samchain/econo-pairs-v1 huggingface dataset:
Therefore, it is important for us to take care of financial system stability as well when we conduct  2  BIS central bankers’ speeches  monetary policy. The Bank of Thailand has been closely monitoring the expansion of private sector’s loans and assessing ability of debt repayment of the private sectors, especially the middle and the low income groups. Second, on exchange rate policy, the main challenge is that the Thai baht has been on an appreciating trend due to various factors, including capital inflows surge into the region, structural change in the world economy, growth differential between advanced and emerging economies as well as accommodative monetary policy in advanced economies. Generally, allowing the exchange rate to be determined by the market can serve as an automatic stabilizer in the short-term and as an important price signal and catalyst for structural change in the long term. So, as the first line of defense, the exchange rate should be determined by market mechanism and from both the market and our own assessment, the Thai baht still remains broadly in line with economic fundamentals. However, the BOT stands ready to use policy instruments at our disposal to prevent and manage dysfunctional market conditions, excessive speculation or exchange rate overshooting. It should be noted also that, the baht appreciation at this juncture provides an opportunity for businesses to upgrade their technology and productivity.

The Chinese economy, in particular, was in a sweet spot with rebounding growth and low inflation, with room for further public investment. Asian economies also performed well mainly due to strong domestic demand. Last year, the Thai economy grew robustly at a higher-than-expected rate of 6.4 percent. Even though the impact of the still weak global demand became more apparent in the latter half of the year, spillovers beyond merchandise exports and export-oriented manufacturing production were limited. Factors supporting domestic economy include private reconstruction investment after the flood, while domestic consumption was supported by favorable wage and employment condition as well as government stimulus measures. Inflation in 2012 remained low at 3 percent, while core inflation averaged at 2.1 percent which was well within the Bank of Thailand’s target range. This year we expect growth momentum for the Thai economy to continue, amidst remaining uncertainties in the global economy. The US has managed to avoid the socalled fiscal cliff, although uncertainties surrounding the sequestration process still remain. Structural reforms in the euro area continue slowly but on course. Japan also has an optimistic outlook, given a series of government stimulus measures to pull the country out of deflation. Improving outlook for the global economy should underpin a gradual recovery in export for Asian economies, including Thailand. We have forecasted the GDP growth this year at 4.9 percent. However, given a stronger than-expected GDP growth in 2012, this forecast is likely to be revised up for the next release in April.
In their solution to the debt crisis, our political leaders must develop an entirely new structure of incentives for private businesses and investors to put their money to work creating jobs here at home. Only fiscal authorities have the power to affect this outcome. Monetary authorities, like me and my colleagues on the Federal Open Market Committee of the Federal Reserve (FOMC), have limited influence. We can fill the gas tank with attractively priced fuel – abundant and cheap money – needed to propel the economy forward. But we cannot trigger the impulse to step on the pedal and engage the transmission mechanism of job-creating investment by the  2  2  See Collected Short Stories, by William Somerset Maugham, New York: Penguin Books, 1972. BIS central bankers’ speeches  private sector. This is the province of those who write our laws and regulations – the Congress of the United States. I firmly believe that the Federal Reserve has already pressed the limits of monetary policy. So-called QE2, to my way of thinking, was of doubtful efficacy, which is why I did not support it to begin with. But even if you believe the costs of QE2 were worth its purported benefits, you would be hard pressed to now say that still more liquidity, or more fuel, is called for given the more than $ trillion in excess bank reserves and the substantial liquid holdings above the normal working capital needs of corporate businesses.

