samchain/econo-pairs-v1 huggingface dataset:
The three points in the 2 chart reflect different types of inflation targeting. Strict inflation targeting means that only the variation in inflation is included in the loss function. No weight is given to output changes, thereby resulting in relatively high output variability. Monetary policy has the swiftest effect through the exchange rate channel. If inflation is higher than the inflation target, the central bank will raise its key rate sharply to reduce inflation quickly. This may lead initially to a relatively strong appreciation of the currency, which reduces imported inflation. As CPI inflation quickly approaches the target due to the change in imported inflation, demand is also reduced as a result of a higher real interest rate and stronger exchange rate. The change in demand will then influence inflation. In order to avoid a further reduction in the inflation rate, the central bank will lower the interest rate. The result of this policy will be considerable variations in nominal and real interest rates, accompanied by substantial variations in the nominal and real exchange rate and in output. Flexible inflation targeting implies that the central bank also puts some weight on output and employment variability. Output is therefore also included in the loss function. This means that the central bank will attempt to avoid the sizeable variations in output resulting from strict inflation targeting. The way to take account of output and employment under a flexible inflation target is to choose a relatively long time horizon.

Over time, growth in real wages must be consistent with growth in labour productivity. An inflation target of 2½ per cent and trend productivity growth of around 2 per cent, according to updated national accounts figures, imply annual nominal wage growth of about 4½ per cent. Under the “Solidarity Alternative” in the 1990s, a stable exchange rate and the rate of wage growth among our trading partners functioned as an anchor for the social partners. Up to 1997, this anchor remained effective. However, growth in labour costs jumped in 1998 and has since been around 2 percentage points higher than among our trading partners. Wage growth is high in relation to earnings in many enterprises. It is demanding to improve efficiency at the pace required to keep up with the rise in labour costs. 10  BIS Review 49/2002  The sharp rise in labour costs in recent years carries with it a potential for higher unemployment. The interest rate is an effective instrument for countering lower demand and growing unemployment when measures to stimulate demand do not translate into higher wage growth or unstable financial markets. However, there is little monetary policy can do to prevent an increase in unemployment that is driven by high cost inflation. Developments in wage settlements have been a driving force behind the appreciation of the krone. The foreign exchange market has responded as expected.
Larger companies, on the other hand, can draw on the openness of the economy and the prestige of local regulations to take advantage of the overseas bond market while avoiding undertaking FX risk. Corporations have learned to operate in a flexible FX environment by using both, natural and market-based FX risk hedging instruments. This, in turn, has also been supported by the development of the derivatives market, in which Pension Funds have been key counterparts as well. Page 7 of 20  Central Bank of Chile September 2019  Total external debt in dollars has been stable over the last few years, at around $ billion. A substantial part of this reflects the growing internationalization of the Chilean corporate sector. A large share of that total is associated with foreign direct investment (FDI) on local subsidiaries of multinational corporations. To the extent that FDI represents a commitment between related companies, the enforceability of debt repayment and the associated financial conditions respond to different factors than in the case of debt with other institutions, which mitigates risk in the event of an increase in financing costs. Among firms that report to the FMC, two-thirds of external debt is concentrated among companies that use the U.S. dollar as their accounting currency, this share has been stable over the last decade. Learning from previous episodes, the risks associated with external debt remain low, given the characteristics of the debt and an appropriate use of hedging by the firms.

