samchain/econo-pairs-v1 huggingface dataset:
This is partly because the after-effects of the financial bubble that burst appear to be more substantial and more protracted than previously assumed. It is expected that a number of countries will reduce their interest rates again, and that the level of interest rates in other countries will remain low for some time. In Norway, price inflation is lower than implied by the inflation target and will remain low in the period ahead. The krone has remained strong, partly due to the fall in international interest rates, weakening the impact of our interest rate reductions. Growth in the Norwegian economy is now likely to be weak. Although private consumption continues to show strong growth and oil investment is providing an impetus to the Norwegian business sector, labour market developments have been weaker than expected in our previous Inflation Report. Employment has fallen and unemployment is on the rise. House prices are falling and many commercial properties are vacant. It now appears that fiscal policy will have a more neutral impact on overall demand, and growth in public consumption and employment is no longer rising. Fiscal policy as drawn up in the Revised National Budget will therefore not contribute to locking in the strong krone. One encouraging development is that wage growth appears to have moderated more quickly than expected. This may partly be explained by the interim wage settlement this year, as in 1999.

In fact, those that surrender most of their monetary autonomy or maintain restrictions on cross-border capital flows need not feel immediate pressure to appreciate. But those that have come further along the liberalization road have to face a different kind of challenge. In our case, the Bank of Thailand has sought a balanced approach to managing capital flows under flexible exchange rate. We also undertake concomitant reforms in the area of financial system and market development. These initiatives are closely related and progress in one requires progress in the others. In building a resilient economy, prudent fiscal and monetary policy does help. As an automatic stabilizer, flexible exchange rate also helps. BIS Review 104/2007  3  Ladies and Gentlemen, Hot money, or indeed large inflows in general, can fuel asset prices and encourage excessive risk-taking behavior. Central banks may wish to counter that excess in the interest of financial stability. If the central bank chooses to maintain a high interest rate stance, the pressure on the currency to appreciate will likely mount. Since these challenges require significant ability for the domestic economy to adjust flexibly, the solution package we seek must help reduce the distortions in our economies. Allowing the competitive pressure and incentive to operate is undoubtedly the best way to foster investment in physical and human capital, as well as innovation and risk-taking, all of which are crucial to long-term productivity growth. They are also crucial for a flexible and resilient economy. But policy and regulations still have a role to play.
Almost half of the forecasting error in the Banco de España projections in the first eight months of 2022 is due to the direct effects of the greater energy price growth. And this is despite the measures adopted to contain the rise in these prices having lowered headline inflation by 1.8 pp in that period. 5. The duration and scale of the increase in energy prices, and the concurrent rises in other commodity prices, have made it difficult for firms to absorb the higher energy prices. Thus, they have gradually fed into the prices of other goods and services, doing so more forcefully than before the pandemic.2 These “indirect effects” are estimated to have contributed onethird of the increase in underlying inflation in the euro area and Spain in August (10% of headline inflation). 6. Food commodity prices have also surged, reaching historically very high levels, although they have eased since their March peak. Such higher prices are attributable to strong global demand, adverse climate factors and the higher costs of international shipping and some key inputs, such as fuel and fertilizers.3 Between December 2021 and August 2022 annual food price inflation increased by 8.1 pp in Spain (7.4 pp in the euro area),4 such that 30% of inflation in August was attributable to food (3.2 pp) (25% in the euro area).

