samchain/econo-pairs-v1 huggingface dataset:
Strong imports result in negative trade balance  The smaller than expected effect of the pandemic on Iceland’s economy can therefore be attributed to rather agile expenditure switching, helped by a 12% depreciation of the króna relative to the trading partner currencies from end-February until early May 2020. Local consumers and firms transferred their expenditures during the pandemic from imported consumer durables, investment goods and tourismrelated services to domestic services and housing. As in other countries, they also ramped up their savings. Iceland’s imports contracted by 21%, more than elsewhere in the OECD. The contribution of net trade to output growth was still negative by 5.5 percentage points. The combination of agile expenditure switching, and fiscal and monetary stimulus, considerably softened the shock to household finances and corporate profitability. After a short pause, the housing market recovered, as households took advantage of record low interest rates. The impact of the pandemic on the economy was therefore not as strong as expected. Recovery amidst a war in Europe The global recovery turned out to be stronger than expected and rekindled inflation in most parts of the world. In Iceland, the recovery was particularly strong, driven by a sharp reversal of the contraction in services exports. Like other countries, Iceland suffered from the inflationary impact of global bottlenecks as the structure of global demand changed and expanded post-COVID, but a significant share of the increasing inflation in Iceland can be attributed to excess demand for housing and faster wage growth than in most other OECD countries.

And, at the retail level, too, we will all eventually need to learn to live with totally new, and more efficient, ways of doing things - though that will no doubt come harder to people of my generation! I don’t think anyone at this stage can see at all clearly the end-point of all this or even necessarily the appropriate next steps. And that is why we are seeing a continuous, and often bewildering, stream of new individual and collective initiatives, many of them involving the same participants, both in this country and abroad. Some of these initiatives will inevitably fall by the wayside - that’s part of the process by which the market as a whole discovers the way ahead. But those that do succeed will succeed because they add value by meeting more effectively the needs of the consumers of the products and services they provide. As an intensely interested - but non-commercial - observer of it  3  BIS Review 134/1999  all, I find the whole process hugely stimulating and encouraging. I recognise that I might feel differently if I were a commercial rather than a central banker, but I’m impressed by the fact that most of the commercial bankers I talk to see it in terms of opportunities rather than threats.
Our economy has been affected by a number of large shocks – to energy prices, the level of VAT, and the value of sterling – which have caused prices to increase. Some of these shocks were not predictable in advance. And even if they were, trying to use monetary policy to offset short-run movements in inflation is likely to have amplified output volatility. 9  Another defining feature of this recession is that it has been very deep. If companies are already down to their core customer base, cutting prices may generate little additional demand. Put more formally, as output fell, the demand curve faced by some companies may have become increasingly inelastic, thus reducing their incentive to cut their margins. See Bils (1989) and Ravn et al (2006) for examples of pricing models that incorporate such customer behaviour. 6  BIS Review 122/2010  But that does not mean that we should not learn from the behaviour of inflation. My current assessment is that changes in the structure of the economy, the nature of the financial crisis, and the different role played by policy all affected the behaviour of inflation during the downturn. And it is important that we learn from those developments to help set policy in the future. Conclusion So what are the implications for policy? Surely with inflation above target and expected to remain so for some time, the natural thing is to begin to reduce the degree of monetary stimulus?

But what is different is that the current risks to inflation are unusually large. My central view is that these risks should gradually lessen as the temporary effects pushing up on inflation wane and the economic recovery continues. But it is possible that some of the risks will crystallise and policy will need to react. It is quite likely that in hindsight, once we see how the economy evolved and which risks materialised, that the current stance of policy will be criticised for having been too tight or too  BIS Review 122/2010  7  loose. But we cannot set policy with hindsight. All we can do is set policy in such a way that balances the opposing risks to inflation and be ready to change policy decisively in either direction as this balance of risks alters. I do not know when policy will next change or in what direction. But I can assure you that when making this decision, the objectives of policy will be clear and unchanging: inflation, inflation, inflation. References Benito, A, Neiss, K, Price, S and Rachel, Ł (2010), “The impact of the financial crisis on supply”, Bank of England Quarterly Bulletin, Vol. 50, No. 2, pages 104–114. Bils, M (1989), “Pricing in a customer market”, The Quarterly Journal of Economics, Vol. 104 (4), pages 699–718. Campa, J and Goldberg, L (2006), “Distribution margins, imported inputs, and the sensitivity of the CPI to exchange rates”, NBER Working Paper No. 12121. Chamberlin, E (1933), “The theory of monopolistic competition”, Cambridge, Mass.
In this context, the Road Map 2018 reviews the policy actions that have been pursued during 2017 and more importantly, proposes policies and actions for the forthcoming period. Accordingly, the outline of the Road Map 2018 is as follows: Section 2:  The Central Bank’s monetary policy strategy and policies for 2018 and beyond  Section 3:  The Central Bank’s policies related to the financial sector performance and stability in 2018 and beyond  Section 4:  Key policies related to strengthening the broader economy through the Central Bank’s agency and ancillary functions  Now, let me elaborate on these sections in a detailed manner. 8  2. Monetary Policy Strategy and Policies for 2018 and Beyond The Central Bank is entrusted with the task of maintaining price stability. Price stability remains a key fundamental in fostering an environment conducive for sustained growth and securing rising living standards for the people. The Central Bank seeks to achieve its price stability objective through the conduct of monetary policy. Based on the current monetary policy framework, we have been able to maintain inflation in single digits for close to a decade. Going forward, the introduction of an effective Flexible Inflation Targeting (FIT) framework will improve our capacity to deliver price stability. This will provide a more propitious environment for growth and employment generation.

