samchain/econo-pairs-v1 huggingface dataset:
But the problem with prices falling is often said to be that demand will then collapse as households are postponing consumption while waiting for prices to fall so they can buy more cheaply.19 This reasoning is not necessarily wrong, but is really only a reformulation of the problem I mentioned above; that low inflation limits the scope for making monetary policy more expansionary. There is a risk that households will postpone their consumption – that is, that they will increase their saving – if the real interest rate becomes unjustifiably high. Here it is necessary to put price developments in relation to developments in wages and the return on saving. There is therefore scarcely reason to believe that anything dramatic will begin to happen just as the general rate of inflation becomes negative. One should also remember that substantial differences are hidden in the price trends for different product groups that lie behind the general rate of inflation. One example is developments in prices for technology-intensive goods such as TVs, computers and mobile  15  According to Drehmann et al. (2012), an average financial cycle, in which the credit cycle is a central element, is 16 years long. The length of an average business cycle is much shorter, perhaps five years. 16  Inflation expectations have fallen in recent years in the surveys conducted by the National Institute of Economic Research and Prospera. Short-term expectations are now just below one per cent, but long-term expectations are still close to the two per cent inflation target.

A monetary policy that succeeds in maintaining stable prices promotes financial stability by encouraging investment and economic growth. Conversely, a stable financial system helps monetary policy achieve its primary objective by, for example, ensuring the smooth propagation of the central bank’s interest rate signals throughout the economy. At this point it is useful to dwell briefly on the meaning of the concept of financial stability. In Malta we define it as “a condition where the financial system – comprising institutions, markets and infrastructure is able to: allocate savings to investment opportunities efficiently; ensure the rapid settlement of payments; effectively manage potential risks that may harm its performance; and absorb shocks without impairing its operations.” If there was ever any doubt as to the importance of ensuring the realization of such conditions, it can surely no longer be the case after the experience of the past three years. The financial crisis has clearly underlined the vital role of central banks in safeguarding financial stability and the importance of adopting a macro-prudential approach to regulation and supervision. This thinking lies behind the many initiatives taken recently to strengthen the institutional framework for financial stability, most notably in the EU and on which Mr Fell will be elaborating later on. It is not surprising that in this new emphasis on macro-prudential supervision of the financial system, central banks are expected to play a key role.
Addendum 'No Man is an Island' No man is an island entire of itself; every man is a piece of the continent, a part of the main; if a clod be washed away by the sea, Europe is the less, as well as if a promontory were, as well as any manner of thy friends or of thine own were; any man's death diminishes me, because I am involved in mankind. And therefore never send to know for whom the bell tolls; it tolls for thee. John Donne 1 International Monetary Fund, World Economic Outlook: Global Manufacturing Downturn, Rising Trade Barriers,  Washington, D.C., October 2019. 4/4  BIS central bankers' speeches

These include the traditional agriculture and fisheries sector, transport and media, management and marketing consultancy services, wholesale, health, maritime, archaeology, restoration, fair trade, tourism, youth services and community care. Our cooperatives are affiliated with the International Cooperatives Alliance (ICA), and so abide by the Seven Basic Principles established by the Alliance mentioned previously. Banks too have been with us for a long time. Indeed one can trace the origins of banking in Malta to the times of the Knights of St John, though more rapid development took place under British rule, helped by the island’s strategic and central position in the British Empire. In 1826, the Anglo-Egyptian Bank started operations here, and through a series of mergers and acquisitions this later became Barclay’s Bank DCO (Dominion, Colonial and Overseas), which soon established an extensive branch network on the island. A number of smaller Maltese-owned banks were also established, and some of these eventually merged to become the National Bank of Malta, which also established a branch network. There followed a period when these two major banks were nationalised, but following the subsequent  BIS central bankers’ speeches  1  liberalisation of the economy they were again privatised, with the Government retaining only a 25% share in Bank of Valletta. More banks began to operate here after Malta joined the European Union, but these were all commercial, joint stock banks. No one, till recently, seems to have thought of setting up a cooperative bank in Malta.
Good practices are therefore, essential to guide behaviour in the FX market, and to anchor a strong ethical culture within firms. The Code will support the nurturing of good practices and in turn, the growth of the FX market across key financial centres, including Singapore. Unique features of the Code Codes of conduct have been in existence and are not new. So why will this Code be different? There are several factors why this may be the case, including: what the Code captures; who the Code will apply to; how the Code was developed and will be maintained; and how it will be implemented. First, the content of the Code is relevant and reflects good practices that should exist in the FX market. The Code provides guidance in areas where clarity is needed. For example, after the misconduct came to light, many market participants swung to the other extreme and became highly reluctant to share market colour. This negatively affected market liquidity. The Code includes principles on information sharing, stating explicitly that “the timely dissemination of Market Colour can contribute to an efficient, open, and transparent FX market”. Additional guidance has been provided on how to apply this principle e.g. while communications should not include specific client names, aggregated and anonymised information can be shared. Both positive and negative examples also provide additional practical guidance. Second, it will apply to all market participants. Previous codes were catered to sell-side participants.

