samchain/econo-pairs-v1 huggingface dataset:
These measures would increase neutrality between different types of investment alternatives and make building up debt less profitable in terms of tax policy. Both the IMF and the European Commission proposes similar measures in their recommendations for Sweden.7 Organisational structure of macroprudential policy in Sweden Developing macroprudential tools strengthens the possibilities of preventing systemic risks. However, creating an organisational structure for macroprudential policy that ensures the right tools are used at the right time is at least equally important. Both decisive action and sound analytical capability are required here. Decisive action is important because acting against systemic risks is generally difficult and unpopular. It must therefore be clear where the responsibility of counteracting systemic risk lies, which in turn requires a clear mandate. Analytical capability is important because the interaction between the financial system and the real sector, and the risks generated in this interaction, are complex matters. Neither is it easy to determine which effects can be achieved with different tools. This requires expert knowledge. However, it is also important that this analytical capability is enduring. In the often fairly long periods of calm, the temptation to cut back or reallocate resources to other areas can be substantial. Many countries have recently created organisations for macroprudential policy and have more comprehensively enhanced the efficiency of financial stability efforts. New structures have emerged in, for instance, the UK, Germany and Denmark.

2  BIS central bankers’ speeches  2007, I took part in a panel debate in Jackson Hole, and indicated then that it is better to attempt to prevent the risk of a financial crisis than to clean up afterwards. The main argument as I see it – now as it was then – is that cleaning up is extremely costly and takes a long time. Experiences in Sweden from the crisis of the 1990s are an example of just how painful it can be. Because, reducing major debts often takes a long time, and during that time possibilities of stimulating demand through monetary policy are limited. It doesn’t matter much if the debts are in the private sector, i.e. among households and companies, or in the public sector. In both cases, a trend build-up of debt in relation to income is always unsustainable in the long term. A question is then how central banks more tangibly can lean against the wind. The policy rate is a tool that can be used. We therefore need to develop the monetary policy framework so that it takes greater account of financial stability. At the same time, financial stability policy is changing, and a new policy area, macroprudential policy, is emerging which also aims to lean against the wind. Hence, we are facing two changes in the areas of responsibility of central banks, both of which create new possibilities to manage the trade-offs between price stability, resource utilisation and financial stability.
The ECB operations during winter contributed to boosting liquidity and reducing risk premiums in the European banking system and in the sovereign debt market. 2  BIS central bankers’ speeches  Financial market turbulence has flared up again recently, with particular focus on the macroeconomic situation and budget developments in Spain and other countries in southern Europe. The political unrest in Greece and growing fears of a Greek government debt default have curbed risk appetite in the markets. Yields on Italian and Spanish government bond have increased, while US, UK and German government bond yields have fallen to historically low levels. International equity indices have declined, particularly in Europe. BIS central bankers’ speeches  3  Despite a prolonged downturn abroad and financial market turbulence, activity in the Norwegian economy is remains robust. Capacity utilisation has been close to normal over the past year. GDP for mainland Norway expanded by 2.4 per cent in 2011 according to preliminary figures. Prices for Norwegian export goods are favourable relative to import prices. The oil and construction industries are booming and both employment and the supply of labour are on the rise. Unemployment is low and fairly stable. At the same time, house prices are moving up and household debt is still rising faster than household income. On the other hand, some segments of the export industry are feeling the adverse effects of developments in Europe and a strong krone.

If he were to summarize this talk he might suggest a title like “Knowing Your Destination is a Good Start in Getting Where You Are Going” or some other derivation of what I believe is his actual quote: “You’ve got to be very careful if you don’t know where you are going because you might not get there.” When setting monetary policy, it is very important to have a clear idea of where you want the economy to go. And fortunately, there is now much more transparency about the Federal Open Market Committee’s (FOMC’s) expected destination, because the FOMC releases its long-term projections for inflation and unemployment. Unfortunately, however, actually reaching our desired destination will prove challenging and involve choices, as I will discuss this evening. At our January meeting, the central tendency of the FOMC members’ long-run projections for unemployment was 5.0 to 5.2 per cent, and for inflation (measured by the personal consumption expenditures price index or PCE) was 1.7 to 2.0 per cent. At present, both unemployment and inflation diverge significantly from these longer-term goals, with the March unemployment rate at 9.7 per cent, and core PCE inflation over the past year at 1.3 per cent. In such circumstances, one might think that the current path of monetary policy would be particularly straightforward. Unfortunately, just knowing your destination doesn’t get you there. To reach your destination you need to know how you want to get there.
Particularly, this stand for: independence, transparency and accountability. It is well recognized by foreign and domestic institutions that legal and real independence status of Bank of Albania enjoys satisfactory standards. On the other hand we believe that independence represents a dynamic rather than a static process, therefore we have adopted contemporaneous practices of communication explaining our decisions to Albanian public. This process is embodied in the continuous improvement of the monetary policy report, standard communication of the supervisory board monetary policy decisions, improved analyses and research efforts, and last but not the least, intensive public activity of the Bank of Albania Governor, with various groups of interest across the country. Taken together these have improved public understanding and expectation building for current and future developments in inflation and economic activity. Our approach to communication has further improved our accountability and has resulted in increased credibility and authority within Albanian public. During the past 2-3 years we have increased our ownership in the short and medium run economic and financial development programs. Since the beginning of transition the economic program has been designed and implemented under the setup of IMF support programs. The current program will end in 2008. Starting from 2009, the Bank of Albania and other Albanian authorities will have full ownership in the design and implementation of financial and monetary policies. In the meantime our relationship with IMF will continue under Article IV, moreover the IMF assistance will be considered a welcomed secondary factor.

