samchain/econo-pairs-v1 huggingface dataset:
Systemic Risk Relieved of our responsibility for supervising individual banks - and it is a considerable relief I can tell you - the “new” Bank can concentrate its energies on detecting and limiting systemic financial risk. That is a responsibility of central banks everywhere, and because it involves close monitoring of economic and financial market developments nationally and internationally - it fits more naturally and comfortably alongside our responsibilities for monetary stability. This responsibility will be overseen by a new, internal, Financial Stability Committee which effectively parallels the role and procedures of the Monetary Policy Committee. What we mean by “systemic risk” specifically is the danger that a failure of one financial business may infect other, otherwise healthy, businesses. This could happen in either of two ways: first through the direct financial exposures which tie firms together like mountaineers, so that if one falls off the rock face others are pulled off too; and second, by contagious panic which sweeps everyone off the mountain side like an avalanche. The dangers still relate particularly to commercial banking businesses, because banks are still at the centre of payments and settlements systems, and they are still relatively heavily engaged in the maturity transformation of liquid liabilities into less liquid assets as an important part of their core activity. But it is of course clear, in today’s world of global finance, that disturbances with the BIS Review 18/1998  -7-  capacity to inflict systemic, financial, damage, and associated economic disruption, can originate outside the commercial banking system.

Still, we must be aware that accumulated trust does not suffice; in our present world such trust must be renewed every day, on the basis of the ability to respond to new demands and challenges. I will comment on some of these challenges towards the end of my presentation. On the recent evolution of the economy, the most noticeable event has been the drop in inflation. After several quarters in which the annual CPI variation was above 4%, in recent months it fell sharply to 3%, placing y-o-y CPI inflation at 2.9% in November. We had foreseen inflation declining at a slower pace. In the Monetary Policy Report we presented to the Senate last September, we projected that annual headline inflation would close this year at 3.5%. Today, private expectations—as well as our own—put it a little under 3%. In addition, in the baseline scenario I will be describing in a moment, we assume that this decline will continue, such that during most of 2017 annual CPI inflation will stand in the lower part of the tolerance range, to start converging back to the target by year’s end. Domestic activity has also shown some surprises. It grew in line with forecasts in the third quarter and even somewhat better in sectors not related with natural resources—what we call Other GDP. However, it began the fourth quarter quite poorly. The decline in mining activity weighed significantly, as has been the trend throughout the year, and so did some specific industry lines.
It starts with a boy being taught the history of the Olmecs, Mayans, Toltecs and Aztecs; of the Grito de Dolores of Don Miguel Hidalgo – the real “Zorro”; and of La Reforma of Don Benito Juárez. It starts with a boy who spent Saturdays at las charreadas, cruised the then-clean waters of Xochimilco, water skied on Lake Tequesquitengo, and whose mother took him on Sundays to La Villa to the Basilica of Our Lady of Guadalupe. It starts with a boy laughing at Cantinflas and weeping for Marcelino Pan y Vino. It starts with a boy playing Little League baseball for los Tigres and later, los Leones, coached by a man named Norman Borlaug. On weekends, Mr. Borlaug would take that wideeyed boy on tractor rides through corn and wheat fields, where at the end of the day they would eat paletas while the coach analyzed samples from the fields. Those samples became the basis for the Green Revolution that he started in Mexico and that ended up feeding billions of people around the world. Well, I think by now you know that the boy I’m speaking of is me. I may be the only central banker on the planet whose Little League baseball coach went on to win the Nobel Peace Prize! My fondest childhood memories are from Mexico.