3/6  BIS central bankers' speeches  Supporting adherence While the above reasons provide a strong foundation for the Code to succeed, the success of the Code will depend on widespread adherence by market participants. Hence, we should each ask ourselves what we can do to support adherence. There are three key elements in the adherence framework developed by the FXWG, which can support adherence at both the individual firm and industry levels. First, the Code has to be embedded into your practices. Training and education of staff will be particularly important to effectively embed the Code. There are ongoing initiatives at the firm level, and the industry should consider if there are system-level initiatives that could make sense. For example, industry associations could consider developing relevant training content that caters to specific segments of the FX market e.g. buy-side players or corporate treasuries. Second, there should be effective monitoring on how successfully the Code has been embedded. To this end, a number of adherence mechanisms have been developed to facilitate effective monitoring. For example, at the system level, the GFXC will use a broad survey of market participants to monitor adherence and adoption. The survey will take place annually and the first survey will be conducted in 4Q this year, to form the baseline for monitoring progress. At the firm level, we expect that mechanisms will be put in place to monitor how the Code has been embedded within internal practices.
Durmuş Yilmaz: Economic outlook for Turkey Speech by Mr Durmuş Yilmaz, Governor of the Central Bank of the Republic of Turkey, at the Bursa Chamber of Commerce and Industry, Bursa, 11 January 2007. *  *  *  Distinguished industrialists, businessmen, dear guests and members of the press, This is the first of the series of meetings planned for 2007, which has become a traditional platform aiming at bringing the representatives of the real sector together directly. Firstly, I wish to thank Dünya Newspaper and Bursa Chamber of Commerce and Industry for organizing this meeting and thereby giving me the opportunity to exchange information and views about the economic outlook with the distinguished industrialists and businessmen like you. In the first part of my speech, I would like to present a general evaluation of the year 2006 with a special emphasis on inflation, and to explain our policy implementations and to share our forecasts regarding 2007 in the light of the current data available. Then, I would like, once more, to mention about growth, employment and current account deficit that we have shared with the public many times, constituting the major items on the economic agenda. I will then elaborate on what should be done in this regard in the medium and long term. Distinguished Guests, The primary objective of the Bank is to achieve and maintain price stability, as laid down in the Central Bank law.

No single building block or focus area can act as a silver bullet, but together they form a holistic solution to the long-standing frictions which have been on the agenda for many years. Strong collaboration and sustained commitment across all of these areas is necessary to tackle an issue spanning multiple players, time zones, jurisdictions and regulations. This will require work internationally and, as I hope my examples from the Bank’s own RTGS Renewal Programme has shown, domestically too. This is an ambitious agenda. But it is also a really important one, where collectively we can enhance global economies, international trade and support financial inclusion. Annex 1: Stage 1  8  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  8  Annex 2: Stage 2  9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9
Monetary policy can therefore not be oriented towards stabilising developments only in the internationally exposed sector, as has been advocated. This could easily create considerable imbalances in the Norwegian economy. The low interest rate policy and devaluations in the 1970s and 1980s are examples of how such a policy can fail. Monetary policy was geared towards preventing a deterioration of competitiveness in manufacturing. The krone was devalued on several occasions. But wage growth accelerated to compensate for higher inflation. The result was a wage and price spiral that hit the entire economy. At the same time, there was a sharp rise in the demand for loans, which created tensions in our financial system in the 1970s and in the 1980s. Monetary policy can be an effective means of influencing aggregate demand in the economy. However, there is little monetary policy can do to counter disturbances on the output side of the economy. Changes in wage formation, a decline in productivity growth or a sharp rise in prices for important factor inputs must instead be countered by measures to improve the way the economy functions. Fiscal policy places emphasis on smoothing fluctuations in the economy with a view to ensuring appropriate capacity utilisation and low unemployment. There is an overlap between the tasks that monetary policy and fiscal policy are intended to perform. This makes it natural to raise the issue of whether there is a need to coordinate fiscal and monetary policy decisions.

