samchain/econo-pairs-v1 huggingface dataset:
The aim was not to achieve a particular level of the exchange rate but to compensate for its deflationary impact. When the exchange rate weakens – as we anticipate that it will in due course – then monetary policy will at some point need to offset that influence in the opposite direction. But in the meantime we have had to manage as best we can a severe imbalance between different sectors of the economy, with the internationally exposed sectors taking a considerable hammering. Despite reasonable macro-economic stability in the economy as a whole, the environment has been anything but stable for those sectors. For a period before 1992 we sought to manage the exchange rate, initially by informally shadowing the DM and subsequently by pegging sterling within the framework of the European Exchange Rate Mechanism. Both these episodes ended in tears, essentially for the same reasons: attempting to manage the exchange rate required us to pursue macro-economic policies which were inconsistent with our own domestic macro-economic needs. In the first case shadowing the DM involved accentuating a domestic boom; in the second case our membership of the ERM, at a time when reunification required abnormally tight monetary policy in Germany, involved us in pursuing an unnecessarily restrictive monetary policy deepening and prolonging recession. In that case, too, the formal commitment made exit more difficult, the exchange rate fell very sharply, and we made a very substantial financial loss as a result of massive foreign exchange intervention seeking to defend the ultimately indefensible.

Philipp Hildebrand: In the focus of the Swiss National Bank - economic outlook and monetary policy Summary of a speech by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the WGZ-Bank, Luxemburg, 9 September 2005. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  The world economy expands at a robust pace but the growth rates of the important economic blocs diverge considerably. In spite of the accommodative monetary policy in most industrial countries, inflation and inflation expectations remain well contained which may, among other things, be due to the process of globalisation and the credibility of central banks. Switzerland, small and extremely open, benefits from a recovering global economy. The conditions for returning to a path of modest expansion look favourable. However, there are certain risks that may affect the global and the Swiss economy negatively. Most importantly, high oil prices and the devastating effect of the hurricane „Katrina”, as well as the possibility of increasing long-term interest rates have to be mentioned. A persistently high price of oil could act as a brake to demand dynamics and growth prospects could also be threatened by soaring long-term interest rates, an effect that could be amplified through the housing channel. In the foreign exchange markets, structural and cyclical factors continue to determine the value of the US-dollar. 1/1
Part of this is aversion to appreciation, and part of it aversion to variability in the exchange rate. In this sense, the high level of reserves today could be read less as an indication of fundamental strength than as an indication of the need for more progress toward completing the transition to a modern monetary policy regime. Even though reported inflation in most emerging economies has been moderate, the observed preference for nominal exchange rate stability suggests a monetary policy regime with less independence to sustain price stability over time. Emerging market economies have retained controls on cross-border capital flows, some quite comprehensive, some more selective. These come with a range of different justifications, from insulation against volatility and speculation, to protection of the domestic financial system, to limiting variability in the exchange rate or maintaining a specific objective for the level of the exchange rate. By design, these controls limit the degree of integration with the global economy and they necessarily distort incentives in ways that affect all economic and financial activity. Their appeal as a source of durable stability has diminished over time, and we now have a greater understanding of the effects they can have in lowering long-run growth potential. For policymakers in many emerging economies,  BIS Review 91/2006  3  the question is not whether to remove controls, but when and how to do it without significantly raising short-run vulnerability to financial instability.