Moreover, although supply bottlenecks are easing, they are still limiting activity in certain sectors. That said, the euro area economy is expected to grow by 3.1% in 2022, before slowing significantly in 2023 to 0.9% – vs the 2.1% forecast in June. In 2024 GDP is expected to grow by 1.9% (2.1% in the June forecast). Inflation continues to be driven by the surge in gas and food prices, demand pressures in some sectors owing to the economic reopening, supply bottlenecks and the depreciation of the euro. In addition, slightly stronger wage growth is expected, in the context of a robust 13  For more information, see C. Martínez-Carrascal (2022). “The impact of the surge in inflation and the war on Spanish households’ economic outlook”, Economic Bulletin 3/2022, Banco de España. 6  labour market, higher minimum wages in some countries and the delayed effects of past high inflation rates. These factors more than offset the negative impact on inflation of the weaker growth outlook. As a result, inflation projections have been revised significantly upwards, although inflation is expected to decline as the current inflation drivers gradually abate and the normalisation of our economic policy passes through to the economy. The forecasts now put inflation at 8.1% in 2022, 5.5% in 2023 and 2.3% in 2024, an upward revision of 1.3 pp, 2 pp and 0.2 pp, respectively, with respect to the June projections. In the case of the Spanish economy, the Banco de España will update its latest projections in early October.
The chart on the left of side 10 shows that compared to the situation in 2005, the distribution of returns on equity for large and complex banking groups (LCBGs) has become more compressed around the mean with the profitability of the institutions in the lower quantiles remaining unchanged or increasing slightly. At the same time, Tier 1 capital bases comfortably exceeded the regulatory minima for solvency ratios, pointing to a reassuring shock-absorbing capacity. Risk management among LCBGs is expected to improve further as the Basel II capital rules are being implemented in the course of the current year. Special Feature articles B and C in this edition of the FSR introduce a model for stress-testing the resilience of euro area LCBGs in the face of a wide range of adverse shocks to the global macrofinancial environment. The results suggest that the corporate credit quality of LCBGs tends to deteriorate following negative shocks to GDP and oil prices as well as an appreciation of the euro against the US dollar. The worsening credit quality, in turn, can have a rather marked negative impact on banks’ solvency as measures by Tier 1 capital ratios. In recent years, euro area LCBGs have faced challenges in increasing, or at least maintaining, interest income as a share of total income, but they have enjoyed further improvements in fee, commission and especially trading income. Indeed, the share of banks’ trading income in net operating income rose significantly in 2006.

However, pre-existing sources of risk and vulnerability remain and some have grown: •  The recent market jitters have confirmed concerns regarding previously identified risks and vulnerabilities and have revealed the relevance of some new risk exposures;  •  Vulnerabilities could be quickly unearthed if market liquidity were to abruptly and sharply decline, possibly triggered by a wane in risk appetite caused by a change in risk perceptions;  •  Re-leveraging in the corporate sector and the process of credit risk transfer from the banking system to other financial institutions and market participants which is associated with a greater emphasis on the “originate and distribute” business model by banks, could constitute vulnerabilities in a less benign market environment. •  In addition, global imbalances remain a medium-term, low-probability but potentially high impact risk for financial stability. Therefore, despite the strong performance of the financial sector and the benign macroeconomic outlook, there is no room for complacency, given the potential risks and the identified vulnerabilities. This conclusion also reflects the fact that the materialisation of risks and the triggers that could expose vulnerabilities can not be predicted with any degree of certainty. The main message for the financial institutions is to prepare to mitigate potential disturbances through appropriate risk management arrangements including through stress-testing and vigilant monitoring of the financial soundness of their counterparties.
The stronger the upswing in relation to potential output, the greater will be the risk of a faster increase in prices and wages and vice versa. That is why those of us who work in central banks around the world talk so frequently about the cyclical picture even though our target variable is actually inflation. The future value of the krona plays a part in our assessment of inflation. Exchange rate movements affect inflation directly in that they show up in the price of imported goods and services; they also have indirect effects through aggregate demand. Changes in the value of the krona relative to other currencies of importance for foreign trade have consequences for the competitiveness of Swedish goods and services. Turning finally to inflation expectations among households and firms, there is the effect on the actual formation of prices and wages and thereby on inflation. Altered expectations are liable to influence price formation if the Riksbank does not act through monetary policy. There are, however, other price impulses that the Riksbank also has to handle. Examples are last winter’s shortage of snow that restricted the supply of hydroelectric power, cattle diseases that pushed up the price of meat, and the unusually cold weather in Europe that raised the price of fruit and vegetables. Price shocks of this type can occasion large shifts in the general price level at the same time as their impact on inflation is probably only transient.

