samchain/econo-pairs-v1 huggingface dataset:
The more recent criticism has been that the ECB has been slow to respond to the weakening of the US economy. Implicit in that criticism is no doubt a judgement about the extent and duration of the US slowdown and its likely impact on the euro area. As I have said there is a great deal of uncertainty about that. But the ECB has to take account, too, of domestic demand pressures in the euro area, and of the fact that even on the core measure Euro area inflation has been moving up gradually towards the top of the ECB's 0-2% range. Frankly I don't see how anyone can be confident whether the ECB has it precisely right or wrong – it is perfectly normal for even the best-informed people to disagree on  BIS Review 36/2001  3  these judgements, as anyone who reads our own Monetary Policy Committee meeting minutes will tell you. But I am wholly confident that the ECB is sensitive to the issues surrounding those judgements, including the downside risks in the US. So, too, are we in the United Kingdom. In our case, we again enjoyed relatively steady overall economic growth last year combined with a further fall in unemployment to its lowest rate for 25 years. Inflation meanwhile continued to run somewhat below the Government's 2½% target, partly at least as a result of the dampening effect of sterling's surprisingly persistent strength against the euro.

But even a snail can make considerable progress provided it keeps going. I am told that the world record for a snail is about 16 cms a minute, or roughly one kilometre in 4 days. On that basis a snail could leave here this evening and be in the BIS in Basel in under a year. It necessarily takes time to build an international consensus to move forward on any significant issue, and you need a broad consensus if whatever it is you agree is to have any meaningful effect. And if you look back over ten, or even five, years, rather than just at the outcome of any particular meeting, then the amount of progress really has been very considerable. Overall economic management Let me illustrate this first in relation to the broad consensus that now exists – within the developing, emerging, and transition economies as well as within the industrial world – on the general approach to overall economic management. That consensus can perhaps be summed up essentially as "macroeconomic stability and supply-side flexibility", though that characterisation needs elaboration. On the macro-economic side we have learned – and it has taken some countries longer than others – that you cannot achieve what we are all trying to achieve – sustained growth, high levels of employment and rising living standards – simply by pumping up demand in our economies through expansionary monetary and fiscal policies without proper regard to the underlying supply-side capacity of our economies to meet that demand.
It has to be more data driven  Development Department and the  and less influenced by short-term  provincial offices, the Central Bank seeks  political expedience. Equally, the private  Central Bank of Sri Lanka – ROAD MAP 2017  3  sector needs to recalibrate its risk  When we review Sri Lanka’s post-  appetite and take advantage of  independence economic performance, it  opportunities generated by improving  is clear we could have done better. In  macroeconomic policies and a more  the Central Bank’s context, the  conducive, enabling environment for  perennial excess aggregate demand in  business. We would all like progress to  the economy, created by large fiscal  be faster but the direction of travel is  deficits, has complicated monetary and  clearly positive. There is also the  exchange rate policies. likelihood that, as the reforms gain momentum, the pace of change will accelerate, provided there is the commitment to persist with the measures that are necessary to place the economy on a higher trajectory of growth, employment generation and incomes. As the Central Bank, we have a pivotal role to play while being at the heart of this much needed transformation. The government is putting forward many new initiatives to develop the country. This is happening at a time when the global economy is undergoing yet another transitional period. Hence, this is truly a challenging time, which calls us to be proactive and focused on clear outcomes.

