samchain/econo-pairs-v1 huggingface dataset:
Weaker developments both abroad and at home have had an impact on the Norwegian labour market. Unemployment has increased. Decisions concerning saving and investment are affected by the real interest rate, that is the nominal rate minus expected inflation. The real interest rate is also low. An enterprise investing in productive capital will typically apply a longer perspective than a household buying durable consumer goods. Enterprises’ cost estimates will be based on the interest rate and expected inflation in the long term, while short-term interest rates and expectations will be more important to households. Monetary policy influences inflation indirectly via domestic demand for goods and services and via its effect on the exchange rate. Because changes in the economy take time to feed through, monetary policy functions with a lag. It will therefore take time for all the effects of the substantial changes in the interest rate since December 2002 to come into evidence. When interest rates fall, consumption rises both because disposable income increases and because it is less profitable for households to save. Borrowing also becomes less costly, with an associated rise in investment. Higher demand leads to higher employment. Another important mechanism is that lower interest rates make it less attractive to invest in NOK. Lower interest rates will therefore normally lead to lower capital inflows and a weaker krone. Imported goods thereby become more expensive and inflation can rise relatively rapidly.

Denis Beau: Emerging supervisory priorities - technology, risk culture and sustainability Opening remarks by Mr Denis Beau, First Deputy Governor of the Bank of France, at the BCBSBSCEE-FSI High-level Meeting for Europe on Banking Supervision, Session: “Emerging supervisory priorities: technology, risk culture and sustainability”, Vienna, 21 May 2019. * * * Accompanying slides of the speech. Along with some other national central banks, in particular the Bank of England and the Dutch National Bank, the Banque de France ant its supervisory arm, the ACPR has started to work on sustainability risks since 2015, in particular on financial risks arising from climate change. This willingness to take ownership of this issue was linked with the requirement from the French Energy Transition Act of 2015 to prepare a report discussing the feasibility of stress-testing exercises focusing on climate change-related risks, though the scope of the report was finally broader as it discussed the relevance of these risks for French banks. Our conclusions, published in March 2017, were that climate-related risks, in particular transition risks in the case of French banks, were relevant for financial stability, although the horizon of materialization was perceived way beyond the one underlying most of the risks we currently supervise and horizon of decision of banks. From this point of view, it was deemed within the mandate of the supervisor to raise  awareness and enhance ownership of these potential risks throughout the banking sector via regular meetings with institutions.
The question of whether they are relevant can be answered quickly. There is a broad consensus on several interconnections. Equity and real estate prices determine household wealth and therefore influence consumer demand. This aspect must certainly be taken into account. Another factor impacting monetary policy is the interdependence between equity prices, the cost of capital, and the demand for capital goods. Moreover, asset prices, especially real estate prices (as collateral in the credit business) can change financing conditions. This can undoubtedly have repercussions for the economy, at least if the prices fluctuate sharply. As indicators for the development of overall demand, these effects must feed into economic forecasts which unavoidably exert an influence on monetary policy. Above and beyond these aspects, there is a general consensus that, in the event of an asset price crash, central banks must react to the sharp increase in liquidity demand. Such willingness to react is the consequence of the central banks’ responsibility for the stability of the financial system. In addition to this accepted premise, however, the discussion - especially in the financial press focuses on two calls for action that go even further. Most central banks, however, are sceptical or opposed to such demands. First, some claim that central banks should not remain passive when confronted with a bubble in the making, but rather take a proactive stance so that an abrupt or even dramatic adjustment does not occur at all. There are convincing counter arguments to this opinion.

If, however, the central bank still harbours an uncertainty and - for example - still wishes to await the disclosure of figures, it should refrain from making a prior announcement as it would then find itself under a constraint. For if, in response to a signal received, the markets anticipate the interest rate move, the central bank will hesitate, out of concern for its credibility, not to implement the signalled move. This may well result in an endogenous interest rate policy: the central bank becomes, through its own fault, the prisoner of market expectations - an absurd notion. A central bank should inform openly about its long-term designs. At the same time, it should not hesitate to make interest rate decisions, if necessary, which come as a surprise to the majority of market participants. 4. The “new economy” - fact or fiction? The term “new economy” is certainly vague, which may be the very reason why it is popular. Coined in the United States, it is used as a label for several hypotheses which strive to explain the performance of the US economy in the second half of the 1990s. Poorly explained by most conventional macroeconomic models, this economy is characterised by continued high growth rates, unexpectedly robust productivity, and long-running low unemployment, combined with very little inflationary pressure. These attempts to explain the phenomenon termed “new economy” refer to two prominent areas of change.
Broadly, having emphasised the importance of not undermining contractual obligations, the principles stress that all private creditors should accept responsibility for their lending and investment decisions – without expecting to be underwritten by the official sector. They encourage co-operative solutions between the debtor country and its creditors, building on effective dialogues established in advance. The tools link official support to efforts by the debtor country to obtain private financing – or maintain existing exposures – on a voluntary basis, and provide for comparability of treatment within the Paris Club, of all categories of creditors other than international financial institutions. They include mechanisms that can be used to limit the use of official financing to fund external deficits or domestic capital outflows or to repay private sector debt. And they provide ultimately for capital controls, as part of payments standstills, in conjunction with IMF programmes. So we have the principles and we have the tools. What we still need to develop is a better framework of understanding as to how they might normally be applied. I agree of course that we should not adopt hard and fast rules, because to a degree each case is different. But we do need to develop some kind of presumption about the limits within which IMF support might be made available to member countries in different situations, and the conditions, relating both to adjustment action and to private sector financing that would normally be applied.

