samchain/econo-pairs-v1 huggingface dataset:
You would recall that in my first message to you on assuming the office of the Governor of the Central Bank on the 01st July 2004, I stated that I was deeply conscious of the great honour attached to my appointment to this august post. Now, I address you with 6 months’ experience at the helm of this unique institution which is responsible for safeguarding the price stability and the country’s banking and payments system. During the last decade, the staff of the Central Bank faced several traumatic events and challenging situations. The Central Bank bomb blast, which took away the lives of 41 employees and caused injuries to nearly 1000 employees, was the most traumatic event. However, I understand that even those seriously injured joined the unaffected employees to offer their best efforts to the Bank and as a consequence, the Bank was in a position to resume normal work without an interruption within a short period of time. This reflects the resilience of our staff. Thereafter, the Bank was subject to a modernization and restructuring scheme. A major feature of the restructuring process was the offering of a Voluntary Retirement Scheme (VRS) for certain categories of the Staff at the end of 2001. Around a third of our staff opted for the VRS and left the Bank.

With the change in the MLA, the organizational structure of the Central Bank has undergone a major transformation on a function-oriented basis to support its objectives and functions. The Departments of the Bank were grouped into four major categories under the headings of price stability, financial system stability, agency services, and corporate and support services. The two Deputy Governors have been entrusted with the responsibility of overseeing the achievement of the two core functions. The vacancies to the posts of Assistant Governors (AGs) have been filled and they have been entrusted with line responsibilities with a view to building the 3rd and 4th layers of succession in the Bank’s managerial hierarchy. BIS Review 1/2005  1  Price Stability means maintaining a low inflation rate. Central banks are mandated to maintain price stability as their main objective in order to create a conducive environment for long-term sustainable economic growth by eliminating uncertainties, protecting the value of financial assets, enabling all economic agents to take a long-term view of the economy and ensuring the well being of the general public. Maintaining price stability during the course of 2005 will prove to be a very challenging task given the surging oil prices, which may continue for some time during the year, and the enhancement of demand pressure on the price level on account of wage increases in the government sector.
It is therefore natural for fiscal policy frameworks to focus on maintaining long-term stable public finances and for monetary policy frameworks to keep inflation at 2 per cent.8 Although it is practical, and probably necessary, to have separate frameworks for fiscal and monetary policy, it is important to recognise that there is an interdependence between the two policies. Confidence in one depends on there simultaneously being confidence in the other. For example, if public finances are perceived as unsustainable, the expectation may easily arise that monetary policy will eventually allow inflation to rise in order to reduce the real value of public debt, that is, inflate it away. This may also cause the anchor of monetary policy to loosen. Similarly, if inflation rises because confidence in the inflation target has been eroded, it may lead to significantly higher interest rates, which, in turn, will  6 For a description of the Fed’s changes to its strategy and the background to these, see, for example, Powell  (2020). 7 See ECB (2021). 8 Of course, it is not self-evident that this number should be exactly 2. According to the previous reasoning, a higher target would give more room to lower the interest rate in bad times and I myself have raised the question of whether a target of 3 per cent should not be considered instead; see Jansson (2020). 5 [17]  lead to an increase in the government’s interest expenditure and will challenge the sustainability of public finances.

