samchain/econo-pairs-v1 huggingface dataset:
Our overhaul of RTGS is helping to reduce complexity and costs in other areas as well. Take cross-border payments, where the Bank is leading by the adoption of emerging global standards for payments messaging and by working with other central banks and the private sector to explore the scope for cross-border payments in central bank money through synchronised national RTGS systems. This all could increase the speed and safety, as well as lower the costs, associated with cross-border transactions to support purchases and travel overseas. When coupled with the capture of richer payments data made possible by its renewal, RTGS will help support innovative services for the more effective management of personal and company finances. These benefits will be amplified by the UK’s ambition in implementing the Open Banking standard– under which the largest banks will be required to make customer data available to other existing firms and innovators, if the customer demands. In turn, this will help improve aggregator, comparison and switching services. Taken together, these advances will support innovation that allows you to manage your finances seamlessly, from tracking how much you spend on beer and books, to managing your future savings and current loans.

In the meantime the United Kingdom will prepare both for the introduction of the euro on the Continent from next January and for our own eventual participation. BIS Review 29/1998  ˝  -4-  The fact is that monetary union will have a major effect on this country whether or not we are a part of it, and it is clearly in our national interest as well as the interest of the participating countries, that it should be successful. We benefit in macro-economic terms from a stable and prosperous Europe just as Continental Europe benefits from a stable and prosperous United Kingdom - and the same mutual interest, of course, applies between Europe and its Mediterranean neighbours. We can contribute to that success in at least three ways. Most immediately the Government has undertaken to use its current term as President of the European Union Council of Ministers to promote an orderly decision-making process during the crucial next few months. Not being part of the first wave leaves us free to concentrate on that, and while there are issues - such as the vexed question of the Presidency of the European Central Bank - which only others can resolve, the UK’s role is to give them every opportunity to reach timely decisions. More fundamentally, we can contribute to the success of the euro, even from outside by continuing to pursue policies directed towards macro-economic stability and supply-side flexibility in parallel with those persuaded within the euro area.
Figure 12 Risk premiums in emerging economies (1) (basis points) Sovereign bonds (2) Corporate bonds (3)  350  350 800 Latin America  Latin America (4)  300  300 700  250  250 600  Europe (right axis)  Europe (6)  200 500  200 Asia (5)  150  150 400  100  100 300 Chile  50 14  15  16  50 17  200  Chile  Asia  14  15  16  17  Net capital flows to Latin America (billions of dollars, moving month)  1.400 5 4 1.200 3 1.000 2 1 800 0 -1 600 -2 400 -3 -4 200 -5  5 4 3 2 1 0 -1 -2 -3 -4 -5  Equity  Bonds 15  16  17  (1) Dotted vertical line marks statistical cutoff date for the December 2016 Monetary Policy Report. (2) Measured by 5-year CDS premiums. Simple average of each region' countries. (3) Measured by the CEMBI. (4) Includes Brazil, Colombia, Mexico, Panama and Peru. (5) Includes China, Indonesia, Malaysia, the Philippines and Thailand. (6) Includes Bulgaria, Croatia, the Czech Republic, Hungary and Turkey. Sources: Bloomberg and Emerging Portfolio Fund Research.

16  Figure 8 Bank credit survey (*) (average for four moving quarters)  Demand  Supply  100  100  100  100  50  50  50  50  0  0  0  0  -50  -50  -50  -50  -100  -100  -100  -100  12  13  14  15  12  16  Enterprises  13  14  15  16  Real estate and building firms  Persons  (*) Difference between percentage of respondents that said lending standards had become less stringent to some extent and percentage of respondents that said that lending standards had become more so to some extent. Source: Central Bank of Chile. Gráfico 9 Citigroup surprise index  Manufacturing prospects (*)  (mean of 25 moving weeks, pivot=0)  (diffusion index, pivot=50)  70  70  60  60  35  35  55  55  0  0  50  50  -35  -35  45  45  -70  40  -70 12  13  14  15  16 U.S.  17 Eurozone  40 12  13  14  15  16  17  Japan  (*) Measured using the purchasing managers' index (PMI). Source: Bloomberg.
Moreover, it is quite possible that pass-through may exceed 100% if companies making domestically produced goods and services are able to use the increased competitiveness associated with sterling’s depreciation to widen their margins.10 So there are a number of potential channels through which developments abroad may affect domestic inflation. But to repeat a point I made up front: inflation is home made. If we think that global price pressures are likely to push up on CPI inflation for an extended period, UK monetary policy will need to be set in such a way as to reduce domestically-generated inflation, and so leave room for these external price pressures. And to respond to an argument I have seen made by a number of commentators in recent months. No: raising Bank Rate will not directly dampen global inflation. But it can ensure that it does not lead to high and persistent domestic inflation. The second upside risk to inflation that I would highlight is if the prolonged period of above target inflation erodes the public’s confidence that the MPC will keep inflation close to target. Inflation has been above target for 49 out of the past 60 months. Over that 5 year period, inflation has averaged 2.8%. Inflation is likely to remain above target for the next year or so. This suggests that by mid 2012, inflation is likely to have been above target for the best part of six and a half years.