The problem we face is that unemployment’s critical level cannot be identified for certain and we do not know when shortages and rapid wage increases will actually arise. Estimating these matters is difficult and the results cannot be taken for granted. It is therefore hard to tell how much scope there is for a temporary phase of economic growth above the long-term trend. The ability to look ahead and formulate monetary policy cautiously is particularly important when an economy is moving further and further along an upward phase. Otherwise there is a risk of price and wage increases accelerating so that the brakes have to be applied more abruptly later on, leading to a situation that is worse than would otherwise have been the case. Thus it is in this phase of rising activity that we can be said to influence the depth of the next slowdown. It was the overheating in the late-1960s, the mid-1970s and the end of the 1980s that set the stage for the subsequent deep troughs. And each recession was worse than its predecessor. Looking back, it is easy to see that economic policy ought to have been tightened much earlier than was the case on those occasions. At the same time, it has tended to be difficult, not least in fiscal policy, to take such measures sufficiently early, particularly as that needs to be done before the problems are clear to everyone.
As a result, we hope that the forward guidance on the monetary policy stance of the Bank of Albania will be adequately understood by all market agents and the public. Banks and entrepreneurs should use this opportunity to boost their activity resting assured that the central bank will continue to sustain and support their activity. In addition to the monetary policy easing, the Bank of Albania has paid special attention to the reform in the financial sector and the prudent supervision of the banking sector. The Chair of the Board of Governors of the Federal Reserve System, Ms. Yellen, in a statement not long ago leaves no doubt about the necessity of reforms in the financial sector, I quote “... a sine qua non for sustained economic recovery following a financial crisis is a thoroughgoing repair of the financial system.” From the perspective, in cooperation with the Parliament, government and other public regulatory entities we have undertaken a series of legislative and regulatory initiatives, aimed at creating incentives for the recovery and assurance in lending. Thanks to the reforms we have undertaken during this year, we have started to reap the first positive results as regards the situation of the non-performing loans. As a result, the ratio of the non-performing loans fell for the first time after almost seven years of continuous rise. The write off of loss loans, as I have explained in previous statements, was the finalisation of joint inter-institutional efforts.

Thank you. 1 Source: IMF World Economic Outlook Database, April 2019. 2 A Gini coefficient of 0 means everyone has the same income, and 1 means all disposable income of an  economy is concentrated on one person. The Gini coefficients quoted are based on household income before taxes and transfer payments. Sources: Census and Statistics Department (Hong Kong) and the Congressional Budget Office (US). 3 Domanski, D., Scatigna, M., & Zabai, A. (2016). Wealth inequality and monetary policy. BIS Quarterly Review  (March). 2/2  BIS central bankers' speeches
2  BIS Review 27/2007  Ladies and gentlemen. I would like to reassure you that we have always welcomed genuine foreign capital flows and investors and will continue to do so. The measure implemented in December was not meant to affect genuine investors and this was clear from the beginning. The measure announced on 18th of December clearly stated that capital inflow in the form of foreign direct investment (FDI) was exempted from the reserve requirement. And later on, as it turned out that genuine flows were still affected by the measure, we attempted to find an alternative option to alleviate pressure on the baht and adverse effects on productive sectors. To date, the exchange control measure has effectively slowed down the appreciation of the baht. On average, the nominal effective exchange rate in February strengthened by only 0.5% relative to January, compared to an appreciation of 1.7% between November 2006 and the first half of December – before the measure was implemented. After we have successfully slowed down the one-way appreciation momentum, we have allowed greater flexibility to the measure without compromising the needs to contain excessive volatility – by providing the fully-hedging option for all categories of inflows that are covered under the reserve requirement measure. We will closely monitor the hedging requirement. If its implementation is effective, we can lift the reserve requirement and keep only the hedging requirement. In safeguarding economic stability and fostering long term growth, the BoT also looks beyond the immediate horizon.

From a central banker’s standpoint, the role of asset prices in general and of inflation-indexed bonds in particular in the process of setting monetary policy is mainly related to their information content on future economic activity and inflation. As you have already probably noticed, the Governing Council of the ECB sometimes refers to the information delivered by the changes in the inflation-indexed bond yields both in its introductory statement and in its comprehensive assessment of recent economic and financial developments, as presented, for instance, in the ECB’s Monthly Bulletin. To elaborate further on this, I will develop three points. First, I will describe the information content of inflation-indexed bonds and explain why this information is relevant for central banks. Second, I will highlight some of the main drawbacks and potential biases that may alter this information content. Third, I will briefly review the other indicator variables that we also use in our cross-checking exercise at the euro area level. Finally, I will conclude my presentation by raising the issue of what I call the  1  Robert Shiller: “The Invention of Inflation - Indexed Bonds in Early America”, NBER Working Paper N°10183, December 2003. 2  In the year prior to the introduction of the indexed bond, the inflation rate was at 69.2% in Brazil, 22.2% in Chile, 19.7% in Colombia, 34.8% in Argentina, 16,1% in the UK in 1974 and still at 14% in 1980.
I would like to discuss the changes in the financial environment and how they affect our different areas of operation, but before I do so I shall talk about the Riksbank's main role in the financial system, namely to provide the Swedish economy with safe money that is easy and efficient to use. The Riksbank provides the economy with money that safe and simple to use Money is needed so that we can buy and sell goods and services. If we are to have confidence in money, and want to use it, it needs to be both safe and easy to use. This requires in turn financial stability, price stability and smoothly-functioning payment systems. Let me describe how the Riksbank tries to create the right conditions. If we start with money being safe, this means that one can rely on money representing a particular value in goods and services, and that it will retain this value until the day one wants to redeem it for goods and services. The pieces of paper that we issue have no value in themselves, but function as a form of evidence that someone has produced something of value. 2 In the academic literature there is, for instance, a branch known as ‘monetary economics’ or in its modern form, ‘new monetarist economics’ 3, which looks into why money arises and under what conditions it retains its value.

