samchain/econo-pairs-v1 huggingface dataset:
There are many indications that an increasing number of companies are now approaching the limit where they can no longer meet the increase in demand without recruiting new staff. We are thus beginning to see signs of a turnaround, but the question of the labour market and the significance of monetary policy for employment remains important. To what extent can the problems in the labour market be said to be due to the Riksbank having conducted an excessively tight monetary policy? If we had succeeded in predicting the high productivity we would probably have conducted a slightly more expansionary policy, but my answer is nevertheless that one is overestimating the power of monetary policy if one believes that it could have solved the problems in the labour market. A large part of unemployment is due to structural reasons and therefore does not vary according to the economic cycle. I do not believe that it would have led to so much higher consumption and investment if the repo rate had, for instance, been on average half a percentage point lower during 2002 and 2003. My assessment is thus that it would probably have led only to marginally lower unemployment. If one wishes to achieve a lasting improvement in employment, measures are required that will stimulate the functioning of the labour market in different ways and lead to investment and a good corporate climate.

In addition, French national regulators are recognised for their credible action, and for being at the cutting edge of technological developments, as Geoffroy Goffinet from the ACPR will develop in more detail. Let me just briefly highlight one last course of action at the Banque de France. We have been a pioneer in central bank digital currency (CBDC): in addition to taking an active part in the work on a potential euro retail CBDC, as early as 2020 we launched a series of twelve experiments on a wholesale CBDC, both for payments and securities settlement. The first nine experiments have been very valuable, and the three experiments underway focus on cross-border payments and tokenised asset settlement. 4 We are keen to pursue our long-standing partnership with commercial banks, to reconcile innovation and security. To conclude, this stay in New York is also the opportunity for me to point out that the Statue of Liberty, which so forcefully embodies our common values, is the fruit of a tight cooperation between France and America. Let this fruitful cooperation carry on throughout the 21st century; we will be happy to welcome you in Paris. I thank you for your attention, and will now leave the floor to Olivier Vigna, deputy CEO of Paris Europlace. 1 ECB, Macroeconomic Projections, 16 March 2023 2 Eurostat flash estimate, 31 March 2023 3 Bloomberg, 22 March 2023 4 An updated report will be published by the Banque de France within next months.
The statement references “strong” labor market conditions, “strong” job gains, and a “strong” rate of growth in economic activity, household spending and business fixed investment. 1 Although this may suggest that we really need to consult a thesaurus, at least we can’t be accused of ambiguity. The Fed has attained its dual mandate objectives of maximum employment and price stability 1/5  BIS central bankers' speeches  about as well as it ever has, with most indicators pointing to a very strong labor market indeed— including an unemployment rate below 4 percent—and an inflation rate very near our longer-run goal of 2 percent. With fiscal stimulus and favorable financial conditions providing tailwinds to the economy, the outlook is for more of the same. Let me put some hard numbers to that: I expect real GDP to increase by 3 percent this year and by 2.5 percent in 2019. This above-trend pace of growth should lead to continued solid job gains and further declines in unemployment. I expect the unemployment rate to fall slightly below 3.5 percent next year, the lowest level in nearly 50 years. In keeping with the strong economy, I expect price inflation to edge up a bit above 2 percent, but don’t see any signs of greater inflationary pressures on the horizon. And, I continue to expect that further gradual increases in interest rates will best foster a sustained economic expansion and achievement of our dual mandate goals.