Several reasons may lead to the interplay between monetary and fiscal policy failing to function. Interplay functions well when the decision-making bodies are conscious of how one body’s decisions influence the decisions of the others. Unless this fact is recognised, a decision will not produce the result that was planned. The economy may move in a very undesirable direction, with high interest rates, sluggish economic growth and a deterioration in the state’s financial position. Without coordination, a good result may still be achieved if fiscal policy acts as “leader” and monetary policy as “follower”, to use expressions taken from game theory. The fiscal policy authorities can internalise the monetary policy response pattern. The central bank’s response pattern must of course be known so that the fiscal authorities can take this into account. The social partners can similarly take any monetary policy response into account when wages are being determined. The “leader” in this interplay - the social partners - can take the “follower’s” - Norges Bank’s - response into account. This view is most relevant in centralised wage formation. In decentralised wage formation, monetary policy will instead affect wage growth via market mechanisms by stabilising aggregate demand. A precondition for interplay that functions well is that monetary policy is known and remains firm. The outcome of this year’s wage settlement indicates that the social partners have not internalised the monetary policy response pattern.
Because they are an essential element for the financial sector: they deliver creativity and they understand new needs rapidly. And they bring to the forefront French scientific expertise and technology: artificial intelligence, cryptography, distributed ledger technology, etc. Regardless of how they are integrated into the financial sector – via cooperation or direct competition with established players – they make the industry more dynamic. This is also true with regard to the entry into financial services of the Bigtechs, which are often less keen on competition. I'm not just saying this to please the Fintechs that are here with us today. It is a deeply-held belief and a commitment, on my part and on that of the entire ACPR. But what, I hear you ask, are you doing concretely to help the Fintechs in their development? Let me start by reminding you that the Banque de France is working with Fintechs on two levels: via its mission of providing services to the economy – to businesses and SMEs – and via its mission of safeguarding financial stability. Our role as a central bank and supervisor, is to reconcile confidence and innovation. If you would allow me to borrow a metaphor from the history of the railroads – which were originally a major innovation in the 19th century, but also one that was not without its risks – our role is to prevent the train from derailing and to make sure the passengers aren’t afraid to get on board.

The lessons we derived from this experience will lead global decision makers to reconsider their policies. We have already started to observe critical and permanent changes in global financial order. The future of the financial system will be in a much better shape with a pre-emptive approach. The coordination is especially needed in terms of better regulation and supervision of financial market instruments. In order for the mission of the COMCEC and thus of the Organization of the Islamic Conference to be successful, it is necessary for the decision making mechanisms to acquire a more active and global dimension. The success of the economy policies of the Islamic counties under the roof of the COMCEC depends on the formation of measures to increase trust and establishment of a close cooperation in economic and commercial areas. Annual meetings of the Governors of the Central Banks of the COMCEC countries will be very important in terms of catching up with the world’s agenda and following the recent developments. Economic activities of the related countries will be supported the most by increasing the cooperation between the central banks of the COMCEC countries, enhancing the functioning of the active mechanisms of communication in international platforms and sharing the experiences. The recovery of the economies of the Islamic countries will be fastened by increasing the exchange of information in the fields of economy, finance and banking among the member and observer countries’ central banks and financial authorities.
The root causes of the crisis, therefore, are deeply structural. There was a combination of excess savings and asymmetry in financial developments between countries which was conducive to the formation of bubbles. This disequilibrium was amplified and compounded by distorted financial innovation. There was little, or no, role for monetary policy in that process. Looking to the future, however, it is legitimate to ask how monetary policy can better contribute to financial stability. Here, I would make four points 1. Financial instability should first be addressed and dealt with by specific tools. Those tools come in many forms, such as capital or margin requirements, loan to value ratios and liquidity constraints. Most are currently available to regulators and supervisors. They have been used, however, with one objective: ensuring the robustness and viability of individual institutions. There is now a need, which is widely recognized, for a change in perspective. Regulation and supervision should be designed and implemented in a broader, systemic perspective, with the objective of ensuring the stability and integrity of the financial system as a whole. 2. There is a strong case for giving central banks a pivotal role in this new “macro financial supervision”. They have intimate knowledge of financial systems and markets. They have an incentive to act since monetary policy works better when financial institutions are robust and financial markets are stable and efficient. And, finally, they are well placed to have an integrated view of the economy and its interaction with the financial sector.

