samchain/econo-pairs-v1 huggingface dataset:
Elvira Nabiullina: Review of recent inflation developments in Russia and economic outlook Statement by Ms Elvira Nabiullina, Governor of the Bank of Russia, in the follow-up to the Board of Directors meeting, Moscow, 12 February 2021. * * * Today, we have decided to keep the key rate at 4.25% per annum. The economy is bouncing back rather steadily. I would like to remind you that at our previous meeting we expected economic revival to pause at the end of 2020. However, GDP statistics and high-frequency indicators evidence that this did not happen. Moreover, inflation also exceeds our expectations. I will further on dwell on the factors, which we were taking into account when making our decision today. I will start out with the situation in the economy. It has turned out to be better than we expected, and there is a range of reasons for this. First, the restrictions in autumn and winter were not as tough as in spring. Second, both households and businesses were better prepared for the resurgence of coronavirus cases and adjusted faster. Credit activity did not decline, and consumer demand remained unchanged, including owing to a rise in online purchases. Third, external demand for Russian exports also turned out to be higher than our expectations. We assume that demand in the economy will be recovering steadily further on, promoted by lending expansion amid accommodative monetary policy, mass vaccination, and an improvement in household and business sentiment.

Over the acute phase of the crisis, budget spending considerably supported the real sector. The effect of stimulus measures is expected to continue in the first half of the year as well. Further on, the scheduled fiscal policy normalisation will reduce the extent of this influence. Nonetheless, the budget will remain expansionary as compared to the long-term parameters provided for by the fiscal rule. In these conditions, economic growth will continue owing to a further revival of both domestic and external demand. The recovery of domestic demand will be driven by the cancellation of restrictions as the epidemic situation improves, especially in the service sector. External demand will be boosted by a rebound in the global economy. Disinflationary demand-side pressure will thus be decreasing overall. Given the current positive trends, we keep unchanged our forecast of GDP growth at 3– 4% for 2021. Furthermore, the economy may reach its pre-pandemic levels already by late 2021, and not by mid-2022, as we assumed earlier. This will become possible primarily as a result of a less significant decline in 2020. The second factor is inflation. Annual inflation sped up to 5.2% in January, exceeding the Bank of Russia’s target. This elevated inflation rate largely resulted from the pass-through of the ruble weakening and price growth in global commodity markets. According to our estimates, the contribution of the pass-through of the exchange rate movements to annual inflation approximated one percentage point. The contribution of high prices in food markets was slightly lower yet substantial.
Changes in the real exchange rate mainly affect the economy via net exports, in which a weakening of the real exchange rate tends to increase net exports. Slightly simplified, it could be said that higher net exports lead to increased resource utilisation, higher wage growth and thus to higher inflationary pressures. The exchange rate effects arising in inflation via net exports can thus be seen as being significantly less direct than those arising via import prices, which I discussed earlier. Changes in the real exchange rate may entail adjustments to the economy that monetary policy may need to consider. For example, during a real appreciation of the krona, exporting and import-competing firms may have to review their costs so as to restore competitiveness. Among other strategies, the firms can achieve this by implementing operational changes to increase productivity.10 Such adjustments can contribute towards lower inflationary pressures, as increased productivity lowers unit costs. Another possibility for some firms is to move operations overseas. For major firms with broad international operations, it may be relatively easy, in some cases, to reorganise operations so that costs arise in another currency than Swedish kronor. However, for smaller firms with all of their production in Sweden, relocating operations overseas is generally associated with high costs. Monetary policy decision-making in consideration of the exchange rate I would now like to say a few words about how everything I have said so far about the exchange rate affects my view of monetary policy analyses and decisions.

