samchain/econo-pairs-v1 huggingface dataset:
Chart 3: Terms of trade developments in selected countries and regions  Note: Annual; average 1996–1998=100; three year moving averages shown. Data based on IMF WEO October 2010 database. Sources: IMF WEO, Haver Analytics and ECB staff calculations. BIS central bankers’ speeches  7  Chart 4: Commodity price developments  Note: Last observation refers to 2010Q3 for EME real GDP. For Brent oil prices and commodity price indexes data is quarterly up to 2010Q4. Last data point in chart for Brent oil price is spot price on 2 March 2011 and for non-energy commodity indexes January 2011. EME real GDP index for 1996Q2 = 100. Oil prices are quoted in US dollars. Sources: Haver Analytics, IMF IFS and ECB Staff Calculations. Chart 5: Inflation rates in selected countries and regions  Note: Annual; %. Data based on IMF WEO October 2010 database. Grey shaded area indicates the evolution based on the IMF October 2010 WEO projections up to 2015. Sources: IMF WEO, Haver Analytics and ECB staff calculations. 8  BIS central bankers’ speeches  Chart 6: IMF WEO two year ahead forecast errors  Note: Forecast errors were calculated as the actual minus the two year-ahead autumn projected figures produced during the preceding year. A positive figure thus shows an underestimation, a negative figure an overestimation. Sources: IMF WEO and ECB staff calculations. Chart 7: Foreign exchange reserves in selected countries and regions  Note: Monthly; billion USD.

7 [13]  situation in recent years has probably made it more attractive to participate in the labour force. Monetary policy cannot solve structural challenges with greater labour supply Higher labour supply is basically positive as it should lead to higher employment in the long term – which is beneficial not least in light of the challenges we face as regards a greying population. Higher labour force participation in the long term raises the economy’s output potential, which means that the wheels can turn more quickly without the risk of overheating and rising prices, which monetary policy ultimately needs to subdue. But a prerequisite for this positive effect is that the increased labour supply also leads to higher employment. As it takes time for the labour market to adapt to rapidly increasing supply, it is likely that the increase will, in part, result in higher unemployment in the near term. High demand in the economy can facilitate the adjustment. But the extent to which greater labour supply leads to higher employment in the longer term is determined by how the labour market works and by the matching of job-seekers to vacancies. This is particularly true of groups with a vulnerable position on the labour market, for example persons born outside Europe. We have had a strong labour market in recent years and not only the labour force but also employment are now on a historically high level. The expansionary monetary policy has contributed to this development.
Financial integration in Europe and in the euro area had been growing steadily before the financial and sovereign debt crisis. However, the system was not structurally integrated and when the crisis financial erupted integration quickly reversed, exactly when it was most needed. In response to global and local shocks almost all financial markets became highly fragmented and retrenched inside domestic borders. These developments represented an existential threat to the Monetary Union and the single currency. That fragmentation has reversed along several dimensions in the last few years. But significant room for further improvements in financial integration remains, for example in the integration of retail banking services and in the financing of the corporate sector. Financial integration provides risk sharing mechanisms which can reduce the impact of countryspecific shocks and contributes to macroeconomic stability. Internationally diversified portfolios – cross-regional and cross-border asset holdings, including firm ownership claims – are more resilient to global and local shocks and can mitigate the impact of such adverse scenarios. This is particularly true when integration occurs also in the equity markets as opposed to the current bias towards debt finance intermediated by banks.2 For countries in a monetary union, this risk sharing mechanism is particularly important because the single monetary policy is unable to address asymmetric shocks, since other important adjustment mechanisms, for example related to fiscal policy and exchange rates, are limited.

