samchain/econo-pairs-v1 huggingface dataset:
Looking at your coverage of our policy one might be inclined to think so. Between 2001 and 2005, for example, the Swiss National Bank was mentioned three times less in the Financial Times than in the period 1996 to 2000. However, let me emphasise that more transparency does not mean that monetary policy will always be simple to predict. Remember that the inflation forecasts published by central banks are always based on expectations of future economic developments. Hopefully, these expectations will be accurate most of the time. However, during certain periods of the economic cycle, particularly at turning points, our expectations will be prone to correction. I am therefore confident that, despite transparency, there will remain some news to report about monetary policy. I do believe, however, that central bank transparency may change the nature of media reports on monetary policy. In the old days of secrecy and unexpected monetary interventions, journalists obviously debated the objectives of central bankers and what this meant for the future. With increased transparency, such discussions have become obsolete, as objectives seem to be clear and future policy is easier to predict. In return, central bank transparency now gives journalists the opportunity to question the consistency of our monetary policy decisions with our stated objectives. This leads me to believe that, in future, media coverage of monetary policy may concentrate on scrutinising the congruency of our actions with our goals, rather than debating about what central banks are trying to achieve.

Market predictions of monetary policy measures have been accurate, leading to lower volatility in financial markets and improving the effectiveness of our policy measures A prime example of this is the most recent increase in our operational target in March 2006. An analysis of interest rate movements shows that the increase of our operational target by 25 basis points was almost fully anticipated by financial markets prior to the announcement. Contrary to what many believe, a central bank does not lose any prestige in seeing its policy correctly anticipated by the markets. It is just proof of a well-understood monetary strategy. 3. Credibility - words are not enough  In Switzerland, the systematic communication of monetary policy has had the desired effect of getting market participants to adapt their expectations well before actual policy interventions are made. Does this mean that the Swiss National Bank now only has to indicate its intentions in order to influence interest rates? Or as some academics and practitioners have posed the question: can central bankers now replace open market operations with "open mouth" interventions? Considering the recent tightening of monetary policy in Switzerland, one might be tempted to agree that open mouth operations are sufficient to move interest rates. After all, short-term interest rates rose long before an increase in the operational target was announced or before we raised the actual interest rates on repo transactions. However, this interpretation of the data ignores one crucial issue.
In future, banks should be required to prepare sufficient assets in such a way that they can be delivered to their respective central banks as collateral for existing liquidity facilities. Page 5/8  Zurich, 22 June 2023 Thomas Jordan, Martin Schlegel and Andréa M. Maechler  News conference  Taken together, these observations raise an important question concerning the ‘too big to fail’ (TBTF) regulations: Are these regulations adequately geared towards the timely adoption of corrective measures so that banks can recover by their own means in the event of a crisis? Focusing solely on regulatory metrics may delay such corrective action. These metrics are important for assessing the need for corrective measures and for justifying their implementation. At the same time, however, they do not reflect a broad, forward-looking perspective, as the example of Credit Suisse shows. The crisis at Credit Suisse will be analysed, and the lessons drawn will be factored into the review of the TBTF regulations, among other things. The SNB will contribute to this work. I now hand over to Andréa Maechler. Implementation of monetary policy  I would now like to look at developments on the money and foreign exchange markets since the last monetary policy assessment. Secured short-term Swiss franc money market rates remained close to the SNB policy rate despite the tense situation on the financial markets, as can be seen in chart 2. We ensured this by deploying our monetary policy instruments.

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 also allow for the wage Philips Curve to be non-stationary: it moves over time, and it is absolutely normal to do so. Reference wage values, social preferences, jobs’ characteristics, skill endowments and even Central Banks’ targets, they all change over time – hence, the impact of wage gaps on inflation cannot be the same in different time periods. The preliminary finding of our model is that inflation does not increase close to or above its target level until the wage gap is closed. For Philips Curve to work, the loss of welfare from a negative wage gap has to be fully compensated first – as a stock measure, not as a flow. The policy recommendation from here is that countries which closed their wage gap should be much more prudent in further wage increases – because they will be seen in inflation much faster and larger than in the recent past. And for countries which have not closed their wage gap the implication is 3/5  BIS central bankers' speeches  that inflation will remain subdued until this happens. I fully agree with the IMF’s recommendation that central banks in NMS with their own currencies should be alert to the inflation risks of higher wage growth, while bearing in mind that raising policy rates could trigger capital inflows and exchange rate appreciation – which could further deepen current account imbalances. While the real monetary policy stance may differ between euroarea and emerging Europe, there is broad heterogeneity even among emerging Europe.