2/3  BIS central bankers' speeches  I am also very happy to note the Association’s launch of the MSB App this evening —- which will provide consumers with convenient access to price comparisons, locations of MSB companies, customer reviews, and avenues to lodge complaints and report illegal MSB activities. This App reflects an increasingly digitalised society and business environment where demands for greater transparency, convenience and consumer engagement have become the norm. The MSB App is a great example of how financial technology, or fintech, is changing how customers experience financial services. The possibilities are almost boundless as we are discovering through Bank Negara Malaysia’s recently launched “fintech hacks”. This is a project where we are inviting the public to submit ideas to improve financial services. Let me mention some of the suggestions we have received in the area of money services. Allow tourists to exchange their unused foreign currencies for e-money that can be used to make purchases at any airport merchant worldwide. Develop a peer-to-peer currency exchange app that will allow travellers to meet up and exchange currencies. Provide an app that will allow individuals to book and pay for foreign currencies using their mobile phones, and have the currencies delivered directly to them. And enable e-KYC for remittances. These represent opportunities for MSB companies to innovate and continuously improve on products and services that are meeting the needs of today’s consumer.
Since May this year, many SMEs and think-tanks suggested that Hong Kong should develop a market-oriented platform to guarantee SME loans upon the phasing out of the Special Loan Guarantee Scheme. This suggestion has gained a good measure of support from the market and society at large. The HKMC therefore immediately launched an in-depth study and market consultation exercise. In mid-November, the HKMC announced that it will launch the SME Financing Guarantee Scheme on 1 January next year. The Scheme will offer extensive and flexible guarantee coverage to help the SMEs in Hong Kong obtain more sustainable bank financing for their daily operations or purchase of equipment etc. Also, this Scheme will help banks manage their lending risks more effectively – the banks can meet the financing needs of the SMEs without having to warehouse excessive credit risks. Undoubtedly, the Scheme will bring benefits for the SMEs, banks, economy and employment in Hong Kong. We do not expect an overwhelming demand for the new Scheme initially. However, the global market conditions change and turn all the time. There is a high degree of volatility and uncertainty in the future. The business and financing environments for the enterprises could easily come under stress and the SME Financing Guarantee Scheme will then play an important role to help banks maintain a steady and sustainable flow of financing to the SMEs. To promote the launch of this new Scheme, the HKMC will offer a special discount for applications filed on or before 30 June 2011.

The committee is chaired by the Chief Executive of the HKMA and comprises members coming from multiple functions including monetary management, banking supervision, research and macro surveillance. 1/3  BIS central bankers' speeches  6. Some commentators have criticised the HKMA’s macroprudential measures as being ineffective because they have not been able to arrest the rising trend of property prices. This is a misunderstanding of the objective of the HKMA’s macroprudential measures. The objective of the HKMA’s measures is not to tame property prices. Instead, they are aimed at strengthening the risk management of banks and thus safeguarding long-term banking stability. In this regard, it is worth noting that the average LTV ratio of new residential mortgage loans has been consistently lower than 60% while the average debt servicing ratio of new mortgages has been consistently lower than 40%, suggesting that the banking system has built in buffer to safeguard its resilience. 7. Competition dynamics: Mortgage products in Hong Kong are homogeneous, in the sense that from the mortgagor’s perspective it makes little difference which bank is offering the mortgage facility. There is therefore a strong tendency for banks to compete for market share by lowering their underwriting standards. With the macroprudential measures in place, however, banks can compete for mortgage business only in terms of pricing (e.g. mortgage rate). Against a backdrop of rising property prices and a consistently low delinquency rate of mortgage loans, many banks tried to outcompete their peers by pushing down the mortgage rate to record low levels.
I believe that central banks can play a special role in this area. Important “intra-financial system markets” are not restricted to banking. The reinsurance markets, and the mechanisms for sharing risks in Lloyd’s of London, are other examples. As are the inter-dealer markets in derivatives, which have traditionally employed different protocols (notably collateralisation, under Credit-Support Annexes) than get used in transactions with end users. Away from banks, these Over the Counter derivative markets have been the principal focus of policy. They are being rethought, under a mandate from the G20 Leaders7. The third category of markets is those that matter directly in their own right to end users. Notably the primary markets in equity and debt. These markets and the associated secondary markets often rely on “market makers” for liquidity, but they are not the marginal source of financing or risk management for banks and dealers. In the past, they have often  4  Drysdale, Lombard Wall, and so on. 5  See Tucker P M W (2010), “Shadow Banking, Financing Markets and Financial Stability”, January 2010. 6  See Gary Gorton “Securitized Banking and the Run on Repo”. 7  In September 2009, G-20 Leaders agreed in Pittsburgh that: “All standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms, where appropriate, and cleared through central counterparties by end-2012 at the latest. OTC derivative contracts should be reported to trade repositories. Non-centrally cleared contracts should be subject to higher capital requirements.

