samchain/econo-pairs-v1 huggingface dataset:
It should also be pointed out that exchange rate movements can be the result of external events or changes beyond our control, such as a sudden shift in international investors’ risk perceptions or global credit supply. The exchange rate of the króna is closely linked to developments in capital markets elsewhere in the world, especially while the current account deficit is as large as at present. Inflation and macroeconomic forecasting The Central Bank bases its monetary policy formulation and implementation on the inflation and macroeconomic forecast that it prepares three times a year and publishes in Monetary Bulletin. Forecasts are always uncertain and by definition can never state precisely what will happen over the forecast horizon. The Central Bank forecasts are based on extensive research and analysis, and on models that have been developed to simulate how events are likely to unfold. A major advance was made in 2006 with the introduction of a new macroeconomic model designed by Central Bank economists. The Central Bank has always expressed qualifications about the accuracy of its forecasts, and readers of Monetary Bulletin will be familiar with the risk profiles that draw attention to forecasting uncertainties. Another uncertainty is the output gap at any time, which is an important determinant of the inflation outlook. However, the economic laws are known and are the same as everywhere. Forecasts are prepared on the basis of the best available information and known correlations between changes in aggregates.

When it was decided to raise the policy rate on December 21, it was known that inflation had slowed down to considerably below the midyear forecast rate. Inflation was mainly brought down by lower energy prices, the impact of the appreciation of the króna since the middle of the year, less-thanexpected wage drift and a slowdown in house price inflation. Domestic demand in Q3 was broadly in line with the Central Bank’s November forecast. It was also known that the current account deficit was wider than expected in Q3 and would significantly overshoot the forecast for the year as a whole. No indications of easing labour market pressures could be seen. Unemployment was negligible and there was a large influx of foreign labour. Despite lower inflation than in the Bank’s July forecast, there was still no sign that the target would be attained within two years if the effect of indirect tax cuts on headline CPI in the first half of 2007 was ignored. Furthermore, the wide current account deficit and tight labour market aroused suspicions that pressures in the economy were underestimated, and thereby inflationary pressures as well. As mentioned earlier, policy rate hikes primarily impact the exchange rate. The króna appreciated substantially until near the end of 2005. By then it was considerably stronger than was compatible with external balance in the economy, as the Central Bank had explained in detail, among other things in its December Monetary Bulletin that year. So it was not surprising that the króna depreciated.
All the above entails capital gains for banks exposed to these financial and real assets, at the same time as it increases the value of loan collateral. This also favours an improvement in the credit quality of loans and, therefore, smaller losses in the credit portfolio. It is true, in any event, that these capital gains dry up once interest rates stop falling and remain at low levels. Furthermore, there is also evidence that, since the ECB’s deposit 2  See, Banco de España (2018): Annual Report 2017, Chapter 2, “The challenges facing the Spanish banking sector” and Banco de España (2017): Annual Report 2016, Chapter 1, Overview, Box 1.3. 10/13  facility rate has stood below zero, negative surprises in short-term interest rates have been accompanied by declines in European banks’ stock prices.3 Given the endogenous nature of the monetary policy response to projected economic developments, this change in banks’ stock prices due to monetary surprises may reflect, on one hand, the negative impact of less favourable projections for the future macroeconomic setting and, on the other, the market view on the direct negative effect of additional interest rate cuts on the future profitability of banks against the backdrop of protracted negative rates.4 In recent years, Spanish banks have partially cushioned the fall in net interest income by generating other income and, in particular, by increasing fee and commission income.

Given the diverse nature of the region, it would be highly ambitious and challenging to achieve the necessary preconditions for achieving an integration that is similar to that in Europe. The integration process in Europe was taken forward with the establishment of supranational institutions with mandates to promote common approaches and frameworks across the member states in the union. In contrast, Asia is adopting a more flexible approach. Regional financial integration in Asia has manifested itself mainly in the form of greater regional presence and participation in domestic financial systems. This is taking place with the gradual and sequenced liberalisation of the financial sector and the capital account. Capital  BIS central bankers’ speeches  1  account liberalisation in particular is prompting increased intra-regional investment and portfolio flows which in turn contributes to the deepening of the financial markets. By itself, the liberalisation of the financial sector and the capital account will however, not be sufficient to achieve regional financial integration. Most important, is the development of regional financial markets, the financial infrastructure including the regional payments and settlement systems, harmonising the financial standards and practices including the regulatory and supervisory regime and building the institutional capacity of the domestic financial intermediaries. For the ASEAN region, an agreement has already been reached to allow for different speeds of integration depending on the state of readiness of the respective member countries.
And this takes considerably more time than addressing or doing away immediately with problems by injecting public funds. Yet this requirement to promote private solutions does not fully explain the enormous workload that has fallen on the supervisor over recent years. Insofar as it was decided at first to retain without major changes the singular legal arrangements for savings banks, and particularly their governance, this made it necessary to pursue most complex negotiations with the parties involved, namely trade unions, managers, regional governments, etc., each with very different interests from those that prevail in any mercantile company, where market discipline leads owners to worry about minimising losses and increasing shareholder value, and not about maintaining power, or the total amount devoted to early retirements, or about where headquarters should be established. In merger operations, processes such as determining shares of interest are reasonably easy to agree upon, since it suffices to make a proper valuation and to assign to each party what corresponds to it. But those who have followed the news in recent years will have witnessed the long drawn-out discussions, on a flimsy economic basis, that have been necessary to determine the power apportioned to each player in savings bank integrations. Before their transformation into banks, observance of the legal structure of savings banks meant that their restructuring could only move forward very gradually, step by step and with great prudence.