The studies I have mentioned helped to define a range within which inflation is no longer a factor that distorts economic choices. The ECB pursues, as an objective of monetary stability in the medium term, an inflation rate below, but close to, 2%, which is the upper limit of this range. The macroeconomic model on which the ECB’s monetary policy strategy rests is imbued with contemporary macroeconomics, based on dynamic optimisation and on the centrality of forward-looking expectations.5 At the same time, the model is broader and well structured and corrects the simplifications of the pre-crisis neo-Keynesian paradigm with its prescriptive approach to optimal monetary policy. The weakness of this paradigm was, and is, its inability to recognise the importance of financial frictions and the role of credit and money. This has to do with the fragility of the theoretical foundations that formalise the links between the real economy, financial imbalances and the level of confidence. Ignoring money is tantamount to assuming an absence of risk and uncertainty. Without risk, Keynes would have said, there would be no money. The preference for liquidity is not justified in an economy without uncertainty. But the neo-Keynesian model excludes the possibility of default. In it, risks in the financial sector can be isolated and therefore have no effect on the real economy. The financial crisis has clearly highlighted the weaknesses of this system. Macroeconomic theory has begun to reflect on the neo-Keynesian system and these studies are now one of the liveliest areas of analysis.
Most of the selling pressure has come from foreign real-money investors seeking to hedge their portfolios from currency devaluation, Brazilian companies hedging their foreign exchange liabilities, and foreign companies hedging their exposure to local assets. There is no foreign currency shortage in the domestic spot market, which the Central Bank monitors continually. And therefore, at the Central Bank of Brazil, we responded to the change in global financing conditions in a classical fashion, through policy tightening, exchange rate flexibility and using accumulated buffers to reduce volatility, avoiding abrupt changes that potentially threaten financial stability. Accordingly, by mid-August, we announced a program of daily FX interventions through foreign exchange swaps and dollar credit line auctions, totaling in 2013 nearly USD 100 billion equivalent and scheduled through the end of the year, providing currency hedge for the private sector. Here the picture is mixed for emerging markets. Some are certainly feeling more the volatility than others. It depends on fundamentals, resilience, position in the cycle with its associated policy response, credibility of the buffers and willingness to use them timely and with a clear unambiguous communication. In sum, while the prospect of interest rate normalization as economic growth recovers in core economies is a net positive, it does create transition risks. The lesson I take from the last few months is that emerging market policymakers need to show that they are ready and capable of stepping in and providing the public goods of financial and price stability.

); (b) maintain financial and price stability; after having policy-engineered their V-shape recoveries, controlled their inflationary consequences and managed destabilizing large capital inflows; (c) calibrate their responses to this transition period of exiting from unconventional monetary policies, using their uneven policy room for maneuver and their preparedness; and (d) make the best possible use of the foreseeable changes in relative prices including their own asset prices; these changes are either occurring or in the making, in the light of the expected shifts in global monetary conditions in the coming months. I will focus my remarks tonight on three issues: (1)  how we prepared ourselves with policies put in place in Brazil and other EMEs over the last few years to sail through a period of intense capital inflows and to be well positioned for the exit from unconventional monetary policies;  (2)  notwithstanding that preparation, what has been the impact and the response to the start of the normalization of monetary conditions; and  (3)  what are the few analytical and policy lessons learned in the last few years with regards to the inflation-targeting framework for monetary policy in the context of the post-crisis challenges. The policy response to large and volatile capital inflows Let me begin by revisiting the rationale of the policies that many emerging markets put in place during the most expansionary phase of advanced economy monetary policies.
Italy has agreed to a technocratic government to ensure structural reforms are implemented, and invited the IMF to give extra credibility to this process. All euro area countries, except those under a programme, have committed themselves to bringing their budget deficits below 3% of GDP by 2013 at the latest. Overall, the forward commitments of euro area countries to fiscal sustainability go far beyond what has been agreed in the U.S. or Japan. Each of these measures, seen individually, may not represent the “shock-and-awe” or “big bazooka” that some commentators and markets participants call for. But when seen collectively, they represent a comprehensive broadening and deepening of euro area economic governance. And relative to a reasonable benchmark – the status quo ante – they are very significant developments. It is also worth noting that many steps have been taken to strengthen the financial sector regulation and supervision. Under the leadership of the G20, a remarkable amount of work has been done by the Financial Stability Board (FSB) and the Basel Committee in a demanding timeframe. Profound regulatory reforms need to be implemented to address the underlying deficiencies that have become apparent in our financial system. In general, Europe is exceeding international benchmarks in implementing these reforms. The Commission issued a proposal in July 2011 aimed at transposing the Basel III framework into EU Law. By doing this, it is among the first to introduce the Basel III framework and is taking a leading role in delivering on the G20 commitments.