If I see inflation continuing to rise and, most importantly, inflationary expectations beginning to spread, I will be the first out of the box to advocate the removal of the substantial monetary accommodation now in place. I cannot think of anything more damaging to the welfare of hard-working Americans who have jobs, those who are unemployed and barely eking out a living, retirees who are earning minimum returns on their savings, or any consumer already stretched thin, than to have their purchasing power reduced by still higher inflation. Yet even though I am a central banker and am professionally disposed to being a worrywart, I am more optimistic about the economic outlook than the consensus. American businesses and workers have made very important improvements in their efficiency and competitiveness that will aid growth. If we can add to that a sound long-run budget deal, the recovery could gain even more strength. We are a resilient people. I know it is fashionable to think we have somehow been infected with an economic stasis with no way out, but as a Texan and an American, I am culturally unable to accept that view. During the Q&A that followed a recent speech of mine abroad – in New York – a questioner cited the sickly economic pace of the first quarter and then recited the consensus view that very weak growth will likely ensue for the rest of the year and beyond. In response, I cautioned that forecasting based on current trends can be very misleading.
The main issue of this block is how effectively the monetary policy pursued achieves its operational objective, which is to keep money market rates close to the key rate. We will also consider whether we need to adjust our operational procedure given the evolution of the Russian financial market. Work stream 3. Retrospective assessment of the effectiveness of the monetary policy pursued. This block of topics is probably the most challenging one technically. Within this work stream, we will try to estimate, relying on our model-based approaches, what results we could have achieved through our monetary policy if we had known what we know now when making our earlier decisions. I would like to stress straight away that we will not assess our actual decisions as they were made when we had less information than today. Nevertheless, this is a very useful practice to analyse the robustness of the monetary policy pursued, which will provide helpful insights for the future. Work stream 4. Communication as a monetary policy instrument. I may say straight away that we have been consistently developing our communication practice throughout the entire period of inflation targeting and continue to improve it now. We are to assess how well the society understands our communication, how predictable our actions are, and what areas of our communication we should prioritise in the future in order to strengthen confidence in the policy pursued. Work stream 5. Monetary policy and financial stability.

It is meant to analyse the decisions made over this period, which was rather challenging to be honest, and to assess their influence on the economy and price stability. Second. The conditions of monetary policy implementation change over time. We are going to scrutinise whether the effective parameters of our monetary policy we are adhering to now are coherent with these developments and to what extent. Possibly, it would be reasonable to consider certain adjustments that would enhance the effectiveness of our policy in the future, taking into account, among other things, structural shifts in the Russian and global economies which might occur in the future. The third aspect is no less important than the first two. Price stability, which is the goal of monetary policy, is beneficial to the entire society. However, there are significant differences in how people, businesses, financial market participants, analysts and experts perceive price stability as such and the role of monetary policy in ensuring price stability. Annual inflation has averaged 4% over the period since January 2017 until now. Nonetheless, its rate has been fluctuating from 2.2% to 7.3% and currently stays at a high level. Within this Review, we will be able to carry out an extensive discussion of how the society perceives the policy pursued and its results.
Moving forward, a better policy calibration is needed in order to weather these structural changes and banks should put in place arrangements for restructuring the debt of those firms that can be saved, while facilitating the orderly exit of those firms that are unlikely to succeed in the postpandemic economy. The uncertainties remain extremely high and further delays in the economic recovery will put more pressure on the public resources and complicate the trade-offs in their reallocation. However, I would like to end on a more optimistic note and say that we do hope for a swift 1/2  BIS central bankers' speeches  recovery as we continue to do our part in curbing the effects of the pandemic. With these in mind, I wish Ms Laura Valderrama success with her presentation on the results of the analysis of corporate vulnerabilities and a very fruitful discussion to all the panelists and guests. Mr Kammer you have the floor. 2/2  BIS central bankers' speeches

The aim of the policy of gold parity in the 1920s was to bring the krone back to the value prevailing before World War I: “Our monetary regime is enshrined in law. (…) The regime is anchored in our legal system, which we cannot break down. Inherent therein is a moral obligation to restore the monetary  8  For more discussion of the IMF proposal, see Pål Winje (2002): “Gjeldsordning for land (Sovereign debt restructuring)”, Penger og Kreditt 4/2002, Norges Bank. 9  Henrik Bahr (1962): “ Høyesteretts dom i gullklausulsaken (The Supreme Court’s ruling in the gold clause case)”, Lov og Rett, Norsk Juridisk Tidsskrift, No. 5. See also Jan F. Qvigstad (2008): “On keeping promises”, 11 November 2008. BIS Review 123/2010  5  system to its previous condition. (…) This is a question of fundamental importance to the nation through time. The difficulties that arise in connection with the transition to normal, legal conditions are transient. No one can close his eyes to the fact they are very serious. But the life of the people is eternal and this involves a decision of significance across generations.” 10 4. What is a sustainable sovereign debt load? A debt level that is high in one country can be sustainable for another. When Norway experienced payment difficulties in 1816, government debt stood at 6 million speciedaler, or about NOK 700 million at today’s value of the krone, and was probably considerably smaller than annual GDP in the country at that time.
Should economic slack emerge and unemployment rise as the latest MPC forecasts imply, that will weigh against domestic inflationary pressure and ease the threat of inflation persistence. It is these two factors – the evolution of energy prices and developments in domestic labour markets – as well as the policy responses to them, such as the fiscal announcements made last week, that drive my current assessment of the outlook for monetary policy. If you like, these are the main arguments of my monetary policy reaction function, especially in so far as the typically more persistent domestically-driven dynamics of inflation stem from the labour market and corporate pricing behaviour. As I have said on previous occasions, in my judgment there is still some more to do with Bank Rate in order to address prevailing inflationary pressures and complete the necessary normalisation of monetary policy following a decade or more of exceptional accommodation. Bank of England  Page 8  In line with the MPC’s most recent forecast and communication and on the basis of the information we have available today, I do not anticipate the levels of Bank Rate priced in financial markets when the forecast’s conditioning assumptions were frozen12 will be required. But, given the need to contain the risk of greater inflation persistence implied by potential second round effects, further action is likely to be required to ensure inflation will return sustainably to its 2% target over the medium term.

