samchain/econo-pairs-v1 huggingface dataset:
Confidence in monetary policy depends on whether we succeed in anchoring inflation expectations and thus provide the economy with a nominal anchor. A credible nominal anchor is important to ensure that economic agents are able to differentiate between changes in relative prices and changes in the nominal price level. Changes in relative prices for goods and services are an important bearer of information about the degree of resource shortages and provide signals to investors, producers and households. Without a nominal anchor, it is more difficult for households and enterprises to make consumption and investment decisions. There is greater uncertainty surrounding real returns on nominal investments. This may increase risk premiums in financial markets. The absence of a nominal anchor may therefore result in unsound decisions and considerable fluctuations in output and employment and inflation. The interest rate will then have to be used more aggressively to stabilise output and inflation. Monetary policy may become less effective. Very low inflation over a longer period increases the risk of the economy moving into a negative spiral with real economic costs. Even if low inflation initially reflects favourable supply-side conditions, it may lead to a demand-driven downturn if economic agents choose to delay investment and consumption on the basis of expectations of continued low or falling prices. Orienting monetary policy with a view to achieving the inflation target within a reasonable time horizon and thereby providing a nominal anchor will be a safeguard against such a development.

Mr. George gives an address on recent changes in the international financial and economic environment Speech given by Mr E A J George, Governor of the Bank of England, at a Dinner with the Lord Mayor for Bankers and Merchants of the City of London on 10 June 1999. My Lord Mayor, Mr Chancellor, My Lords, Aldermen, Mr Recorder, Sheriffs, Ladies and Gentlemen. When we were last here for this splendid occasion I suggested that we were living in a dangerous international financial and economic environment. These were strong words for a central banker – but perhaps not strong enough. That environment rapidly became worse through the autumn, so that by around the time of the IMF Annual Meetings in October there was a good deal of talk about global financial meltdown and impending world recession – which was not simply journalistic hyperbole. Since that low point things have certainly improved. The hectic scramble for financial asset quality and liquidity following Russia’s default and the near collapse of LTCM – an exceptionally highly geared hedge fund – failed to uncover fatal weaknesses elsewhere in the financial system, and lenders and investors have gradually regained some of their appetite for risk. Fears of a general credit crunch in major industrial countries quickly receded; and sentiment towards the emerging markets has improved, with growing evidence of recovery in the original Asian crisis countries and a better than expected outcome in Brazil.
The ongoing work of the Committee The ongoing work of the Committee is noteworthy. It includes an evaluation of the scientific bibliography on financial literacy, as well as a review and assessment of international initiatives for the promotion of financial literacy. The Committee, with the help of CBC staff, has also conducted an in depth econometric analysis of the results of the CBC's sampling survey in order to representatively assess the level of financial literacy in Cyprus, as well as to identify the groups that are in greater and urgent need of financial education. For instance, people who studied financial subjects at high school scored higher in the survey than those who focused on classical studies with 5.2 out of 7, compared to 4.5 out of 7 in knowledge questions; 5 out of 7 being the minimum score for adequate knowledge as set by the OECD. The CBC had carried out a sampling survey in 2018 to better identify the extent of the financial literacy problem, covering all groups of the population at a national level. This survey followed another similar survey, which focused on university students, namely, a survey by Andreou and Phillips (2018)1 which showed that the low level of financial literacy among university students appears to be a major problem in our society. The CBC survey, which as I mentioned covers all segments of the population, is instrumental in deriving useful results on financial literacy in Cyprus.