Richard W Fisher: Forward guidance (With reference to Monty Python, Odysseus, Apollo, Paul Fisher, Deng Xiaoping and Mario Draghi’s Old Man) Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the Asia Society Hong Kong Center, Hong Kong, 4 April 2014. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, Alice (Mong). It is always an honor to speak before the Asia Society anywhere in the world but especially here in Hong Kong, one of my favorite cities. I was in Hong Kong during the transition ceremonies in 1997 when the White House called to ask if I would become deputy U.S. trade representative. It was a position in which I served for four years under President Clinton, and it put me on the path to high-level public service. That and my love for the spectacular food here have cemented Hong Kong in my heart. Thank you for inviting me to stop here on my way to Beijing. I want to talk today about “forward guidance” in monetary policy. It is the subject du jour of central bankers.
Directive 2009/111/EC of The European Parliament And Of The Council of 16 September 2009 amending Directives 2006/48/EC, 2006/49/EC and 2007/64/EC as regards banks affiliated to central institutions, certain own funds items, large exposures, supervisory arrangements, and crisis management. OJ, L 302, 17.11.2009, p. 97. 8. European Commission Public Consultation regarding further possible changes to the Capital Requirements Directive (“CRD”). The consultation was closed on 4 September 2009. 9. European Commission Public Consultation regarding further possible changes to the Capital Requirements Directive (“CRD”) – launched on 26 February 2010. 10. European Commission Public Consultation regarding an EU framework for CrossBorder Crisis Management in the Banking Sector. 11. Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, Has the financial sector grown too big? 2010. 12. Lucas Papademos, European Central Bank Vice President, “Financial Integration, development and stability: Lessons from the crisis”, speech delivered on 12 April 2010 at the conference on “Financial integration and stability: the legacy of the crisis”. 13. Jean-Claude Trichet, European Central Bank President, ceremonial address at “100 years of Confindustria” delivered at Parma, Italy on 10 April 2010. 14. Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, “Monetary Policy: Recent experiences and future directions”, speech delivered at the Bank of Canada, Toronto, 9 April 2010. 15. Group of Twenty “Declaration of the Global Plan for Recovery and Reform”, London, 2 April 2009. 16. Group of Twenty “Declaration on Strengthening the Financial System”, London, 2 April 2009. 17.

In the identification of its policy orientation, the ECB bears in mind that an inflation rate too close to zero restrains the conduct of policy in deep recessions and it also filters out a host of factors that distort the measurement of the policy-relevant drift in prices. 3 Third, the strategy describes and structures a host of economic and monetary variables which can signal risks to price stability before they materialise. This set includes important monetary and financial variables which influence the way monetary policy intentions are transmitted to price-setting decisions in the medium term. As I said, the strategy turns the Treaty assignment into an action plan which, if I may borrow from performance management jargon, I would call S.M.A.R.T. — Specific, Measurable, Attainable, Relevant and Timely. Let me focus on the “M” and “A”. The action plan is measurable, and we can assess the ECB’s progress towards that goal by looking at its record. Prices since the start of the euro have indeed been stable and in line with our definition. The average inflation rate over the past 13 years has been slightly higher than 2%. 4 The goal was attainable and it was attained. Monetary policy and lack of trust in the integrity of the euro area Over the summer the price of bonds issued by some governments in the euro area fell on concerns that investors’ claims could be discharged by the issuer in a currency other than the euro, the currency of denomination.
Commodities are priced in dollars, and this may mean that commodities exporters will try to gain compensation through higher prices if the dollar falls. In recent years, portfolio investment in commodities has become an increasingly common means of diversifying and spreading risks. The fact that interest has increased is due to the return on other investments deteriorating and this has probably contributed to reinforcing the upswing in commodity prices. If the expectations of the relative return on this type of investment were to decline, it could instead have a subduing effect on prices. How does one weigh together all of the factors I have mentioned? There is of course considerable uncertainty. The assessment we made at our last monetary policy meeting was that the world market prices would not continue to rise at the same rapid rate. This meant that the high inflationary impulses from the price rise on food commodities were assessed as  4  See Irma Rosenberg, “Rising commodity prices”, speech held on 9 May 2008. 5  IMF (2008) World Economic Outlook. 6  See the UN’s climate panel 2007: Impacts, Adaptation and Vulnerability. 4  BIS Review 68/2008  partly temporary. This is something that is so far supported by the tendencies towards a slowdown in food commodities prices in the world market which we have been able to see recently. Information received since the last meeting I now intend to move on to say a few words about the information received since the most recent interest rate decision.

