samchain/econo-pairs-v1 huggingface dataset:
In the first case, we have good tools with which to respond. As the economy moved closer to full employment, we could raise short-term interest rates and subsequently sell assets from our portfolio. By doing this, we would tighten financial conditions, slow the economy and ensure it remained on a path consistent with our dual mandate objectives. The losses to society from this scenario should not be very large, provided we act in a manner that keeps medium-term inflation expectations in check. But the losses to society may be very high in the second case. That is because – as Japan has discovered over the past two decades – once in a liquidity trap it is not easy to return to full employment and price stability. Pinned at the lower bound, we don’t have as good a set of tools as we would ordinarily have to push the economy back toward our dual mandate objectives. As a result of this asymmetry, we should give somewhat more weight to avoiding the liquidity trap outcome. Embedded within the traditional Taylor Rule formulations is the implicit return path back to full employment and price stability that the FOMC achieved in the past when faced with shocks that pushed economic activity below its potential level.14  14  Obviously, there is a cost to those who are unemployed longer than necessary with no offsetting gain in terms of greater price stability. But there also is another potential long-run cost.

If the relationship between  4  In practice, so-called inflation-targeting central banks also tend to take into account employment and other aspects of the real economy; hence, their approach is often referred to as “flexible inflation targeting.”  5  More formally, a Taylor Rule can be represented as: FFR = r* + π + a(π-π*) + b[100(Y-Y*)/Y*] where: FFR = federal funds rate r* = neutral real federal funds rate π = rate of inflation π* = target inflation rate Y = output Y* = output at full employment a = weight put on inflation gap b = weight put on output gap  2  BIS central bankers’ speeches  monetary policy and the real economy were stable over time, following a relatively simple and unchanging policy rule would likely generate acceptable results. However, if the linkage between monetary policy and the real economy is more variable, as I believe it is, then an approach that is more pragmatic and updates the policy setting in a clear and systematic manner based upon what the FOMC learns over time will be more effective. In particular, a simple policy rule can generate poor macroeconomic outcomes when either the structure of the economy or the transmission mechanism of monetary policy changes in a significant way (whether the change is temporary or permanent).
What I had in mind was the period from 2011 and a few years onwards when inflation in Sweden was unexpectedly low and periodically below the inflation target by quite a wide margin. Once inflation had undershot the target for a while, long-term inflation expectations also began to fall. In addition, there were signals from the labour market parties that the inflation target was no longer a given starting-point in wage negotiations. In other words, a risk began to arise that confidence in the inflation target would weaken to such an extent that the target would no longer function as an anchor for price-setting and wage formation. As is well known, we eventually managed to reverse the development and bring up inflation to the target again, but it took a long time and required a very expansionary policy, as well as a slice of good fortune. An important reason for inflation being so low for so long was the debt crisis in Europe which hit after the financial crisis and which most analysts had not seen coming, at least not with so much force and so soon. It slowed down the recovery that had begun and caused economic activity to deteriorate again, dragging down inflation in the process. The Riksbank underestimated the inflation effects, but we were far from alone in doing so.