Luis de Guindos: Interview with Telediario 2, Televisión Española Interview with Mr Luis de Guindos, Vice-President of the European Central Bank, and Telediario 2, Televisión Española, conducted by Mr Carlos Franganillo on 19 March 2020. * * *  One way or another, this massive asset purchase programme will be of particular help to those countries that have been deeply affected, such as Spain or Italy, to ensure that spreads don’t widen dramatically at this critical time. It will help all euro area countries. Some were in a weaker position; their public finances were also more vulnerable than others. But what the ECB will not allow is fragmentation of any kind in the sovereign debt markets and a return to the nightmare caused by widened spreads. We are dealing with a huge health crisis, there is a severe economic crisis and we are going to ensure that it does not result in some kind of financial crisis or debt crisis. This is what we are going to avoid because the ECB is at the service of the European people. The European Central Bank has said that it will do whatever needs to be done to combat this crisis. Does the ECB have more weapons at its disposal for the weeks or months ahead if the situation deteriorates? We can always do more. As you mentioned earlier in your news item, our commitment knows no limits.
Dimitar Bogov: Recent financial and economic developments in Macedonia Interview with Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, in The American Times, October 2013. *  *  *  Please offer our readers a brief on the functions of the National Bank of the Republic of Macedonia (NBRM) Our primary goal is price stability with a secondary goal of financial sector stability. Without jeopardizing the primary goal NBRM should support economic policies. The way in which we execute the primary objective is by pegging the exchange rate with the Euro. Pegging our currency has been our long term strategy since 1995, originally with the Deutsche mark. When one compares our inflation with that of the European Monetary Union the result is relative alignment; to put it in real terms, EMU inflation is at about 1.9% with Macedonia hovering at 2.2%. We have witnessed in the past 4–5 years several very important foreign direct investments. Some of them are so large that they already equate to roughly 17% of our exports. How has the global recession and currently, the strength of the Euro, especially when compared to the US dollar effected your ability to maintain price stability, if at all? It affected our economy because our largest export markets are EU countries, equating to 60%, whose demand for our products dramatically reduced.

So, from this point of view it means they can operate as a stand-alone but due to parent bank strategies they are inhibited. Do you think there is opportunity for more entrants in the banking sector? Currently at 16 banks, we have too many. In that case, do you see more mergers and acquisitions occurring? Yes, absolutely, in fact it is a process that I have been encouraging in the last 2 years, sending signals and urging banks towards this end. 7–10 banks would be ideal. There is another strong possibility that parent company banks may decide to sell their Macedonian subsidiaries, which are very solid banks, possibly resulting in some strong international brands entering the market. Based on your position and knowledge of the Macedonian marketplace. Please offer a personal message to our American Investor readers. Macedonia’s market is not yet saturated and there is room for investors at the earliest stages. We are actively pursuing and obtaining EU standards and EU accession is certainly something to benefit from when it does occur. First-movers entering this market will be the ones benefiting from the immediate and privileged market access. The beauty is that there are strong returns available now, not just after accession! BIS central bankers’ speeches  3
The rate since 1994, however, has averaged 1.9% and this cannot be attributed solely to cyclical factors. Thus it may indicate an increase in potential growth. While it is not yet on a par with the United States, where productivity growth has been accelerating in recent years, it does constitute an improvement. Neither would it be surprising if future productivity growth turns out to be somewhat higher than observers have counted on to date, though this is not a matter of any dramatic change. Certain indicators in the early part of this year, although still somewhat uncertain, may point to some upward adjustment. It would be interesting if this is confirmed because it would mean that productivity growth is tending to move up even in such a late phase of the business cycle. At the corresponding stage of the previous upswing in the 1980s, productivity growth had already slowed down and price and wage increases were beginning to accelerate. From this it can be concluded, at least for the time being, that the economic upswing in Sweden has not been just a cyclical improvement. It is also a result of factors that are more structural. The transformation of economic development and its new patterns naturally face forecasters and macro economists, including the Riksbank, with major challenges. From this I conclude that when making assessments of the future, we must be highly alert to new economic information and be prepared to reassess earlier models, relationships and forecasts as and when the need arises.

