samchain/econo-pairs-v1 huggingface dataset:
Beyond the ups and downs of the economic cycle since 1999, despite the swings in the international prices of raw materials, monetary policy has managed to keep its inflation record faithful to its strategic aim. I am satisfied that we have fulfilled our mandate. Speaking in Germany, I would like to recall that the average annual inflation rate in this country in the 1990s was 2.2%, and in the 1980s it was 2.9%. Given the initial promise made to all people of Europe that the euro would be as credible, reliable and as good a store of value as were the best of the national currencies. On these figures, I can say that with an estimated average annual inflation rate of 1.95% for the first twelve years, the euro is in terms of safeguarding purchasing power “stark wie die D-Mark”. In a nutshell, the “M” has done its part. The main current challenges for our union originate in the “E”. Economic union is based on responsible national policies: fiscal policies, wage policies, structural policies. At the core of the economic union is the Stability and Growth Pact. The crisis has revealed some of the shortcomings of national policies to comply with the requirements of an economic union. In particular, in a number of cases, national policies that  BIS Review 59/2010  3  are responsible for domestic public finances and for the competitiveness of member economies have not achieved their objectives.

But the crisis has also revealed weaknesses in the peer surveillance process and in the implementation of the Stability and Growth Pact. Thus another major lesson of the crisis is the need to strengthen the institutional framework of the economic union. Of course, the deterioration of public budgets has partly been due to a “migration” of risk from the financial sector to the public sector. Public budgets have been called on to absorb the excessive risk that the financial industry had been creating during the booming years that led up to the crisis. Partly, however, the deterioration of public budgets is also due to some short-sighted fiscal and economic decisions in the brighter times that preceded the crisis. Before the crisis, weak public finances had combined in some countries with inattention to domestic competitiveness and a lack of long-term strategies to prepare national economies for competing successfully in the challenging – but rewarding – environment of the internal market. In Greece, in particular, past fiscal irresponsibility and inattentiveness to domestic competitiveness made the national economy extraordinarily vulnerable to a sudden turn in confidence. As I have implied, after the crisis, the main players in the world economy will be judged by a new yardstick. Private players will be held accountable to new and stricter standards of economic integrity and prudent management. And governments, the world over – and in Europe in particular – will have to show self-discipline and trustworthiness to gain respect and preserve confidence.
A more co-operative approach, in which surplus countries instead eased fiscal policy, and allowed their exchange rates to appreciate, would lead to better outcomes all round. But that’s hard to achieve when countries act individually because they don’t take into account the effect of their actions on others7. I don’t see that, in either respect – whether it’s the frequency of conflicting shocks or the extent of crosspolicy spillovers – the situation is as serious for the money/macro-pru interaction. Regarding the first, my guess is that outright conflicts between the two sets of objectives are unlikely to occur that frequently. Indeed I suspect that, given the sorts of shocks that tend to hit the economy, the two policies will more often be complementary. Conventional aggregate demand shocks would tend to push inflation and credit growth in the same direction. The same goes for independent shocks to the supply of domestic credit: expansions in lending are more likely to occur alongside periods of relatively strong economic growth and rising inflationary pressure than are economic downturns. In that case, and to the extent there really are cross-policy spillovers, the two policies will tend to help rather than hinder each other. Broadly speaking I think this is exactly what’s happened over the past few years. In Britain one sometimes hears that the historically low interest rates after the financial crisis have been fuelling “unsustainable booms” in asset prices and in lending.