Similar policy recommendations follow from another paper 6 prepared by IMF staff, which was presented in Session 2 and sought to identify the features that distinguish “good” credit  2  Neagu, F., Mărgărit, A., Copaciu, M., Racaru, I. Mircea, R., Andrassy, A.: Non-Government Credit in Romania: Perspectives and Implications, National Bank of Romania, Occasional Paper No. 4, June 2006. 3  Ramanauskas, T: Interest Rates, Credit and Macroeconomy – a Small Structural Model for the Lithuanian Case, mimeo, November 2006. 4  World Bank EU8+2 Regular Economic Report, Special Topic: Credit Expansion in Emerging Europe: A Cause for Concern?, January 2007. 5  Bems, R., Schellekens, P.: Finance and Convergence: What's Ahead for Emerging Europe?, IMF Working Paper No. 07/244, November 2007. 6  Barajas, A., Dell’Ariccia, G., Levchenko, A.: Credit Booms: the Good, the Bad, and the Ugly, mimeo, November 2007. 2  BIS Review 137/2007  booms from “bad” ones, i.e. such that probably eventually lead to a banking crisis. The analysis has shown, inter alia, that better banking supervision lowers the probability of a crisis. It has also established that booms that coincide with current account imbalances seem less dangerous (a finding that may seem counter-intuitive at a first glance), that trade openness is another factor that makes a crisis less probable, and that the more prolonged booms as well as those accompanied by high inflation or slow economic growth are the “bad” ones. Another important topic raised during the conference was housing.
Average mortgage rates for households and bank interest rates for companies on new agreements, and the repo rate Sources: Statistics Sweden and the Riksbank  BIS central bankers’ speeches  11  Figure 11. Inflation expectations of money market agents Annual percentage change 14  14  Inflation expectations CPI  12  12  10  10  8  8  6  6  4  4  2  2  0  0  -2  -2 90  92  94  96  98  00  02  04  06  08  10  12  14  16  Sources: Statistics Sweden and TNS SIFO Prospera  Figure 12. Household debt ratio Percentage of disposable income 225  225 Ireland Spain  200  200  USA Sweden  175  175  150  150  125  125  100  100  75  75  50  50 86  90  94  98  02  06  10  Sources: Eurostat, national central banks and the Riksbank  12  BIS central bankers’ speeches  Figure 13.

However, there is no natural limitation of the indebtedness of the private sector and this becomes a particularly important issue when the repo rate is low. This has led to major problems on two previous occasions. In the 1990s, there was an excessive expansion of credit and many loans were used to fund the purchase of commercial properties. More recently, we imported problems via the banks’ excessive lending in the Baltic countries. Today I am talking most about household indebtedness, but the issue is a general one. We need to focus more than previously on debts and the stock of debts in our analysis apparatus. More specifically-targeted tools are possibly more effective than the repo rate to deal with household indebtedness, for example amortisation requirements and higher risk weights for mortgages. Higher risk weights for mortgages mean that the banks must hold more capital for their mortgages. This is something that the Riksbank has pointed out earlier on a number of occasions and that we analyse in more detail in our latest Financial Stability Report. The issue has also been discussed by the council for cooperation on macroprudential policy set up jointly by Finansinspektionen and the Riksbank. Finansinspektionen recently proposed a floor of 15 per cent for risk weights for mortgages in Sweden. 4 However, of the conceivable concrete measures for preventing risks on the housing market in Sweden, the mortgage cap is practically the only one in place today.
So, when unemployment stands at 9%, we’re missing on our employment mandate by 3 full percentage points. That’s just as bad as 5% inflation versus a 2% target. So, if 5% inflation would have our hair on fire, so should 9% unemployment. Today, I would like to explore further the implications of the Fed’s dual mandate framework for monetary policy-making in today’s environment. And don’t worry, the views I am about to express are my own and not necessarily those of my Federal Reserve System colleagues. Brief update on the U.S. economy It’s useful to start with a brief update on the U.S. economy. The economic outlook clearly has deteriorated this year. Early in 2011, most forecasters thought that the recovery was gaining  BIS central bankers’ speeches  1  traction and that economic activity would increase at a solid – though not spectacular – rate this year and next. The financial repair process seemed to be progressing well, and, at least among large firms with access to the bond market, borrowing costs were quite low. We also had finally begun to see a long-awaited improvement in labor market conditions, with private job gains running about one-quarter million per month during the winter of 2011 and the unemployment rate falling about 1 percentage point over a four-month period. Higher prices for energy and other commodities were taking a bite out of purchasing power and the disasters in Japan were a drag, but these influences were expected to be temporary and growth was expected to strengthen.