Jean-Pierre Roth: Heading for more sustained growth? Summary of an address by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the General Meeting of the Swiss Italian Chamber of Commerce, Zurich, 20 June 2006. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Lately, Switzerland has been experiencing an encouraging upturn in the economy on the back of growth in the international economy. This development is particularly welcome because it follows a number of years of economic listlessness which have prompted repeated criticism from international bodies, due to the lack of growth in the Swiss economy. However, Switzerland's medium and long-term growth problem has not disappeared. Faster economic growth is the only possible response to the challenges posed by an ageing population. Moreover, it is the sole antidote to Switzerland's continuing loss of ground with respect to the other members of the OECD. Reforms are needed to ensure that, in the future, we can achieve more with fewer resources. The ways and means of doing this are evident. The Federal Council's package of growth measures is a move in the right direction, and the current improvement in the economy gives Switzerland the opportunity to move ahead with the requisite reforms. BIS Review 59/2006  1
This is called in academic literature Delphic forward guidance, with reference to the Oracle of Delphi, who was  8 Yellen (2018). The expression “lower-for-longer” is usually ascribed to Reifschneider and Williams (2000). 9  For more detailed reasoning, see for instance Söderström and Westermark (2009). 10 This follows on from the so-called expectations hypothesis, which briefly says that longer interest rates are de-  termined by expectations of the future policy rate. 11 Yellen (2018) has proposed, for instance, that this could be done in the United States by means of a revision to the Federal Open Market Committee’s “Statement on Longer Run Goals and Monetary Policy Strategy” or by publishing a separate supplement, “Committee Guidelines for Implementing Policy at the Zero Lower Bound”. 6 [24]  thought to be able to see into the future. How well this strategy will function depends on how successful the central bank is at predicting its future interest-rate policy. If the forecasts for the policy rate are often correct, then it will be common for economic agents to believe in the central bank's forward guidance. But if the forecasts for the policy rate are not so accurate, then the forward guidance will be taken less seriously. And unfortunately it seems to be quite difficult to forecast policy rates. If the economy is hit by shocks, which is often the case, then the forecasts will not be very accurate. Our experiences in Sweden illustrate this problem clearly.

Bernanke’s proposal of a temporary price level target can therefore be regarded as a special application of Yellen’s “makeup strategy”, where one aims to make the “makeup” mechanism specific and potentially more credible by formalising it in terms of a temporary new target definition for the central bank. Higher inflation target A proposal for which Olivier Blanchard, former chief economist at the International Monetary Fund (IMF), is one of the strongest advocates is to raise the central banks’ inflation targets. 28 The idea is straightforward. With a higher inflation target, say 3 per cent, the nominal policy rate would be on average 1 percentage point higher compared to when the inflation target is 2 per cent, assuming that the new target is credible. There would therefore be a further 1 percentage point to reduce the rate before it reaches its lower bound. An increase in the inflation target to 4 per cent would increase the scope for reducing the policy rate by another percentage point, and so on. However, some argue that raising the target is not a good idea. One fear is that higher inflation would mean that inflation would also vary more, which indeed ap-  26  See also, for instance, Evans (2012). 27 One might also therefore call this approach a temporary target for average inflation. A target for average infla-  tion is a strategy reminiscent of a price level target, but nevertheless different in certain aspects, see Nessén and Vestin (2005) or Andersson and Claussen (2017).
(Slide: General government net lending in the United States and the euro area). There are also major differences between the countries in the euro area. In some of the euro countries the deterioration in public finances has been dramatic. I will come back to this later. 1  These figures are taken from the OECD’s latest Economic Outlook, November 2009. BIS Review 56/2010  1  There are several reasons for the deterioration in public finances There are a number of causes behind the substantial deficits in public finances. Firstly, many countries were in a weak initial position even before the crisis began, as their public finances were already in deficit. Many countries failed to save money for a rainy day when times were good. This is illustrated by the fact that in the decade prior to the crisis average general government net lending was –2 per cent of GDP in the OECD area, the USA and the euro area. In the case of the euro area this is remarkable given that the so-called growth and stability pact stipulates that the aim should be to achieve a balance or a surplus in public finances in the medium term. (Slide: Average general government net lending). Secondly, a downturn automatically leads to a weakening of public finances. Tax revenues fall and cyclical expenditure, for example on labour-market policy, increases. The OECD estimates that this effect has accounted for just under half of the total deterioration in public finances since 2007.