In my view, developments in forecasting over the last 15 years have played a decisive role in that shift. BIS Review 40/2006  1  Simultaneously, the ever-changing world map in terms of monetary policy regimes has also modified the role of forecasting at central banks. In the past, most countries had pegged exchange rates against the major currencies. Indeed, in the 1980s and the first half of the 1990s one could hardly imagine a macroeconomic stabilisation programme without an exchange rate anchor and, of course, under such a system, the role of forecasting is rather small. However, since the early 1990s the number of countries with floating exchange rates has increased dramatically, reflecting numerous currency crises and a growing consensus on the undesirability of conventional currency pegs. Moreover, the inflation targeting regime has gained much more weight among the group of countries with floating rates. Inflation targeting, or following Svensson “inflation forecast targeting”, has placed the forecasting process at the heart of monetary policy decision-making. Under inflation targeting, the forecasting process centres on future price developments. This does not necessarily mean, though, that central bankers are obsessed with inflation. In fact, inflation targeting requires us to assess all the available information, including real economic developments, monetary analysis and the external balance of the economy, in a systematic and complex way. It is hence more demanding from the point of view of consistency than the alternative monetary strategies. Of course, the latter require a consistent system for analysis and forecasting.
Jarle Bergo: Oil - economic policy challenges Address by Mr Jarle Bergo, Deputy Governor of Norges Bank (Central Bank of Norway), at the 2003 Southern Norway Conference, Kristiansand, 11 March 2003. The address is based on the assessments presented at Norges Bank's press conference following the Executive Board's monetary policy meeting on 5 March and on previous speeches. Please note that the text below may differ slightly from the actual presentation. *  *  *  Oil is a major component of the Norwegian economy - with all the advantages and disadvantages this entails. Oil gives us an economic base that is not available to many other countries. But it also presents us with considerable challenges. How should we use our petroleum wealth wisely? This question poses a number of economic policy challenges. In my discussion today, I will focus on three points: First, we must manage our petroleum resources recognising that they are part of our national wealth. When oil is extracted and sold, natural assets are transformed into financial wealth. This is not income in the ordinary sense. Norway’s national wealth belongs not only to our generation, but also to future generations. This means that our petroleum wealth must be equitably distributed between generations. The authorities must therefore be disciplined and apply long-term considerations in their spending. Moreover, the size of the cash flow from petroleum activities varies considerably.

Second: It is important for the growth potential in the economy that we maintain a broad sector in the mainland economy that works under intense competition so that we maintain and strengthen the incentive to acquire knowledge and to be innovative. Third: It is important that we bear in mind the issue of distribution across generations and that we manage the wealth as an asset. BIS Review 13/2003  5  1. From petroleum to financial wealth Per cent of total wealth  8  Petroleum wealth  7  Financial wealth  6 5 4 3 2 1 0 1999  2030  Source: Long-term programme 2002-2005  2. A Demographic Challenge 1000 persons 3000  Ratio 4 Number of persons in labour force (left-hand axis)  2500  3 labour force / pensioners (left-hand axis)  2000 1500  2  1000 1 500  Number of pensioners (left-hand axis)  0 1970  0 1980  1990  2000  2010  2020  2030  2040  2050  Source: National Budget 2003  6  BIS Review 13/2003  3.
In the description of the framework for the Riksbank’s monetary policy, which we published recently it says: “The Riksbank routinely takes into consideration changes in asset prices and other financial variables (exchange rates, house prices, share prices, household and corporate indebtedness, etc.) in monetary policy decisions. This should not be interpreted as introducing targets for different asset prices or other financial quantities. However, situations may arise where the consequences for the real economy and inflation of the development of different financial variables threaten to become very unfavourable and serious without it being possible for that reason to quantify or capture this type of risk in the normal analytical and forecasting work. This means that there are risks of sharp corrections in the future which in turn affect the real economy and inflation. It may be necessary to take these risks into account in monetary policy decisions in a different way than in the normal approach, where the forecasts for inflation and the real economy for the next two years serve as the foundation.” Although it is difficult to quantify the risks related to strong and long-term growth in asset prices and debts using normal methods, there is a fairly large flora of research into how different types of imperfections can cause and reinforce the types of imbalances I have discussed. One research area, for instance, is based on psychological factors being able to lead to expectations becoming an independent driving force behind fluctuations in the real economy.

