samchain/econo-pairs-v1 huggingface dataset:
On the other hand, reabsorbing this huge volume of liquidity once monetary policy began to normalise would have been very difficult and extremely costly. Communication and timing of the discontinuation The discontinuation of the minimum exchange rate took the financial markets by surprise and the price reactions on the foreign exchange and equity markets were correspondingly strong. In an age when transparency and openness in monetary policy matters are riding high, the decision to exit the minimum exchange rate policy so abruptly bewildered many observers. However, transparency is not an end in itself; it is part of monetary policy. Traditionally, monetary policy has been steered via short-term interest rates. These then feed through to exchange rates and long-term interest rates, thereby influencing – albeit with a time lag – the demand for goods and services and, ultimately, wages and prices in the economy. By communicating its intentions transparently and credibly, the SNB can influence expectations (e.g. on the financial markets), thereby rendering its monetary policy more effective. Fundamentally, we are keen to avoid surprising the economy and triggering major price movements on the financial markets with our monetary policy measures. In the context of conventional interest rate policy, it is thus advantageous to keep the gap between financial market participants’ expectations and the SNB’s actual interest rate adjustments within reasonable limits. Normally, therefore, there is no contradiction between the notion of transparent communication and our monetary policy intentions.

The US economy is more robust today than it was in 2011. The latest GDP figures for the euro area are once again more reassuring, although the situation remains difficult. In addition, the substantial fall in oil prices has had an easing effect. Despite all this, the risks – notably the debt dispute between Greece and the rest of the euro area, as well as the crisis in Ukraine – are not inconsiderable. In the long term, I am confident that our economy will be able to cope with Swiss franc appreciation. The currency has been strong in the past, and has a tendency to appreciate. While a strong currency is an expression of a sound economy, it also presents companies with major challenges, as an appreciating franc means higher prices for foreign customers buying from Swiss firms. In order to remain competitive, this disadvantage has to be continuously offset by adaptability, quality and innovation. Various competitiveness and innovation indicators suggest that Swiss companies have been very successful on this score in the past; the country regularly ranks among the leaders in these categories (cf. chart 6). These findings inspire optimism, however it is important to remember two things. First, we are dealing with averages here. When it comes to managing the new currency landscape, the options available to individual industries and companies will vary greatly; and so, in turn, will the impact of Swiss franc strength.
(2021). Several of the world’s large economies are now in a period of slower labour force growth, making it less profitable for companies to undertake major investments. Even if savings are falling, companies’ incentives to invest are declining even further. The prediction is therefore that the global real interest rate will fall for a long time to come. 6 When the inflation target was introduced at the beginning of the 1990s, the Riksbank had support from the then prevailing economic crisis, in the sense that inflation was pushed down to a level close to the target, making the task then ‘only’ to try to keep inflation at this level. 4 [15]  way that companies set their prices and the wage demands that households put forward. The inflation that results from the inflationary price-setting and wage formation confirms expectations and in turn affects the new expectations of future inflation. This gives a new round of effects on price-setting and wage formation, and the high inflation thus becomes a self-generating process. One reason why the high inflation was built into expectations among households and companies was that it was not sufficiently counteracted by the overall economic policy. Instead, this policy became systematically too expansionary. At that time, Sweden had a fixed exchange rate. The idea was that this would have a disciplinary effect on price-setting and wage formation: If Swedish prices and wages increased faster than prices and wages abroad, our competitiveness would weaken, exports would decline and unemployment would increase.

Today, inflation is 9.3 per cent and the Riksbank, like other central banks around the world, has raised the policy rate in rather large steps. This is as good an illustration as any of how quickly and unexpectedly things have happened or, to refer to my initial quotation, that decades have happened within a few weeks. A natural conclusion is that this development was genuinely difficult to predict. There are, of course, things that we could have predicted better, such as the boost to inflation that came from the rapid recovery after the pandemic. However, it would also have been necessary to foresee, for example, that Russia would invade Ukraine in February 2022, that Russia would throttle its exports of natural gas to Europe and that this would bring electricity prices up to exceptionally high levels. Two opposing types of criticism of monetary policy There will always be those who claim, after the event, that things should have been anticipated – and not rarely that they themselves actually did so. One argument in the Swedish debate is that today’s high inflation is an obvious result of the expansionary policy previously pursued by the Riksbank and many other central banks, during the rather long period when the problem was the reverse; that is, it was difficult to bring inflation up to the target level.
Currently, the portfolio of euro area households at the age of retirement is tilted towards real estate rather than financial assets, especially in the Mediterranean countries. There are, however, various financial products that can be used to extract liquidity from real estate assets. 13  For example, reverse mortgages are loans, guaranteed by the borrower's property, in the form of either a lump sum or a regular income stream until the accumulated debt reaches the loan limit, which is a fraction of the property value. Other forms of reverse mortgages include the possibility for borrowers to borrow funds as they need them up to a pre-agreed limit. Another option is the so-called sale and leaseback contract. In this case the ownership of the dwelling passes to the cash provider who in turn leases the property back to the seller. Some of these products could be combined with annuities, which are insurance products that guarantee an income stream for life. However, in the era of low interest rates the income stream per unit of asset is comparatively low, and tends to decrease even further with the increase in life expectancy. These changes in the demand for financial products could have implications for the structure of the financial system. The traditional role of banks in their intermediation of funds from short-term deposits to loans may diminish.

