samchain/econo-pairs-v1 huggingface dataset:
This is notwithstanding a more intense operation of automatic stabilizers as a result of divergences in the behavior of cyclical revenues. About the MPR, the working assumption is that in the coming quarters it will stay flat and will begin a gradual normalization process during next year. Nonetheless, this is one of several alternative MPR paths compatible with achieving the target, so it must not be construed as a forecast or commitment with respect to the decisions that the Board will be making as more information is gleaned about the twists and turns of the economy. Taking all of this into account, the baseline scenario sees CPI inflation hovering around 3% during 2020, and the CPIEFE arriving to 3% by the turn of 2021. For the end of this year CPI inflation is foreseen slightly below 3% (Figure 12). III.4. Risk balance As always, the baseline scenario I just presented reflects those events most likely to occur with the information at hand at the close of this Report. There are risks, however, that if come true, would alter not only the macroeconomic outlook, but also the course of monetary policy. On the external front, the balance of risks continues to be clearly biased downwards, increasing the probability of occurrence of negative events. The escalation of the trade dispute between China and the US has become the main risk and has begun to transcend other areas of these economies’ relationship. Moreover, US tariff decisions have been extended to other countries and with motivations not strictly commercial.

Jaime Caruana: Perspective on issues relevant to the new international capital framework After-dinner remarks by Mr Jaime Caruana, Governor of the Bank of Spain and Chairman of the Basel Committee on Banking Supervision, at the “Accounting, Transparency and Bank Stability Workshop”, Basel, 17 May 2004. *  I. *  *  Introduction  Good evening. I hope that you are enjoying this opportunity to dine and unwind after your deliberations on emerging issues in accounting, transparency, and financial stability. You represent a wide range of views and institutions and, based on the animated conversations taking place during dinner, it seems that you bring great enthusiasm and interest to this workshop. In my view, that mixture enlivens the exchange of ideas and helps us to sharpen our understanding of the questions we face and the options we have to address them. It has been said that “learning is achieved only in company.” In this connection, we are all indebted to the workshop’s coordinators and sponsoring organisations for bringing together such select and highly qualified company in which to learn. Here I’d like to thank in particular Urs Birchler from the Swiss National Bank, along with Reint Gropp from the European Central Bank. On the academic side, I’d like to thank Mark Flannery (University of Florida), Rafael Repullo (CEMFI and CEPR), Ernst-Ludwig von Thadden (Université de Lausanne, CEPR and JFI), and Anjan Thakor (Washington University).
During the upturn, a growing share of the rise in lending was met by banks turning to the international wholesale markets. Savings banks, for example, which traditionally based their liabilities on attracting retail deposits, increasingly and irreversibly used foreign funding sources. It should be underlined that the banks tapped this source of funding in a relatively prudent manner. Thus, most of these liabilities mature at medium and long term. Nevertheless, this greater reliance on the international markets has made institutions more vulnerable to a financial crisis which, as I have said, is marked by increased risk aversion and by the suspicion aroused by highly leveraged firms. The impact of these tensions on assets, liabilities and structure has been more significant at savings banks or, to be more accurate, at some of them. They built up more imbalances because their decision-making mechanisms made them more sluggish when the time came to react and because their corporate model did not allow them to readily raise high-quality external capital and reduced the discipline imposed by the market on management. 2  BIS Review 161/2010  Measures adopted to restructure the Spanish banking system The larger imbalances at savings banks, together with the limitations inherent in their model, explain why the reforms centre on this segment in particular. The changes have consisted of pressing them to restructure and amending their legal framework. The Fund for the Orderly Restructuring of the Banking Sector (“FROB” by its Spanish acronym) came into operation in September 2009.