By April 2008, the FSF had reached consensus on a set of 67 policy recommendations aimed at addressing the vulnerabilities identified in the global financial system. Some of these recommendations concern structural changes and thus can only be implemented over the medium term. However, a number of priority areas calling for immediate action were identified and the relevant recommendations are already being implemented by the competent authorities and the industry. In this respect, a major priority area involves the disclosure of financial institutions’ structured finance-related exposures and their valuation practices. Many large global banks have already applied the methodology set out in the FSF report to their holdings of complex and illiquid instruments in their mid-year financial reports. By doing so, they have demonstrated the willingness of the private sector to contribute to strengthening market confidence by increasing transparency. I strongly support this development and believe that the example set by these banks should be followed by a wider range of institutions. Furthermore, guidance on transparency has been provided and is being further developed by the Basel Committee on Banking Supervision and public sector initiatives, such as the European and the American Securitisation Fora. In the same vein, the International Accounting Standards Board is intensifying its work to enhance the accounting and disclosure standards for off-balance sheet entities and to develop guidance for valuation in illiquid markets.
2/4  BIS central bankers' speeches  Any new form of digital money in order to succeed will need to be trusted as a store of value and as an accepted means of payment. Stablecoins must therefore promise, credibly and consistently, to be fully interchangeable with existing forms of money. In other words, they must be anchored in and thus maintain confidence in the monetary system. It is with this objective firmly in mind that the Bank of England’s Financial Policy Committee has set out its expectations to inform the design and regulation of stablecoins, and thus lay a clear foundation for sustainable innovation by setting out the public interest. The FPC’s first stablecoin expectation relates to the principles and expectations that payment regulation should aim to achieve. In this regard, UK authorities are already considering the regulatory approach for payments, including in response to both systemic and non-systemic stablecoins. The FPC’s second expectation relates to the use of stablecoins as money. This recognises that the Bank’s existing payments regulatory regime alone would not be sufficient to ensure the safety of a new form of digital money. Certain key features of the banking regime would also need to be reflected in any regulatory model meeting the FPC’s second stablecoin expectation. The Bank’s view is that these include: legal claim, capital requirements, liquidity requirements and eligibility for support from a central bank during a stress, and a separate backstop to compensate depositors in the event of failure.

There will inevitably be elements of tough love in such a process, and some disappointed ambitions, but I am confident that out of it will come a robust form of innovation. I hope also that laying out the principles of public interest and how they should be put into practice in the context of new innovation will help to deal with another difficult and perennial challenge of financial regulation. It is in the nature of innovation – and a good thing – that while some ideas succeed, many fall by the wayside. How many people remember Visi On, TopView and GEM? I have to admit I did not until I did some research for today. In the mid-1980s, they were rivals to Windows for the personal computer software market. More precisely, they were briefly rivals, but the rest as they say is history, as were these three rivals. In our world of finance, things can be more complicated, because dealing with failures itself raises public policy issues. There are quite often suggestions that central banks and financial regulators are anti-innovation and lukewarm on competition, because the results will at times be messy as the winners emerge and the losers fall by the wayside. We are not anti-innovation or anti-competition, but we are trying to manage our sphere of influence in order to achieve our public policy objectives, as required by Parliament and serve the public interest continuously. With that in mind, let me apply the framework to the world of payments and digital currency.
As an example, allow me to present the background for the monetary policy decision in June, when the key rate was raised from 6.5 per cent to 7 per cent. Developments in international financial markets were uncertain at that time, as they are today. We assumed that activity among our trading partners would show only a gradual recovery. Oil prices were high, also measured in NOK. Private consumption had shown a substantial rise as a result of strong income growth. Households expected strong income growth and borrowed heavily. Housing investment was high and financial investment was low. House prices were rising. Public expenditure was growing as a percentage of GDP. It was also expected that the level of petroleum investment would be high. Against this background, pressures on real economic resources were deemed to be strong. Wage growth was markedly higher than projected earlier. The outcome of the various settlements pointed to wage growth of 5½-6 per cent this year. The wage settlement awarded high pay increases with effect from next year for some groups even though they will also be negotiating pay increases in 2003. Developments in the krone exchange rate had the opposite effect. The krone had appreciated. Expectations of higher interest rates as a result of developments in wage settlements probably contributed to this.