But while nearly all markets are subject to regulation, relatively little thought has been given over the past decade to how different markets matter to stability and, hence, about the role of the authorities in this area. 1  On that, see the Bank of England/FSA paper released last week on how banking supervision is being reformed in the UK in preparation for the establishment of the new Prudential Regulatory Authority. 2  See Tucker P M W “Macroprudential Policy: Building Financial Stability Institutions”, 2011 for a discussion of macroprudential regimes. 3  Bank of England Annual Report and Accounts 2010 pp 26–27. BIS central bankers’ speeches  1  Markets matter to stability in different ways As a provisional attempt at this, I think it might be helpful to distinguish between three types of market: infrastructural markets, intra-financial-system markets, and end-user markets. The first type is those markets that provide essential, quasi-infrastructural support to banking. The obvious example is the overnight wholesale money markets. They are effectively part of the payments system infrastructure. Banking, which is integral to the provision of all three core financial services, simply could not operate without these markets. They have long been, and will remain, of concern to central banks. I will not return to them today. The second category is intra-financial system markets (a slightly broader concept than inter-dealer markets). These markets determine the interlinkages amongst financial firms.
The week of 12–18 March 2018 is internationally known as the Money Week. Initiated by Child and Youth Finance International, with the support of the Organisation for Economic Co-operation and Development (OECD), and adopted by more than 23.000 organisations across the globe, the Money Week is an annual financial awareness campaign built to inspire children and young people to learn about money matters, livelihoods and entrepreneurship. The celebration of this Week aims at raising the awareness of the younger generation to be responsible future citizens and capable of making well-informed financial decisions Following the tradition from the previous years, the Bank of Albania, in cooperation with the Albanian Association of Banks, with the support of the Ministry of Education, Sports, and Youth, like many other institutions worldwide, will organize various activities to involve children and young people, teaching them how to manage money, to save money, to think financially, to understand the changes in the economic systems where they live, to earn income through entrepreneurship, and set the foundations for their future through financial literacy. In the light of these objectives, during the Week, a number of activities will be organised such as lectures, contests, and visits to commercial banks and the Museum, aimed at including as many students as possible. This year’s motto “Money: You reap what you sow” highlights the importance of money matters as a necessary means to achieve and maintain welfare.

16/17  A cyclical downturn not associated with prior excessive credit growth may also affect the profitability and solvency levels of financial institutions. It is thus advisable to improve banks’ capital levels when the macroeconomic circumstances are propitious. In short, to address these macro-financial challenges and risks, we need to internalise in our decision-making what should constitute responsible and efficient management of private and public matters: accumulating buffers in good times so they can be used in hard times. And this applies not only to lenders, but also to borrowers and, above all, to those responsible for managing economic policies, including myself. Contributing transparency and rigour to the establishment of this culture of stability is part of the mission entrusted to the Banco de España as an independent institution at the service of the community. Thank you for your attention. 17/17
The Swiss franc’s safe haven properties and financial market participants’ perceptions that the risks to the global economy were extreme in size and uncommon in nature (and thus hard to evaluate) offer a far more complete explanation. The unique safe haven properties of the Swiss franc are well recognised. They have rarely been as clearly demonstrated as in recent history. It is striking, for instance, that the price of gold in Swiss francs depreciated by approximately 5% between early 2011 and 2 August, while, in the meantime, the US dollar price of gold kept breaking one record after another. The Swiss franc’s safe haven properties are also illustrated by the negative correlation between its movements and the price of risky assets, such as equity shares. Additionally, these movements are positively correlated with risk indicators, such as the VIX index. The Swiss franc’s significant appreciation within a few hours of the first plane crash into Manhattan’s twin towers on 11 September 2001 constitutes another vivid example of the strength of its safe haven properties. While the Swiss franc’s status as a so-called safe haven currency may be a testimony to the country’s long history of stability, in times of global uncertainty on the financial markets, it is an essentially financial phenomenon which may inflict significant and potentially permanent damage upon the real economy. When financial forces push a currency so far away from its fundamental value so quickly, the consequences are very real.

I think there is a broad agreement on the fact that interest rate decisions are state-dependent rather than time-dependent and as a consequence, both the frequency and the amplitude of the policy changes are mainly driven by the underlying state of the economy. As far as the Eurosystem is concerned, the more gradualist approach is nothing but the reflection that the economy of the euro area has been less affected by cyclical fluctuations than the US economy. Moreover, recent research carried out by the Eurosystem on inflation persistence tends to show that the degree of inflation persistence in the euro area is quite moderate while the degree of price stickiness is considerable and higher than in the United States. This finding may provide another justification for a gradualist monetary response to cost-push shocks as: first, the impact of an inflation shock will be small as agents anticipate a low persistence of this shock and therefore will maintain their expectations of future inflation at low levels; in turn, the negative response of the output gap will be limited implying a less persistent response of the real rate. 5. As a result, the Eurosystem monetary policy has won European citizens’ confidence in and acceptance of the new currency  Finally, the euro has been readily accepted by economic agents and is now part of European consumers’ daily lives. Surveys confirm that the general public has confidence in the euro, as a solid currency, and in the Eurosystem as their Central Bank.
Some of the conventional, static metrics that we now use - such as those to judge asset quality and to assess the adequacy of credit loss reserves - are likely to be supplanted by more quantitative and more sophisticated measures. Supervisors will increasingly have to assess the bank’s ability to properly rate all exposures across the spectrum of its internal rating grades - not just its classified or problem assets. In addition to ensuring the integrity of banks' internal rating assignments, supervisors will also need to understand how these ratings feed into the models and tools used by banks to manage credit risk. They will also need to understand the implications of using these new tools. I also see a significant shift on the horizon in our examination approach to operational risk, as we bring together operational risk management assessments with operational risk capital analyses. Examiners will have to understand, and be able to evaluate critically - much more so than today - how banks combine qualitative and quantitative techniques. Here I am thinking of the need to consider selfassessments banks may make of their control environments, as well as their processes for data collection and statistical analyses. It clearly will be important to devote the necessary supervisory resources - in terms of skilled personnel, technical training, and a targeted strategy - to these new supervisory efforts. As we prepare to traverse this uncharted regulatory landscape, there is an opportunity for supervisors to take a fresh look at how they do their work.