Furthermore, the Spanish State is committed to ending next year with a deficit of 6%, more than 5 percentage points lower than in 2009. 4  BIS Review 161/2010  As for the quality of bank balance sheets, it is well known that non-performing loans have increased in recent years, and also that lending to the construction and real estate development sector was excessive. However, the stress tests have shown not only that banks have the capacity to absorb potential losses arising from extreme and highly unlikely scenarios, but also that most balance sheets comprise healthy assets in the various consumption and investment segments of the Spanish economy. Despite these fundamental differences, the climate of uncertainty makes it advisable to reaffirm the adjustments promised by the authorities and to demonstrate to the international community that each major goal will be scrupulously met. I would like to point out four actions which I consider essential within this framework: –  First, it is necessary to continue to restructure bank assets and full information should be provided in this connection. In the last three years, credit institutions have made notable efforts to recognise the impairment of assets on their balance sheets. This impairment recognition, effected through profit and loss accounts, amounts to more than € billion. To this figure should be added the possible use of a further € billion built up as a “general provision” since the introduction of countercyclical provisioning in 2000, and another € billion provisioned with a charge to equity in the mergers.
6  BIS Review 50/2002  Key rates and rise in labour costs1) 2) Per cent  Key rates September 2002  Iceland  8  Norway²) 6  Sweden 4  Denmark UK Euro area  2  Finland US  Japan  0 0  2  4  6  8  Rise in labour costs, 1998-2002 Hourly wage growth in manufacturing Figures for Norway from the Technical Reporting Committee on Income Settlements  1) 2)  Sources: OECD, TRCIS and Norges Bank Fafo og Makt- og demokratiutredningen 6. september 2002  When wage growth reaches a level that is inconsistent with the inflation target, the result over time will be higher interest rates, lower employment and higher unemployment. Similarly, lower wage growth will normally result in lower interest rates, higher employment and lower unemployment. There is a relationship between wage growth and interest rates. The lower wage growth is, the lower interest rates will be, and vice versa. Japan represents the one extreme, with an interest rate of zero and no wage growth. At the other extreme are Iceland and Norway, with high wage growth and a high key rate.

Is there, for example, a risk of a situation arising where Norges Bank tightens monetary policy to achieve the inflation target, while at the same time the central government authorities increase the use of petroleum revenues (more than implied in the fiscal policy guideline) in order to increase employment and reduce unemployment? 2  4  Report 29 (2000-2001) to the Storting: Guidelines for economic policy. BIS Review 50/2002  There are various factors that can prevent the interplay between monetary and fiscal policy from 3 functioning. Interplay functions well when the decision-making bodies are conscious of how one body’s decisions influence the decisions of the other. Unless this fact is recognised, a decision will not produce the result that was planned. The economy may move in a very undesirable direction, with 4 high interest rates, sluggish economic growth and deterioration in the state’s financial position. However, even without continuous coordination, a fairly good result may be achieved if fiscal policy 5 acts as “leader” and monetary policy as “follower”, to use expressions taken from game theory. The authorities determine fiscal policy knowing how monetary policy will react. Today’s flexible inflation targeting establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. The fiscal policy authorities can internalise the monetary policy response pattern. This is only natural, since the mandate for monetary policy was laid down by the Government and the Storting.
BIS Review 75/2000  2  The difference today is that the timeframe for answering these fundamental questions is dramatically shortened. As supervisors, we must be able to look at rapidly changing financial institutions and assess whether their strategies make sense and whether they are effectively evaluating the risks associated with executing those strategies. Technology and innovation have also rendered geographic boundaries all but meaningless, and undermined the power and control of financial authorities. As you know, one of the principal means of supervising internationally active banks has been the process whereby the host supervisor approves the establishment of a brick-and-mortar presence in its country or jurisdiction. By way of a web-based platform, banks can now target customers far beyond the reach of a typical branch, and even cross borders into countries where they have no local offices and may never have conducted business before. We’ve already seen a few cases in which a bank is chartered in one country, handles its data processing in another, and targets customers in still others. Such situations will surely challenge traditional notions of “home” and “host” supervisor, and raise difficult issues regarding international coordination and cooperation, information sharing, law enforcement and privacy. In a world of instantaneous communication, interconnected markets, and more complex instruments and risks, effective supervision is more important than ever to maintaining financial stability, both locally and globally. To remain effective and relevant, supervisors must understand how and to what extent the “wired” economy and other technologies are changing banking and finance.

Preemptive action to slow domestic demand growth to a more sustainable level is the key to avoiding a larger and more painful adjustment at a later date. That is why the MPC has raised interest rates by 100 basis points since September. I hope you now understand why our ambition is to be so boring. Our aim is to maintain economic stability. A reputation for being boring is an advantage - credibility of the policy framework helps to dampen the movement of the see-saw. If love is never having to say sorry, then stability is never having to be exciting. Miss Prism should not have to tell future Cecilies to omit the chapter on the activities of the Monetary Policy Committee. 3  BIS Review 34/2000
Karolina Ekholm: The interest rate, the exchange rate and inflation Speech by Ms Karolina Ekholm, Deputy Governor of the Sveriges Riksbank, at a meeting at Danske Markets, Stockholm, 4 April 2011. *  *  *  The views expressed here are my own and are not necessarily shared by the other members of the Executive Board of the Riksbank or the Riksbank’s staff. I would like to thank Johanna Jeansson and Pär Österholm for their great assistance in the writing of this speech. Today, I will give an account of my stance at the latest monetary policy meeting in February. However, I will keep this relatively brief – the main part of my talk will focus on the significance of the exchange rate in the monetary policy process. There is no target level for the exchange rate, but, as it affects both inflation and resource utilisation, it is of fundamental interest to the Riksbank’s analysis work. The fact that it is difficult to forecast does not mean that it can be ignored. The current situation and the monetary policy decision In February, the majority of the Riksbank’s Executive Board decided to raise the repo rate to 1.5 per cent and to revise the interest rate path upwards slightly. The justification for this decision was that the Swedish economy remains strong. For example, GDP growth in 2010 was historically strong (see Figure 1).