More important still, however, is the need for the Banco de España’s autonomy in the area of supervision to continue to be respected and for governments to continue to resist the temptation to interfere in its supervisory decisions, while continuing to design legal instruments and to defend the proper use of public resources. The Banco de España must continue to maintain a dialogue with governments, not only advising them but also listening to them (since nobody has a monopoly on good ideas), although supervisory decisions must continue to be based, as up until now, solely on a professional basis. 6  BIS central bankers’ speeches  I have been emphasising today what has been done during these years of crisis by Spain (that is to say, everyone), because until our country has regained the trust of the rest of the world, the attention of investors will continue to be focused on what all relevant parties have done and are doing to correct the imbalances of the Spanish economy. In particular, they will be monitoring and assessing the extent of cooperative behaviour to overcome the crisis. I’m going to conclude with a few words on Europe, as I believe our membership of the European Union and of the Monetary Union is another good reason for viewing optimistically our possibilities of overcoming the crisis. Some measures need no further explanation, as they clearly show how Europe has helped us and continues to help us during this crisis.
See  also Nina Boyarchenko, Richard Crump, Anna Kovner, Or Shachar, and Peter Van Tassel, "The Primary and Secondary Market Credit Facilities," Liberty Street Economics (May 26, 2020). 14 Information on the Term Asset-Backed Securities Lending Facility ("TALF") is available on the Board of Governors' public website and the New York Fed's public website. 15 Information on the Federal Reserve's Municipal Lending Facility ("MLF") is available on the Board of Governors' public website. See also Andrew F. Haughwout, Benjamin  G. Hyman, and Matthew Lieber, "Helping State and Local Governments Stay Liquid," Liberty Street Economics (Apr. 10, 2020). 16 Information on the Federal Reserve's Main Street Lending Program is available on the Board of Governors' public website and the public website of the Federal Reserve  Bank of Boston. https://www.newyorkfed.org/newsevents/speeches/2020/hel200625  3/4  The Federal Reserve’s Pandemic Response - FEDERAL RESERVE BANK of NEW YORK 17 Board of Governors, "Federal Reserve Board announces it will be seeking public feedback on proposal to expand its Main Street Lending Program to provide access to credit  for nonprofit organizations," Press release (June 15, 2020). 18 Daleep Singh, "Implementing the Fed's Facilities: Moving at Maximum Speed with Maximum Care" (Apr. 17, 2020). 19 Michael Feroli, "Fallout from COVID-19: Global Recession, Zero Interest Rates and Emergency Policy Actions" (Mar. 27, 2020). 20 12 U.S.C. § 343(3)(B)(i). 21 Id. at § 343(3)(B)(iv). 22 See, e.g., Lev Menand, "Unappropriated Dollars: The Fed's Ad Hoc Lending Facilities and the Rules That Govern Them," Law Working Paper No. 518/220 (May 2020).

