samchain/econo-pairs-v1 huggingface dataset:
Naturally, macroeconomic stability was and still is a necessary condition for the framework to operate properly. The crisis has led to a reexamination of some issues we thought were settled and to the emergence of some new questions. Even though Brazil was not at the epicenter of the crisis, we were affected by the crisis itself and by the policies that were put in place in its wake. Furthermore, we have been actively participating in the international central banking debate in order to offer our views and to learn from the experience of others. *  *  *  In my opening remarks, I will focus on three topics that have provoked particularly intense debate and that I believe will shape central banking for some time to come. In each of these topics, the global financial crisis prompted a rethinking that is still underway, although some initial conclusions can already be drawn. First, maintaining financial stability was reemphasized as a core function of central banks. Central banks have always been concerned with financial stability, particularly through their lender-of-last-resort role. But in many jurisdictions, central banks progressively downgraded the importance of the financial stability goal in the post-war period. The supervision of banks was progressively split off from central banking, and a gap emerged in that, in some jurisdictions, nobody was tasked with looking at the vulnerabilities in the system as a whole.

This is less true for emerging markets, including Brazil, where central banks tended to keep a strong focus on financial stability even before the global financial crisis. In part, this reflects the fact that financial crises were relatively more common in emerging markets in the late 20th century. There was also an old and important academic and monetary policy debate in the decade leading up to the crisis on whether we should lean against a financial bubble or clean up after it has burst. However, the lack of consensus on this issue resulted, in practice, in a mostly laissez-faire policy stance. BIS central bankers’ speeches  1  Today, I think it is safe to say that there is general agreement that proactively maintaining financial stability, by taking appropriate action against the buildup of vulnerabilities, is a proper goal for central banks. The high cost of “cleaning up” after the global financial crisis will serve as a reminder against excessive complacency for some time to come. The current debate is about the policy tools for the goal of maintaining financial stability. Macroprudential policy is widely seen as the first line of defense against systemic risk, but there is still uncertainty about its effectiveness. There is also disagreement on whether monetary policy should take financial stability considerations into account at all. On this latter issue – the use of monetary policy to deflate potential financial bubbles – there are two views.
With regard to our exchange rate policy, the Bank of Thailand has used the managed floating approach for some time now. Our principle is to let the exchange rate reflect the fundamentals of the economy relative to our trading partners and competitors. In the short run, international price competitiveness depends on 2 things: 1. the appreciation of the Thai baht vis-à-vis a basket of currencies of our trading partners and competitors; and 2. the increase in production cost of a Thai company relative to that of our trading partners and competitors. For example, given the same appreciation path of two competing currencies vis-à-vis the US dollar, if production cost of a Thai company rises beyond that of its foreign competitors, then it loses price competitiveness. Generally, production cost rises with inflation. And so, keeping inflation low helps to lower relative cost increase for Thai exporters and boosts their price competitiveness. The exchange rate that the Bank of Thailand manages is that which represents price competitiveness; it is called the real effective exchange rate. Let me give you a specific example: It is well known that even though the baht has gained against the US dollar, it has been appreciating in line with regional currencies. From the beginning of 2007 to early March 2008, the real effective exchange rate of China has  BIS Review 33/2008  3  appreciated by roughly 8 per cent while India has gained by 5.4 per cent.