This in a sense underscores the importance of Tinbergen’s augmented policy rule – that there should be as many policy tools as there are complex sub-systems – when managing a complex system of systems. None of the models so far considers global spill-overs, either through trade or financial channels. Generally-speaking, there is a dearth of macro-economic models which take seriously these international spillovers in an analytically-coherent fashion. Even if modelling this behaviour is over-ambitious in the short-term, there may be merit in improved monitoring of these global flows of financing over time, given their importance for the stability of economies and financial systems. Elsewhere, I have likened this to the creation of “global weather map”. This could be used to track and map the source, scale and nature of cross-border capital flows in close to real-time (Haldane (2012, 2014) and IMF (2013)). Plotting this complex, rapidly-adapting web would be a natural precursor to using it to address “what if” questions. What, for example, would be the impact of a rise in US interest rates on the international flow of funds? The IMF would be the natural guardians of this surveillance-cum-stress-testing machine. (c)  Policy design  Significant changes have been made to the macro-financial policy architecture since the crisis. In general, these frameworks have moved closer towards meeting Tinbergen’s rule of having as many distinct policy tools as there are complex layers in the macro-financial system.
Donald Joshua Jaganathan: Digitization of remittances for migrant workers in Malaysia Welcoming remarks by Mr Donald Joshua Jaganathan, Assistant Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Project Greenback 2.0 Kota Kinabalu Dinner, Kota Kinabalu, 3 November 2018. * * * Yang Berbahagia Datuk Yeo Boon Hai, Datuk Bandar, Dewan Bandaraya Kota Kinabalu, Dr. Firas Raad, Country Manager for Malaysia, World Bank Group, It is a pleasure for me to be here this evening. On behalf of Bank Negara Malaysia, I would like to express my appreciation to Dewan Bandaraya Kota Kinabalu for hosting Project Greenback 2.0 in this beautiful city; our Project partner, the World Bank, for your continued support and commitment to this important initiative; and to all of you who are gathered here today, for your hard work and dedication to ensure the Project achieves its objectives. I am also delighted that we have representatives from Bangko Sentral ng Pilipinas and Bank Indonesia with us tonight. Migrant remittances and Project Greenback 2.0 Mr. Juan Somavia, the former Director General of the International Labour Organization based in Switzerland once said “migrants are an asset to every country, where they bring their labour. Let us give them the dignity they deserve as human beings and the respect they deserve as workers”. Malaysia is a land of opportunity for many. Close to 1.8 million foreign workers, men and women, have left their loved ones behind to earn better income here. For many, they are simply chasing the “Malaysian dream”.

We identify common control profiles for process types and assess their effectiveness based on risk ratings and past risk events. That informs the second line’s recommendations to business areas on control protocols. We also use the common control profiles to assess where we are over-controlled and have the opportunity to shift resources to other priorities. The risk information collected and the risk analysis performed by the second line is the basis for operational risk reporting in the Bank’s risk profile report that is presented to the Risk Subcommittee, the Management Committee, and the Audit and Risk Subcommittee. The risk profile report shows the Bank’s most significant risks (including operational risks) along with a risk rating and the status of mitigating actions and mitigation plans. In addition, the report highlights significant and notable risk events along with the event’s impact, root causes, and remediation activities. We have found that the risk profile report provides the necessary flow of information to create meaningful committee dialogue around risk issues, feedback to business areas, coordination across Groups and lines of defense, and when necessary, additional escalation. Past, present, and future As the theory and practice of operational risk management and the complexity of our operations have evolved, so has our approach. In the mid-2000’s, the Bank formalized its operational risk program.
8  BIS Review 99/2010  Table 1 Main international scenario assumptions (annual averages) 2009 (e)  2008  Mar.10  2010 (f)  Jun.10  Mar.10  2011 (f)  Jun.10  Mar.10  Jun.10  World GDP at PPP (annual change, %)  3.0  -0.6  -0.6  4.3  4.3  4.4  4.0  World GDP at MER (annual change, %)  1.8  -1.7  -2.0  3.5  3.2  3.5  3.0  Trading partners' GDP (annual change, %)  3.0  -0.8  -0.3  4.0  4.4  3.8  3.7  WTI oil price $  100  62  62  82  77  85  80  LME copper price $  316  234  234  310  300  290  270  Terms of trade (annual change, %)  -16.1  4.1  4.1  12.5  14.3  -5.6  -7.2  External prices, in $ (annual change, %)  12.2  -6.1  -6.2  3.7  3.4  3.0  3.3  (e) Estimate. (f) Forecast. Source: Central Bank of Chile.