As the study team has found out, emigrants in Italy have a high banking utilization rate – more than 50 percent have bank accounts. On the Albanian side, this figure drops to less than 20 percent. Emigrant families’ access to banks is suboptimal despite the considerable geographical expansion of commercial banks in recent years. In contrast with other remittance-receiving countries, banks in Albania still have only a small market share in remittance services. However, there are encouraging signs of demand for new technologies, innovative partnerships and entry points to reach disadvantaged groups. The high fees of the money transfer applied by the banks are often brought up as a motive why individuals do not prefer this service. Nevertheless, there is already an Albanian commercial bank, which offers transfers from Italy to Albania without charging any fee for amounts up to 250 euros a day, when the average monthly delivery of emigrants usually ranges from 100 to 150 euros. In the meantime, there are several other banks that provide the same service for transfers from Greece. Actually, we are examining the possibilities to lower the transfer costs through broader bilateral agreements between the two countries. Even though, money transfer companies provide transfer services at reasonable rates with a good geographical coverage, we still observe a lot of cash entering the country in bags. I retain, this is more a regulatory problem rather than the preference of emigrants to go informal.
•  But banks have held up well. − In the US, nearly all the largest banks have passed the Federal Reserve’s most recent annual stress test. − In Singapore, an industry-wide stress test conducted by the MAS indicates that Singapore’s banking system will be resilient against severe economic stress scenarios in the major economies and Asian region. •  And beyond the stress tests, the global banking system has remained relatively resilient through actual episodes of market stress in recent years: − the May 2013 US taper tantrum; − the Oct 2014 US Treasury “flash crash”; − the Jan 2015 Swiss franc de-pegging; − the Aug 2015 “Black Monday” selloff; and most recently − the Jun 2016 UK referendum. Third, bank lending to the real economy has been stable. •  Overall provision of credit to the economy has been maintained even as banks met higher capital and liquidity requirements. − According to the FSB, by the end of 2014, bank lending growth had resumed in all regions of the world. •  The cost of financing has not increased, although I suspect that this has had more to do with highly accommodative monetary policies. •  There has been no material shortage in the supply of long-term investment financing in most countries surveyed.

In the long run, the result will only be higher inflation, not higher employment. Output and employment will return to their potential level. – The third factor is the special challenges to stabilisation policy posed by petroleum revenues. Norway’s export revenues and government revenues can be expected to be very high as long as production remains high and as long as the global market allows producing countries to extract substantial economic rent. At the same time, we know from experience that revenues may vary sharply from year to year. As a result of the high level of earnings and fluctuations in these revenues, the most important contribution fiscal policy can make to stabilising the Norwegian economy is to provide a sound, long-term strategy for the use of petroleum revenues. Attempts to use the central government budget to fine-tune economic activity may have a destabilising effect if these attempts are perceived as a breach in the long-term strategy for the phasing in of petroleum revenues. It is necessary to show that fiscal policy is applied symmetrically in periods of economic expansion and contraction. From the mid-1980s, during and after the credit bubble, it was recognised that a substantial revision of economic policy would be necessary and that the problems created by inflation had to be taken seriously. The exchange rate was chosen as the nominal anchor. Deteriorating competitiveness due to high wage growth would no longer be remedied by means of devaluations.
For example, the fact that the rate of growth of labor compensation costs remains so subdued is consistent with this conclusion. With respect to prices, inflation has been running somewhat below the Federal Reserve’s objective of a 2 percent annualized rate for the personal consumption expenditures (PCE) deflator. The latest Congressional Budget Office forecast has the four-quarter percent change of the core PCE deflator moving up from 1½ percent in the second quarter of 2014 to 1.9 percent by the fourth quarter of 2015. As with growth, I find this forecast to be quite reasonable, but would argue that the risks are on the side that inflation moves upwards more slowly than this. First, the appreciation of the dollar and weakening of foreign growth prospects that I mentioned earlier both act to dampen inflation pressures. Second, energy production in the U.S. is rising much faster than I would have guessed just a few years ago, helping to reduce energy prices which in turn reduces a wide range of production and distribution costs. Lastly, I would note that research suggests that inflation expectations play a very important role in the inflation process. Those expectations remain well anchored at the present time, despite concerns by some that the amount of slack in the economy has declined substantially. I am quite confident that those expectations will remain well anchored in the future, limiting the increase in inflation set in motion by faster growth and further reductions in slack. So what does this imply for monetary policy?