Moreover, we have to cope with home-brewed shocks as well. It is for these reasons that we are eager to keep an independent monetary policy. Furthermore, if markets became convinced that in the future the SNB’s actions would merely be a Xerox copy of the ECB’s monetary policy, they would rapidly force a convergence of our nominal interest rates with those of the eurozone. Our real interest rates might remain lower for a while, given our relatively large endowment of physical capital, but a tendency towards equalization would nonetheless set in. What this might mean for us is a higher inflation rate for some time, together with a collapse in asset prices and in domestic gross capital formation. A cocktail of higher interest rates and our high wage structure would be highly detrimental to our competitiveness in export markets. The third fear that was sometimes expressed, although here I must say I was rather sceptical myself, was that the euro could eventually make the Swiss franc obsolete. With many of our trading firms billing and paying their suppliers in euros, there might be a tendency for them to adopt the euro more generally for their accounting as well as for their domestic transactions. Some people even went as far as predicting that before long wages would be paid in euros. Shops, hotels and restaurants would rapidly be forced to accept euros, so that visitors from abroad would no longer see the need to convert their euros into francs.
The primary goal of an independent monetary policy in the Czech Republic, Sweden and Switzerland is price stability. Denmark bases the maintenance of its price stability on ECB policy, as Danmarks Nationalbank keeps the krone in a narrow fluctuation band to the euro. The Danish experience of recent years, in particular, provides interesting insights into unconventional monetary policy measures. 2  BIS central bankers’ speeches  Three phases of monetary policy in Europe since 2008 The period between 2008 and today can be divided into three phases. The first phase, from 2008 to 2011, has the global slump in demand at its centre. During this period, primarily conventional monetary policy measures were deployed. The second phase, from 2011 to 2014, is shaped by growing fears about the future of the euro area and, in the event of its collapse, potential consequences for neighbouring countries. This period sees the introduction of unconventional measures. In the third phase, from mid-2014 to the present, the emphasis lies on quantitative easing in the euro area and its effects on neighbouring countries. During this period, unconventional measures are adjusted and their deployment is stepped up. For each phase, I will illustrate the most important economic developments and how central banks reacted to them, and provide a brief interim conclusion. Finally, I will place these observations on monetary policy in a broader context, before summing up.

Much of the complexity in making progress in cross-border payments arises from the significant number of stakeholders in the public and private sector. The building blocks under this Focus Area are intended to drive meaningful, coordinated change at a global level over a sustained period. This will address frictions where complex regulatory, political and operational issues are prevalent. It will also provide the foundations to deliver interdependent building blocks in other focus areas. To date, much focus on removing frictions in cross-border payments has centred on technology and operations. But divergent regulation, legislation, supervision and oversight frameworks across jurisdictions, or overlaps and underlaps in frameworks, can reduce any benefits of such initiatives. The building blocks in Focus Area B are intended to foster greater coordination by advancing consistent international rules and standards. And this covers not just regulation of firms, or infrastructure providers but broader compliance and Anti-money laundering type issues too. That does not mean everything will end up being identical, but rather it seeks to promote greater consistency in rules and standards. The building blocks in Focus Area C are targeted at improving the existing payment infrastructures and arrangements to support the requirements of the market. This is at the heart of what we, as central banks, are doing. Addressing technical and operational restrictions rooted in the design of both international and domestic systems can tackle the key frictions underlying the challenges in cross-border payments, including different operating hours, access criteria and long transaction chains.
2  BIS central bankers’ speeches  From my perspective, Japan’s experience with forward guidance for the policy rate, asset purchases and a more formal inflation goal are particularly instructive, as this helped inform the later use of such tools in the United States. In early 1999, the Bank of Japan said it would maintain its zero interest rate policy until “deflationary concerns” were “dispelled.” This commitment was lifted in August 2000, and the BoJ raised the policy rate by a quarter-point. However, the BoJ was subsequently obliged to reverse course, and reintroduced forward guidance in March 2001. This guidance was tied to the realization of a new inflation objective. With deflation intensifying, the Bank of Japan embarked on a quantitative easing (QE) program in 2001 designed to increase the size of the monetary base. The Bank of Japan engaged in purchases of JGBs that were large in scale, but confined to short-dated maturities. This reflected a view that such purchases primarily acted through the liabilities side of the central bank's balance sheet – pushing up the amount of reserves in the banking system. Because the growth of the monetary base was deemed the goal of policy, it was logical to purchase short-dated assets, which could be allowed to run off once a sustainable recovery was in place. The downside of this approach was that the purchases did not change the composition of the private sector’s balance sheet very much because the policy essentially resulted in the exchange of one short-term risk-free asset for another.