Is it worth accepting slightly weaker demand and thereby inflation over the coming years if the economy develops as we have assumed in our forecasts in order to perhaps reduce the effects of possible corrections following inflated asset prices and loan stocks? Before I get into a discussion of this dilemma, I would like to give a brief reminder of how central banks with price stability as their objective take into account developments in the real economy. Flexible inflation-targeting policy requires openness and clarity In the short term, monetary policy can affect demand in the economy. Most countries with an inflationtargeting policy use this possibility and conduct what is known as flexible inflation-targeting policy, which means that some consideration is given to short-term fluctuations in the real economy. However, in the long term growth is essentially determined by factors outside of the control of monetary policy, such as technology and population growth. As I mentioned earlier, monetary policy’s best contribution is to ensure that inflation is low and stable, which requires confidence in the target. This sets limits as to how much consideration can be given to short-term fluctuations in the real economy, but also limits the uncertain negative effects on inflation and the real economy that in some cases risk arising from a strong growth in asset prices and loans. To be able to maintain confidence, it is necessary that the inflation target has strong support from the general public, the politicians and the financial markets.
Of importance is to ensure that the implementation of the new accord is consistent with the overall agenda and objectives for the financial sector to facilitate growth and economic expansion. Implementation principles for Malaysia In Malaysia the appropriateness of the new accord is being assessed in the context of our own objective to develop a more effective and resilient banking system that is best able to serve the nation. In view of the significant and special role of the banking sector in the economy, a well-capitalised banking system has always been a priority in the regulatory framework. In this context, the principles advocated by the new accord are consistent with our regulatory philosophy that encourages capacity building and enhancing risk management. Effective Basel II implementation strategies would be premised on the industry having the correct understanding of the new framework. To implement the required changes, it is therefore vital that the management of banking institutions understands the principles of the new accord. One common misperception is that the recognition of financial collateral under the new framework will encourage more collateral-based lending within the banking sector. This is a simplistic conclusion given the stringent minimum standards for the recognition of such financial collaterals before banks can qualify for the capital savings. Moreover, the potential capital savings under the new framework is not from the recognition of financial collateral, but rather from the much lower risk weights attached to higher rated loans.

For me today, it means that all current EU member states will contribute as much as they can to these improvements with their own ideas, knowledge and experience. The new ESCB members are prepared to contribute their share. They have gained a wealth of experience from a decade of economic transformation, a decade during which they used a wide variety of monetary policy strategies, from inflation targeting to currency boards, in order to deliver low inflation. Let me mention just a couple of lessons that were learnt: •  how to make decisions and produce good-quality economic forecasts when faced with large uncertainty (eg. about available data)  •  how to bring the economy back to low inflation after a series of supply-side shocks and how efficient communication is crucial in such circumstances  •  and that maintaining low inflation is much easier providing fiscal discipline and policy co-ordination can contribute to the task. These issues will surely be familiar to others. The knowledge gained during the transformation period will enrich the policy debates of the ESCB´s councils and working groups. This is how monetary integration will happen on a day-to-day basis both in countries that already use the euro and in those that will introduce it in the future. 2  BIS Review 70/2004
Second, transparency must be improved in the financial system and for CRT in particular. Indeed, for stress tests to be fully relevant, we need reliable data at the aggregate level. Without good reporting of exposures, mitigation actions are not efficient. Increased transparency can take various forms. One means is to increase the transparency of institutions such as hedge funds or private equity funds. Another possibility is to increase the transparency of market operations, with trades recorded in a central depository, for example. Such infrastructure improvements can also produce transparency in a “seamless” way, avoiding an excessive reporting burden. 2  BIS Review 33/2007  Third, there is a need to work to better understand and assess risk at a system-wide level, including the linkages that bind together the various elements of the financial system. Like in physics, there are resonance frequencies, propagating tensions from one knot of the network to another. Stress testing plays a key role here. To complement individual stress tests, policymakers are developing global and cross-country stress tests. These impact studies consist in measuring the impact of linkages between business cycle fluctuations and a range of key observable variables that best characterise the banking sector. These exercises should also incorporate potential market contagion through different channels: banks' interlinkages (domino effects) and bank portfolios’ exposures to shocks. **** To sum up, we should not forget that the current financial system is multidimensional and closely interlinked. It remains essentially an untested world in stress situations.