However, putting too much emphasis on regulations can also become a double-edged sword and hinder innovation and further development, should the pendulum swing the other way. To this end, it is rather pragmatic and sound policies that remain alert to developments in financial and asset markets, and strong macroeconomic fundamentals that are our best buffers. 8. It is trying times like these that remind us of how interconnected we are and how important it is for the IMF to continue to play its role effectively as the guardian of global economic and financial stability. In our view, the Fund’s role is determined by its mandate. The Fund cannot do what it was not built to do. For example, it is neither a regulator nor a central bank. As we see it, the Fund’s role is in analyzing and evaluating policies and its impact, facilitating dialogue and disseminating, both the warning signs and the lessons learnt, providing guidance and lessons learnt, forcefully where necessary. To this end, we see three areas where the Fund can be useful:  2  BIS Review 51/2008  •  The first is in providing policy guidance to individual members. Within its surveillance mandate, the Fund should be advising members what to do and how best to respond to the fallout from the crisis. •  The second is in the provision of appropriate financing instruments to ensure that members are able to ride out the turmoil. The recent market jitters are clear reminders of a still-fragile global financial system.
Second, one can consider whether reported expectations vary with observable characteristics in a predictable way.8 Third, whenever possible and assuming a stationary environment, one can check for relevance of reported expectations, looking at whether they are meaningfully related to future or past realizations. Fourth, one can ask whether subjective expectations help predict actual behavior. Finally, one can look at whether agents update their reported expectations in sensible ways upon receipt of relevant information. Based on these criteria, a literature that has grown rapidly since the mid-1990s has demonstrated the validity and information content of responses to probabilistic questions  6  See Manski (2004), Hurd (2009), Attanasio (2009), and Delavande, Giné, and McKenzie (2011a, 2011b) for recent overviews. 7  Likert (1932). 8  For instance, researchers can consider whether mortality expectations vary in expected ways with age, education, and risky behaviors. BIS central bankers’ speeches  3  about a broad spectrum of economic concepts. This evidence extends beyond the United States and Europe to developing countries.9 Thus, probabilistic questions, with appropriate instructions and visual aid tools, have been successfully used not only in the Survey of Professional Forecasters and the U.S. Health and Retirement Survey (and its sister surveys in Europe and Japan) but also in surveys of fisherman and farmers in India, aspiring migrants in Tonga, poor households in rural Colombia, and junior high school students in Mexico.

Inflation may then deliberately deviate from the target if this provides a better balance between stable inflation and a stable real economy. As there is a significant time lag before monetary policy measures have an impact on inflation and the real economy, monetary policy is best when it is based on forecasts. With a flexible inflation targeting regime, it is thus a question of choosing a repo rate path so that the forecast for inflation and the real economy stabilises inflation and the real economy as effectively as possible. It is thus possible and desirable to evaluate monetary policy ex ante and in real time by assessing to what extent the central bank's forecasts optimally stabilise both inflation and the real economy. However, before we do this it is necessary to assess whether the central bank's previous forecasts have been reasonably accurate and of good quality, for example in comparison with those of other forecasters. It is also of interest to evaluate monetary policy ex post, that is, after the event. As target deviations and forecast deviations are unavoidable due to the great degree of uncertainty about the future development of the economy and the delayed impact of monetary policy measures, an ex post evaluation is mainly a question of whether it would have been possible to predict the shocks and deviations that occurred, particularly if other analysts have systematically been able to predict them. 10  A preliminary analysis is carried out in Svensson, Lars E. O.
In the absence of the asset purchase programs, the size of the SOMA portfolio would be around $ trillion, as required to meet currency demand and other factors. Thus, the Federal Reserve has about $ trillion of additional assets in the portfolio as a result of its asset purchase programs. The SOMA portfolio also has different characteristics than it would have had in the absence of the asset purchase programs. Most notably, the overall duration of the SOMA portfolio at the end of June was over 4½ years, compared to its historical range of between two and three years. Together, the larger amount and longer tenor of our securities holdings result in a considerable amount of duration risk in the SOMA portfolio, meaning that the market value of the portfolio is sensitive to movements in interest rates. One measure of this risk that is familiar to market participants is the concept of “10-year equivalents,” or the amount of  BIS central bankers’ speeches  1  10-year notes that would produce the same degree of overall interest rate risk. At this time, we have about $ trillion of ten-year equivalents in the SOMA portfolio, which is about $ trillion above the amount that we would have under our traditional portfolio approach. The majority of this additional risk came from the expansion of the balance sheet, but the extension of its average duration also contributed significantly.