These objectives of macro-economic policy – monetary and overall fiscal policy – will certainly be familiar to you in this country; they are at the heart of the policies being pursued right across Europe;  BIS Review 36/2001  1  and they are the policies endorsed, too, by all the members of the IMF in the Madrid Declaration adopted at the IMF Annual Meeting in 1994 and expanded and updated two years later. Of course on occasion the flesh proves to be weaker than the spirit – and achieving these macro-economic objectives is not easy in practice even as a technical matter. But the intention – the international commitment to macro-economic stability – is clear. Acceptance of the aim of macro-economic stability served to bring into sharper focus the structural, supply side, of the economy – that is the whole raft of influences that can affect the underlying growth rate of capacity and thus the growth rate of aggregate demand that can be sustained. And here, too, there has been a strengthening international presumption in favour of open markets and free competition – both domestically and internationally – with a continuing strong presumption against predatory trade or exchange rate manipulation. The justification is that undistorted competition contributes to potential global economic growth through increased efficiency and the more effective allocation of productive resources. Faster growth in turn provides a more favourable context for addressing social concerns, including the issue of poverty.
And if they are completed successfully and demonstrate meaningful benefits for the countries involved, they can be replicated very quickly to other interested jurisdictions. Singapore is helping to drive many of these market integration initiatives through our participation in ASEAN/ASEAN+3, APEC and G20, but also bilaterally with our economic partners. 21. Vertical integration through the value chain can achieve cost efficiency and more effective surveillance, particularly in capital markets and in OTC derivatives. Let me elaborate: a. Capital Markets. Although the ASEAN Trading Link created horizontal integration opportunities for investors to access ASEAN stocks of members in the trading link, settlement and custody still goes through non-exchange channels. This Link can be further enhanced and it is the reason why the ASEAN regulators and exchanges set up a task force to design the ASEAN Capital Markets Infrastructure Blueprint to implement post-trade linkages that are vertically integrated with exchange trading. The post-trade infrastructure linkages, which will allow investors in one country to purchase shares in the other markets through their local broker and hold them in their local account, will lower not only cost and transaction time, but also settlement risks. b. OTC Derivatives. Many jurisdictions will eventually implement the full suite of trading, clearing and reporting mandates. Indeed, the way the OTC derivatives market has blossomed today – if we extend the metaphor – is to “allow a thousand flowers to bloom”.

Jacqueline Loh: Integrating Asia’s capital markets Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the ASIFMA (Asia Securities Industry and Financial Markets) Annual Conference 2014 “Developing Asia’s Capital Market”, Singapore, 5 November 2014. *  *  *  Mark Austen – CEO, ASIFMA Ashley Alder – CEO, Hong Kong Securities and Futures Commission and my fellow keynote speaker Fellow regulators and central bankers Distinguished guests Ladies and gentlemen 1. It is my pleasure to join you this afternoon at the ASIFMA annual conference held in Singapore. 2. We have a very ambitious agenda ahead of us. The title of the conference, “Developing Asia’s Capital Markets”, certainly does not do full justice to the breadth of topics covered in the breakout sessions and roundtable discussions over these two days. These topics are very wide ranging indeed, from traditional equity and debt markets, to foreign exchange, investment banking, fund management, financing of Asia’s infrastructure needs, market infrastructures; as well as specific geographic markets China and India. Each segment not only aims to address opportunities and challenges in each market or asset class, but also opportunities and challenges across markets and asset classes. 3. Accordingly, I will focus my remarks on integrating Asia’s capital markets as a natural pairing to the conference theme on developing Asia’s capital markets. I. Economic dynamism and wealth creation in Asia  4.
And I insist that, in the current circumstances, this decision must be taken promptly, if the necessary capital is to be raised for the projects that need to be developed. Firms in other sectors of the economy, savings bank workers, the public in general and welfare projects will ultimately be the true beneficiaries of concentration processes conducted in accordance with the criteria of rationality I have referred to. The Banco de España, in its capacity as the supervisory authority, has adapted the organisational structure of its supervisory services to the new savings bank map, in order to monitor meticulously the progress of each project. Before concluding, I must draw attention to an urgent outstanding task. Over the past year, savings banks have performed an excellent job of self-criticism, reform and adaptation which, in my opinion, has only been partly publicised and explained to all parties interested in their welfare: the financial markets – on which they depend for the lifeblood of funds to conduct their activity – and the public, who are the ultimate beneficiaries of the banking services the savings banks provide. Businesses, balance sheets and income statements have been integrated, market values, capital gains and capital losses have been recognised, and assets have been written off in the concentration processes, which will be recorded in the accounts at year-end 2010. This overhaul and the key future milestones in the concentration processes (relating to resources, systems, human resources, etc.) have not been sufficiently communicated to all interested parties.