In part due to the Fed’s actions, the U.S. economy gradually recovered, and as a result the FOMC has been slowly but surely moving monetary policy “back to normal.” This process can be thought of in three stages. Stage 1: Lift-off The first stage in policy normalization focused on the lift-off of the federal funds rate target from near zero, which occurred in December 2015. But, well before that happened, the FOMC went to great effort to communicate its thinking to the public to better prepare it for the upcoming change in policy. 2 Importantly, we also made extensive preparations to ensure that we were ready and able to raise rates as needed, in the context of a very large Fed balance sheet and bank reserves. And, consistent with the Fed’s aim to be as transparent as possible, we published our plans on how we would use interest rates paid on bank reserves and overnight reverse repurchase agreements to keep the federal funds rate within the FOMC’s target range.3 At the time—in light of the shallow recovery and low inflation—the FOMC was very focused on balancing the risk of a premature removal of accommodation against concerns that excesses could eventually develop in the economy. In the end, lift-off went without a hitch. The approach developed back then has served us extremely well in controlling the federal funds rate, and has proven to be flexible as market conditions have evolved. I will come back to this point later.
Thomas Jordan: Swiss National Bank’s monetary policy decision and assessment of the economic situation Introductory remarks by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 16 June 2016. *  *  *  Ladies and gentlemen It is a pleasure for me to welcome you to the Swiss National Bank’s news conference. I will begin by explaining our monetary policy decision and our assessment of the economic situation. I will then hand over to Fritz Zurbrügg, who will present this year’s Financial Stability Report. After that, Andréa Maechler will review the situation on the financial markets and outline some innovations affecting financial market infrastructure. Finally, we will – as ever – be pleased to take your questions. Monetary policy decision Let me begin with our monetary policy decision and the inflation forecast. As you will have gathered from our press release a few minutes ago, we are maintaining our expansionary monetary policy. Interest on sight deposits at the SNB is to remain at –0.75% and the target range for the three-month Libor is unchanged at between –1.25% and –0.25%. At the same time, we will remain active in the foreign exchange market, as necessary. Our monetary policy thus continues to be based on two key elements: the negative interest rate and our willingness to take an active role in the foreign exchange market.

We expect to implement the risk-based capital frameworks for life and general insurance companies in the third quarter of 2004. BIS Review 43/2004  1  III  Enhancing market discipline  On enhancing market discipline, we began inspection for compliance with the Financial Advisers Act (FAA) last year. We noted a number of best practices during these inspections and have published them in a paper. To alert investors here, we intend to publish a list of unlicensed entities based outside Singapore who are suspected of conducting activities regulated under the Securities and Futures Act and/or FAA. Details will be released by the end of the week. To help consumers become more self-reliant in their financial affairs, MAS has worked with other public sector agencies to launch MoneySENSE, a national financial education programme, in October 2003. In the next few months, MoneySENSE will conduct a national financial literacy survey to benchmark the current level of financial literacy among Singaporeans. We are also facilitating the development of an integrated dispute resolution scheme for the financial sector. IV  Developing the financial sector  On the developmental front, the wealth management industry grew considerably, both in institutional asset management and private banking. Financial institutions enjoyed fresh inflows of funds as well as substantial appreciation in the value of their assets under management. The alternative asset management industry also saw good growth, with the entry of hedge fund managers.
They are not new topics: they were postponed due to the pandemic and now we are returning to them. I’m talking about systemically important banks transitioning to an advanced approach and regulation of concentration risk. First, I’ll touch on the transition to an advanced approach. This approach 3/5  BIS central bankers' speeches  is voluntary, two banks have transitioned to it, and one more bank is on its way. We believe that over time, this approach, the advanced approach, should be mandatory for major banks. It must be said that in the USA, Europe (the European Union), all systemically important banks have already switched to advanced approaches. This approach allows banks to more accurately assess capital and improve their own risk management system. And the greatest savings in capital will then be enjoyed by banks with a high-quality loan portfolio. We have also prepared an advisory report on this topic and will publish it shortly. We will then be ready to discuss it in detail with the banking community. Now let’s look at the concentration risk for systemically important banks. This is a sensitive topic for our banking sector if we look at the history of it. It is objectively due to the fact that our largest corporate borrowers and enterprises are larger than our largest banks. And in conditions where syndicated lending is not developed, an accumulation of risks for individual large borrowers can create vulnerabilities and risks for banks’ stability.