In fact, the downsizing of current accounts can be attributed to both public and private sectors. This means that aggregate demand was affected for a longer period, and measures to stimulate it, when the economies experienced negative output gaps, were needed. Despite very low interest rates, credit was not a main driver of the recovery; and public investments, as the report outlines, are on average 2 percentage points of GDP lower than their pre-crisis levels. Although it is nowadays a demand-led recovery, we do not have sufficient demand-push inflation, with the notable exception of countries that have closed the output gap – and these are the New Member States. This justifies the report recommendation of further accommodative policies from the ECB. However, as Mr. Thomsen highlighted in his presentation, policymakers need to seize the good times to advance further with fiscal consolidation and structural reforms. But the low rate environment and the strong sovereign-bank nexus are feeding the beasts and provide the wrong incentives for reforms. This is where policy trade-offs step in. Monetary policy has been overburdened in times of crisis, trying to address the market failures and the pro-cyclical fiscal policy. Yet, monetary policy is not a universal medicine, and it cannot work in isolation. Jens Weidmann, the President of Bundesbank, once made an analogy between monetary policy and Coca-Cola’s all-round curative properties: monetary policy is also currently being branded as a cure for assorted ills.
Thus, we have ended up in a somewhat strange situation where countries that not long ago were complaining about receiving too much capital inflows are now complaining about a potential shortage of funding. Countries in this situation should consider the temporary postponement of tapering as a welcome opportunity to reduce their vulnerability by strengthening their fiscal position and addressing potential risks in their financial systems. There is still time, but the clock is ticking. Let me be clear: tapering will take place, global monetary conditions will and should eventually normalize, and the times of extremely cheap and abundant international financing will end. In Chile, we are currently in a situation where we do not consider tapering as bad news. After declining for some quarters, our trade balance has gradually improved. Gross inflows are still concentrated in FDI, and an important part of foreign expenditure goes to investment goods. Furthermore, Chilean residents, mainly through pension funds, have large gross foreign asset positions, which have lately acted as a buffer against fluctuations in gross inflows by non‐ residents, as mentioned in the latest World Economic Outlook. Our fiscal position is solid. The on‐shore peso rates have not moved in tandem with the latest global increase in long term rates, but instead they have actually fallen. And we have maintained a regime of fully flexible exchange rate that has helped us deal with external shocks in an economy with small degrees of dollarization.

Nonetheless, identifying the role of pull versus push factors poses problems akin to those of separating supply and demand. There is still room for research that finds clever identification strategies to settle this question. Under most conditions, a situation of abundant capital inflows and low global interest rates is good for developing countries. Theory tells us that, in the absence of frictions, international capital flows not only contribute to expand a country’s productive capacity, but also allow their citizens to share risk with the rest of the world. However, the presence of pecuniary externalities, of inefficient fluctuations in credit standards, or of other types of financial frictions may lead to perverse situations where these inflows result in excessive credit growth, risk taking, or misallocation of capital. An important amount of recent research has been devoted to understanding how an economy may borrow in excess and miss‐allocate credit.3 Of course, if we believe that these frictions are present and strong, first‐best policy actions should aim to undo them. But this may not be feasible, either because we are unsure about the presence, type, or magnitude of the frictions involved, or because first best policies cannot be implemented in the timeframe required. In such a situation, policymakers may have to resort to second best policies. We will address some of the roles of financial frictions in the transmission of foreign shocks in the presentation by Javier García‐Cicco this afternoon.
BIS central bankers’ speeches  3  But opening up the capital account amidst a slowing economy, a still developing domestic financial system, and a debt overhang, is no easy task. China has also made progress in reforming its exchange rate framework. •  Decoupling the RMB from the US Dollar last year – while it caused considerable anxiety in the markets – was an important and necessary step towards a more market-based exchange rate. •  The shift to a trade-weighted index for evaluating the exchange rate of the RMB will, however, take some time to gain credibility among market participants. The most decisive yet most difficult piece in the overall reform programme is the reform of state-owned enterprises, or SOEs. The SOEs have been generating lower rates of returns on investment compared to the non-state sector, and are a drag on China’s overall measured productivity performance. •  An SOE restructuring blueprint was announced last year, with the aim of improving competitiveness and efficiency but without outright privatisation, for example by consolidating similar SOEs or promoting “mixed ownership”. •  This is a strong step in the right direction, but the Third Plenum’s vision of a marketbased economy can only be realised if SOEs are subject to competitive forces in all aspects of their operations. China in transition: near-term effects on Asia So, what does this all mean for the global economy, and Asia in particular?