Expertise in the analysis of financial sector issues, market and public intelligence provided by the EU authorities represented in the ESRB will be considered invaluable. However, assessments of a qualitative nature should, to the extent possible, be complemented by quantitative impact assessments, which will also facilitate the task of prioritising the risks and the decision to issue risk warnings. In short, if the European Systemic Risk Board is to really strengthen macro-prudential supervision in Europe, four conditions need to be fulfilled. First, a clear legislative framework must be created to underpin the work of the ESRB and the supporting role of the ECB. It should be noted that last June the European Council clearly indicated that the ECB should provide the secretarial, logistical, administrative and analytical support to the ESRB. Second, all parties involved in the preparation of ESRB risk assessments and potential risk warnings need to do the necessary analysis and research to bring our understanding of systemic risk and macro-prudential regulation to a new level, and to find common languages and frameworks. Third, in addition to improving the analytical tools supporting risk surveillance and risk assessment, more detailed and accurate information – to back up ESRB risk warnings – is essential. It should include better data coverage of non-regulated financial sectors, as well as more granular information on key node-institutions in the financial system and on potential inter-linkages between them. The ability to formulate concrete policy recommendations, as opposed to general recommendations, depends greatly on access to critical information.
Not only is the federal funds rate trading close to the middle of the new 25 to 50 basis point target range, but the entire complex of money market rates, such as LIBOR deposits and GCF repo, has also risen as well. Moreover, apart from a temporary spike in usage around year end, which was expected, the usage of the overnight, fixed rate reverse repo facility has fallen back to levels similar to what we saw during the testing phase. In recent days, usage has averaged less than $ billion per day. Thus, the facility has been absorbing only a small fraction of the $ trillion of excess reserves in the banking system. This demonstrates that to firm interest rates, we don’t necessarily have to drain reserves or shrink the size of our balance sheet. We are very pleased by how well our tools are working, and this has reinforced our confidence that they will support the policy normalization process going forward. This is what we expected given our extensive testing, but there are always uncertainties that only can be resolved by actually getting underway. For example, there was some residual uncertainty about how important a factor the zero lower bound of interest rates had been in supporting the federal funds rate and other money market rates. This uncertainty now has been at least partially resolved. Even as we have moved away from the zero lower bound, the relative yield relationships we saw before December’s federal funds rate hike have persisted.

Even the one bright spot in manufacturing over the past year – the auto sector – seems to be close to a cyclical peak. Thus, I suspect manufacturing will continue to be soft in 2016. Overseas developments, especially with respect to the emerging market economies, pose a risk to the U.S. economic outlook – potentially exerting greater restraint on the demand for U.S. exports and contributing to greater turbulence in global financial markets. Putting these positives and negatives together, the most likely outlook seems to be more of what we have experienced in this expansion – an economy that grows at slightly above a 2 percent annual rate this year. The inflation outlook also has not changed much. Inflation remains well below the Federal Reserve’s 2 percent objective. In my assessment, this is due mainly to weaker energy prices and the impact of a stronger dollar on non-energy import prices. However, the fact that core measures of inflation are considerably higher than the headline readings, and have been quite stable in recent months, suggests to me that we are likely to see inflation rise once energy prices stop falling and the dollar stops appreciating – clearly neither trend can persist indefinitely. Of course, this assumes that the U.S. economy grows sufficiently rapidly so that pressure on available labor and capital resources continues to increase. With respect to the risks to the inflation outlook, the most concerning is the possibility that inflation expectations become unanchored to the downside.
In Australia, the senior official in the Ministry of Finance and Administration is a member of the monetary policy committee. He or she has voting rights. In the UK, the Ministry of the Exchequer has the right to be present but only has the right to speak. In the ECB, the chairman of the ECOFIN Council and one member of the Commission may participate in the meetings of the Governing Council, but they have no voting rights. At Norges Bank, the Executive Board makes the monetary policy decisions. The Executive Board consists of internal and external members and has responsibility for all of Norges Bank’s operations. Australia has a similar arrangement. In the Bank of England and the Riksbank in Sweden, the interest rate is set by a monetary policy committee with members who in practice work full-time for the bank. In New Zealand, the central bank governor alone sets the interest rate. In Canada, the central bank governor has also been given this responsibility. In the UK and Sweden, the individual member’s responsibility is emphasised in particular. Minutes from the monetary policy meeting as well as the voting results are published. At the same time, members participate actively in the public debate with speeches and articles on monetary policy. In Norway, we have chosen to provide a broad account of the interest rate decision that reflects the Executive Board’s discussions. Differences in the practice of inflation targeting are often due to historical and cultural differences.