When these transitory influences drop out of the year-over-year numbers this spring, the inflation rate is likely to move higher. Importantly, even as inflation undershot the FOMC’s objective over the past year, inflation expectations have been broadly stable. I would be much more concerned if low inflation outcomes were contributing to a decline in inflation expectations. That would make it more difficult to push inflation back toward our 2 percent objective and would increase the risk of getting stuck at the effective lower bound for interest rates following the next economic downturn, which inevitably will come. Even if inflation were to remain somewhat below 2 percent over the near future, that might not be a serious problem, if the economy were to continue to perform well in other respects. To me, it would imply that the unemployment rate associated with “maximum employment” is lower than current estimates and that we could let the labor market tighten a bit further. This would be a positive outcome because the productive capacity of the U.S. economy would be enhanced and more people would be able to find jobs, develop their job skills, and build their human capital. In short, 2018 looks like it will be a good year for the economy. I anticipate that the Federal Reserve will make further progress in achieving its dual mandate objectives of maximum sustainable employment and price stability. If circumstances evolve close to what I have outlined today, I will continue to advocate for gradually removing monetary policy accommodation.
Moreover, the influence of demand on prices will also depend on future changes in the epidemiological situation, the pace of recovery processes when vaccines become widely used, and an improvement of consumer sentiment and business expectations. As we could observe in summer and early autumn, when the situation returns to normal, the recovery may be sufficiently quick. At the moment, we consider it too early to adjust our medium-term inflation forecast since it is necessary to also analyse the effect of competing factors on price movements. As regards the near future, our preliminary estimates show that annual inflation will approximate 5% in 2021 Q1. Further on, if the influence of one-off factors diminishes rather fast, it will trend down and return to 4% by mid-2021. Given the accommodative monetary policy pursued, inflation is expected to equal 3.5–4.0% by the end of 2021, subsequently stabilising close to 4%. We will carry out an additional analysis to assess whether there are grounds for adjusting our forecast in February, for the core meeting on the key rate. As regards other risks for medium-term economic development and inflation, their estimate has remained unchanged overall. Various geopolitical risks are still relevant — they may provoke fluctuations in financial markets, affect exchange rate expectations and sentiments, and influence trends in the Russian and global economies. As always, further changes in budget spending are a critical factor. This has a considerable influence on our monetary policy decisions.

During the year, apart from enhancing the regulatory environment, MAS worked with other government agencies to improve the tax and legal environment for financial institutions involved in the wealth management business. The new Trustees Act is expected to come into force later this year. MAS will also be introducing a framework to regulate trust companies. The proposed framework will ensure high standards of business conduct, professionalism and competence in the trust services industry in Singapore. The Singapore dollar bond market has developed beyond serving the needs of just local borrowers and has attracted a diversified base of foreign issuers as an alternative venue for cost-effective funding. Large issuers, including Freddie Mac, Fannie Mae and Asian Development Bank have found cost-effective opportunities to tap our bond market. In five years, the market has grown significantly in breadth and depth. Product range has also increased significantly. Structured products now account for more than half of the Singapore dollar bond market. The asset securitisation market has also gained traction, recording a fivefold increase since 1999. To further enhance the attractiveness of Asian capital markets, MAS has, over the past year, worked with various governments in the region to encourage investor demand, and to address market access and market infrastructure issues. The Asian Bond Fund or ABF is one such initiative. After the successful launch of ABF 1, the Executives’ Meeting of East Asia-Pacific Central Bankers or EMEAP is making good progress on ABF2 to invest in local currency-denominated Asian bonds.
6 [20]  of the problems among the general public, market participants and economic policy decision-makers. But it is, of course, necessary that this raised awareness results in concrete measures or changed behaviour that counteracts the financial imbalance. It is doubtful, as far as Sweden is concerned, whether it can be said that this has been the case, at any rate not to such an extent or at such an early stage as could have been hoped for. The fairly modest leaning against the wind that we practised was thus insufficient to halt the build-up of debts and housing prices. Nevertheless, I myself was not prepared to keep the rate any higher than we did in an attempt to achieve this. This was also apparently true of the Executive Board as a whole. If we had set the repo rate significantly higher, the increase in indebtedness would perhaps have stopped more permanently, but, at the same time, there is a severe risk that the development of the economy would also have been significantly worsened. Perhaps even more importantly, the development of inflation would have been even weaker than it actually was and it would have been even more difficult to bring it up and maintain confidence in the inflation target. One further conclusion, or lesson, is that a policy that leans against the wind requires that there is confidence in the inflation target.