Erdem Başçi: Financial stability and Turkey’s achievements to date Welcome speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, for the 17th International Conference of Banking Supervisors, Istanbul, 13 September 2012. *  *  *  Distinguished Deputy Prime Minister, Esteemed Guests and Distinguished Members of the Media, Welcome to Istanbul and to the 17th International Conference of Banking Supervisors jointly hosted by the Central Bank of the Republic of Turkey and the Banking Regulation and Supervision Agency of Turkey. In my speech, I will try to summarize the importance we attach to financial stability and the achievements we have made up to date. Dear Guests, There are three essential factors that determine the growth potential of a country; these are price stability, financial stability and productivity. Any weakness in any of these three factors may cause considerable damage to growth. The history of economics is teeming with examples of this. The social costs of loss of price stability are now very well known by economists. Academic studies indicate that an inflation rate that is on average higher by 10 percentage points leads to a reduction in the GDP growth rate an average of a quarter point.1 Meanwhile, the loss of financial stability has deep and long-term impacts on growth and employment.2 The cost of preventing a financial crisis is much lower than the cost of the crisis itself. Turkey’s recent history is a very good example of this statement.
Although these numbers might ring some bells, the performance of the Chilean index does not differ significantly from other regional stock markets and its recent behavior might just be a catch up from very low levels. Measured in real terms, its current value does not seem to be an outlier either (figure 7). Figure 7 120  MSCI: Latin America  Real IPSA  (fixed-base index: January 2013=100)  (fixed-base index: January 2001=100)  120 Mexico  Latin Chile America  Colombia  Peru  30 13  14  15  350  Brazil  90  60  350  16  17  90  250  250  60  150  150  30  50  50 01 03 05 07 09 11 13 15 17  Sources: Central Bank of Chile and Bloomberg. 12. The prolonged strike at the Escondida, the open-pit copper mine with the world’s largest production, will have a very important effect on our first quarter GDP figures. It already did in the Imacec of February, which showed a yoy contraction of 1.3%, with a fall of 17.1% of its mining component. Since the strike ended in late March and resuming normal production levels is not instantaneously, the figures of that month will also be affected. If you add the continued weakness in construction, the economy could experience an expansion close to 0% in the first quarter of the year.

Strength of our country is the fact that compared to earlier low-growth periods it has more liquid external funds available. At the same time, the financial sector is healthy and non-performing loans have diminished over time. Reforms currently under discussion, particularly a New General Banking Law, aim to bolster resilience and improve banking capital adequacy ratios (figure 10). Figure 10 Regulatory Capital  NPL  (percent of risk-weighted assets)  (percent of total loans)  Latin America (*)  Chile  18  18  15  15  12  12  9  9  6  6  3  3  0  0 10  11  12  13  14  15  16  3  3  2  2  1  1  0  0 10  11  12  13  14  15  16  (*) Shows the region’s simple average. Source: Global Financial Stability Report, IMF. The medium- and long-term outlook 19. The Chilean economy has endured a long period of slow growth, while its potential growth has dropped to a range between 2.5% and 3%, i.e., less than estimated a decade ago (4% to 5%). In principle, this change is explained by: (a) a smaller contribution of the accumulation of productive factors, inherent to a maturing economy; (b) a drop in gross fixed capital formation that has lasted several years; (c) reduced mining productivity; and (d) a limited contribution of productivity growth in the other sectors. 20.
We need a more structural view of QE transmission. In the annex to this paper, we sketch out a very simple monetary framework as a starting point. [16] That monetary framework may help answer important questions about the dynamics of these polices. As we will see in the next section, such a model helps address questions such as: what is the relative importance of the stock of purchases announced versus the flow of purchases conducted? Does the impact of QE fade over time? What influences the relative potency of QE over time? By their nature, event studies cannot answer such questions. I apply this highly stylised model to the current situation in the next section, in order to develop and illustrate some high-level views about the potential conduct and impact of QT. Thinking about QT Just to be clear from the outset, the discussion here is not intended to front-run the MPC’s discussion of asset sales and quantitative tightening. As I have already said, in February the MPC decided to start shrinking its holdings of gilt accumulated via QE by ceasing to reinvest the proceeds of maturing bonds. Bank staff have been commissioned to think about the potential  Page 12  modalities of gilt sales in the future. But no decisions have yet been made about whether or, if so, how to conduct gilt sales. Nor is the discussion here intended to develop a quantitative view of QT transmission.