Markets expect quick, bold and “shock-and-awe” decisions on highly complex matters. They are exasperated that something can be agreed by leaders but take months to enter into force. Yet this is a necessary condition of operating in a system of 17 sovereign democracies. Decisions have to be explained, approval processes have to be followed, compromises have sometimes to be made. These dynamics were witnessed even in the US when Congress sent back the TARP in 2008. The net effect on the euro area, however, is that by the time decisions are eventually implemented the expectations of market have moved on. The impact of those decisions is then discounted. These market-democracy dialectics provide a second reason why a more integrated economic and financial union is so essential for EMU. The rationale for the original design of EMU – with centralised monetary policy, but decentralised economic policies – was linked to principles of subsidiarity and democratic accountability. This was consistent with the environment that prevailed 20 years ago. But these same principles now imply more Europe, not less. Subsidiarity is the principle that the centre should perform only those tasks which cannot be performed effectively at the national level. Can we really argue, in the current crisis, that the centre is not the more effective level to exercise, or at least coordinate, certain economic and financial policies? Democratic accountability is the principle that citizens should be able to hold their representatives responsible for decisions.
For financial markets, however, shrinking government bond markets have a number of potential implications that could be relevant to financial stability. First, government bond markets have tended to be more volatile in recent years. Volatility makes government bonds less reliable as a hedge and as a benchmark for pricing, and market participants have been exploring other instruments, such as swaps and securities issued by public sector agencies. Indeed, US, European and prospectively Japanese agencies are playing an increasingly important role in the bond markets, with for example, Freddie Mac's € billion annual debt programme in Europe and European agencies such as KfW also bidding to position their issues as substitutes for government debt. Given this trend, the Bank continues to follow closely the debate in the US over the credit status of the US federal agencies, which are not in fact government-guaranteed. 4  BIS Review 15/2001  A second issue is that the growth of private sector debt relative to government debt puts a greater premium on credit risk management. This of course brings us back full circle to my earlier remarks about credit transfer markets. More generally, though, bond investing seems likely to be a higher risk and higher return business than before. The growth of a European high yield market over the past few years and the fall in prices of many of those issues in the second half of last year, mean many of you will need no reminding of this.

Rather it is in the use of credit derivatives that leave the underlying asset on the balance sheet but transfer some or all of the credit risk. The market in credit default swaps on individual investment-grade corporate and country issuers is becoming more liquid, in some cases, we have been told, more liquid than the underlying bond market. And investment banks pricing new bond issues can increasingly look to credit default swap premia as well as to the spread over the relevant benchmark on any existing debt. Increasingly, also, banks use derivatives to transfer some portion of the credit risk on a loan portfolio rather than selling the portfolio outright, creating so-called 'synthetic' collateralised debt obligations. Data on the size of the market are difficult to come by. But a survey by the British Bankers' Association last year found that outstanding notional principal of all credit derivatives had increased more than three times since 1997 to around $ billion. Some contacts suggest the market may now be even larger than this. But I think it safe to conclude that it is already large and has been growing quickly. In a wider sense, the development of these markets for the transfer of credit risk is highly desirable. The institution best placed to originate a loan is not necessarily best placed to bear the risk. Markets in credit risk allow financial institutions to diversify their exposures across different sectors and geographic regions while maintaining customer relationships.
The fact that the US has enjoyed an unparalleled period of strong and continuous growth during the nineties owes a great deal, of course, to the policies of the US authorities. They have had to steer a difficult path between maintaining conditions conducive to growth while not being seen to underwrite the risks of "irrational exuberance" in security markets or lax lending standards by banks. This balance became especially difficult to strike towards the end of last year in the face of sharply lower corporate earnings projections and widening spreads on higher risk borrowings. As some lower-rated companies found access to the capital markets increasingly difficult, and as banks tightened credit standards, liquidity fears for some borrowers intensified. These factors, together with a sharp downturn in business optimism and mixed economic data, added to growing fears of a recession this year. Such a climate of uncertainty calls for clear signals from the authorities and over the past two months the Fed has responded in a decisive fashion. The adjustment in the policy bias and recent cut in rates have increased the probability of a soft landing and will, from an international perspective, reduce the risk of a sharp reversal of capital flows into US markets. The combination of a slower growing - but still expanding - US economy and a weaker dollar should provide a more sustainable pattern of current accounts and capital flows, reducing the risk of instability in financial markets in both the US and abroad.