Thomas Jordan: Real estate prices falling in the US, rising in Switzerland – implications for the SNB’s monetary policy Summary of a speech by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the Hochschule für Technik und Wirtschaft, Chur, 18 December 2007. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  Developments in the real estate market are important for monetary policy. Real estate markets can influence inflation and economic cycles, but also the stability of the financial system. Property bubbles can result in a massive misdirection of capital and thus give rise to lengthy and difficult adjustment processes. Therefore, the SNB closely monitors developments on the real estate markets both in Switzerland and abroad. The economic outlook is still clouded by undesirable developments on the US real estate market, notably in the period 2004-2006. Given the size of the United States and the broad international spread of investments in the US mortgage market, these distortions have had a serious impact on the world’s financial markets and on global economic development. For some years now, Switzerland too has been experiencing a construction boom and a relatively sharp rise in property prices in certain regions and in given market segments. Comparison of the Swiss and US real estate markets shows, however, that these markets differ in a number of key respects.
Svein Gjedrem: The inflation target and the floating krone: the interplay between fiscal policy, the interest rate and competitiveness Address by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), to the Executive Board of the Federation of Norwegian Manufacturing Industries, Oslo, 20 March 2002. This speech is based on information provided in Norges Bank’s Inflation Report 1/2002, earlier speeches and the Governor’s Annual Address on 14 February 2002. Accompanying charts can be found on the Norges Bank’s website (www.norges-bank.no). *  *  *  Norway’s economic policy is based on the guidelines for fiscal and monetary policy. The guidelines for fiscal policy state that the use of petroleum revenues over the central government budget shall be equivalent to the expected real return on the Government Petroleum Fund. Monetary policy is oriented towards low and stable inflation. Historically, periods of high inflation have always been followed by a downturn. Low and stable inflation fosters stability and growth in the economy. Establishing guidelines for economic policy is not new. Both fiscal and monetary policy have been based on such rules throughout the post-war period, with the exception of the last half of the 1970s and the first half of the 1980s. Monetary policy has had a clear anchor since 1986. The inflation target provides an anchor for expectations concerning future inflation and interest rates. The inflation target is set at 2½ per cent.

It is necessary to continue strengthening the robustness of these methods to evaluate situations of extreme tension. Starting tomorrow, the Central Bank of Chile will hold its Annual Conference, and this version will feature frontier work in this area. From the regulatory standpoint, supervision must consider the macroeconomic impact of financial activity. In the months to come, we will have to analyze also the potential procyclicality of the Basel II capital requirements, as well as the modeling and quantification of liquidity risk. A regulatory framework will be necessary to ensure the building of sufficient reserves in the boom phase of the cycle in order for the financial system to be well capitalized when the bust phase comes. 9 One of the most recurring sources of financial stress in the past few years in emerging economies are periods of euphoria or pessimism, which trigger movements in their exchange rates beyond what their fundamentals would justify. For example, when economic expectations are good, foreign exchange appreciations can arise with symptoms of bubbles in favor of all the domestic assets. As I discussed before, a first line of defense for specific asset prices, stocks or housing is to raise the interest rate. However, in the area of exchange rates this may trigger more pressures to appreciate and exacerbate financial imbalances.
This diversity of exchange rate regimes can be explained in terms of the progress made thus far by these countries in disinflating their economies; their degree of openness; the extent of capital account liberalisation; and the adequacy of their reserves. Generally speaking, during the early phase of transition when many accession countries were faced with the task of disinflating their economies and restoring the credibility of monetary policy, fixed exchange rate regimes were the norm. Then, a credible anchor in the form of the currency of a low-inflation trading partner was viewed as the best strategy for meeting these objectives. The rationale is not difficult to understand. The persistence of inflation differentials under a fixed exchange rate regime would lead to an appreciation of the real exchange rate, undermining a country’s external competitiveness. The mere adoption of a fixed exchange rate indeed signals the intention to subordinate monetary policy to exchange rate policy, adding to the credibility of anti-inflationary monetary decisions. As these countries progressed with disinflation and as the emphasis shifted towards integration with the EU, the continuation of structural reforms and attracting sufficient capital flows to enhance real convergence, a gradual move to more flexible regimes become feasible. At first sight, such a shift would also seem to be indicated for Malta, particularly as the capital liberalisation programme approaches full implementation.

Today, on the basis of a Progress Report, we have reviewed the advances of the banking industry against the objectives set by the Eurosystem and we have identified the outstanding issues that need quickly to be addressed. A press release on this topic will be issued later on today. The Progress Report will be available on the ECB’s website shortly. 3  BIS Review 74/2000
[20] Cumulating across these events, the long-term Bund rate declined by 30 basis points. This is the bar that you see on the left in Chart 7. With the help of an econometric term structure model, ECB staff have decomposed that change into the contribution of changes in average short rate expectations and the term premium. [21] Chart 7 shows that it is the term premium that accounts for essentially the entire decline in yields. On the day of the APP announcement itself (22 January 2015), the ten-year Bund rate decreased by 15 basis points, which is one of the largest daily declines in Bund yields since the inception of the euro. The second bar in Chart 7 also shows that the observed yield compression can be explained exclusively by the term premium. [22]  Chart 7 Decomposed changes in ten-year Bund yields (percentage points)  Sources: Based on Lemke and Werner (forthcoming). Notes: Based on an affine term structure model, the bars shows the decomposed change of the ten-year Bund yield over the indicated horizons: left bar corresponds to cumulated one-day changes associated with APP-related ECB communication between summer 2014 and 22 January 2015. The other two bars correspond to a one-day change for the indicated date. So staff analysis suggests that, at least initially, growing expectations of the imminent start of the APP were primarily reflected in a compression of the term premium.