Svein Gjedrem: Monetary policy in Norway Lecture by Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), at the Norwegian School of Economics and Business Administration, Bergen, 17 October 2002. The text below may differ slightly from the actual presentation. The references for the speech can be found on the Norges Bank’s website. *  *  *  A year and a half ago, the Government and the Storting adopted new guidelines for economic policy in Norway. The guidelines outline a medium-term strategy for the use of petroleum revenues over the government budget. Government petroleum revenues are transferred to the Government Petroleum Fund. The guidelines provide for the use of the expected real return on the Fund, i.e. 4 per cent of the Fund’s market value each year. As the Fund’s market value grows, so does its return. A gradual increase in the use of petroleum revenues ensures greater stability than a rapid withdrawal. The Government laid down a new operational mandate for monetary policy at the same time. Norges Bank shall set the key interest rate with a view to maintaining low and stable inflation. The inflation target is set at 2½ per cent. The responsibility for implementing monetary policy is delegated to Norges Bank pursuant to the Norges Bank Act and appurtenant regulation. Norges Bank sets the interest rate on the basis of our understanding of the regulation.
Were we to see evidence of second round effects in wage and cost developments, a tighter policy than otherwise might be required. Were energy prices to fall steadily in line with futures rather than stabilise as we assume, then – other things equal – more policy accommodation could be maintained. Exploring how monetary policy decisions and their communication should be managed in the face of such uncertainties is the topic to which I will now turn in the body of my talk. Monetary policy and uncertainty As I hope to have illustrated, the MPC’s assessment and treatment of uncertainty has played an important role in coming to last week’s monetary policy decision. Of course, the current conjuncture has its own specificities – many of which are uncomfortable for the MPC, as I have discussed. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  But dealing with uncertainty is part of the job. If we lived in a world of perfect certainty, then monetary policy would be a much simpler – perhaps even a trivial – task. Sitting on the MPC at present, that is not how it feels. So I hope you will indulge me with scope to discuss more generally how monetary policymakers might deal with risk and uncertainty, before concluding with some more specific remarks about where the MPC stands today. The economic literature on monetary policy and uncertainty is voluminous and surprisingly inconclusive.

16  All speeches are available online at www.bankofengland.co.uk/news/speeches  16  Charts Chart 1: The social loss associated with different monetary policy rules under different calibrations of lambda  Source: Bank calculations  Chart 2: The relative performance of level-based and difference-based rules under different relative importance of persistent vs temporary shocks  Source: Bank calculations 17  All speeches are available online at www.bankofengland.co.uk/news/speeches  17  Chart 3: Impact of a persistent risk premium shock that is misjudged to be temporary  Source: Bank calculation  Chart 4: Impact of simultaneous persistent and temporary risk premium shocks (relative weight 2.3 times)  Source: Bank calculations 18  All speeches are available online at www.bankofengland.co.uk/news/speeches  18  Annex: Model specification This model is based on a variant of a model developed by Harrison, Seneca and Waldron. It consists of 5 basic equations. IS curve: 𝑦̃𝑡 = 𝐴𝑦̃𝑡−1 + 𝐵𝔼𝑡 𝑦̃𝑡+1 − 𝐶(𝑖𝑡 − 𝔼𝑡 𝜋𝑡+1 − 𝑟𝑡∗ ) Phillips curve: ∗ 𝜋𝑡 = 𝐷𝜋𝑡−1 + 𝐹𝔼𝑡 𝜋𝑡+1 + 𝐺[𝐻(𝑦̃𝑡 + 𝑦𝑡∗ ) + 𝐽(𝑦̃𝑡−1 + 𝑦𝑡−1 ) − 𝐾𝑧𝑡 ] + 𝑢𝑡  Potential output 𝑦𝑡∗ : ∗ 𝑦𝑡∗ = 𝐿𝑧𝑡 + 𝑀𝑦𝑡−1  Natural rate 𝑟𝑡∗ : ∗ ∗ 𝑟𝑡∗ = 𝑁𝑦𝑡−1 + 𝑄𝑦𝑡∗ + 𝑆𝔼𝑡 𝑦𝑡+1 − 𝜈𝑡  where all capital letters denote functions of underlying parameters, 𝑦̃𝑡 is the output gap, and the risk premium 𝜈𝑡 , the cost-push disturbance 𝑢𝑡 and productivity 𝑧𝑡 follow exogenous autoregressive processes.