Given such diversity with global orientation, it is only fitting to label this programme as the ISRA Global Scholarship. Our aspiration is that this programme will continue to grow and makes a difference. We aspire that ISRA Global Scholars are acknowledged as potential game changers for the industry and a product of a highly rigorous selection process. Ideas to further contribute towards the industry’s transformation I would like to raise three issues for your consideration as alumni of the Shariah Scholarship 1/2  BIS central bankers' speeches  Award. First, continuously push and expand the frontiers of knowledge in whatever role you are in. As scholars, we know intimately the importance of knowledge and research. Research is where breakthrough thinking should originate, especially in the area of applied research that is solutiondriven and industry-related. But this will necessitate us to develop a greater understanding on the real issues facing the industry. It also necessitates us to learn other disciplines as well, just like the great scholars of yesteryears that venture into other areas of studies. They became very innovative because of the varied disciplines. Only then, are we able to develop practical and costeffective solutions. For example, most Islamic Finance industries around the globe are still domestically oriented and a majority of them still engage in consumer credit and simple form of banking products. If Islamic Finance were to expand we need to go beyond these domains.
And, households appear quite far along in the deleveraging process by a number of important measures. For example, the ratio of household debt service relative to income is back to levels last seen in the early 1990s. For these reasons, I expect that growth will gradually strengthen over the next few years. Nevertheless, significant downside risks remain, especially those related to the challenges in Europe and how the potential “fiscal cliff” in the United States will be resolved after the fall elections. Even if these risks do not materialize, I anticipate only slow progress toward full employment. BIS central bankers’ speeches  1  On the inflation side, in recent years our forecasts have been noticeably more accurate than on the growth side, and we have succeeded in delivering inflation very close to our 2 percent price stability objective. Through March, as measured by the personal consumption expenditures deflator, overall consumer prices have risen 2.1 percent over the past 12 months, and prices excluding food and energy have risen 2.0 percent. But price trends have been a bit stickier than one might have anticipated given the large amount of slack in the economy. To some degree, this likely reflects the anchoring exerted by stable inflation expectations. But some of the price pressures can be attributed to other, more temporary, factors:   Higher oil and gasoline prices and their pass-through into the costs of other goods and services.   Upward pressure on imputed homeowners rents due to increased demand for rental housing.

34 Constancio (2014) argues that “It seems unacceptable that macro-prudential authorities would passively watch the development of a bubble in housing prices and other asset prices, comforted by the idea that the banking sector is prepared to weather the storm and that the central bank would deal with the painful aftermath. The crisis showed that the amount of risk endogenously generated by a financial cycle spinning ‘out-of-control’ dwarfs the ‘mopping up’ ability of fiscal and monetary policy due to fiscal capacity limits and the zero lower bound on nominal interest rates. In matters of financial instability, prevention is always better than cure”. 35 The FPC recommendation on the loan-to-income (LTI) flow limit is that the PRA and the FCA should ensure that mortgage lenders do not extend more than 15% of their total number of new residential mortgages at LTI ratios at or greater than 4.5. The FPC recommendation regarding mortgage affordability is that when assessing affordability, mortgage lenders should apply an interest rate stress test that assesses whether borrowers could still afford their mortgages if, at any point over the first five years of the loan, Bank Rate were to be 3 percentage points higher than the prevailing rate at origination. For further detail, see for instance Bank of England (2014) for a documentation of the Bank of England’s 2014 housing market measures. 36 See Bank of England (2016).
Despite the important progress recorded, the overall employment rate in the euro area remains low by international standards (64.5% in the euro area compared with 72% in  1  European Commission – AMECO database. Hours worked data from OECD. BIS Review 82/2007  1  the US in 2006) and the unemployment rate is still clearly too high (7.9% compared with 4.6% in the US on annual average in 2006 and 7.0 % to be compared to 4.5 % in May this year). It has to be noted that in 2006 the estimated number of annual hours worked in the euro area was 1604 compared to 1804 2 in the US. Moreover, while the prime-age male employment rate in the euro area is comparable to that observed in the United States, the disparities remain important when we look at the youth, female and older worker employment rates. In 2006 the female employment rate was 56.5% in the euro area and 66% in the US, the older workers employment rate was 41.7% in the euro area and 61.8% in the US, and youth employment was 37.1% in the euro area and 54.2% in the US. These features appear to be consistent with an “insider-outsider” characterisation of the European labour market, where structural impediments prevent those groups “at the margin” from participating in the labour market. The performance of the labour market in Finland has also been quite impressive these last years with the overall employment rate increasing from 62.4% in 1996 to 69.3% in 2006.