They are universal banks; and as such much less vulnerable to funding market conditions. Sound and revolving sources of profits are a vital asset at the current juncture. In this context, French banks can play an active role in the ongoing restructuring of the international financial sector. All in all, beyond sometimes serious tensions and incidents, French banks are now reaping the benefits of the major advances in productivity and innovation they have made over the last two decades. Public policy during the crisis both from a public and a private sector perspective Past months have seen a marked change in public policy. Having been in a first phase geared exclusively to providing liquidity to financial intermediaries, public intervention is since last Fall also aiming to support banks’ financing and own funds. This is a significant shift. Needless to say, restoring liquidity remains a pressing priority. Inter-bank markets have shown gradual signs of improvements. Yet, there is still some way to go. To this end, central banks have mobilised considerable ammunition. A process underway for over a year has culminated in the central banks having adjusted their operational frameworks in various areas. The maturity and currency of their facilities have been expanded. The range of eligible counterparties has been broadened. The tender procedures have been modified with a view to ensure unlimited amounts of central bank money. The list of collateral for refinancing has been widened. As for the Eurosystem, they have been providing liquidity at a fixed rate for unlimited amount.
6  These types of clauses generally entail an automatic transfer of higher future prices to wages, irrespective of the type of shock that causes prices to rise, and therefore generate the above-mentioned second-round effects that we wish to avoid. 7  When settlements that will be effective in 2023 are considered this percentage rises to almost 50%, although the number of such settlements is still limited. 8  For example, the II Agreement for Employment and Collective Bargaining 2012-2014, signed at the beginning of 2012, established wage recommendations that excluded, in the event of energy price increases, like the current ones, the energy component of inflation from wage settlements. 9  Fifth, these wage guidelines should be accompanied by explicit profit-margin moderation commitments. Only in this way can it be assured that the wage moderation is effectively passed through to business competitiveness, at the same time as the passthrough of energy input costs to other goods and services in the economy is limited. Conclusions I shall conclude by underlining the three basic messages of my speech this morning. First, the Russian invasion of Ukraine, besides amounting to an extraordinary human drama for the Ukrainian people, could seriously threaten the social and political project that we have been constructing in Europe in recent decades. From the purely economic standpoint, the gradual recovery that has been taking place in the Spanish and European economy in recent quarters is undoubtedly going to be adversely affected by this armed conflict through numerous channels.

To maximize its effectiveness, macroprudential policy should cover all types of financial institutions that make up a financial system, not just banks, but also the likes of securities companies, insurance companies, and hedge funds, to name a few. This is because modern financial systems are complex and intertwined. In fact, one root cause of the global financial crisis can be traced to loose regulation of the so-called shadow banking system in the U.S. One key purpose of macroprudential policy is to limit excessive exuberance that could come about during “good times,” for example, by requiring financial institutions to hold extra capital or by putting a cap on how much they can lend during an economic upswing. An implicit  2  BIS Review 96/2010  message behind this is that these policies will not only help strengthen the financial system’s resilience, but also moderate financial institutions’ actions from being too optimistic during an economic upturn or too pessimistic during an economic downturn – the behavior known as “procyclicality” of the financial system that exacerbates the business cycle. All in all, it is envisioned that the combination of monetary policy and macroprudential policy will effectively safeguard financial stability and hence macro stability at large. On institutional arrangements, the global financial crisis clearly shows that the independent regulator model does not live up to its promise. Some countries would have been better off in dealing with this crisis had the regulatory power remained with the central banks.
the number of workers) that change given the impossibility of adjusting prices, i.e. wages. Thus it is not surprising that in the past year the unemployment rate in Spain has risen by 2.4 percentage points to 10.4% in 2008 Q2, while in the same period the euro area unemployment rate has remained relatively steady at a little above 7%. The fact that Spain has the highest unemployment rate of the OECD countries should lead us to reform our labour market institutions and improve this lamentable ranking. Many of my talks in recent months have referred to the activity of Spanish financial institutions. These played an essential role in the fourteen years of expansion and, thanks to their capable management, were in a sound position at the beginning of the international  6  BIS Review 117/2008  financial crisis. But it cannot be denied that Spanish institutions face difficult challenges: first, as noted above, although they were not agents of the crisis, they are being affected by the standstill on the international financial markets; second, balance-sheet building by firms and households, which I mentioned earlier, will lead to a substantial moderation of borrowing by these sectors and hence to a reduction in the business of credit institutions; finally, the phase of real-estate adjustment and, in general, of economic slowdown, is already being reflected in increased doubtful assets, although this was to be expected and is still far from reaching alarming levels.