Taken together with the supply chain disruptions that accord firms pricing power in supply chains, this tightness creates conditions conducive to the emergence of the second-round effects we fear. Behind the labour market tightness lies a decline in participation rates among the working age population, particularly those in the 50-65 age group. The reasons behind this decline remain the subject of controversy, but the impact of the pandemic on early retirement and long-term health, as well as underlying demographic developments, all seem to have played a role.10 Crucially – and just like the rise in gas prices – rising inactivity among the working age population represents an adverse supply shock, which adds to the difficult shorter-term trade-offs facing monetary policy.11 Looking back to a year ago, the MPC debated whether the prospective end of the furlough scheme introduced during the pandemic would release furloughed workers into the labour market and ease the tightness emerging in the labour market. This was a difficult judgment to make, given that the furlough scheme was without precedent. As it turned out, that easing did not materialise: through the middle of this year, the labour market has continued to tighten and has proved tighter than we had expected, largely owing to the adverse developments in participation that we did not fully foresee. Now that the economy has slowed (and probably entered recession), we are starting to see labour market indicators turn. Vacancies have stabilised and there are tentative signs they will fall from their historically high levels.
First, they expand the possibility frontier of the technology of collective decisions and can be designed to raise the cost of those decisions deviating from pre-announced contingent paths. Second, they are set up explicitly to exercise a degree of discretion - “constrained discretion” - subject to the broad objective of price stability. Discretion is inevitable because of the need to learn about the economic environment. Institutions thereby become repositories of experience and knowledge which they communicate to society as a whole. III. Case Study I: Exchange rate regimes in Brazil and the UK  I want to illustrate the importance of institutions and the credibility of their stability by three case studies. My first example concerns the collapse of exchange rate regimes in Europe and Latin America. It demonstrates that economic institutions require a broad base of political support if financial markets are to believe that those institutions are likely to survive. For a while fixed exchange rate regimes enjoyed a degree of support in both Europe, with the Exchange Rate Mechanism (ERM), and Latin America. But experience shows that, in terms of credibility in financial markets, the design of those policy regimes was less important than the fact of their having broad political support. Brazil in 1998-99 is a case in point. In 1998 Brazil operated a crawling peg exchange rate regime.

What is particularly interesting about Iraq is the link between expectations of a change in political regime and movements in currency values. Prior to the Gulf War in 1991 the Iraqi currency was the dinar. Following that war Iraq was divided into two parts that were politically, militarily and economically separate from each other: southern Iraq was under the control of Saddam Hussein and the enforcement of the northern no-fly-zone meant that northern Iraq became a de facto Kurdish protectorate. In the South, Saddam’s regime struggled to cope with UN sanctions, and resorted to printing money to finance growing fiscal deficits. Unable to import notes printed abroad because of sanctions, the regime printed low-quality notes in Iraq that  12  This quote appears on page 5 of the NBER working paper number 9808 (Cambridge, MA) version of their paper. At the time of writing, the Journal of Economic Perspectives version, which appears in the list of references, was still forthcoming. BIS Review 5/2004  7  bore Saddam’s image. In May 1993, the Central Bank of Iraq announced that the 25 dinar note, then the highest denomination note in circulation, would be withdrawn and replaced by a new locally printed note. These were known as ‘Saddam’ or ‘print’ (because of the offset litho print technology used) dinars. Citizens had three weeks to exchange old for new notes.
In other words, the Federal Reserve was to be the lender of last resort and it was to ensure stability of the banking system: a financial stability mandate. Experience showed that instability often followed a speculative bubble and that such bubbles were often fuelled by credit. The framers of the 1913 Act were, accordingly, anxious to avoid the new Federal Reserve making it easier for the private sector to lend into such bubbles. The Act gave the Fed permission to “discount notes and bills of exchange arising out of actual commercial transactions for agricultural, industrial or commercial purposes”. But it barred the Fed from rediscounting paper “drawn for the purpose of carrying or trading in stocks, bonds or other [private] investment securities”. The Real Bills Doctrine was, therefore, a driving principle of the Federal Reserve’s original charter. And in 1935 Senator Carter Glass, who had sponsored the 1913 Act, resisted attempts by Fed Chairman Marriner Eccles to change that part of the Fed’s mandate, because he blamed the Great Depression on the preceding speculative excess. The mandate did not really have anything to say about preserving nominal stability – that is, low and stable inflation of consumer prices. So long as the Gold Standard delivered, that lacuna was probably masked. But as the Fed became the anchor for a flat currency, the Real Bills Doctrine proved woefully inadequate as a founding precept.