4  BIS Review 88/2001  The second claim is that, with the Link we place the control of our monetary policy in the Federal Reserve and thus lose monetary policy as an instrument for stimulating (or restraining) the economy. In particular, we have, during the life of the Link so far, had the experience of low interest rates imported from the US when a tighter policy might have been more suited to our macroeconomic needs; and, more recently, in the aftermath of the Asian financial crisis, the opposite problem. But these misalignments are one of the trade-offs that we have to accept from time to time in return for exchange rate stability. At present, and more often than not, the US and Hong Kong economies are more or less in sync, and the interest rates we import are perhaps more appropriate for our needs than they have been at any time over the past decade. That in itself does not alter the point about loss of control of monetary policy, though it makes it less relevant and less forceful at a time like this. But the complaints about shackling our interest rates to those of the US beg the larger question of whether, if we free ourselves of that burden, we would really be able to run a truly independent monetary policy. How far, for example, would we be inhibited from reducing interest rates at times when that would be appropriate because of inflationary concerns generated by exchange rate depreciation?
In 1996, the Bank Guarantee Schemes Act was passed, which continues to be current Norwegian law. The act makes it possible to write down equity capital and force banks to issue new shares to the government, enabling them to be nationalised. 9  Forhandlinger i Stortinget [Proceedings of the Storting] No. 18, 17 October 1991: Address by the Minister of Finance on the situation at Kreditkassen etc. (in Norwegian). BIS central bankers’ speeches  5  Subordinated debt – debt instruments with characteristics similar to equity capital – is to be written down in proportion to banks’ losses. In this way, banks can continue operating under government ownership. Should a bank nevertheless be closed, deposits of up to NOK 2 million per depositor are guaranteed by the Norwegian Banks’ Guarantee Fund. For a long time, this was one of the world’s most modern bank resolution laws and Norway weathered the crisis in 2008 better than most countries. Moreover, Norwegian banks have probably also drawn lessons from the banking crisis of the 1990s. Norwegian banks had via that crisis gained greater insight into crisis risk than banks in many other countries had before the global financial crisis erupted in 2007. Managements and boards of Norwegian banks were probably also more conscious of their social responsibility than those in many so called leading financial centres elsewhere in the world. But the Bank Guarantee Schemes Act does not provide for the imposition of losses on creditors who have made ordinary loans to banks, without, in practice, closing the bank.

If a large bank should experience difficulties, the contagion to other banks and the rest of the economy can be very serious. This is called systemic risk. Banks’ activities have considerable externalities. 7 Few bank failures illustrate this point better than the bankruptcy of Lehman Brothers on 15 September 2008. In the course of the week following the closure of the bank, interbank lending rates soared. Banks distrusted one another. Short-term funding markets, money markets, dried up worldwide. US money market funds experienced payment problems. The spillovers spread throughout the financial system. One of the world’s largest insurance companies, AIG, teetered on the edge of bankruptcy. To prevent the Lehman bankruptcy from ending in the complete collapse of the financial system, the authorities in a large number of countries took measures on an unprecedented scale. Central banks in many countries injected large quantities of liquidity into the banking system to keep the wheels turning. The aim of these measures was to keep the banking system operating so that the rest of the economy would not be impacted. That is why banks are bailed out. The costs associated with closing a bank are largely borne by parties other than the bank itself. We bail out banks to prevent systemic crises. We bail out banks to limit the substantial damage a deep banking crisis can inflict on the economy. Why should banks not be bailed out? But it is not that simple. There are also compelling arguments against bank bailouts.
We have gone through a long period where inflation has been low and central banks around the world have struggled to bring inflation back up to their respective target levels. One might therefore think that the question of monetary policy’s distributional effects has become topical because inflation has been higher than expected, which has benefitted some groups at the cost of others. But this is not actually the main reason; instead it is the efforts the central banks have made to increase activity in the economy and to bring up inflation. Low interest rates have contributed to a rapid rise in prices of shares and other assets, both financial assets and real assets. This effect in itself should be inconspicuous. Asset prices normally rise when interest rates fall, which occurs in periods when monetary policy stimulates the economy. However, recent years have been special in many ways. Apart from policy rates being low for an unusually long time, the Riksbank and other central banks have also used other methods to further push down the general interest rate level, for instance purchases of government bonds. The monetary policy measures have affected asset prices in a more direct and visible manner than the conventional policy of interest-rate cuts. This has contributed to more discussion of the distributional effects of monetary policy.