Clearly the wage bill cannot be expanded by major pay rises, since this eventually leads to a higher relative cost of labour and, consequently, less job creation, higher unemployment, loss of household confidence and fresh falls in demand, which would mean still lower growth and more unemployment. Therefore, it is crucial to adapt wages to the specific situation of firms, to their activity, productivity gains, profits, etc. The current wage bargaining system does not take into account the large differences in individual firms’ specific situations, so it is not the most suitable one to prevent the bout of weak demand from generating a sharp fall in employment. Further, the predominance of indexation clauses in collective labour agreements is a problem that becomes particularly harmful when, as in the current circumstances, inflation has risen due to an external shock, like oil prices, at a time of cyclical weakness. It is naive to believe that automatic wage adjustment to reflect past consumer price increases provides any protection to household disposable income. On the contrary, these clauses (which have now been done away with in most European countries) lessen the ability of firms to compete and keep creating jobs, generate inflation (which affects those not protected by similar provisions) and, in short, hinder adaptation to the external shock. In general, these characteristics of the Spanish labour market have meant that employment has so far been the economy’s main adjustment variable in periods of crisis, since it is the quantities (i.e.
Based on the examples of negative interest and foreign exchange market interventions by the SNB, I have shown that the requirements, scope and complexity of analyses as well as the importance of regular market contacts have significantly increased in this environment. Unconventional monetary policy has extended central banks’ reach in the financial markets, and their direct influence on various financial markets has increased. To reiterate, this is desirable from a monetary policy perspective since it helps to transmit the required monetary policy stimuli to the economy and inflation. Just how much the activity, sometimes intensive, of central banks on the financial markets has changed traditional price relationships and correlation patterns is difficult to answer definitively. However, it is still the case that financial market prices reflect investor expectations for the future development of the economy and inflation. I would like to thank you for your attention, and hand over to my colleague Dewet Moser.

I now come to central banks’ foreign exchange market interventions. The exchange rate is an important variable for a small open economy like Switzerland, and thus for its monetary policy. Yet the SNB only rarely intervened directly in the market in previous decades, and 5  6 7  In addition to the Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan have also introduced securities purchase programmes. With respect to Switzerland, the SNB’s purchases of Swiss franc bonds in 2009 and the large-scale repo transactions and foreign exchange swaps concluded in August 2011 may be termed quantitative easing. These are exchange-traded funds which replicate the TOPIX, Nikkei 225 or JPX-Nikkei 400 indices. Andrade et al. (2016), The ECB’s asset purchase programme: an early assessment, ECB Working Paper Series, No. 1856, September 2016. Page 4/8  then only with small amounts. Since March 2009, this has changed. It was at this point that the SNB began buying foreign currency on a large scale, in order to counter excessive upward pressure on the Swiss franc and prevent an undesirable tightening of monetary conditions in Switzerland. Alongside the negative interest rate, our willingness to intervene in the foreign exchange market as necessary constitutes a key element of our current monetary policy. To sum up my remarks so far: the sphere of influence of monetary policy on the financial markets has increased markedly with the broad application of unconventional measures.
For example, the CBO projects that debt service costs in 2027 will be more than $ billion—nearly 3 percent of GDP, more than double their current share.10  5/6  BIS central bankers' speeches  Finally, the retirement of the baby boom generation over the next decade will put considerable pressure on outlays. The CBO projects that, by 2027, outlays on Social Security and Medicare will rise to 6 percent and 5 percent of GDP, respectively—each more than a percentage point higher than in 2017. As the economist Herbert Stein once remarked, trends that are unsustainable must end. How, precisely, the United States chooses to address its fiscal challenges will have important consequences for the economy, monetary policy, and financial markets in the years ahead. To sum up, I am optimistic about the near-term economic outlook and the likelihood that the FOMC will be able to make progress this year in pushing inflation up toward its 2 percent objective. The economy has considerable forward momentum, monetary policy is still accommodative, financial conditions are easy, and fiscal policy is set to provide a boost. But, there are some significant storm clouds over the longer term. If the labor market tightens much further, it will be harder to slow the economy to a sustainable pace, avoiding overheating and an eventual economic downturn. Another important issue is the need to get the country’s fiscal house in order for the long run.