Rather monetary policy actions need to be calibrated to impart the  Page 8  appropriate impulse to inflation at the 18-24 month horizon when the lags in policy transmission unwind. Fourth, emphasis of the need for a nominal framework within which to analyse and communicate monetary policy. And fifth, adherence to the view that monetary quantities (i.e. specific safe and liquid liabilities on the balance sheets of the central bank and/or commercial banks) play an important and distinct role in the transmission mechanism of monetary policy actions to the price level. The key assertion here is not that the central bank should use a quantity measure of money as its policy instrument rather than a short-term interest rate – that is something resolved pragmatically through the Poole considerations discussed above. Instead it is the contention that failure to incorporate monetary quantities in models of monetary transmission excludes important channels through which monetary policy works: policy analysis without money is subject to specification bias. Viewed from today’s perspective, the striking thing about this list – in particular, given the doctrinal tensions between monetarist and Keynesian camps of monetary and macro economists in the 1970s – is how many of the monetarist tenets have become mainstream. Any reputable modern monetary policy framework or strategy purports to embrace the first four of these elements, albeit with some of the flexibility needed to turn an academic argument into a policy programme. For sure, how these elements are presented and communicated varies across jurisdictions, reflecting different histories, experiences and contexts.
Sixth, the MMLR should avoid propping up markets that would not be fundamentally viable once peacetime returns. I must stress that those are just starters for debate. But, unfortunately, we cannot always wait for consensus around fully articulated principles. Recently, in the context of its Asset-Purchase Facility programme, the Bank of England has embarked on what could, perhaps, be viewed as two variants of MMLR in the sterling corporate financing markets. Both have been focused on our being a buyer, rather than operating on both sides of the market, but arguably that is what the various MMLR ideas really amount to in crisis conditions. In the first, we offer to buy Commercial Paper at announced spreads, which are designed to be above those warranted by credit-fundamentals, and above market spreads during peacetime, but below those prevailing in the market before we stepped in. In other words, we are ready to lend without charging a hefty liquidity premium, since we are not liquidity constrained. We offer to buy paper in both the primary market and the secondary market. The latter is in effect a temporary liquidity facility to money market funds and others, at an extra cost of 25bp over the fixed spread, and with the aim of increasing their willingness to buy new paper. The goal has been to stimulate the market to bring market prices to at least our spreads, with market transactions occurring there or more cheaply.

From that discussion of LOLR as Bagehot would have recognised it 2 , I shall go on to air some developing thinking about two other instruments available to the authorities to address financial system distress: Market Maker of Last Resort, and Capital of Last Resort. The implementation of monetary policy in stressed conditions Most of the time, central bank operations revolve around the implementation of monetary policy. For the Bank of England, in routine circumstances that means, of course, establishing overnight money market interest rates in line with the Monetary Policy Committee’s policy rate (Bank Rate). It is vital that we should be able to achieve that primary rate-setting Objective in stressed conditions, as well as in peacetime. Since mid-decade, the reserves part of the Bank of England’s operational framework has, accordingly, made explicit provision for three broad types of contingency: a bank finding itself temporarily short of reserves at the end of the banking day due to technical problems or frictions in the money markets; a widespread shock to the sector’s demand for reserves; and, thirdly, a pronounced shift in the degree to which banks collectively find themselves needing to manage their reserves directly with the Bank rather than via the money markets. To cater for those eventualities, banks can, first, borrow unlimited amounts overnight against the highest-quality collateral, for a modest premium of 25 basis points, designed to leave intact incentives to manage liquidity in the markets rather than with us.
Most likely, the existence of the European single market would also have been challenged in such a situation, given the sequence of abrupt shifts in competitiveness between EU Member States. Globalisation, by contrast, has promoted diversification and allowed risks to be spread across regions. Regional and global financial integration as well as internal stability have shielded the euro area against potential speculative attacks on the euro with all their negative consequences. But the euro is far from a universal panacea. Countries must make flexible adjustments to their product and labour markets in order to increase the potential output of the euro area and to reduce the still intolerably high unemployment rate. Establishing competitive, efficient and well-functioning markets is essential in order to enhance medium to long-term economic growth, to facilitate the adjustment process, and to increase the resilience of the euro area to economic shocks. In this respect, the globalisation process itself should induce policymakers to take unpopular decisions while ensuring fiscal discipline. For a monetary union to work, sound fiscal policies are a prerequisite. Therefore, Member States must adhere to the criteria set out in the Growth and Stability Pact. But is it possible, as some have argued, to promote growth and structural reform at the same time as encouraging further fiscal consolidation? My answer is a clear yes. There is no evidence for such a trade-off.