Spain is trading between –45 bps and –50 bps. Italy is now trading below –40 bps1. And for Austria, Belgium and The Netherlands, rates have been moving downwards as well. One could say that whereas in the past the repo market was largely characterised by “collateral chasing cash”, today the main dynamic in some markets appears to be “cash chasing collateral”. The evolution of repo rates for different collateral classes over reporting dates suggest that the old pattern still exists in parallel with the new. As I will argue below, this observation provides a key to understanding the roots of these developments. New dynamics in the short term funding markets unsurprisingly lead to debate in the financial industry. There are concerns about short-term borrowing costs swinging sharply at the end of reporting periods, creating volatility and potentially spilling over into government bond markets – an effect we have indeed seen for core general collateral (GC) collateral. And some observers fear collateral scarcity might herald more general disruptions to the “plumbing” of the financial system, which would be especially problematic given ongoing structural changes in financial intermediation. Activity is after all shifting increasingly from banks to non-banks, and marketbased finance is, by and large, organised around collateralised lending. Perhaps inevitably, some point the finger at monetary policy, and in particular at the side-effects of the ECB’s asset purchase programme. The substantial creation of liquidity by the APP is argued to have pushed unsecured lending rates to the deposit floor, causing secured lending rates to fall even lower.
Although these developments caused the prices of core goods to increase more in the fourth quarter than in previous years, the price hikes adjusted for tax effects remained below those of previous years (Figure 5). 2  BIS Review 31/2010  Processed food prices followed a course in line with the outlook presented in the October Inflation Report, whereas unprocessed food prices surged more than expected (Figure 6). Thus, food prices, which increased due to processed food prices in 2008, maintained an upward trend in 2009 due to the surge in unprocessed food prices. As I have already mentioned, these high-rated increases in unprocessed food prices explain substantially both the rise in inflation in the last quarter and the deviation from the end-2009 inflation forecast. In Turkey, annual inflation in unprocessed food prices displays remarkable fluctuations and this creates a significant forecast uncertainty. To illustrate this, following the lowest rate of third quarter change of the past five years in 2009, this group also displayed the highest rate of increase over the last six years due to price hikes in fruits-vegetables and meat in the fourth quarter of 2009 (Figure 7). Here, I would like to remind that, in the third chapter of Inflation Report that will be posted on our website shortly you can find the Central Bank’s  BIS Review 31/2010  3  detailed assessments regarding volatility in unprocessed food inflation, including comparative analyses between Turkey and other countries.

However, I would like to underline that should any unforeseen developments lead to a deterioration in general price setting behavior, the CBT will not hesitate to tighten monetary policy sooner than envisioned under the baseline scenario drawn up in this Report. Increasing budget deficits on a worldwide scale, especially in developed economies, continue to pose upside risks on inflation expectations and thus on longer term global interest rates. Countries with relatively sounder banking systems and prudent fiscal policies would be more resilient against these risks. In this respect, the CBT will continue to monitor fiscal policy developments closely while formulating monetary policy. Should the goals set out in the Medium Term Program be implemented through institutional and structural measures, rather than tax and administered price hikes, it would be possible to keep policy rates at single digits throughout the forecast horizon. The probable course of oil and other commodity prices still remains as another important risk factor. Short-term ample liquidity driven by countercyclical policies that are adopted by public authorities on a global scale can give way to speculative movements in commodity prices. Fast growth trends in countries like China and India, and the rising share of these economies in global commodity demand, exacerbate these speculative motives. Therefore, oil and other commodity prices may continue to rise, even in a scenario of a gradual global economic recovery. At this point, it is worth noting that weak domestic demand conditions would limit the pass-through stemming from upside cost-push shocks.
Rising inflation due to a food price shock is a problem affecting many emerging economies such as Brazil, China, Mexico and South Africa. In turn, the impact of this food price shock on inflation in industrial countries has been smaller, because the share of food items in the CPI basket is lower in high-income economies. As a result of these price shocks, now it is foreseen that projected annual inflation will be above those published in the last MPR. In line with inflation, short-term inflation forecasts have also risen. However, long-run inflation expectations are still anchored at 3%. This reflects the confidence of economic agents in the Central Bank’s commitment with the inflation target, and the transitory character of the recent hike in inflation. The different measures of trend inflation have also been rising during the last months, following the rising perishables prices and the reduction of the output gap (effective minus potential GDP) as observed up to the second quarter of this year. At the same time, the growth rate of wages shows increases in recent months (except in August). In addition, the Chilean peso has appreciated in nominal and real terms during the last month. These changes in the inflationary front have been the main concern of the Central Bank of Chile in the design of monetary policy, considering the purpose of keeping the inflation around 3% most of the time, with a tolerance range of +/-1 percentage points.

We now have a web portal that offers such opportunities, identical to the statistical portals of many European Union countries. The presentation within the today’s workshop is the first since its launching. The National Bank’s Plan of Activities we adopted yesterday also includes a project to further improve the availability and understanding of our press releases, information, data. In one of the first phases of the project, we plan to conduct surveys in order to obtain opinion from you, the journalists, as well as from other users of our information and data. But even before we embark on such a project activity, we would greatly value your suggestions and ideas, which will surely be an important road map for us to develop our communication with the public. According to recent releases, we are one of the most transparent central banks in the region and actually very close to the average index of Eastern European countries and the ECB.1 Of course, there is room for further improvement to approach more advanced economies, or the euro area as a whole. I believe that you, with your ratings and comments, will help us achieving this goal. A good opportunity for this will be the open discussion that is foreseen in the closing part of today’s event. In the end, for modern central banks, the rule “it would be good to have” no longer applies, but the rule “it must have” good, open communication with the public.