Banks were essentially incentivised to focus on aggressively originating loans which were of compromised quality due to lowered underwriting standards. Investors of such bundled risks had then become far removed from their origins. Information was no longer transparent and risks could no longer be fully understood. Economic agents seeking larger returns were in turn encouraged to achieve them through greater leverage, thereby amplifying the vulnerabilities of the financial system and wider economy. 2  BIS central bankers’ speeches  Much attention has also focused on the misaligned incentives of financial services professionals as reflected by the compensation structures that rewarded short-term performance and inadequate reprimand for overzealous risk-taking. This, I believe, was also symptomatic of the growing disembodiment of finance from its consumers and the wider economy. When social bonds are reduced to just profit measures, it provides a weak foundation for sustainable finance. Outcomes for finance need to be measured based on end services to the real economy, reflected for example, by an entrepreneur’s successes or the financial well-being of retail clients. The detachment of finance from its function in serving the economy, results in clients being viewed as opportunities for extracting value and transactions as bets on financial outcomes. The prevalence of mis-selling of complex financial products exemplifies this shift in trend. Future finance: re-anchoring finance to the real economy Allow me now turn to some of the imperatives for re-anchoring finance to the real economy.
I begin with a brief description of international developments over the next few years and then present my view of Swedish monetary policy in the period ahead. Abroad There are many similarities between the situation in the autumn of 2008 and the spring of 2011. For the world as a whole we once again expect to see a GDP growth of over 4 per cent per year, although there are considerable differences between different regions. Growth is continuing in the United States and Europe although, due to the financial crisis, at a slower rate than after a normal downturn. We expect to see a GDP growth of around 3 per cent per year in the United States and of just below 2 per cent per year in the euro area, with an inflation rate of almost 2 per cent in both areas. But the emerging economies are growing rapidly (see Figure 16). The strong increase in demand in the emerging economies is pushing up the demand for energy and commodities. There has therefore been a substantial increase in crude oil prices and the prices of other commodities recently. There is a risk that these prices will continue to rise and that inflation will therefore also rise in both the emerging markets and the developed countries. Inflation expectations have also increased in recent months and there has been an upward shift in monetary policy expectations (see Figure 4).

I did subsequently enter reservations in favour of an increase in the repo rate several times in 2007 when the majority on the Executive Board decided not to increase it.9 The second thing is that I accepted such a low repo-rate path the first time we presented our own path in February 2007. This was just before the completion of wage negotiations for large parts of the labour market and it sent the wrong signal to the social partners; that is that wages could be significantly increased without consequences in the form of too high inflation. Wage expectations had then risen to the highest level since the mid-1990s. But we were too focused on all the work that was required to produce and decide on the repo-rate path for the first time for me to adequately realise the consequences of the decision. When visiting different venues to speak about monetary policy, I have often been asked why we raised the repo rate from 4.50 to 4.75 per cent in September 2008, just before the financial crisis hit Sweden with full force. The members of the Executive Board were divided on the issue, with three for (including me) and three against and Stefan Ingves had to use his deciding vote to push the decision through. I usually say that with the information we had at the time I would have made the same decision again.
The policy was summarised in a single sentence in our explanatory document:6 “In essence, the MPC judges that, until the margin of slack within the economy has narrowed significantly, it will be appropriate to maintain the current exceptionally stimulative stance of monetary policy, provided that such an approach remains consistent with its primary objective of price stability and does not endanger financial stability.”  4  For example, Gagnon, Raskin, Remache and Sack (2010) estimated that the Fed’s first round of Large Scale Asset Purchases reduced 10-year term premium by somewhere between 30 and 100 basis points, with most estimates in the lower and middle thirds of this range. 5  For instance, Neely (2010) finds evidence of significant spillovers from the Federal Reserve’s LSAPs to other advanced economy sovereign bond markets, with yields falling on average by around half the associated fall in US 10-year yields, while Moore, Nam, Suh and Tepper (2013) find that emerging economy government bond yields fell by around a sixth. 6  Monetary Policy Trade-Offs and Forward Guidance, Bank of England, August 2013 (http://www.bankofengland.co.uk/ publications/Documents/inflationreport/2013/ir13augforwardguidance.pdf)  BIS central bankers’ speeches  5  In case that’s not sufficiently simple, let me put it the other way round: we remain committed to returning CPI inflation to its 2% target in line with our remit but, in doing so, we will not act in a way which would risk choking off the recovery prematurely, given the potential for a substantial amount of spare capacity in the economy.