I’m going today to set out what new instruments we have in that little metal tray next to the “prudentist’s” chair, and what we plan to do with them, so that you can prepare yourselves. View from the chair The good news is that, despite the impact of Covid, our patients are generally alive and well. Looking across the banking and insurance sectors as a whole, capital and liquidity positions are strong and operational resilience has largely held up to Covid and cyber pressures. This is the result of the efforts that have been made by many people in financial services to get the industry onto a stronger footing following the 2008 crisis, as well as the fiscal, monetary and regulatory support provided in response to Covid by the authorities. This means that we have the luxury of sitting in the dentist’s chair, and not in the hospital. A number of things seem much more visible than last time we were here: on the back of the door, a charter of regulatory freedoms to try new approaches following our exit from the EU; on the wall in front of the chair, new ideas on diversity and inclusion; and on the ceiling hanging over it all, the storm clouds of climate change. Plus of course Solvency II, which is resistant to being included in any form of analogy.
François Villeroy de Galhau: New Year wishes to the Paris financial centre New Year wishes to the Paris financial centre by Mr François Villeroy de Galhau, Governor of the Bank of France, Paris, 15 January 2020. * * * I would like to welcome you for this for this happy tradition of extending my New Year wishes to the Paris financial centre. But there are not just financial players here, there are also elected representatives, the press, and many associations that work with us. I would like to start by extending to you, on behalf of the Banque de France and the ACPR, our warmest wishes for 2020, for you and all of your staff. And a special thought goes to all those who are struggling with transport difficulties, or those who have, sadly, been the victim of the unacceptable attacks on branches. Within this tradition, I would like to welcome some new developments: the arrival of Dominique Laboureix as Secretary General of ACPR, alongside Patrick Montagner, Bertrand Peyret, Frédéric Visnovsky, and Emmanuelle Assouan, who will now be in charge of financial stability issues. In a world as hectic as ours, it is risky to make professional wishes. However, I will hazard three wishes for the financial sector in our country: that 2020 will be a year of stabilisation, a year of adaptation and a year of inclusion.

Secondly, the difficulty of delivering an appropriate “policy-mix”, the monetary policy being by definition concentrated in the hands of the ECB and the ESCB when, at the same time, the absence of a federal government and therefore of a federal budget leaves the fiscal policy of the Union in the hands of 15 different governments. Thirdly, the difficulty of absorbing “shocks” in a particular member economy, whether this shock is of a domestic or an external nature. This difficulty stems in particular from the absence of the automatic stabilizers of fiscal transfers because there is no federal budget. Fourthly, it is stressed that there are important costs associated with the transition towards EMU, namely the necessity to reduce overall fiscal deficits in the run-up to the single currency in accordance with the Maastricht fiscal criteria and the necessity to embark on an excessively tough monetary policy after the creation of the single currency to ensure the global credibility of the ECB, which in this view will start from scratch. Let me respond to these criticisms and try to demonstrate that the Europeans have embarked upon a coherent economic and monetary strategy, responding as accurately as possible to the various questions I have just listed and paying due attention to the special nature of the European endeavour.
The trend real rate as we have seen is determined by slow-moving structural factors that determine the underlying balance of the supply of savings and the demand for investment. But the interest rate necessary to offset the impact of unexpected outcomes – shocks – hitting the economy can vary significantly around the trend real rate over an economic cycle. Over the economic cycle, the natural rate will lie below the trend real rate when the economy needs stimulus to offset a negative demand shock and above it when demand needs to be reined in. The actual monetary policy rate, Bank Rate in the UK, may well deviate from the natural rate – for example, if there are so-called ‘trade-off inducing shocks’. These are best thought of as shocks that would still move inflation away from target even if we were to perfectly match demand and supply. Such shocks include a 5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  shock to the exchange rate or to competition and firms’ mark-ups. Nevertheless, the natural rate remains useful to policymakers as a reference point for assessing the tightness or looseness of the monetary policy stance. 5  The natural rate of interest cannot be observed directly any more than the trend real rate. It can be estimated through economic models though the estimates are sensitive to the models used. Bank of England estimates, using a variety of models, suggest that the natural rate fell very sharply below the trend real rate during the financial crisis.

And so it is my pleasure to welcome you to this ceremony today, formally to witness the appointment of Standard Chartered Bank as the Settlement Institution for the new euro clearing system. This system will enable a wide range of financial transactions in euro to be settled on a real-time basis here in Hong Kong. Not only should this be useful to those involved with trade and remittances in euro, but it should also facilitate financial institutions to manage international liquidity and investment portfolios in Hong Kong. The system will encompass not only the best, internationally agreed, principles of payment system design but also state-of-the-art technology. It will provide RTGS settlement for euro denominated fund transfers; a linkage with the US dollar payment system to provide real-time PvP settlement for EUR/USD transactions; and linkages with the CMU to provide DvP settlement for euro-denominated debt securities, in readiness for the potential development of that market. We expect to see all these features implemented by the second quarter of 2003. For the moment there will be no cheque clearing capability, but this is something which could be added later if there was sufficient demand. As in the case of the US dollar clearing, we have adopted a private sector solution, with a commercial bank as the Settlement Institution. This is not only consistent with the tradition in Hong Kong, but is also in line with international practice and with the recommendations of the Bank for International Settlements.