Although inflation has not been falling recently, but has remained at a low level, and inflation expectations are fairly close to 2 per cent, it is very important to ensure they do not fall further – especially given the coming wage bargaining rounds. As I mentioned earlier, the global dimensions of the fiscal and debt crises, combined with the fact that Sweden is a small, open economy, have brought to the fore the question of how much our monetary policy can deviate from that conducted abroad. When several central banks abroad are conducting a very expansionary monetary policy, the conditions for monetary policy in Sweden are affected. If the policy rate is higher in Sweden than abroad, the krona exchange rate will tend to strengthen, contributing to lower inflation through lower import prices. All other things being equal, the lower policy rates abroad thus argue for lower policy rates in Sweden too. It was in the light of all this that we began a series of repo-rate cuts, which resulted in the repo rate coming down to zero per cent in October last year. When the repo rate approaches its lower limit further complementary measures are required if monetary policy needs to become more expansionary. 24 The Riksbank has therefore cut the repo rate to –0.25 per cent and has begun purchases of government bonds to a total value of SEK 80–90 billion.
Layard, R. (2003), Happiness: Has Social Science A Clue?, Lionel Robbins Memorial Lectures delivered at the London School of Economics, 3-5 March: Lucas, R. (1980), “Rules, Discretion and the Role of the Economic Advisor” and Fisher, S. (ed.) “Rational Expectations and Economic Policy”, University of Chicago Press. Marx, K. (1867): Das Kapital: Kritik der politischen Ökonomie, Buch I, Hamburg: Otto Meissner; Buch II (1885), Buch III (1894) edited by F. Engels. Moutot, P., F. Mongelli and A. Jung, “The Eurosystem: Monetary Policy Preparation, Decision-Making, and Enlargement - Selected Issues”, ECB Occasional Paper, forthcoming. Nicoletti, G., R. Haffner, S. Nickell, S. Scarpetta and G. Zoega (2000), “European Integration, Liberalization and Labour Market Performance”, in G. Bertola, T. Boeri and G. Nicoletti (eds), Welfare and Employment in a United Europe, MIT Press. Nickell, S and L. Nunziata (2001), Employment Patterns in OECD Countries, Centre for Economic Performance. Nickell, S., L. Nunziata, L., W. Ochel,and G. Quintini (2002), Why Do Jobless Rates Differ?, CESifo Forum 3:1, 50-59. Phelps, E.S. (1973), “Altruism, Morality and Economic Theory”, New York, Basic Books for the Russell Sage Foundation. 10  BIS Review 43/2007  Phelps, E.S (2003), “Commentary II”, in Philippe Aghion, Roman Frydman, Joseph Stiglitz and Michael Woodford (eds. ), Information and Knowledge in Modern Macroeconomics, Princeton, Princeton University Press. Phelps, E.S. (2003), “Globalization and Development”, Public lecture in Bangkok, Beijing, Tianjin, Shanghai, Singapore and Havana, January-February. Phelps, E.S.