While as a general rule I am against this invasion of jargon, perhaps in this specific case the initials are preferable to the longer version, because IPSs, the focus of this conference, are not merely “institutional protection schemes”, or legal instruments suitable for securing the benefits of consolidation under capital regulations. They are and should be much more than that. IPSs have arisen as an innovative structure in the banking system and, like all new products, they are best evaluated by organising their assessment in steps, or successive degrees of scrutiny, so that at the end of the process their structure can be fully appreciated. The first step in the process of evaluation will be to judge whether they are timely. The second will focus on their design and construction. The third will be a “use test”. And the fourth and final level of assessment will look at how readily they lend themselves to progressive development so as to cover potential future needs. Allow me to cover these successive steps or facets one by one. Let us start with the first, their timeliness. IPSs are a response to an unquestionable substantive need: the downsizing of the Spanish banking sector, following the excesses of the growth period prior to 2007. These factors left many institutions facing the challenge of a future far removed from the comforts that had characterised the previous period, namely: strong economic growth, abundant liquidity on international markets, extensive business margins and healthy assets.
15  In 1980 bank deposits accounted for 45% of total financial assets, currently their share dropped to 30% (McKinsey Global Institute 2005 – ibidem). 16  It is called the Feldstein-Horioka puzzle, after the two economists, who were the first to empirically prove its existence (Feldstein, 2005). 17  Feldstein M. Monetary Policy in a Changing International Environment: The Role of Capital Flows, NBER Working Paper 11856, 2005. 6  BIS Review 32/2006  growth of cross-border capital flows. What does that mean to the monetary policy? If domestic and foreign financial assets are treated more and more as perfect substitutes, domestic interest rates, especially mid- an long-term ones, are determined on the global market, and thus the influence of particular central banks on their level is weakened. This phenomenon is already observed in the USA. Although the key interest rate of the central bank has been raised from 1.00% in 2004 to 4.75% at present (i.e. by 3.75 percentage points), long-term interest rates, which are more important from the aggregate demand perspective, have remained roughly unchanged 18 . As a result, the effect of tightening the monetary policy on the aggregate demand has been significantly contained due to lack of response from long-term interest rates. In the world of global financial markets nobody seems to be surprised by the fact that during the session of the Federal Open Market Committee (FOMC 19 ) of the American Federal Reserve, the eyes of the entire financial market are fixed on its Chairman. Why is that?