Only for more complex organizations, a more extensive technological infrastructure is needed. Let’s come to the answer to the question then. To have a well established, in other words, efficient risk management system, first we need to develop the risk culture within our organizations meaning that we need to make sure that at all levels every person understands the risks the institution is exposed to. It is the responsibility of top management to provide that kind of information by having a clear approach to risk, its appetite for risk and assigning responsibility for assuming and controlling risks. Therefore, the first step in risk management process is to identify the risks the institution is exposed to and to quantify those risks. Effective risk management requires that a consistent methodology be developed for analyzing risk. Important steps in risk management analysis are as follows: •  identifying the key financial flows;  •  determining the appropriate time horizon;  •  setting a benchmark;  •  defining the institution’s return objectives and views toward risk. As you all know, most progress has been made in the measurement of market risk and much work is now being done in many places to construct models for a better management of credit risk. Difficulties with credit risk measurement lies in the lack of statistics about individual default probabilities. Even if these default probabilities can be estimated reasonably accurately, it is still rather difficult to combine them into portfolio assessments.
The conduits and SIVs are greatly diminished where they are not being wound up altogether. And the money market and other funds that stepped away from these off-balance-sheet vehicles are not willing at least yet to buy ABS directly. Finding new homes for these securities is bound to take time. So long as there are known to be reluctant holders, even long term real money investors will tend to hold back to see whether prices are driven lower in coming months by forced sales. On the other side many issuers are reluctant to accept the prices on offer today since they could become benchmarks for the future. Lessons from the crisis The story is far from over but it is still possible to identify some lessons. The past seven months have taught market participants a lot about the risks and limitations of the new markets and their business models; their responses will be the most powerful force for change. On the official side, a recent consultative document has set out proposed responses by the UK tripartite authorities. 3 Internationally, the Financial Stability Forum (FSF), which draws together central banks, supervisors and finance ministries from the main financial centres, is co-ordinating an action plan for authorities to develop and implement recommendations across a number of areas (Chart 7).

Progressive development of Islamic finance in Malaysia As part of the strategy to sustain balanced economic growth, Malaysia has developed Islamic finance as one of the sectors that not only adds value to the economy but offers an alternative to businesses and the public. Our approach has been holistic, yet focused on specific outcomes. The focused approach has led to the exponential growth of the industry and contributed towards the diversification of the Malaysian economy. The future and continued progress of Islamic finance in Malaysia would very much depend on the industry resourcefulness to build and maintain an innovative, competitive and inclusive Islamic financial industry. Empirical evidence shows the importance of an enabling environment for Islamic finance to fluorish, with tax incentives, business-friendly policies and initiatives, as well as an appropriate and robust regulatory and supervisory framework. It is these ingredients that enable Islamic banking assets to consistently record double-digit annual growth rate since year 2000 and now representing 25% of domestic banking assets. In terms of customer base, it is estimated that non-Muslims make up over 50 percent of the customer base of Islamic banks in Malaysia. Growth numbers are also most evident for the Islamic capital market, with the sukuk market commanding a 57 percent market share and attracting global issuers and investors. From 2006 to end-2014, foreign issuers have issued sukuk amounting to an estimated RM28 billion in various currencies – US dollar, Yen, Renminbi and Singapore dollar – in the Malaysian marketplace.
Compensation rate and percentage of people with fixed-term employment contracts, before and after the financial crisis (A) Compensation rates (b) Fixed-term employment contracts 90  Low income Average 2001-2007 and 2010-2018 Average income Average 2001-2007 and 2010-2018  80  18  90 18 80  17  17  16  16  15  15  70  70  60  60  50  50  40  40 14  Average 2000-2007 and 2010-2018  01  04  07  10  13  16  00  04  08  12  16  14  Note. Per cent of wage replaced after preliminary tax for medium and low income earners during three months of unemployment and number of fixed-term employment contracts as a percentage of the total number of employees. Sources: The OECD, Statistics Sweden and own calculations  Changes on the labour market may have contributed to lower prices and wages The period following the financial crisis was a challenge, from a monetary policy perspective. Inflation has on many occasions been lower than expected and even below the target. On average, inflation measured in terms of the CPIF has been around 0.3 percentage points lower after the financial crisis than before, see Figure 3a. But it is not only inflation that has been lower than expected, wages have also been lower. Wage increases have been around 1.1 percentage points lower after the financial crisis, see Figure 3b.