They establish the “framework conditions” for the actions of economic agents, and also define the objectives and scope of public policies. The final – and fundamental – layer of this structure underlying both markets and institutions is the set of “human values” which potentially influences and interacts with both. I will use the term “human values”, or simply “values” in a broad sense: to include social and cultural values which are reflected in people’s preferences and attitudes and which influence their behaviour, including their actions as economic agents and market participants. Edmund Phelps (2006), in a very recent paper, uses the term “economic culture” to describe the set of “cultural values, attitudes, morals and beliefs”. His concept is similar to the one I have defined as “values” and it seems to relate more to cultural attributes than pertain closely to economic behaviour. In principle, values can affect markets and economic performance both directly and indirectly, that is by shaping the features, objectives and functioning of institutions. There can also be interactions and feedback effects. The history of economic and political thought reminds us that great philosophers and economists, starting with Aristotle and including the Enlightenment thinkers like Adam Smith, David Hume, Immanuel Kant, and later on Max Weber (1905) and Joseph Schumpeter (1911), emphasised the role and influence of a society’s values or culture for the functioning and performance of the economy.
8  BIS central bankers’ speeches  may choose to temporarily deviate from the inflation target to support the target of the committee with responsibility for macroprudential supervision.27 Riksbank’s strategy well in line with international debate Let me conclude by returning to the question in the title of my speech today. Is the Riksbank’s monetary policy strategy in tune or out of tune with the rest of the world? Right now there is an international debate on potential changes in the strategy for monetary policy that was common prior to the crisis. One of the most central questions is whether monetary policy should give greater consideration to financial imbalances. Most people agree that macroprudential policy should be the first line of defence. But an increasing number have also begun to take the view that monetary policy may need to provide support by leaning against the wind. Given this, it is difficult to understand the critics who try to claim that the monetary policy the Riksbank has conducted in recent years is strange and our own invention. On the contrary, I would say that the Riksbank’s monetary policy strategy has been well in line with the international debate. To be sure, this claim may seem strange to someone who has only followed the Swedish debate on monetary policy. And this worries me somewhat. It is not a good thing if the debate in Sweden is not as open and inquiring as the debate going on in the world around us.

The experience from the crises that nevertheless arose, for instance the year 2000 when the dot-com bubble burst, was that one could also manage more difficult situations. However, the financial crisis 2007–2008 and the deep and protracted downswing that followed have meant that central banks have been forced to closely examine things that were previously taken for granted. In this way, the situation is a little reminiscent of the situation at the beginning of the 1990s when inflation targeting was introduced. Then, too, there were crises that made it necessary to question the prevailing monetary policy doctrine. 1  Many papers have been published on this theme recently. See, for instance, Bayoumi et al (2014) and the various contributions in the anthology by Reichlin and Baldwin (2013). 2  See, for example, Issing (2009) for a description of the Jackson Hole consensus. The expression comes from the fact that the town of Jackson Hole in the United States hosts an annual conference that gathers central bank governors and other economic policymakers from around the world. BIS central bankers’ speeches  1  And then, too, it was the central banks that – of necessity – took the first steps and adjusted their strategies and practical policy before there was any real consensus from academic research to lean on.
A number of initiatives have been launched to achieve progress in this field, relating in particular to the implementation of the industry’s Code of Conduct and the removal of the so-called Giovannini barriers. A crucial complementary step towards an integrated European securities market infrastructure would be to establish a common securities settlement platform. This is the objective of the Eurosystem’s TARGET2Securities (T2S) initiative. Under T2S, cross-border transactions will be settled at the same price and as efficiently as domestic transactions. Moreover, the T2S settlement cost will be significantly lower even than the cost today of domestic transactions. If T2S existed now, the average settlement cost could be reduced very substantially. If the geographical scope of T2S were extended beyond the euro area, substantial further cost savings would be achieved. In addition to the pure settlement cost, banks and other users would also enjoy substantial back office and collateral savings. The details of the economic impact analysis of T2S are set out in the proposal by the ECB’s Governing Council’s proposal for all European central securities depositories to join the T2S project. This proposal also includes the user requirements that have been developed in close co-operation with hundreds of experts from central securities depositories (CSDs), banks and central banks. The entire documentation, which was sent to the CSDs on 23 May 2008, is available on the ECB’s website.

As we know, trade finance is an integral part of the global trading system and the paper-based system is very inefficient and prone to human errors and fraud. But then it has proved to be very difficult for the trade finance processes to be automated or digitalised mainly because multiple parties and banks in different jurisdictions are involved in a single trade transaction. Unless there is a common global standard for the digitisation of trade-related documents and a trusted central repository, it is pointless for any party or jurisdiction to change the paper-based system on its own. However, with the breakthrough of the Distributed Ledger Technology (DLT), we firmly believe that the time has come for trade finance to move into 1/4  BIS central bankers' speeches  the digital era. Together with a consortium of five banks in Hong Kong, the HKMA conducted in the second half of 2016 a proof-of-concept project on the use of DLT to build a trade finance platform in Hong Kong. I am pleased to announce that the proof-of-concept project has been successful in that it can digitise trade documents, automate the processes, allow sharing of required documentation among authorised participants, and reduce human errors and risks of fraud. We are therefore moving into the next phase of the project by developing a full production system. The consortium, now joined by two more banks, is in the process of conducting tender for the system development.