Due to this distinctive feature of the Icelandic financial system, even the short-term benefits to households and business from a more accommodative monetary stance could prove to be minimal or even negative. However, a tight fiscal policy can contribute to a softer landing. Buoyant demand and soaring business profits have generated revenues for the Treasury this year far in excess of forecasts. A similar position could be on the cards in 2006. It is vital for both central and local government authorities to respond to this boost in revenues not by easing their restraint on the expenditure side, but rather by planning to achieve increased surpluses, which appears to be the aim behind the budget currently before Parliament. As announced recently, a change will be made to monetary policy implementation whereby interest decisions will be made on six fixed, preannounced dates next year. Three will coincide with the publication of Monetary Bulletin. On all these dates, the Board of Governors will announce its decision at a press conference, irrespective of whether the policy rate is changed or not, together with supporting arguments. This change will make monetary policy even more transparent. The Central Bank can thereby be said to have increased its formal interest rate decision dates from four to six, because the publication dates for Monetary Bulletin were already recognised as such in effect. Nonetheless, the Board of Governors can of course decide to change interest rates in between the preannounced dates if this is considered justified.
The recent fall in oil prices will ease the pressure on firms’ input costs allowing them to restore profit margins without an increase in output prices. Nevertheless, according to surveys, businesses are more likely to raise prices than during the NICE decade. And in their own survey, the Bank’s Agents found that half of those (largely manufacturing) firms which had experienced some erosion of margins were now intending to raise prices. 2  2  Not so bad: not of the same order but also desirable. Speech at the Eden Project, Cornwall, October 2004. BIS Review 94/2006  A change in oil prices does not in itself tell us where overall inflation is headed in the medium term. For that, we need to look at the balance between money spending and potential supply. The growth of total money spending in the economy has picked up in recent quarters – nominal domestic demand rose by 6% in the year to Q2. And the growth rate of broad money and credit in the economy is now higher than at any point since 1990. There is, however, great uncertainty about potential supply. The possibility of continuing migration from the new member countries of the European Union and elsewhere is likely to increase the potential labour force available to UK employers. And it appears that more people of pensionable age are choosing to continue to work.

At the same time, sharp rises in the prices of oil and other commodities reduced the income households had available to spend on more discretionary items and put downward pressure on those prices. Not surprisingly, that loss of spending power was one of the contributory factors to the standstill in consumer spending in the second quarter of last year. But since then consumer spending and output growth in the economy have picked up, and in the first half of this year were growing at around their long-run average rates. After a prolonged period during which consumer price inflation was below its 2% target, inflation has been above target for nine out of the past thirteen months. So what are the challenges facing the Monetary Policy Committee as it tries to bring inflation back to the 2% target? Since their peak in early August, oil prices have fallen by around a quarter. In due course, that will ease the pressure on petrol prices and fuel bills, including gas and electricity. The direct impact was seen in the producer price data published yesterday, and will be seen in CPI inflation over the coming months – making it less likely that I will have to write an explanatory letter to the Chancellor than was the case two months ago – although the anticipated fall in inflation for September may not persist for long. Over the past year, profit margins, especially in manufacturing, have been squeezed and outside the oil sector the share of profits in GDP has fallen.
If a central bank is committed to its price stability mandate and given enough time for the monetary transmission mechanism to work, there should be no reason why we should not be able to meet our inflation targets. However, there are two caveats here: –  2  In pursuit of its inflation target, a central bank can and might be forced to engage in un-conventional monetary policy tools. This is very much the case when central banks are flirting with the limits of conventional instruments of monetary policy (zero lower bound of policy rates or extreme risk aversion in the financial system). As we know, un-conventional tools can be both distortionary and present us with the risks of unintended consequences in terms of financial stability. Under certain premises, the risk associated with employing un-conventional monetary policy tools might be sufficiently strong to revisit the scope or the speed of fiscal consolidation;  BIS central bankers’ speeches  –  –  A prolonged undershooting of the inflation target might decouple inflation expectations from the inflation target of central banks requiring a more active monetary policy. This is not an argument against the policy mix per se; rather, it is a reminder of the crucial role that central bank communication and management of expectations should have. Third, we should avoid burdening monetary policy with too many goals or risk losing our credibility. With public finances highly indebted, politicians have been only too happy to place the burden of economic recovery on central banks.