Therefore, financial literacy can be seen as a key element for a wellfunctioning economic system and thus as a prerequisite for sustainable economic growth and financial wellbeing of individuals. The establishment of the Ad-Hoc Committee to prepare the National Strategy for Financial Literacy in Cyprus Recognising the seriousness of the issue, state authorities around the globe have taken actions in order to enhance financial literacy among the wider population. A typical response to the challenge, is the establishment of a National Strategy for financial literacy in which a number of public and private stakeholders are involved. Up until recently, no such organised effort had been initiated in the case of Cyprus. Even though a number of initiatives have been undertaken by various stakeholders, these significant and valuable efforts have been limited in scope and without the necessary coordination for a truly effective impact on society as a whole. To this end, following an invitation by the Parliamentary Committee of Education and Culture, an Ad-Hoc Committee for the formulation of a National Strategy for the Promotion of Financial Literacy and Financial Education in Cyprus was established in December 2020. The Committee consists of members from the Central Bank of Cyprus (CBC), which also has the coordinating role, the Ministry of Finance, the Ministry of Education, the  1/4  BIS - Central bankers' speeches  Cyprus Securities and Exchange Commission, Dr Panayiotis Andreou (Cyprus University of Technology) and Dr Andreas Milidonis (University of Cyprus). The Committee receives administrative and analytical support from the CBC.
During the period 2008–2012, the rate of inflation has exceeded the inflation target in the United Kingdom. However, this is compatible with an optimal monetary policy when unemployment, as in the case of the United Kingdom, exceeds a long-run sustainable rate. BIS central bankers’ speeches  1  average inflation has thus been significantly lower than these expectations. According to established theoretical and empirical research concerning the link between inflation and unemployment – the so-called expectations-augmented Phillips curve – this means that the average rate of unemployment since 1997 has been higher than necessary, according to my calculations approximately 0.8 percentage points too high, which is equivalent to about 38,000 unemployed people in Sweden (Svensson 2012b, d).3 Monetary policy is an inappropriate instrument for limiting household indebtedness Monetary policy is thus tight at the moment, with a higher real short rate than abroad, an inflation rate significantly below the target, and unemployment well above a reasonable longrun sustainable rate. A possible explanation for this tight monetary policy is that it has aimed to limit household indebtedness, measured as the ratio between debt and disposable income.4 However, as I will soon explain in more detail, according to established theoretical and empirical research, monetary policy has only a very limited short-run impact on the household debt ratio and – when inflation is low and stable – no long-run impact. A tight monetary policy thus instead leads to inflation being too low and unemployment being too high, without having a tangible effect on potential risks arising from household indebtedness.

Bank lending to business has risen more sharply in France than anywhere else in Europe: up 4.5% in annual terms at end-November 2015, compared with a rise of 1% in Germany, and 0% in Italy. Moreover, interest rates in France are among the lowest in Europe. Interest rates on new bank lending are currently below 2% on average, compared to 5% in 2007. However, I would like to stress the fact that access to cash loans is more difficult for very small enterprises. Their fragile financial position may be one reason; but there is an ongoing misunderstanding with the banks that the latter must seriously address. French households’ savings must also adjust to the low interest rate environment. This is an opportunity to encourage more “risky” and more long-term investments, both in the interest of investors themselves and of our economy. Today only 31% of French households’ financial investments are made up of risky assets, against 45% in the euro area. This requires taking action in two directions. First, the decrease in interest rates should be gradually passed on to risk-free investment returns – this is why I proposed lowering the rate on the PEL, the French housing savings plan, this is also why we must resolutely continue to lower the returns on life insurance invested in euro funds. Second, new products should be developed: probably less liquid, with or without a capital protection over the long term, and possibly offering the best equity performance over time.
Indeed, one of the key benefits of globalisation over the past several decades is that the freer flow of goods and services, people and capital, ideas and information, has served as vehicle for the transmission and diffusion of new technologies across borders. Other things equal, this should have accelerated catch-up between countries operating at and inside the technological frontier. 65  Other things, however, have not been equal. Penetration rates of new technologies, once adopted, tell a different tale. They suggest that, over time, there has been a divergence between frontier and non-frontier countries. In other words, the intensity with which new technologies have been used has expanded more rapidly in frontier (especially Western) economies than in non-frontier (non-Western) ones. This will have retarded catch-up between the two blocs. It is a less encouraging story about the diffusion of innovation. With the intensive and extensive margins of diffusion pushing in opposite directions, which has won out? It seems to have been the forces of divergence: slower rates of penetration of new technologies have more than counter-balanced faster rates of adoption across countries. This has shown up in levels of productivity between frontier and non-frontier which, since around 1980, have if anything diverged. Chart 7 illustrates that. It compares levels of productivity across 44 countries since 1950 relative to the frontier country (the US). Convergence prior to 1980 has given way to divergence subsequently.