It consists of setting a quantitative inflation goal to anchor expectations, which in our case is 3% with a tolerance margin of plus/minus one percentage point, to be met most of the time. 1  1  There is wide empirical debate on the effects of inflation targeting regimes on the volatility of inflation and output. Gonçalves and Salles (2008) show that output volatility and inflation volatility are actually reduced in inflation targeting emerging economies. BIS Review 150/2008  1  To operationalize this objective – because the Central Bank controls inflation imperfectly and with lags and its purpose is not to cause output to deviate significantly to achieve its target – inflation deviations are corrected over a two-year horizon. In other words, the monetary policy is conducted in such a way as to have forecast annual inflation two years ahead stand at around 3%. The instrument of monetary policy is the interest rate. It could be some monetary aggregate, but virtually everywhere central banks will rather use the interest rate for well-known reasons that are beyond the scope of this meeting. 2 What is inconsistent is to use both variables as monetary policy instruments, which certainly complicates the interpretation of the two-pillar strategy of the European Central Bank. Simply put, setting a monetary aggregate and the interest rate at the same time is tantamount to setting the price and the amount to be consumed for gasoline. Supply and demand constraints imply that you can peg either one, but not both.
With price-level targeting, the de facto near-term target would regularly vary according to (recent) inflation outturns and the time horizon for offsetting them. That might confuse households and firms about the long-term objective, making it more difficult for the central bank to maintain credibility. By repeating an unchanging and simple message about the inflation rate we are aiming at (2%), we may make it easier for households to learn about our aims. (d)  How should central banks respond to asset prices? Others argue that whether the central bank targets consumer price inflation or the price level, they should also target asset prices. On this question, I subscribe to much of the current orthodoxy 27 . Of course, changes in asset prices feed into policy making as they are an important influence on demand conditions, through households’ wealth, firms’ cost of capital, and the price (exchange rate) at which we trade with other economies. But I do not believe we should use interest rates to target asset prices alongside consumer price inflation. In the first place, we just do not know enough about the determination of asset prices – especially of risk premia – to have much of an idea about what price to target. Big moves in asset prices do occasionally occur because of changes in the underlying economic fundamentals. We could not be relied upon to distinguish between those benign changes and bubbles.

Notably, on the supply capacity of the economy and its prospective rate of growth; on the rate of unemployment below which inflation is liable to increase; on the natural (or neutral) real interest rate. Those judgments are, in truth, formidably difficult to make, because they need to be regularly updated given structural change in the economy; and because each of the variables is unobservable! Perhaps understandably, that leads some policymakers 8 to the conclusion that these concepts may be useful as just that – concepts – but not at all in practical decision taking. Whilst not wanting to deny their unobservability, I do not take quite that view. For example, the natural real rate may be unobservable, but there is no ducking the fact that a policymaker needs to form a view on whether its policy stance is stimulating or restraining demand, which amounts to broadly the same thing. Against that background, I can return to a central bank’s objectives. To maintain inflation in line with a target over the medium term. And, typically with less priority, to stabilise the path of output in the face of cyclical shocks; in the UK Government’s mandate to the Bank of England 9 , that is expressed in terms of, inter alia, the MPC avoiding ‘undesirable volatility in output’. I shall say something about both, before going on to discuss some issues concerning monetary policy strategy that have featured in recent academic commentary.
An inflation target was adopted and the krona was allowed to float free. In Norway, the situation was somewhat different. The Norwegian krone had not depreciated as much when Norway left the exchange rate mechanism. Norway therefore returned to a fixed exchange rate regime, although this regime gradually changed and in 2001 Norges Bank also formally adopted an inflation target and a new fiscal framework was introduced. So our two countries have had a similar strategy for monetary policy based on an inflation target and a floating exchange rate since 2001. During this period there have been frequent and deep contacts between our staff, and I am thankful for all that we at Sveriges Riksbank have learned from these exchanges of methodologies and other experiences. However, the emergence of Norway as an oil nation has made Norges Bank unique in many respects, not least in managing a sovereign wealth fund. Norges Bank is one of very few central banks charged with such a task. In fact, this fund is one of the largest investors on the Swedish stock exchange. When Norway became an oil nation in the 1970s, the country started its journey to become one of the richest nations in the world. We Swedes have some-times been a little envious of this, and perhaps even thought it was a shame we no longer have the union! Huge oil revenues also create major challenges, and many countries have not managed so well. But Norway has.

In the light of high  BIS Review 15/2003  1  expectations of future growth, households financed their consumption, and companies their investment, by increasing their indebtedness in the belief that these debts would be easy to repay due to high future earnings and income. Moreover, a large proportion of the companies' financing was obtained via the stock market. Balance sheets became inflated, as did the actual growth in the economy. When earnings prospects later proved to be lower than expected, there was a fall in both share prices and the value of assets. Debt levels appeared high, particularly in the corporate sector. In order to lower their debts, companies had to increase their income and reduce their costs, which resulted in weaker demand in the economy. Furthermore, the declining share prices prompted households and the financial institutions that invest households' money to seek out investment alternatives that appeared safer. The downward adjustment of the future outlook itself also resulted in uncertainty. This in turn was compounded by the uncertainty caused by international terrorism and the attempts to deal with this by putting pressure on Iraq. This contributed to an increase in the spreads between corporate and treasury bonds as well as to greater volatility in the markets. To counteract the effects of balance sheet and income statement adjustments on the real economy, monetary policy was eased in several countries around the world. At the same time, fiscal policy became more expansionary.