This is something on which individual banks will have to take a view, but I would like to offer some general advice. First, banks should accept that profits for 2003 may not reach budgetted targets as a result of the outbreak; and they should not strain too much to make up the difference. When profitability comes under pressure, it is important to avoid the mistakes that might arise from over-aggressive business tactics. Keep the bank healthy from a capital and liquidity point of view in order to benefit from the business recovery when it comes, as it surely will. Banks should also monitor closely the financial position of their customers and adopt a supportive attitude to those experiencing financial difficulties as a result of the SARS outbreak. This means being prepared to offer temporary relief arrangements to borrowers who find that they cannot service their debts in the current environment. This should not be seen as soft option for customers since the banks will certainly not benefit if those customers go bankrupt. Nor do I suggest that relief should be offered indiscriminately. The long-term viability of the customer or his business, his track record and his willingness to cooperate with the bank are all factors to be taken into account in deciding whether to restructure debts. Each case thus needs to be looked at on its merits.
We are also pleased to witness the unique partnership between Banks and MFIs and SMEs on sharing skills and experiences in areas of common interest. This is key to creation of common understanding. I wish to conclude by urging participants, to actively participate in the deliberations of this conference. I am certain that this conference will benefit both the local institutions and our visitors from abroad. BIS Review 79/2008  3  Once again, I would like to thank Standard Chartered Bank Zambia Plc, for organising such an important workshop for MFIs and SMEs. Honourable Minister, distinguished ladies and gentlemen, I thank you. 4  BIS Review 79/2008

It assigned to the Central Bank the main objective of pursuing price stability. The Bank was granted instrument independence to pursue that main objective, its financial independence was enhanced and the Act included clear provisions on transparency and accountability. The Act also stated that the Bank should promote an efficient and safe financial system, including payments systems domestically and with foreign countries. In addition to price stability, the Bank was, in other words, given a clear mandate to concern itself with financial stability. An inflation targeting framework was adopted at practically the same time with a joint declaration of the Government and the Central Bank which set a target for inflation of a 2½% twelve-month rise in the CPI. The framework imposes strong demands on the professional capacity of the Central Bank. The Bank regularly publishes a macroeconomic forecast and inflation forecast, with an associated inflation report. The inflation forecast provides the foundation for the inflation targeting policy. In its quarterly Monetary Bulletin, the Bank publishes a detailed analysis of current economic and monetary developments and prospects. It also presents the rationale behind the decisions by the Board of Governors to change or not to change interest rates, as well as signalling the monetary policy intentions for the period ahead. In these endeavours, the Bank seeks to be as transparent as possible. When the inflation target was adopted, the economy was quite unbalanced. It had boomed during the second half of the 1990s.
The consequence of such a correction might be that the economy developed weakly over a long period of time. It would also have effects on inflation. It may be necessary to take these risks into account in monetary policy decisions in a different way than in the normal approach, where the forecasts for inflation and the real economy for the next two years serve as the foundation. This can be done, for instance, by beginning a phase of interest rate increases slightly earlier than would otherwise have been the case. Of course, the hope is that this will contribute to a smoother adjustment process for house prices and thereby to a more stable development of inflation and the real economy. Let me say, to round off my contribution on this subject, that there are some questions here that are still debated among central banks and within the academic world. As yet, there is no consensus as to how monetary policy should be used to manage risks related to rapidly rising house and asset prices. I would also like to emphasise that, all in all, I do not see any major differences between the Riksbank’s view and the authors’ view. The approach we have chosen has in practice only meant a marginally different timing of our interest rate decisions. Given this, the fairly strong focus in the evaluation on the Riksbank’s way of managing house prices appears slightly exaggerated, but I agree with the criticism that we should have communicated our actions more clearly.