But if successfully executed, these objectives are mutually reinforcing and will lay the foundation for a more sustainable and vibrant First World economy. Moderation in growth Why is China growing more slowly? As China reaches a more mature stage of development, it is simply unrealistic to expect it to grow at the same rate as before. China is confronted with the reality of supply-side constraints that every economy eventually runs into. •  According to UN projections, China’s working-age population (aged 15–59), is projected to shrink by 0.6% each year over the next 15 years. Slower growth does not mean anaemic growth. China may no longer grow at 8–10%, but it is well positioned to grow by 6 to 6.5% for the next five years. With the right mix of structural reforms, there is substantial scope for China to achieve faster catch-up in productivity and income levels. •  China’s per capita GDP is modest by international standards and its labour productivity remains well below the frontier. •  The less developed regions in China still have scope to grow at rates that are higher than the national average, and this process of internal convergence is itself an important source of future productivity growth. The large size of the Chinese economy means that, at even more moderate rates of growth, the incremental demand from China will be quite substantial in absolute terms – and this is what matters for the global economy.
In this context it is not the present exchange rate that is decisive, but how we see it developing in a slightly longer-term perspective. There is no reason to depart from the basic assessment we made earlier; there are still strong reasons in favour of a stronger krona. It is not merely that Swedish macro data in general has developed well over a number of years compared with, for instance, the euro area; most forecasts indicate that this development will continue. Sweden is also one of the countries that has had the highest trade surplus as a percentage of GDP over a number of years, which is one indication among many that the value of the krona has been relatively low. However, even if we should not – as I see it – change our basic assessment that the krona will strengthen, its value at present is rather different. There is therefore reason to take into consideration a risk scenario for inflation linked to a weaker exchange rate. Just as the Riksbank emphasised during 2003 and 2004 that the strong krona was one reason behind the low inflation rate, there is reason to point out that the weakening of the krona this year, particularly if it persists, could result in higher inflation,” said Mr Heikensten. ”All in all, I do not at present see any reason to change my view of inflation now to any great extent, compared with the October assessment.

•  There will be a greater rebalancing between the role of the public and private sectors in the economy, with the public sector activity focussed on providing the enabling environment to strengthen the role of the private sector in the economy. •  While large domestic corporations and multinational corporations will continue to be important in the economy, the role of the small and medium-scale enterprises will gain significance. •  Greater focus will be given to secure competitiveness on a more comprehensive basis in terms of other dimensions such as productivity and efficiency, labour quality, logistics, research and development, the delivery system and the supply chain. BIS Review 44/2004  1  Malaysia will also continue to leverage on our low country risks in terms of the political stability, industrial maturity and the supply of a skilled workforce. To promote endogenous sources of growth, greater focus has been directed at promoting greater private investment, including by the small and medium enterprises (SMEs). The financial infrastructure and incentive structure will continue to be enhanced to promote investment in new sub-sectors in particular, the services, agriculture and manufacturing sectors. On the external front, while there has been a synchronisation of growth among the major economies, there has also been some rebalancing of the relative strength of the growth among the economies. The increase in the expansion of world trade and the strengthening of labour market conditions in most of these economies suggest continued and self-sustaining growth.
This raises the question of whether this expansion has already entered its twilight years, with the risk of recession edging higher with each passing month. As I have said before, expansions do not simply die of old age. 1 Rather, expansions end either because a significant inflation risk emerges that requires a sharp tightening of monetary policy, or the economy is adversely impacted by a large shock that cannot be offset by monetary policy in a timely manner. While the sample of post-war U.S. expansions is still too small for reliable statistical analysis, the evidence suggests that after an expansion’s first few years its likelihood of ending is mostly independent of age, and depends mainly instead on the level of inflation. Since the possibility is low that a significant inflation risk would emerge over the near term, this means that the main danger facing the current expansion is the risk of large, adverse shocks. Given that the labor market still appears to have some excess slack and inflation is below the Federal Reserve’s objective, monetary policy is appropriately still quite accommodative despite the advancing age of the expansion. While this limits to an extent the degree to which monetary policy can aggressively respond to any adverse events, the good news is that the economy is more resilient to any shocks. Key sectors of the U.S. economy, such as the household sector, seem to be in good shape.

