation targeting regime in 2000 eliminated the inconsistencies among monetary policy, exchange rate policies, and capital flow policies that had contributed to the 1997 currency crisis. This framework has served us well, with enough flexibility to accommodate other important policy objectives such as output stabilization, provided that inflation remains in check. In fact, the consistent improvement in our monetary policy mechanism and thus its efficacy have given me reasons to be optimistic about the prospect of our present regime. Seeing less inflationary  6  BIS Review 46/2007  pressure, the Monetary Policy Committee this month turned to an accommodative stance to ensure that the economy continues on a satisfactory course.

Tarisa Watanagase: Changes in Thailand’s economic dynamism after the 1997 crisis Speech by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the International Symposium “Ten Years After the Asian Currency Crisis: Future Challenges for the Asian Economies and Financial Markets”, hosted by the Center for Monetary Cooperation in Asia (CeMCoA), Bank of Japan, Tokyo, 22 January 2007. *  *  *  At the outset, I would like to thank Governor Fukui and the Center for Monetary Cooperation in Asia, Bank of Japan, for inviting me to speak at this special international symposium and for the excellent arrangements made. It gives me both a great honor and pleasure to meet with many people who are genuinely interested in our ASEAN economies. In this first session, I have been asked to speak on changes in Thailand’s economic dynamism after the 1997 crisis as well as the Bank of Thailand’s view on where the Thai economy is heading. Due to the time constraint, I will limit my talk to only three key points. The first is that the Thai economy is now back on a firm growth path and has become more resilient. For nearly five years after the 1997 crisis, the Thai economy went through a period of substantial adjustment. The tough adjustment was unavoidable because the crisis had inflicted a deep wound on the economy.