Large shares of the sizeable revenues from the petroleum sector over the past 20 years have been transferred to the oil fund. Norway’s sound public finances have been a great advantage to the economy, particularly through the financial crisis. But the management of the government’s large petroleum revenues through our 40 year-long oil history has not always been equally well planned. In the mid-1970s, the budget deficit – including petroleum revenues – reached a high level. And we could not know then that oil prices would more than double a few years later – with the second oil shock in 1979, known as OPEC II. But we learned from our mistakes. The oil fund mechanism in 1990 and the fiscal rule in 2001 were introduced to discipline fiscal policy in such a way that Norway’s petroleum wealth would also benefit future generations. Oil fund assets are now equivalent to more than twice the GDP of Norway’s mainland economy, and the oil fund, or the Government Pension Fund Global (GPFG), is today one of the world’s largest sovereign wealth funds. The GPFG represents the nation’s savings, to be managed for the benefit of both current and future generations. As an investor, the GPFG makes capital available to other countries for economic activity, and the return on that capital will depend on the economic performance of those countries. The GPFG is a long-term, responsible investor. The objective of investment management is to achieve the highest possible return at an acceptable level of risk.
Productivity growth (GDP per hour worked) 1981–2001 Per cent  4,0 3,5 3,0  4,0 3,5  Trend Actual  3,0  2,5  2,5  2,0  2,0  1,5  1,5  1,0  1,0  0,5  0,5  0,0  0,0  -0,5  -0,5 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 Sources: Statistics Sweden and the Riksbank  BIS Review 16/2003  7  Fig. 4. Public sector’s share of total hours worked, 1981–2002 Per cent (sliding average) 32,00  32,00  31,00  31,00  30,00  30,00  29,00  29,00  28,00  28,00  27,00 27,00 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Source: Statistics Sweden  Fig. 5. Labour productivity in trade and industry excluding telecom products, 1994–2000 Per cent 6,0  6,0  Trade and industry Trade and industry excl. 32 according to SNI 92  5,0  5,0  4,0  4,0  3,0  3,0  2,0  2,0  1,0  1,0  0,0  0,0 1994  1995  1996  1997  1998  1999  2000  Sources: Statistics Sweden and the Riksbank  8  BIS Review 16/2003  Fig. 6.

What applies to single financial institutions obviously also applies to institutions of financial market infrastructure, to central banks and to institutions of supervision and oversight in general. The same insights apply to everyone: Be aware of the new dimensions of systemic risk within globalized financial markets and refrain from early satisfaction with what you appear to have achieved. At this point, I would like to stress that the overall resilience of the financial sector also depends on the financial strength of each institution. In retrospect it might be said it was a benign coincidence that the September 11, 2001 attacks happened in a period of comparatively favorable economic conditions in the financial industry. Under less favorable circumstances the capacity to absorb shocks could have been considerably smaller. This is another reason why the rapid implementation of the new Basel Accord on capital adequacy is so very important for the financial system as a whole. In addition to this it is obvious that further and new tasks arise for regulatory agencies and central banks at the national as well as the international level. Addressing the issue of disaster recovery has to become part of the routine supervisory process. Supervisory guidelines and examination procedures are being adjusted in this light and they are helpful tools in increasing resilience. Also, when overseeing payment systems resilience and business continuity will have to be scrutinized anew.
We had to test the capacity to have such teleconferences at very short notice, in order to be sure that we could confront any new situation. We had a large number of teleconferences with the Governing Council. You see there…[points to telephones on table] If the situation were to demand now that we had in one hour and a half a teleconference with the Governing Council, we will then indeed have a teleconference in one hour and a half. The full continent would be there. That’s very impressive, because this would mean all members of the Governing Council from Ljubljana to Helsinki and from Lisbon to Dublin. FT: And as you say, an exceptional crisis, a global crisis. How much worse would it have been without the euro? Trichet: It is very difficult to reconstruct history with new assumptions. But my memory of what we experienced together in the old days is certainly that we would have had a situation which would have been very difficult, because on top of all of these global challenges that are without precedent, we would have had to cope with the intra-European tensions, the  BIS Review 159/2008  1  equivalent of the intra-ERM 1 tensions, and that would have been demanding. There is no doubt from that standpoint that the enormous challenges we had at the level of the euro area as a whole were, very fortunately, not the result of intra-euro-area tensions, and that is something which is important.