History has shown that it is precisely in good times that the seeds of financial distress develop. In the present context of the desperate hunt for yield, risk transfer markets may encourage investors to take on more risk. Therefore, financial innovation should not only concentrate on extracting yield but also on pricing risk at a sustainable level. This is one of the most demanding challenges of the coming years for both the private sector and the public authorities. BIS Review 33/2007  3
It seems likely that these shifts in expectations came as the FOMC’s communications became increasingly granular, particularly after the June meeting at which the FOMC provided detail on its balance sheet normalization plan. On net, it seems likely that expectations for the Federal Reserve’s overall stock of asset holdings were fairly stable over this time, despite variation in expectations for the timing and pace of eventual declines. Under the “stock view,” this stability in expected future asset holdings should result in limited changes in asset prices, as has been observed. Of course, as the balance sheet shrinks, some upward pressure on rates should be realized. Market participants’ estimate of this effect over two years is shown in Panel 8. 11 / 15  BIS central bankers' speeches  One last possible explanation for the stability of longer-term interest rates amid the movement toward balance sheet normalization has been the FOMC’s clear message that it would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate. Panel 9 shows the average of survey respondents’ probability distributions for the balance sheet; the left side shows this for the scenario where overnight rates remain away from zero, and the right side shows the adverse scenario in which they do return to zero. The right side shows a significant expansion in the balance sheet.

We should of course expect to see the amount of assets decline, and this will be matched by a decline in the overall stock of liabilities. Most of this decline in liabilities will likely take place as a decline in bank reserves. The size of the balance sheet will be “normalized,” in Federal Reserve parlance, when the FOMC judges that the Federal Reserve is holding no more securities than necessary to implement monetary policy efficiently and effectively. At that point, the size of the balance sheet might well be “normalized,” but its composition will probably not be. Panel 2 shows a stylized summary presentation of how the Federal Reserve’s assets and liabilities might look when the size of the balance sheet is normalized, drawn from the “median scenario” included in the July 2017 update to our annual report, “Open Market Operations During 2016.” This presentation is largely based on the median of market participants’ surveyed expectations collected in June, along with some staff modeling to fill in the details, and as such is not an FOMC projection or forecast. That said, it provides a useful way to illustrate my point. 3 / 15  BIS central bankers' speeches  On the asset side, in this median scenario, the portfolio would still contain a substantial allocation to agency MBS at the time of normalization, even though the FOMC has, as I noted earlier, indicated a preference to hold primarily Treasury securities in the longer run.
There has been a tendency during the crisis to shift responsibility for banking supervision to central banks, making them responsible for macro-prudential supervision. As regards the euro area, one important thing has certainly been the realisation that our monetary union was incomplete. You can draw two conclusions from that: you can decide to scrap it altogether, which would, in my view, be a mistake; or you can decide to complete it. The banking union is the first step in that direction, but not the last. Many experts think that another necessary lesson is the importance of stronger international coordination of monetary policy, as action at national level is increasingly having spillover effects. They also point to the recent turbulence in emerging economies as a result of the debate surrounding the Federal Reserve. Perhaps I should first say a few words about the turbulence in emerging economies. The weakening observed in many countries is certainly related to the reversal of capital flows. However, it is also the case that this weakening is particularly affecting emerging economies that have large current account deficits and have failed to carry out reforms. You can protect yourself from such developments by doing your homework. And with capital controls? Even the IMF is no longer strictly opposed to those. I am very cautious in that regard. There are certainly extreme situations where that instrument can be used. But in normal situations, there is no doubt that free movement of capital supports growth. But let’s go back to international cooperation.

The global economic and financial landscape is currently at an important turning point, as we transition to a fundamentally changed future. The challenges facing us in this environment are manifold. We therefore want to have the skills for this future – to be well equipped to effectively manage our future. Sasana Kijang aims to provide such a platform to pursue this human capital development agenda to become a centre of excellence for learning with the state of the art facilities. Sasana Kijang also reflects our commitment for regional and international collaboration and cooperation. It is our intention for Sasana Kijang to provide a platform for the meeting of minds and to harness the wealth of expertise in the field of Central Banking and finance. As a centre for collaboration, Sasana Kijang has wide ranging facilities for regional and international meetings, seminars and conferences. These facilities are also shared with the South East Asian Central Banks (SEACEN) Research and Training Centre and the Islamic Financial Services Board (IFSB) which are now located in Sasana Kijang. For the SEACEN Centre, it is hoped that all the available facilities will support its enhanced role in the region, particularly, as financial and economic integration in Asia intensifies. For the IFSB, an international organisation that was established as a result of the collaborative efforts of regulators from different parts of the world, it is hoped that it will facilitate further collaboration in the development of Islamic finance and in safeguarding its soundness and stability.