Why is it not possible for monetary policy merely to stabilise the real economy or lean against the wind? Such a monetary policy arrangement would be well in line with the new thinking in the international debate that I presented in my introduction, in particular if this were to be taken to its logical conclusion. 12 I intend to return to this debate soon, so let me put this issue to one side for a moment. Conclusion (ii): Fairly significant interest rate rises may be needed to brake the build-up of financial imbalances One issue in which I have gradually revised my opinion in recent years is that of how much a central bank should and must lean against the wind to deal with the build-up of a financial imbalance. Previously, I had a rather strong belief that leaning against the wind relatively moderately could have a good effect, primarily by sending a clear signal that the central bank is concerned over developments and perceives them to be risky. Today, I am more doubtful about this. It certainly seems reasonable that the effectiveness of such a strategy will vary over time and from economy to economy, depending on the exact circumstances, for example regarding market sentiment and debt levels, but overall I am significantly more sceptical than before. I still believe that a certain degree of leaning against the wind, combined with clear communication of the risks, could increase awareness 12 For one example, see Scholes and Alankar (2017).
On the first one, our revision to core inflation – I've started answering already in the previous question–, a lot of it is attributable to the unit labour cost. That's a large chunk of the revision. The rest is what you have in the monetary policy statement, which is past upward surprises. So, it's a different starting point, which is informed by data that came in after the last projection that we made in March. The latest data that we had in terms of inflation was from January. Now, things obviously changed between those January data and the May data that we have incorporated because we cut off on the 23 May1. I think that's a small part of it. The large part of it is the unit labour cost. You asked me about the decision and the atmosphere. I have to tell you that it was quite a harmonious discussion and a very good and thorough economic discussion. As I said, we went really deep into the analysis of the labour market and tried to really understand the forces behind inflation to better fight it. It was a very, very broad consensus. By the way, I just want to remind that it was a twofold decision. It was, number one, the 25 basis points but it was also the decision, or the confirmation, that we would stop any reinvestment under the APP. What does the ECB know about lag effects? What takes longer to transmit into the economy? What are you looking at more closely?

Christine Lagarde: ECB press conference - introductory statement Introductory statement by Ms Christine Lagarde, President of the European Central Bank, and Mr Luis de Guindos, Vice-President of the European Central Bank, Frankfurt am Main, 15 June 2023. *** Good afternoon, the Vice-President and I welcome you to our press conference. Inflation has been coming down but is projected to remain too high for too long. We are determined to ensure that inflation returns to our two per cent medium-term target in a timely manner. The Governing Council therefore today decided to raise the three key ECB interest rates by 25 basis points. The rate increase today reflects our updated assessment of the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission. According to the June macroeconomic projections, Eurosystem staff expect headline inflation to average 5.4 per cent in 2023, 3.0 per cent in 2024 and 2.2 per cent in 2025. Indicators of underlying price pressures remain strong, although some show tentative signs of softening. Staff have revised up their projections for inflation excluding energy and food, especially for this year and next year, owing to past upward surprises and the implications of the robust labour market for the speed of disinflation. They now see it reaching 5.1 per cent in 2023, before it declines to 3.0 per cent in 2024 and 2.3 per cent in 2025. Staff have slightly lowered their economic growth projections for this year and next year.