Since your organization establishes the business stance on broad issues of trade and investment policy as well as on vital technical or sectoral subjects including financial services, information technology, telecommunication, marketing, environment, transportation and etc., a vital role can be played in articulating the need for improving productivity. Do it now. This will be a major contribution that you make to our country. BIS Review 116/2008  5
Launched in Paris last December, the NGFS started out with eight trailblazing supervisors but has since grown to include 19 members and five observers, including the Sustainable Insurance Forum (SIF). We are working hard on two subjects where insurers are in the vanguard: disclosure of current climate risks and the projection of dynamic stress tests based on future risks. A report detailing the network’s first year of work and making recommendations will be presented at a conference in Paris on 17 April next year. ** I have called green finance “the new frontier for the 21st Century”. Today, you are talking about “pushing back the limits of insurability”. These images testify to your pioneering role and evoke your spirit of entrepreneurship and innovation. The risks facing the world in 2018 are unquestionably growing, and we need these qualities more than ever before. Thank you for your attention. 3/3  BIS central bankers' speeches

Trust is the foundation for a market economy. In financial services and in the digital economy, it is absolutely critical. Customers must have the confidence that systems are reliable, transactions are safe, their data are secure, and service offerings are in their best interest. 8/9  BIS central bankers' speeches  Finally, everything we do in FinTech must have a larger purpose. Ultimately, it must solve realworld problems, so that people’s lives are better off … so that deserving small and medium enterprises can get financing to grow their businesses; so that migrant workers can send money back to their families cheaply, quickly, and securely; so that people can plan their finances holistically to meet their needs. This room is filled with innovators, investors, business leaders, and policymakers from around the world. Together we can re-create finance with technology and innovation. As Tennyson puts it, “Come my friends, ‘tis not too late to seek a newer world”. Thank you. 1 1 Abu Dhabi, Australia, Denmark, France, Hong Kong, India, Japan, Malaysia, Philippines, Poland, South Korea,  Switzerland, Thailand and the United Kingdom, as well as the Association of Supervisors of Banks of the Americas. 9/9  BIS central bankers' speeches
However, a monetary policy that aims in all situations to keep inflation at 2% can lead to large fluctuations in output. If monetary policy was to counteract price increases in CPI which are deemed to be temporary and not a consequence of excess demand, interest rates must be kept sufficiently high to hold down demand in the economy. Output would then be under the long-term trend level. Correspondingly, with the target of achieving 2% inflation, monetary policy must stimulate demand and press output up above the long-term trend level if inflation was held down by factors that temporarily dampen prices. There are therefore reasons for modifying the monetary policy rule of conduct to make it possible to achieve balance between variations in inflation and in growth. Excessively large fluctuations in output can entail high economic costs. Fundamentally, after all, the reason for monetary policy being given the task of maintaining stable prices is that this is the way in which it is considered to make the best contribution to creating the prerequisites for high, stable growth. If inflation is affected by temporary factors or if the economy is affected by such extensive disturbances that it can be difficult to bring inflation back on target within one to two years, there may therefore be reasons to bring inflation back to target more slowly than usually. However, we should give reasons for doing this.

If a lot of companies during the overheating period, have based their investment decisions on incorrect expectations of the demand trend, the fall can be great. The example shows a development where monetary policy by acting too late creates high variability in both inflation and output. The effects need not be visible either until after the forecast horizon. The economic costs of waiting too long to change the direction of monetary policy can be high if imbalances have grown great and the fall in production is large. The same course of events as in USA? Although the prospects for the Swedish economy look very bright, we cannot therefore disregard the risk of overoptimism. History has shown many times that an optimism that was well-founded to start with has become self-reinforcing and has ended up by creating considerable imbalances in the economy. Developments in Japan in the 1980s and in Asia in the 1990s are clear examples of this. The exceptionally long upswing in the USA has contributed to strengthening expectations of faster long-term growth in Sweden as well. It is therefore important to understand whether an American level of growth is sustainable in the long-term and whether anything similar can take place in Sweden. An important basis for the favourable development in the USA is probably the focus on budget consolidation and price stability that has guided economic policy there for a long time. We have had a similar development in these areas in Sweden, although the process started later here.