The key policy has been the implementation of financial sector reform which has resulted in a much improved financial system, especially the banking sector. Policies have also been directed at developing the region’s capital markets, especially the bond market. And as I noted, policy cooperation has also been strengthened to support regional financial integration. But while policies have been important, financial integration in East Asia has essentially been left to the market, in the sense that the process is basically a market-driven one. My view is that, going forward, the process of integration should continue to be market-driven and not policy-driven. But policy can do more by focusing on developing robust, efficient, and resilient local markets. This is because well-developed local markets will make the process of regional financial integration much easier. As for policy cooperation, there are definitely areas that government policies can do more collectively, especially on issues that involve efforts on a region-wide basis. In this context, future efforts at policy cooperation should focus on few but concrete and specific issues to be addressed or projects to be executed. A case in point is the development of a shared regional financial infrastructure such as linking the clearing and settlement systems, harmonizing regulations on cross-border investment flows, and developing a shared facility to promote greater flows of investment information. This type of specific efforts and projects would be easier to win region-wide commitment and support.
But as an academician I was in contact with the central bank already at the beginning of 1990s. At that time, the staff was struggling with very basic issues: a new statistics and data on the newly born market economy, ways how the economy should be analysed and what kind of theory or model should be applied etc. The Czech National Bank was receiving a lot of help from the foreign central banks and international institutions. Today, we are at the level of state-of-art and we do not receive but provide foreign technical assistance. We assist directly to a number of countries as well as our experts are invited to IMF missions around the world. And yet our staff is based primarily on people educated in the Czech Republic. I consider it as a good signal that we have reached significant achievements in economic education and that the problem of missing generation will soon cease to exist. I can only hope that we will continue with this process of catching up and that CMC will keep contributing to it. What can I wish to you personally? Let me recall my recent visit to the Bank of Israel on the occasion of its 50th anniversary. We were having lunch with the Finance Minister Benjamin Netanyahu and we discussed necessary fiscal reforms. Mr. Netanyahu said that for pushing reforms through, one needs three things: the vision, the will and the political power.

Zdeněk Tůma: Education in the Czech Republic - the case of the missing generation Speech by Mr Zdeněk Tůma, Governor of the Czech National Bank, on the occasion of graduation from the EMBA programme at CMC Graduation School of Business, Prague, 4 December 2004. *  *  *  In recent years I have heard many strong statements about knowledge based economy. Today’s graduation is obviously an excellent opportunity for yet another speech on this issue but I fear it would be too general and therefore “empty”. Instead, I would like to contribute with my personal experience and observations. We have almost forgotten that 15 years ago there were not any Czechs nor Slovaks educated in modern economics or business. Economic programs were focused on central planning and marxist theory of socialism before 1990. Nobody - with one exception - was allowed to study abroad since the 1960s. When my friend Martin Kupka returned from Geneva in 1989 from his studies, he brought the textbook on macroeconomics by Dornbusch and Fischer. He told me: “We should translate it into Czech”. At the same time, another group was working on the translation of “Economics” by Paul Samuelson. Later on, we translated the textbook on corporate finance by Brealey and Myers. In other words, we started from scratch. It had two - though interrelated - aspects. First, we had only limited knowledge about what economics and business programs should look like.