Additionally, an important feature of development of the financial market is the gradual fall in significance of intermediation of the banking sector with a simultaneous increase of significance of the market intermediation 15 . As a consequence, the central bank’s channels of influence on the economy are changing. In the past the bank loan channel was deemed more important; it is now loosing its significance in relative terms. Until recently, the investment rate in the economy was to a large extent dependent on the domestic savings rate, which by the way was contradictory to one of the fundamental assumptions of some economic models of the full integration of capital markets. The economy was featured by the so-called home bias i.e. greater inclination of domestic investors to invest in domestic assets rather than in foreign assets 16 . The latest research 17 suggests that home bias over the past years could have dropped significantly, at least in the OECD countries. The decrease may be attributed to the very  11  Chen N., Imbs J., Scott A. “Competition, Globalization and the Decline of Inflation”, CEPR Discussion Paper No. 4695, 2004. 12  Melick W., Galati G. “The Evolving Inflation Process: an Overview”, BIS Working Paper No 196, 2006. 13  Hannoun H. “Internationalisation of financial services: implications and challenges for central banks”, Conference of the SEACEN Governors Bandar Seri Begawan, Brunei Darussalam, 4 March 2006. 14  McKinsey Global Institute, $ Trillion and Counting: Taking Stock of the World’s Capital Markets, February 2005.
Risk management is in line with what we have stated in it, particularly in relation to the Strengthening of the Policy Framework, including the identification of emerging risks and trends, as well as the incorporation of the concept of sustainability across all areas of the Bank's work. The aim is to strengthen the policy with an integral view of the processes and associated risks. Contents of this Meeting In recent decades, central banks have confronted new challenges in their risk management. The great financial crisis and later the Covid-19 pandemic triggered both a qualitative and a quantitative change in the operations of central banks, which was reflected in the size and composition of their balance sheets. For example, the Fed's balance sheet went from less than 10% of GDP in 2007 to close to 40% in 2022. In the case of the Eurozone, the increase was even greater, as it went from just over 10% to a maximum of 70% in the same period. As for the Central Bank of Chile, the size of the balance sheet stood at between 10 and 20 percent of GDP until 2019, peaking at just over 30 percent in 2021. From then on, as operations that arose during the pandemic have expired, it has been declining and by the end of 2022 it stood at 26.2 percent of GDP. Measures to provide liquidity to economies exposed to unprecedented shocks, in extraordinarily complex and uncertain circumstances, drove central banks to implement unconventional monetary policies.

To conclude, I would like to thank CEMLA, the co-organizing central banks for putting together this meeting and the team at the Central Bank of Chile for their work and for arranging the logistics of this event. Currently, when we are living under very uncertain circumstances, it is especially relevant to be discussing risk issues. This is so because high uncertainty affects the evaluation process when making decisions, when assigning probabilities to certain events and, finally, how our institutions are governed and managed. There is no doubt in my mind that this meeting will enrich our knowledge on the subject. We will also benefit from the richness of the exchange of information between institutions, which I hope will show us the road to the future of risk management. I wish you very fruitful sessions today and tomorrow, which will encourage learning, generate more conversations over time and development collaborative work that will provide continuity to the topics that will be covered in these two days. Thank you very much. 3/3  BIS - Central bankers' speeches
Part of the reason for that has been that the oil price increases have been offset by lower price increases elsewhere. Most recently CPI inflation peaked at 2.5% during 2005 and has recently returned to that level (Chart 5). Given the relatively small immediate impact of higher oil and gas prices on CPI inflation, it is less surprising that this has not had major knock on effects. Indeed it is not clear how far it is possible to predict the movement of prices overall by adding up the movements of different components. You might expect overall inflation to be made up of a “core” of domestically produced and consumed goods and services which would be relatively stable and responsive to policy at home and a more unpredictable and uncontrollable component arising from oil and other world markets. But that doesn’t seem to match our recent experience. The CPI in total seems to have been more stable than the CPI adjusted to exclude the impact of energy and import prices. The rise in these external components of our inflation rate has been offset by lower price increases of domestically produced goods and services. Services inflation, for example, has weakened from 4.6 per cent in August to 3.4 per cent in June. This might be because UK price setters have chosen to take a hit to their margins or squeeze other costs rather than pass on higher oil and other import prices to their consumers.

Rodrigo Vergara: Macroeconomic and financial stability – challenges for monetary policy Opening remarks by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, at the XVI Annual Conference on “Central banking, analysis and economic policies” of the Central Bank of Chile, Santiago de Chile, 15 November 2012. *  *  *  I thank Sofia Bauducco, Gonzalo Castex, Maria Consuelo Edwards, Luis Oscar Herrera, Kevin Cowan, and Claudio Raddatz for helpful comments. Good morning. Welcome to the Central Bank of Chile’s sixteenth annual conference on Central Banking, Analysis and Economic Policies. This year’s version is about “Macroeconomic and Financial Stability: Challenges for monetary policy.” We are expecting two exciting days of learning and discussion on topics at the forefront of academic and policy research on macroeconomic and financial stability. The interaction between academics and policy makers fostered by this conference provides an important opportunity to learn from each other and share views and experiences that will help us improve our policy decisions and hopefully go home with new ideas for research. Today and tomorrow we will reflect on the role of central banks in preventing and reacting to financial exuberance and financial crises. The discussion will focus on two important policy questions: first, did the conduct of conventional monetary policy before the crisis contribute to shaping it? And second, how should monetary policy react to a crisis? In particular, we will discuss the efficacy of conventional monetary and macro-prudential policy action in ameliorating the effects of financial crises.