This brings me to the specific topic of this panel: conducting monetary policy when fiscal space is limited. BIS central bankers’ speeches  1  The aftermath of the recent crisis left all economies in the region struggling to reignite economic growth. Most of the countries are doing this while at the same time facing the pressing need to consolidate their public finances. Albania is no exception. Although the repercussions of the crisis were not so severe, economic growth has almost halved compared to its pre-crisis trajectory. Aggregate demand is unable to generate full employment of labor and capital, while CPI inflation has continuously undershot our target. In this economic landscape, our monetary policy has taken an ever more expansionary stance: the policy rate – now at 1.25% – is at a historical minimum, which would have been unthinkable a few years ago; we have increased our liquidity injection operations as well as expanded the range of accepted collateral; and we have also made use of conditional forward guidance as an alternative instrument of monetary policy. On the other hand, our public debt jumped from around 55% of GDP in 2008 to around 72% of GDP today, on account of the joint action of automatic stabilizers and some degree of countercyclical fiscal stimulus. However, this fiscal expansion was thought to be unsustainable, especially given the difficult financing conditions in international financial markets.
So, I will now focus on our structural lag in terms of growth. It is most obvious with China, but the United States is more comparable with Europe. Allow me to explain my approach with a quote from Alexis de Tocqueville: “It is not (…) merely to satisfy a legitimate curiosity that I have examined America; my wish has been to find instruction by which we may ourselves profitiii.” Tocqueville wrote these words two centuries ago and he was comparing democratic institutions. Today, we Europeans can be proud of our democratic traditions. However, over the past 20 years, the growth gap between the United States and the euro area has been widening:  Cumulatively between 1999 and 2019, the real GDP gap amounts to 20 percentage points. Regarding GDP per capita, the cumulative gap is 7 percentage points over the same period. Before the Covid crisis, the gap was also pronounced in employment:  Page 3 sur 14  On top of that, the share of the euro area in global GDP has been declining over the past 20 years, owing to demographic changes and the catching-up of emerging economies, although, this has been a common problem for all advanced economies. The growth gap between the United States and the euro area has mostly widened during crises, in 2008 and in 2011, and more recently with the Covid crisis.

All of these help the public to understand our assessment of economic conditions through the lenses of these different types of forecasts. When asked about the trajectory for the monetary policy stance, I always point out that it is data dependent. The FOMC calibrates the stance of monetary policy to best achieve our twin objectives of price stability and maximum sustainable employment, taking into account our forecast for how the economy is evolving. This forecast reflects the ongoing flow of the data. Data releases that are close to our expectations have little additional impact on the forecast, while data releases that deviate significantly from our expectations can lead to more significant revisions of the forecast. It is, therefore, important for market participants and households to be able to follow the data along with the FOMC and to understand how we are likely to interpret and react to incoming data. While market analysts readily have access to economic and financial data, this access is not widely available to everyone. To help fill this information gap, for the past year we have been  BIS central bankers’ speeches  1  making available on our website a monthly publication called U.S. Economy in a Snapshot. This publication contains a set of key data charts as well as commentary by our staff economists. The purpose is to provide interested readers easy access to clear and concise presentations of important economic information. The associated commentary provides some pertinent observations one might draw from the data.