And even if they could replicate them, humans might still prefer humans to carry them out. The future could see a world of work in which EQ rivals IQ for skill supremacy. Professions involving high degrees of personal and social interaction – such as health, caring, education and leisure – could see demand rise. Indeed, it is possible the balance between cognitive and social skills might alter significantly even among jobs which traditionally have been cognitively-intense. Take medicine. The doctor of the future might be valued far less for their clinical competence in diagnosing illness and prescribing solutions. In a world of individual medical records and data-hungry diagnostic algorithms, much of the process of diagnosis and prescription might fall to machine rather than human. Indeed, the UK Prime Minister has recently suggested a strategy to deliver just that. 60  But that is unlikely by itself to eradicate the need for doctors. Patients are still likely to want to discuss their diagnosis and prescription. And they will want this advice delivered personally and empathetically. In surveys of patient satisfaction it is a doctor’s bedside manner, rather than clinical competence, that matters most. 61  In future, that balance between social and clinical skills may shift further. And, most likely, those  social skills will be demanded from flesh-and-blood rather than robo-doctors. If both the nature of a career and the skills it requires are changing, does this carry implications for educational institutions? That seems likely.
Conclusion As I observed to begin with, the claims that the Riksbank has introduced new parallel targets in addition to the inflation target are wrong. The fact is that the Riksbank conducts a flexible inflationtargeting policy and within the framework for this we take into account risks of large fluctuations in the real economy and inflation over a long period of time. Historically, low interest rates over a long period of time risk leading to households borrowing too much, which pushes up house prices. Abrupt price corrections later on may subdue real demand and inflation. To reduce the risk of such imbalances building up, we can choose to raise the interest rate slightly more quickly than is warranted by the inflation forecasts. The positive effects in the form of a lower risk of future abrupt corrections must be  1  The interest rate burden for indebted households was just over 5 % in 2004. BIS Review 62/2006  7  balanced against the losses in the form of lower demand and inflation that will arise in the short term. However, one problem is that such risks cannot be quantified. This increases the difficulty for a central bank to be open and clear regarding the bases for its monetary policy decisions. Maintaining confidence in the inflation-targeting policy is a central bank’s most important task and it sets limits as to how many considerations monetary policy can take. 8  BIS Review 62/2006

Its first stage, which included the expansion of the rate corridor, improved applications of the bonus-malus coefficient, and an update of driving licence categories, has already reduced the cost of OSAGO in nearly all regions, with a countryaverage decrease in the policy cost totalling 4%. The next stage involves rate personalisation for drivers; it should ultimately solve problems faced by OSAGO policy holders. Firstly, it should put an end to the injustice when careful and responsible drivers have to pay for those who drive in a 3/7  BIS central bankers' speeches  risky manner and often have accidents. Microfinance organisations The microfinance market faces the same fair criticism now as in recent years because of usurious interest rates, and incredible fines and penalties. We came up with a serious tightening of the regulation of microfinance organisations. Currently, there are half as many such organisations in the market as there used to be five years ago. From now on, the law caps interest rates at 1% per day, while the full cost of borrowing with all fines and penalties included is limited to 1.5 times the loan amount. These conditions will allow borrowers to use microfinancing to settle their temporary financial problems without running the risk of ending up in an even worse situation. Moving forward, we believe that one of our priorities is to prevent losses from illegal operations in the economy and damages from fraud suffered by households.
The recovery in output has come in step with a more expansionary behaviour of employment than might have been foreseen on past patterns. According to official Spanish labour force data, from the second quarter of 2014 to the same period this year numbers employed are estimated to have increased by more than half a million, making for an appreciable reduction in the unemployment rate. 2  BIS central bankers’ speeches  The greater flexibility enjoyed by firms, following the reforms approved in 2012, in adjusting their working conditions to the macroeconomic and competitive setting has no doubt provided for the creation of new jobs and, therefore, for the expansion of economic activity. If the dynamics of the past 18 months hold, the increase in employment might place the unemployment rate at around 20% in the fourth quarter of 2016. As to prices, the increases in activity and employment have been accompanied by very low inflation rates. The fall in oil prices has prompted declines in the general level of prices over much of the past year. Yet core inflation, the indicator that excludes energy and fresh food prices, has moved on a rising course over the year. And while still at moderate levels, this indicator’s recent trajectory suggests the risks of entering an overly prolonged period of very low inflation have progressively been dispelled. While in July the overall price index posted growth of 0.1%, influenced by fuel prices, inflation at the end of the year is expected to be around 1%.