I recommend giving it a read: the report itself is a treasure trove of data, and the results do you credit. The average solvency capital requirement (SCR) coverage ratio on the French market climbed from 222% in 2016 to 238% in 2017. What’s more, in the first quarter of 2018, the French insurance market overtook Germany and the United Kingdom to become Europe’s number-one market, with over EUR 35 billion in direct premiums written in non-life insurance and over EUR 2.100 trillion in technical provisions. It also leads in investment capacity: commanding total assets of EUR 2.7 trillion in September 2018, France’s insurance sector is far and away the largest institutional investor in Europe, accounting for over one-third of the total assets of euro area insurers. In comparison, France makes up 21% of euro area GDP. Insurers, then, are a crucial asset for France, and their critical role in financing the economy can and indeed must grow further. Corporate equity is vital to innovation and hence to a vibrant economy, but in mid-2018 equity was equivalent to just 77% of GDP in the euro area and 76% in France, compared with 124% in the United States. II. Tapping into regulatory opportunities. I would like to start this section off by noting that France’s introduction of a flat tax on capital income on 1 January has not had the slightest detrimental effect on life insurance, despite fears on this score within your industry.
Jean Monnet already recognised this in 1976, when he wrote in his memoirs: “Europe will be forged in crises and it will be the sum of the solutions adopted for those crises.” 19 As far as Switzerland is concerned, I am optimistic that it, too, will overcome the formidable challenges it faces. As with most countries, Switzerland benefited greatly from globalisation and from opening up its economy. Thanks to its flexibility and creativity, the Swiss economy is well placed to remain internationally competitive. But the Swiss people must recognise that the world does not stand still. In order to preserve and enhance our high standard of living, we must remain extremely flexible in every respect. This is where the real economy, in particular, faces a challenge: ongoing innovation and qualified human capital are of the utmost importance in a high-wage country such as Switzerland. Both of these factors will enable our companies to continue to bring successful new products onto the world market, many of which we aren’t even able to imagine today. Monetary policy can generate neither innovation nor growth. Nonetheless, the Swiss National Bank’s conduct of monetary policy is relevant for Switzerland as a business location. After all, the innovative capabilities of a country also rely on a favourable and stable business environment. The SNB remains firmly focused on maintaining price stability; a task, which is consistent neither with deflation nor with inflation.

This divergence in the regional focus becomes even more apparent when Asia is viewed as a whole. This is because Switzerland maintains far closer trade ties with Asia’s industrialised countries than the EU does, particularly with the four Asian tiger economies of Hong Kong,  6  The USD value of goods exports to developing and emerging economies (excluding the tiger economies of Hong Kong, Singapore, South Korea and Taiwan) has grown by an average of 7.5% since 1990, i.e. it has quadrupled. Goods exports to industrialised counties increased by 4.7% annually during the same period, representing an increase by a factor of only 2.5. 7  From 1990 to 2008, the GDP of developing and emerging economies rose by an average of almost 8% (China alone grew by more than 10%). The GDP of the EU15, by contrast, rose by just 1.9% on average (US: 2.7%). 8  The USD value of Swiss goods exports to emerging Asia (excluding the tiger economies) has grown by an average of 9.1% since 1990 (since 2000: 18%). The corresponding growth rates for Germany amounted to 11.4% (since 2000: 17.8%), and for the EU, 9.6% (since 2000: 13.6%). 9  Including intra-EU trade. BIS Review 157/2010  3  Singapore, South Korea and Taiwan. Overall, Switzerland’s share of exports to Asia, including Japan, came to 15% last year – more than twice the EU average. 10 Furthermore, Switzerland is one of the few European countries – alongside Ireland, Sweden and Finland – to run a trade surplus with Asia.