Here at the ECB, we are absolutely convinced that whatever we do, it will not have as strong an impact if it is not accompanied by reforms. Asset purchases are not an excuse not to implement reforms. The effectiveness of the purchases depends on these reforms. That said, the programme was designed to work and it is big enough to work. Even though the amount of risk-sharing is very small – 20% – with the rest staying with the national central banks? This is fully consistent with a single monetary policy because all decisions will be taken by the Governing Council. Moreover, it has to be said that the fact that we have greatly limited the level of risk-sharing reflects the philosophy of the Maastricht Treaty: a centralised monetary policy with national fiscal responsibility. We have acknowledged the fact that the euro area is not a fiscal union. There are those who say we could have taken the first step in this direction. But this is a political decision which is for the governments to make, not us. At what point will QE stop? We will make purchases from early March until at least September 2016, i.e. 19 months, and shall continue until there is a sustained improvement in medium-term inflation. When it will end is therefore not an urgent issue, it will be assessed based on a range of indicators, including inflation expectations. Could it end before September 2016? It will end only once we get a strong sense that inflation is converging towards 2%.
But beyond that it certainly means, too, that “outs”, or potential “pre-ins”, should not attempt to exploit any perceived -- and certainly short-term -- advantage from the additional policy freedoms they might have on the outside, but should, for example, persist in macro-economic, fiscal and monetary, discipline in parallel with the EMU countries. But it also means that the “in” countries, for their part, have an identical self-interest in maintaining an open and constructive relationship with the “outs”/“pre-ins”. Otherwise we would all be cutting off our nose to spite our face. I make this general point, Mr. Chairman, because this context seems to me to be relevant to any assessment of the economic prospect, of the economy as a whole or of any particular sector, within or without the euro-area. In the rest of my remarks I assume that, in or out, we will be operating within a constructive, co-operative, environment throughout the EU, for the powerful reason that that is in everyone’s interest. BIS Review 106/1997  -2Against that background let me turn to the prospects for the City. I will, in fact, concentrate on the case in which the UK does not participate in EMU in the first wave, because in the alternative case, the UK in scenario, while there may be uncertainty about the overall macro-economic implications, there is little reason to suppose that there would be any adverse implications for the City in particular.

This suggests that the Monetary Policy Committee did not explain well enough that sometimes it is better to raise rates now so as to avoid a much larger rate increase later on. In view of this criticism, I think it appropriate to explain this more fully. In general, Central Bank attempts to keep interest rates as low as possible — but as high as necessary — at any given time. What that optimum level is, however, depends on conditions, and it changes from one time to another. If Central Bank rates deviate from this optimum, the public will bear the expense. If they are higher than need be, inflation could fall below target and GDP growth would be weaker than it might be otherwise. If they are lower than need be, inflation could get out of hand and economic instability could take root. In that case, a much larger rate hike would be needed later on. So interest rates that are too high or too low do not come without costs to the general public. In this instance, it should not be forgotten that household mortgages tend to be long-term loans, and a majority of them are indexed to the CPI. If inflation is kept at target over the long term, these mortgage rates will be lower in the long run than they would be otherwise, even though an increase in short-term central bank rates might sometimes be required.