We must all continue doing all we can to emerge from the current situation. Today, however, I wanted to pause and look beyond the crisis. For one thing, we do not know how deep and long it may be. But what is certain is that this crisis will end. We are certain we will finally emerge from it. This is not wishful thinking, but an empirical regularity. The economy has worked this way at least since the time Joseph interpreted the Pharaoh's dream about lean and fat cows. I wanted to focus today on the future of the Spanish economy because the essentially macroeconomic dimension of the current crisis makes us forget certain things: that our main problems are structural; that our chief task is to improve and boost productivity; that we ought to seize the moment to reform our regulations and institutions; and because whatever we do to improve productivity does not run counter to exiting the crisis but, quite on the contrary, may help us emerge more rapidly from it. To conclude, let me reiterate what I said earlier. If I’ve talked of only one area of structural reform, namely labour reform, it is because I think it is the most important one for relaunching corporate start-ups and reducing unemployment. But is it not the only area of reform, and nor are others less necessary.
Your government has made strenuous efforts to develop the Saudi Capital Market by utilizing state-of-the-art dealing technologies; increasing the number of financial firms operating in the market and continued floating of joint-stock companies on the market for public subscription. These steps call for optimism as they would further stabilize and deepen the market and enhance investors' confidence and investment awareness. However, the need for boosting more awareness efforts of all categories of market participants on the market is still a challenge that has to be dealt with. Custodian of the Two Holy Mosques, In pursuance of mobilizing all efforts to accelerate the pace of economic development, You have issued Your wise directives requiring timely dissemination of economic and other information and data with further transparency so as to be available to everyone seeking them as dissemination of accurate information reinforces creditability and helps in thoroughly identification of the economic situation. We are all confident that Your continuous efforts in the restructuring process to improve and develop the structure of the domestic economy and continue expanding the private sector's activities will boost economic developments witnessed in the domestic economy. May Allah guide your steps to greater success. 2  BIS Review 111/2006

The Riksbank must take asset prices into consideration to the extent that they affect price stability or financial stability. These are the areas that the Riksbank is responsible for. The inflation target can be threatened if asset prices lead to households and businesses increasing their demand so much that the use of resources in the economy exceeds potential growth. At present, the use of resources in the Swedish economy is still low which creates space for a time for a higher increase in demand than would be sustainable in the long term. There is accordingly space for the stimulation that increasing share and property prices create and which is inter alia reflected in increased indebtedness in the household sector. In a somewhat longer perspective, however, household debts probably cannot increase at the rate we see today without this indicating a growth in consumption that is higher than permitted by the inflation target. The effect of asset prices on demand and inflationary pressure is, however, only one of many factors that affect the assessment of inflation and the conduct of monetary policy. This also applies for the assessment of financial stability. In general, it is moreover probably hardly possible or advisable to attempt to dampen an increase in share and property prices by monetary policy, even though it is possible to conceive of situations where the Riksbank would want to be able to do so on some future occasion, eg with a view to avoiding the risk of recession and falling prices.
These anchors are strong arguments in the hands of the public at large to exert pressure on public institutions, and to formulate and implement policies that guarantee long-term stability and sovereignty. Unfortunately, as I stated earlier, these anchors are currently being jeopardized by internal factors. Driven by short-term perceived benefits vis-à-vis the real costs of the correction process, the public, the business community, syndicates and stakeholders ask for short-term concessions from the institutions, and particularly from the central bank. Judging on the benefits, they require shifting the focus from the objectives and traditional instruments our institutions have been mandated for. These short-term perceived benefits, seemingly, have the potential to offer a right and moral solution to sovereignty versus stability, but they bear the risk of causing the loss of both in the long run. Political and institutional factors have not addressed yet some important concerns identified by the Bank of Albania to have caused financial stability-related concerns and decelerated economic growth in Albania. I refer here to collateral execution, lowering of perceived risk arising from the severe political situation and lack of consensus, deceleration of reforms required by the European Commission and receiving EU candidate country status, severity of political warfare, and use of the economy and the situation for political gain. Lastly, the Bank of Albania notes that the Albanian economy remains under the pressure of market developments in our main trading partners and their economic and financial policies.

On the other hand, this would create an attractive surrounding for absorbing and accommodating foreign investment, and allowing the entry of new capital into the economy, which is vital to support the country’s economic activity and its credibility in the region and beyond. The Bank of Albania is committed to guaranteeing a sound banking system and efficient in channelling public savings into the economy. We will continue to carry out our periodic examinations to guarantee the banking system’s stability. Sufficient capitalisation and capital quality remain our primary objective. I would like to guarantee the system that the Bank of Albania will take all the measures to supply with liquidity, while increasing the pressure for higher credit volume and improved quality. Dear guests, I invite you to actively participate in today’s debate and discussions on issues that have been and will remain the focus and our common interest in the future. I invite you all to contribute,  BIS central bankers’ speeches  3  through presentations and discussions, to setting objectives our region will face in the future and solving the current challenges. Thank you for your attention! 4  BIS central bankers’ speeches