However, we are still far from attaining the employment levels prior to 2008. The second notable feature is that our recovery, which has been intense and prolonged, is proving compatible with the correction of the imbalances that emerged in the years running up to the crisis; in particular, it is proving compatible with the maintenance of a substantially positive external balance. 4/6  In 2017 we posted a current account balance of around 2% of GDP, a figure not far removed from that observed in the four preceding years. Admittedly, transitory or temporary factors – such as low oil prices and low interest rates, for instance – have exerted an influence on this surplus; but largely it is due to gains in external competitiveness and also to the reduction in the economy’s financing costs, a development in which the Eurosystem’s monetary policy has played a crucial role, as have the structural reforms made since 2011. Outlook On the latest Banco de España projections, which we published last December, the current upturn may be prolonged over the coming years with significant growth in activity and employment, albeit at lower rates than those observed in the last three years. This moderation in the increase in activity would be firstly attributable to the lesser momentum of demand-side policies. Specifically, we expect the impulse derived from fiscal and monetary policy to be lower, as well as lower growth of private consumption compared with that in recent years.
In addition, wage and salary demands in some euro area countries caused us serious concern that there could be broad-based second-round effects. The interest rate decision enabled us to bring medium to long-term inflation expectations back under control in line with our definition of price stability. And this regained control of expectations was, by the way, the precondition which allowed us to cut rates strongly from October when the crisis worsened. Do not forget: our definition of price stability in the medium term is “less than, but close to, 2%”. The interest rate increase in July must be related to the “less than 2%” part. Our recent decrease of rates after the intensification of the crisis in September must be related to “close to 2%”. Question: Since then rates have been cut drastically around the world. The US central bank, the Federal Reserve (Fed), has now de facto cut rates to zero. The conventional weapons of monetary policy are fast being exhausted. What unorthodox options does the ECB have at its disposal? Answer: First, let me remind you that we have, in all circumstances, to deliver price stability in line with our definition “less than, but close to, 2%”. Question: And second? Answer: Second, the present unlimited provision of liquidity at a fixed rate and with a oneweek, one-month, three-month and six-month duration can certainly be described as an unusual measure. The extension of eligibility in our collateral framework is also an exceptional measure, particularly as it was already very broad and flexible.

In this sense, I believe the emotional relationship of citizens to the euro has become stronger. Question: What, in your view, is the greatest achievement of the first ten years of the euro? Answer: For me, the greatest success is the fact that, after having promised the citizens that the euro would be equal, in terms of stability and the maintenance of value, to the previously most solid currencies, including the Deutsche Mark, we have fulfilled this promise effectively. Question: And what is the greatest challenge for the next ten years? Answer: There are a number of challenges that face us. The first is to maintain the level of credibility and confidence that the euro has gained during the first ten years. And in addition to all the other challenges that an important central bank in the industrialised world has to deal with, I would stress two challenges that are entirely specific to the ECB. First, the fact that we are ourselves actively contributing to achieving the single market with a single currency and, second, that we must prepare in the best possible fashion for a successful enlargement of the euro area. Question: In addition to price stability, the stability of the financial markets has become the focus of attention in the context of the current crisis. Would it be sensible for the ECB to have an explicit mandate to safeguard the stability of the financial markets? Answer: Our primary mandate, to ensure price stability, is a very important prerequisite for financial stability.