Christian Noyer: Monetary policy and the crisis – some lessons for the future Keynote address by Mr Christian Noyer, Governor of the Bank of France, at the ParisEuroplace Financial Forum, Tokyo, 16 November 2009. *  *  *  Central banks have been very active over the last two years in containing the impact of the financial crisis. Monetary policy has made an important contribution to stabilizing financial markets and the real economy. Today, however, I will not talk about our response to the crisis, whether by conventional or unconventional measures. I will rather focus on the longer term and address two questions: "Was monetary policy the cause of the crisis?" and "How can it contribute to preventing future crisis?" These are two different questions. And they call for differentiated answers. While I doubt very much that monetary policy played a major role in triggering the crisis, I also believe that it can – and should – help in the future to better contribute to financial stability. Was monetary policy the cause of the crisis? One major success in the two last decades has been the achievement of price stability in most industrialized and many emerging economies. This success has rightly been ascribed to the monetary policy framework almost universally adopted in the world, which, beyond national differences and specific features, is based on two common pillars: Central bank independence and price stability as a primary objective.
The projections presented in this Report foresee that this year the economy will grow again, and that output gaps will narrow further until closed in 2011. Monetary policy will remain very expansive in the coming quarters, which will decisively support the reconstruction process. At the same time, however, it will adjust in order to ensure that the process will take place within a context of stability and consistency with the inflation target. We should bear in mind that history, especially the last couple of years, has taught us the importance of price stability and how painful inflation is for the less privileged segments of our society. In addition, history has taught us that with volatile inflation comes a more volatile business cycle, which is very costly in terms of employment and output. Because of this, it is essential that the monetary stimulus complies with its role of backing the reconstruction efforts within a context of stable prices. Nothing will be gained by fostering a reconstruction that at the end will only translate into higher inflation with no benefits on the productive side and with negative implications for key relative prices such as the real exchange rate and real interest rates. That could become the prelude to costlier adjustments in the future. Our monetary policy has already given proof of its high capacity to adapt to drastic changes in macroeconomic conditions and this latest shock will not be the exception. Thank you very much.

Some of the possible causes and elements characterising the nature and evolution of the crisis that have been advanced by commentators include: (i) the excessive borrowing by financial industry and the private sector due to the prevailing low interest rates; (ii) the build up of financial disequilibria and asset price bubbles; (iii) the biased system of incentives that led investors to excessive risk-taking; (iv) the failure by regulators to adapt to the state of the evolution of the financial system; (v) the market failures related to information asymmetry and lack of transparency about risks and characteristics of the different products; (vi) the existence of obvious conflicts of interests affecting key agents needed in the securitisation process; and (vii) finally, the failure of investors to conduct due diligence, blindly relying on information and models that proved to be inappropriate to capture some very relevant risks. It is probably not very adventurous to say that the bursting of the house price bubble in the US, with the ensuing increase in the default rate and the severe underperformance of the subprime mortgage sector, was the spark that ignited the financial and economic crisis. In the summer of 2007, as highly leveraged investors were forced to unwind some positions to cover margin calls, liquidity in some fixed-income markets dried out completely. Investors found themselves trapped and were forced to sell assets at considerable discounts. In some cases further sales – particularly for subprime Mortgage Backed Securities – were forced by stop-losses and Value-at-Risk based risk budgets.