Climate policy measures, changes in public attitudes and the emergence of more 1/7  BIS central bankers' speeches  environment-relatedly friendly technology will have an impact on both production methods and consumption patterns. This will create both opportunities and challenges for the business sector. Not all companies will make the transition to a low-carbon economy. Others will benefit from the restructuring involved, and new companies and industries may emerge. It is uncertain which climate policy measures will be introduced ahead, particularly internationally. If little is done in the short term, economic decisions today must take into account that climate policy may be abruptly tightened later. Postponing climate mitigation measures will also increase the risk of severe and irreversible climate change in the future. Responsibility for achieving the Paris Agreement’s goals lies with the political authorities. However, we already know that climate change and adjustments to a low-carbon economy will affect large parts of the economy. Norges Bank is responsible for maintaining price stability and the stability of the financial system. In its conduct of monetary policy, the Bank also promotes high and stable employment and output. The Bank is also tasked with managing the Government Pension Fund Global (GPFG) and is thereby a major investor in global capital markets. A feature common to these tasks is the identification and management of uncertainty and risk. Climate-related economic and financial risks have important implications for all of Norges Bank’s operations. Climate change and climate risk must also be taken into account by central banks.
Without you – the financial industry – we would not have the vibrant and competitive financial centre that we have today, or the market and digital infrastructures that we have built. You stood with us in crisis after crisis – in 1973, when the Bretton Wood system of fixed exchange rates broke down in 1985, economic recession, Pan-El crisis and closure of the stock exchange in 1995, collapse of Barings Bank from massive losses in derivatives trading here in Singapore in 1997, the Asian financial crisis and closure of trading of Malaysian shares on Clob in 2008, the global financial crisis and when Singaporean investors lost large sums of money from structured notes like Minibonds And you did it again last year, amid the COVID-19 pandemic and plunge in the economy. In less than two weeks of close and intense collaboration between MAS and the banking, finance company, and insurance industry associations, we put together a comprehensive package of unprecedented credit and premium reliefs. This helped many individuals and SMEs tide over a difficult period of financial stress. We achieved this together, not by regulatory fiat or coercion – maybe a little moral suasion – 2/3  BIS central bankers' speeches  but truly in a spirit of co-operation, driven by a sense of common purpose. Thank you all so much for the support and for stepping up in Singaporeans’ hour of need.

In order to keep overall demand in the economy moving forward in the face of the slowdown overseas, which has depressed both financial sentiment and business investment in this country, as well as net external demand, we had no choice but to seek to buoy up the other elements of domestic demand. Without that we, too, would have seen negative growth in this country. In terms of monetary policy that in effect meant cutting interest rates - to 4% - their lowest level for 40 years - in order to sustain the growth of consumer spending. And we were subsequently helped by the Chancellor's decision to increase public spending. That's something which, as a central banker, I'm supposed to frown upon - and it clearly is important for the stability and efficiency of the economy that it is kept within bounds over the medium and longer term in line with the Chancellor's Golden Rule. But I must confess to you that it is something that I positively welcomed in the immediate situation with  BIS Review 3/2003  1  which we were confronted. Without it we would have been even more dependent upon consumer demand than we have been.
The exchange rate The exchange rate is an important but elusive item in assessments of inflation. Last autumn, the main assessment was that the krona would become successively stronger as the financial turbulence subsided and relatively more importance was attached to the favourable economic fundamentals, which include low inflation and a growing surplus on public finances. Recently, moreover, it seems that such a process has begun. Signals of a move by Sweden towards the monetary union may perhaps have acted as a catalyst here. The new political signals about the handling of the EMU issue have brought the question of the krona’s equilibrium level to the fore. Participation in the euro area means that at some stage the krona’s exchange rate with the euro will have to be locked. In the discussion that will then be held with colleagues in Europe, the actual decision will be a matter for the Government. The Riksbank, however, is responsible for choosing the conversion rate we find reasonable on Sweden’s behalf. Meanwhile, we must bear in mind that we are dealing with negotiations between Sweden and the other EU member states, so it may be inadvisable to get tied down in matters of detail at an early stage. The Riksbank has made it clear on numerous occasions that it considers the krona to be undervalued. Much of the debate on this issue has stemmed from an article on the krona’s equilibrium exchange rate that was published early in 1996 in our Quarterly Review.

A distinct message that we intend to remain outside the euro area for the foreseeable future would probably weaken our influence in the European Union still more. Our partners in Europe would then be less interested in allowing for our positions on other matters as well. The monetary union is, after all, one of the Community’s most central integration projects. On the other hand, the economic consequences of Sweden still having a flexible exchange rate should not be exaggerated, at least in the short run. Basically, the development of the exchange rate and interest rates depends on how we manage Sweden’s economy relative to the euro area. If we succeed in making our economic policy credible, the costs of remaining outside for some years should not be unduly high. But our decision not to participate does mean that we need to be extra clear in demonstrating our determination to implement a sound economic policy, focused on sustained growth with low inflation and high employment. There are no easy short cuts, even in the short run. That Sweden, as a euro outsider with a flexible exchange rate, will have to live with exchange rate fluctuations is evident from events last autumn. We know from international experience that  BIS Review 9/1999  –3–  floating exchange rates do in fact float. Not even good economic fundamentals suffice to ensure stability in financial markets. Here we have a price for being outside the monetary union.