Brian P Sack: The SOMA portfolio at $ trillion Remarks by Mr Brian P Sack, Executive Vice President of the Federal Reserve Bank of New York, before the Money Marketeers of New York University, New York, 20 July 2011. *  *  *  Thank you for inviting me here tonight to give these remarks. These events organized by the Money Marketeers provide an excellent venue to talk about the Federal Reserve’s involvement in financial markets, given the focus and expertise of your group. As you know, the Federal Reserve recently completed its second round of large-scale asset purchases, known inside the Fed as LSAP2 and to everyone else in the world as QE2. With the program now in the books, I thought it would be a good time to look back and assess the experience with LSAP2. Specifically, I will discuss the effectiveness of the program relative to its stated objectives, and I will describe some the operational challenges that we faced in implementing it. Lastly, I will touch on several issues related to the potential evolution of the Federal Reserve’s balance sheet going forward. As always, my comments do not necessarily reflect the views of the Federal Open Market Committee (FOMC) or any other members of the Federal Reserve System. LSAP2 and the Federal Reserve’s balance sheet Let me start with a few facts.
Looking back on my time at the HKMA, I am especially pleased with our work in launching the Enhanced Competency Framework (ECF). 27. I am also glad to see the industry and our educational institutions cooperating to create new degree and post-graduate level courses in financial disciplines. 28. I think this whole “soft power” area is one where the regulator and the industry are very much in agreement. The HKMA has not seen a need to impose mandatory qualifications for banking practitioners. Through encouragement and cooperation with the industry, we have achieved our essential supervisory aim of ensuring that our institutions and industry are sound, stable and reliable. In addition, we have worked with institutions to enhance Hong Kong’s competitive position. For example, I like to think that our ECF programmes in AML/CFT and in private wealth management have helped to enlarge and enrich Hong Kong’s talent pool in these areas. 29. People and soft power remain a top priority. Hong Kong’s competitiveness in financial services essentially rests on the quality of our people. The upgrading of skills and the development of talent are the foundation of Hong Kong’s future as an international financial centre. Inclusion 30. It is very nice when both the HKMA and the banking industry have broadly similar interests, as is the case with professional skills. But, inevitably, our aims do not always coincide. And this brings me to the next area of my discussion – and that is “financial inclusion”.

Among the buffers Hong Kong banks have built up are a capital adequacy ratio of above 20%, and a liquidity coverage ratio of above 150% – well above international standards. The classified loan ratio is just 0.56%. 2/5  BIS central bankers' speeches  22. At the same time, with a return on equity of 13% last year, the Hong Kong banking industry is also among the most profitable in Asia. Capacity 23. Next, I would like to look at the capacity of the industry – skills and training. 24. It is not a coincidence that one of the financial industry’s main professional bodies – the cohost of today’s gathering – is the Hong Kong Institute of Bankers, which was founded back in 1963 to enhance the profession. 25. Everything in the financial services industry goes back to people. Since the financial crisis 10 years ago, we have seen a significant increase in the complexity in capital, liquidity, risk management and other requirements. On top of that, we have rapid developments in technology and related areas like cybersecurity. The industry has to constantly upgrade its professional expertise and standards just to keep pace. 26. But unlike some other financial sectors, our regulatory framework for banks focuses on authorizing corporate entities. There is no formal licensing regime that applies to individual banking practitioners. Our approach has therefore focused on encouragement and guidance – and to benchmarking.