Second, there remains significant excess capacity in manufacturing across much of the world. In the 2/6  BIS central bankers' speeches  United States, for example, the manufacturing capacity utilization rate was only 76.4 percent in November, about 2 percentage points below its average since 1972. Third, for manufactured goods, there may be more scope for substituting capital for labor, and/or lowering labor costs by importing labor-intensive intermediate goods. To the extent that this margin of adjustment is available, it would tend to dampen the impact of higher wage costs on prices of manufactured goods. Finally, the so-called “Amazon” effect, which results in greater price transparency for buyers, may weigh disproportionately on goods prices. Although inflation remains somewhat below the FOMC’s 2 percent objective on a year-over-year basis, I still anticipate that it will stabilize around that level over the medium term. As I noted earlier, above-trend growth should tighten the labor market further, pushing up wage inflation and eventually services prices. In fact, we have already seen some increase in inflation in recent months. Over the three months ending with November, core personal consumption expenditure prices rose at a 1.8 percent annual rate, up from a corresponding rate of just 0.4 percent last May. The pronounced slowing of core inflation during the first half of 2017 was due, in part, to transitory factors, such as a sharp fall in prices for cellular phone services. Those influences have been temporarily depressing the year-over-year figures.
FATF will consider these issues as part of its planned review of Recommendation 16 on wire transfers, to improve consistency and usability of message data, and enable more effective AML/CFT checks. It will also continue efforts to promote consistent implementation of the Travel Rule for virtual assets. The new FSB industry taskforce on Legal, Regulatory, and Supervisory matters, chaired by Carolyn Rogers from Bank of Canada, will help move the conversation forward in these areas. We hope to harness expert input from industry and provide guidance, working with national authorities and the international standard-setting bodies. Continued collaboration Improving the payments infrastructure will only be possible through successful collaboration. As policymakers and operators, we can improve the policies and core infrastructure to provide solid foundations for private innovation. The private sector needs to build on this to help deliver cheaper, faster, more transparent, and more accessible services to their customers. The new industry taskforces will play an important role. But this needs to be complemented by strong dialogue and actions in individual jurisdictions: exploring improvements to the domestic payment infrastructure, using the globally agreed frameworks. Page 8  Firms will likely need to continue to invest in their payments technology to be ready for upgrades to payment systems: such as the move to ISO 20022. The industry taskforce on Payment System Interoperability and Extension are developing a handy checklist to support firms on this journey. And importantly, firms should consider how to make the most of these changes.

In particular, given the importance of risk management in finance, I hope that French institutions specializing in this area can bring their expertise to this region. Conclusion In closing, the global financial crisis has presented many lessons for the financial community and policymakers. In Asia, the crisis has accelerated structural reforms. There are many challenges ahead, including the development of the financial services sector in appropriate ways to support economic restructuring. I hope that financial institutions in France and Singapore will contribute meaningfully to this development and help bring about a more resilient and robust global economy. I wish Paris Europlace every success in hosting this Forum, and look forward to many more such exchanges in the future. 4  BIS Review 133/2009
I will start to discuss monetary policy and then move on to macroprudential policy. The monetary policy framework is in need of review As I have mentioned, monetary policy of the 1990s and up to the financial crisis was viewed as successful by many. It was considered that this played an important role in both the relatively low and stable inflation, and the relatively stable GDP growth during those years. During the global financial crisis, it came to light, however, that major financial imbalances had been built up despite the seeming stability of many macroeconomic indicators. An important lesson from the financial crisis is therefore that low and stable inflation does not always guarantee financial stability or sustainable economic growth. The huge costs of the financial crisis to the real economy have led central banks around the world to start thinking about the current monetary policy framework. The challenge ahead is to create a framework which continues to safeguard stable prices, but which at the same time is consistent with a sustainable development in the financial system. Financial circumstances therefore need to be accounted for in the monetary policy decision-making. Taking account of financial factors in monetary policy decisions Different approaches can be used to formally take greater account of financial stability in monetary policy decisions. For instance, how much a change in the policy rate affects the probability of a financial crisis can be calculated.

Jean-Pierre Roth: Switzerland - a platform for global business Keynote address by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the Consulate General of Switzerland / Swiss-American Chamber of Commerce, New York, 1 June 2006. *  *  *  It is a great pleasure for me to be with you today and I would like to thank my dear friend, Ambassador Loretan, for hosting this lunch of the Swiss-American Chamber of Commerce. Swiss people always feel at home, here, in this fascinating city. New York is a unique place, not only because of its size, its beautiful skyline, its location, but foremost because of its openness to the world and its multiculturalism. Compared to New York, is Switzerland anything more than just a small village located in the heart of Europe, a country of watchmakers and chocolate producers? Is there anything to see other than the Matterhorn and the water fountain on Lake Geneva? It is interesting to note that, despite the strong presence of Swiss multinationals abroad and, of course, the very well-known Swiss flag – thanks to the Red Cross flag – Switzerland is largely ignored in international surveys and is almost non-existent in European statistics. “To live happily, live out of sight!” (pour vivre heureux vivons cachés) is a well-known proverb. This may well be true, but it serves to fuel many clichés; and misconceptions are generally counterproductive.