At present, we base our forecasts on the development of the repo rate expected by the financial markets. Professors Giavazzi and Mishkin give several reasons why they advocate that the Riksbank should present its own interest rate forecasts. Perhaps the most important reason is that this would show most clearly what the Riksbank’s own expectations of future monetary policy are. This would make it easier for companies and households to plan for the future. This point of view is easy to agree with, and I have expressed similar thoughts myself in various speeches. We are currently considering and working on how this might be achieved. Compensating for earlier deviations from target As I mentioned to begin with, there are a couple of points where I do not agree entirely with the authors’ conclusions. One such point is how the Riksbank should act if inflation has been below, or above, target for a long period of time. Professors Giavazzi and Mishkin suggest that if inflation has been below target for a long period of time, monetary policy should partly compensate for this by being extra expansionary in the future. As I understand it, the background to this is the developments in recent years, when inflation has been below the target. Here it is worth pointing out that when inflation has been below target level for a long period of time, there have been good explanations for this. The most recent episode has mainly been due to the fact that productivity growth has been surprisingly high.
More recently in 2006, seeing that banks were strong enough, we asked them to further set aside sizable provisions for loan losses in compliance with a new international accounting standard. This had an adverse impact on banks’ bottom line at the time, but the extra provisioning would later provide cushions for Thai banks during last year’s economic downturn. Regarding all these instances, it should be noted that in choosing the specific macroprudential measure to be used, the Bank of Thailand has exercised great caution in  BIS Review 96/2010  3  terms of market friendliness, for a fine line exists between the balance of financial efficiency and financial stability. Here, I would like to note that having both monetary policy and regulatory responsibilities together allows us to see the big picture when making policies, whether monetary or macroprudential ones. This synergy has also enabled us to act quickly and decisively with an informed judgment, which served us well during the global financial crisis. In Thailand, talk of removing regulatory duties from the Bank of Thailand surfaced from time to time after the 1997 crisis, and I think we were fortunate that the government did not go through that path. In addition, with regard to the purview of our regulation, the new Financial Institutions Business Act (Section 5) allows room for the Bank of Thailand to regulate any unregulated financial businesses that may have significant impacts on the economic and financial systems.

Lorenzo Bini Smaghi: From boom to bust – towards a new equilibrium in bank credit Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Ernst & Young Business School seminar, Milan, 29 January 2010. *  *  *  I would like to thank, in particular, L. Cappiello, P. Aberg, G. Wolswijk and D. Marqués Ibañez for their contribution to the drafting of this speech. The opinions expressed are solely my own. 1. Introduction  There is now a broad consensus that the period leading up to the crisis was characterised by excessive credit growth. When the bubble burst, it resulted in the most pernicious banking crisis since the Second World War, accompanied by a severe economic recession. In order to revert to a more balanced and sustainable management of credit, while safeguarding the role that credit plays in stimulating growth, new rules, regulations and incentives for financial market participants are needed. This is what the regulatory authorities and governments of all major industrial countries and developing countries are working towards. This is not the end of the issue, however. Once the objective of establishing a new “steady state” has been identified, the path towards achieving this objective must be carved out. This will not be easy. If the adjustment is too swift, it could result in an over-adjustment of credit flows, i.e. be too restrictive, giving rise to recessionary effects on the real economy.
The narrowest fiscal interpretation of the cost of crisis would be given by the wealth transfer from the government to the banks as a result of the bailout. Plainly, there is a large degree of  1  For example, Reinhart and Rogoff (2009). BIS Review 40/2010  1  uncertainty about the eventual loss governments may face. But in the US, this is currently estimated to be around $ billion, or less than 1% of US GDP. For US taxpayers, these losses are (almost exactly) a $ billion question. In the UK, the direct cost may be less than £ billion, or little more than 1% of GDP. Assuming a systemic crisis occurs every 20 years, recouping these costs from banks would not place an unbearable strain on their finances. The tax charge on US banks would be less than $ billion per year, on UK banks less than £ billion per year. 2 Total pre-tax profits earned by US and UK banks in 2009 alone were around $ billion and £ billion respectively. But these direct fiscal costs are almost certainly an underestimate of the damage to the wider economy which has resulted from the crisis – the true social costs of crisis. World output in 2009 is expected to have been around 6.5% lower than its counterfactual path in the absence of crisis. In the UK, the equivalent output loss is around 10%. In money terms, that translates into output losses of $ trillion and £ billion respectively.

2  BIS Review 5/2005  Further, may I also take this opportunity to inform Your Excellency that our French lessons programme has become so popular among staff that we are sponsoring another class of beginners and six (6) more staff with appreciable knowledge of the language at the Alliance Française. Finally, I will be remiss in my speech if I did not thank Your Excellency for the assistance we have continued to receive in form of: (i)  meeting the full cost of hiring two tutors from Alliance Francaise - Lusaka and Ndola;  (ii)  supply of study materials;  (iii)  coordination of examinations; and, most importantly,  (iv)  your unwavering moral support. To this end, we, at the Bank do sincerely believe that although this MoU will expire in September 2005, its legacy shall linger on and that the signing of this MoU will further cement the cordial relations existing between the Embassy of France and the Bank. I thank you. BIS Review 5/2005  3