•  These are stringent requirements which we can only honour with a consistent focus on the ultimate goal of regulation and supervision, namely a stable financial system. I would therefore like to end my list of requirements with a warning. Under no circumstances should regulation be misused to support economic development. That would blur responsibilities and shift tasks from the political domain to supervision. New rules for the banking industry go hand in hand with burdens. With a multitude of new rules, the sum of those burdens can impair the banking industry’s ability to function properly. This must be taken into account and solutions must be found, but this cannot be done by ignoring risks. The past has shown us far too often that there is no point in ignoring risks to banks – in the medium and long term, they always come back like a boomerang. 4. Current status and further need for improvement  Where do we currently stand in Europe in this respect? Do we need more regulation, or do we need less? Since 2009, the regulatory framework has undergone further extensive development and has been decisively improved upon at both the international and the European level.
This increases the leverage of their customers, exposing the banks to increased credit risk if prices fall. This of course is what has happened in the property market in Hong Kong, although the banks have so far been protected by their prudent lending policies and by the fact that much of their property exposure is related to the residential market. Notwithstanding the good outcome so far, we believe that the Asian crisis has reinforced the need for restraint in the growth in property lending and in other forms of asset-based finance, such as share margin financing and taxi loans. BIS Review 28/1998  ˝  -6-  • The third lesson is that increased disclosure and transparency are necessary to reduce market uncertainty and limit the risk of contagion. The disclosure of bad news can be uncomfortable, but it does serve the useful function of putting pressure on management to run their business prudently and to deal quickly with any problems which may arise. Hong Kong has made considerable progress in recent years in terms of disclosure of information by banks. We intend to build on this during the course of 1998 by recommending new measures such as more disclosure about non-performing loans and more specific guidelines for income recognition by banks. Review of the Hong Kong banking sector 22. We will be building these lessons into our supervisory approach during the course of 1998.

The U.S. monetary policy framework that exists today has proven reasonably good at laying the foundation for price stability that is a necessary condition for sustaining growth at full employment over time. Although the world of central banks is still characterized by substantial diversity in the regimes they operate under, the actions of central banks reveal on average a much greater appreciation of the benefits of price stability and a greater willingness and ability to achieve it. These gains in inflation performance have been supported by a range of factors. Luck in the form of smaller shocks, technological change, other policy actions that contributed to more rapid economic integration and greater flexibility in how economies adapt to change, and greater financial resilience have all contributed to this improvement in inflation outcomes. But monetary policy seems likely to have played a decisive role, and part of that improvement reflects the sustained improvement in the institutional framework within which central banks operate. Credibility, particularly in monetary policy, takes time to establish, and can be easily compromised. It comes not just from what you say you will do as a central bank, but from what you actually do over time, and the results of those actions. It depends importantly on the competence and courage of those asked to lead central banks, on their capacity to be flexible and creative in response to our rapidly changing world, on their ability to communicate effectively and to acknowledge uncertainty.
But, as it showed just recently in making a modest reduction in interest rates, the ECB is sensitive to changes in the balance of risks around those judgements. So, too, are we in the United Kingdom. In our case we have been fortunate, since being driven out of the ERM in 1992 and moving to a symmetrical inflation target, in enjoying a sustained period of relatively stable economic growth. In fact we've experienced the longest period of continuous quarter by quarter growth since quarterly records began, with average annual growth at around 3% over the whole period compared with our long term trend rate of 2¼-2½%. Employment has steadily increased, and unemployment has fallen to its lowest level for 25 years. Meanwhile the rate of inflation has been consistently relatively close either side of the Government's 2½% target – the lowest and most stable rate of inflation that most of us in this country can remember. Domestic demand growth in the UK has remained relatively robust into this year, but we too are affected by the US slowdown and by the associated weakening of equity prices. And we have had a new problem of our own in the form of Foot and Mouth Disease, the effects of which have gone a good deal wider than just the agricultural sector. These new developments were likely to have a dampening effect on overall demand pressure within the economy, both through their direct impact and through possible damaging effects on confidence.

This is an essential element of robustness and, for outside investors, provides a strong guarantee of long term solvency. Its aggregate fiscal balance (with a 2010 deficit at 6,3% of GDP) is the most favorable of all advanced economies ( US is at 10,5%, UK at 9,6% and Japan at 7,7%). The same holds true for public debt which stands at 92% of GDP similar to 93% in the US versus 200% in Japan. But, of course, markets, and analysts do not look always at the euro area as a whole. Because fiscal policies remain national, they tend to assess separately the situation of public finances in each individual country. While most analysts would acknowledge the magnitude of the efforts undertaken, some tend to take a very pessimistic view about future outcomes. As I understand it, that pessimism can be articulated around two lines of argument. First, the amplitude of fiscal consolidation will negatively affect growth for a very long time making it impossible to service debt and leading unavoidably to some kind of restructuring. And second, this economic stagnation will trigger strong political reaction which, ultimately, would put the very existence of the euro area at risk. In short, the whole reasoning is based on the euro area, and more specifically, its periphery, being unable to return to normal growth anytime in the foreseeable future. This is a very dramatic assumption and it matters a lot because, as we all know, the dynamics of debt are extremely sensitive to forecasts about future growth.