5 See ECB (2020), “ECB announces € billion Pandemic Emergency Purchase Programme (PEPP)”, 18  March. 6 See Schnabel, I. (2020), “How long is the medium term? Monetary policy in a low inflation environment”, speech  at the Barclays International Monetary Policy Forum. 7/7  BIS central bankers' speeches
It falls if decisive and correct policies are applied and low inflation and permanent price stability can be continuous if only these policies are carried on. We should not forget that inflation was not only the most important problem of our country for years but also kept us from seeing the existing problems in the society and in the economy. Attaining price stability will repair the damage of the economy caused by high inflation and will help us see other unnoticed problems hiding behind inflation. The key to erasing the traces of past period high inflation and to solving other problems of our country is structural reforms. Today, the process of erasing these traces begins with operation of dropping six zeroes from Turkish lira. I would like to underline that an important issue here. In some countries that had dropped zeroes from their currencies this operation was conducted as a part of the disinflation policies. However, in our country it is the consequence of the successful implementation of the stability program that has already reduced inflation considerably. Within this framework, YTL to be issued as of January 1st, 2005, depicts both the decline in inflation and our determination to achieve price stability. Before I finish, I wish to repeat a remark I made two years ago at the start of the fight against inflation. “Above all, people deserve to live in an environment where price stability is achieved.” Thank you for listening. BIS Review 63/2004  5

I also firmly believe that the process must be carried out with pragmatism and completely in tune with reality rather than based on a theoretical scheme or vision. * Mr Chairman, ladies and gentlemen, we are living through an extremely difficult period of economic history. I am nonetheless firmly convinced that in France and Europe we have both the tools necessary to help us out of this crisis and the necessary vision to guide our actions. The public authorities have shown their willingness to shore up the financial system. It is now essential that the system proves to be dynamic and takes the initiative, as it has in the past, so that the credit that is essential to the economy is available in sufficient quantity and quality. I am sure that Crédit Agricole will, as it has in the past, muster the necessary energy for the benefit of our economy. Thank you very much. 6  BIS Review 130/2008
If a lot of companies during the overheating period, have based their investment decisions on incorrect expectations of the demand trend, the fall can be great. The example shows a development where monetary policy by acting too late creates high variability in both inflation and output. The effects need not be visible either until after the forecast horizon. The economic costs of waiting too long to change the direction of monetary policy can be high if imbalances have grown great and the fall in production is large. The same course of events as in USA? Although the prospects for the Swedish economy look very bright, we cannot therefore disregard the risk of overoptimism. History has shown many times that an optimism that was well-founded to start with has become self-reinforcing and has ended up by creating considerable imbalances in the economy. Developments in Japan in the 1980s and in Asia in the 1990s are clear examples of this. The exceptionally long upswing in the USA has contributed to strengthening expectations of faster long-term growth in Sweden as well. It is therefore important to understand whether an American level of growth is sustainable in the long-term and whether anything similar can take place in Sweden. An important basis for the favourable development in the USA is probably the focus on budget consolidation and price stability that has guided economic policy there for a long time. We have had a similar development in these areas in Sweden, although the process started later here.

As investment activity is becoming increasingly complex, so are the demands of corporate governance. In conformity with the private financial sector, central banks - the SNB counts itself among them - have professionalised their investment and risk control processes and improved their accountability toward the public. With increased professionalism, particularly as a result of applying the mark-to-market principle, the SNB’s profits are more volatile than in the past, however. In order to safeguard the independence of monetary policy and so as not to restrict investment policy, the SNB’s annual profit distribution - as already spelled out in the message of the Federal Council on the new National Bank Law - must remain a variable residual amount in the long term and must not be tied to any specific purpose. BIS Review 55/2003  1