This, of course, seeking to preserve the conditions that will foster economic growth and the welfare of the population. Thank you. 6  BIS central bankers’ speeches  Figure 1 Banks' average CDS (1) (basis points)  Liquidity conditions (4) (basis points)  500  500 100  100  400  400  80  80  300  300  60  60  200  200  40  40  100  100  20  20  0  0  0  0  08  09  10  U.S. (2)  10 Jul. 11 Jul. ene.10jul.10ene.11jul.11  11 Europe (3)  U.S.  Japan  Eurozone  (1) Simple average of 5-year CDS premiums. Dotted line marks statistical cutoff date of previous Report. (2) U.S. includes Citigroup, Goldman Sachs, Merrill Lynch, JP Morgan Chase and Bank of America. (3) Europe includes Société Générale, Deutsche Bank, UBS AG, Santander, BBVA and UniCredit. (4) Difference between the Libo rate and the overnight indexed swap (OIS), both at three months. For the Eurozone, difference between Euribo rate and respective OIS. Source: Bloomberg.
Tarisa Watanagase: Enhancing Thailand’s resiliency against economic turbulence Address by Dr Tarisa Watanagase, Governor of the Bank of Thailand, at the 4th Annual Euromoney Thailand Investment Forum: The Economic Perspective, Bangkok, 6 July 2010. *  *  *  Prime Minister, Distinguished Speakers and Guests, Ladies and Gentlemen, First of all, I would like to thank Euromoney for the invitation to speak to this gathering of prominent members of public and business sectors. I welcome this opportunity to share with you some thoughts on Thailand’s economic and policy issues at this very challenging juncture. As we all know, the Thai economy has been through one of the most turbulent periods due to the global impact from the US sub-prime crisis and the European debt crisis. Despite the difficult external environment compounded by political problem and weak sentiments at home, it is clear that the Thai economy has been able to cope with shocks quite well. Thus far, what the economy experienced has been a mere cyclical downturn, in tandem with the contraction of global demand. The good news is that nothing about our economy amplified the impact of these external and domestic shocks and I call that economic resiliency. Unfortunately, the less good news is that a small open economy like Thailand will be prone to more shocks, especially through international trade and financial market linkages. So, we need to accept this fact and make ourselves as resilient as possible to ride the waves.

These findings suggest the need for a communications campaign that gives the issue of inflation perceptions priority attention, as well as for effective price monitoring mechanisms. Measures are being taken on both fronts. Inflation perceptions are being addressed in TV slots, newspaper articles and official statements. These messages will be intensified in the coming months. As far as pricing abuses are concerned, the national euro Master Plan has invited businesses to adopt dual display from January 2007 and makes it mandatory from the day the irrevocable conversion rate is fixed until the end of June 2008. The dual display of prices has gained momentum since the introduction of the Fair-pricing Agreements in Retailing (FAIR) initiative towards the end of last year as a voluntary, self-regulating mechanism whereby businesses commit to refrain from increasing prices simply as a result of the changeover. They, in turn, benefit from nationwide publicity recognising their commitment to adopt a code of conduct. 5 In addition, consumers are constantly encouraged to use the national telephone helpline not only to seek information, but also to report cases of suspected noncompliance with the guidelines. With the assistance of international experts, including the Austrian Price Commission, a Euro Observatory has also been set-up to monitor and analyse pricing trends during the changeover period. The unit is supported by 70 Euro Assistants who carry out fieldwork in towns and villages across the island.
We have achieved a lot by creating the banking union and the SSM in less than two years – which is unprecedented in European history. Also, the process of balance sheet repair for banks is well underway in the euro area And we will make sure that the forthcoming asset quality review removes any doubt as to the sustainability of the euro banking sector. Furthermore, for the euro area, there is the exchange rate question. As you all know, from a monetary policy perspective, the exchange rate is not a policy variable, let alone a target. But  BIS central bankers’ speeches  1  it is obviously a very important input when considering overall monetary and financial conditions. The recent appreciation of the euro has had a strong disinflationary impact. We could discuss further the different causes of low inflation in the debate, but let me make some remarks on this crucial matter for us central bankers. First, low inflation is not deflation. As many analysts and observers are today alarmed about deflation in the euro area, it is useful to understand the difference. Deflation is a permanent and cumulative process of decrease in the overall price index, fuelled by negative expectations. Deflation is a pernicious spiral. Because consumers expect prices to decrease continuously, they tend to defer purchases, thereby further fuelling the deflation process. Deflation increases the real burden of debt and creates an incentive to defer investment.

The opportunity is there and should not be missed. 4  BIS central bankers’ speeches
For global growth to be sustained at a reasonably strong pace during this period of adjustment, the desirable increase in U.S. savings and the necessary slowing in U.S. domestic demand growth relative to growth of U.S. output would have to be complemented by stronger domestic demand growth outside the United States, absorbing a larger share of national savings. Exchange rate regimes, where they are currently closely tied to the dollar, will have to become more flexible, allowing exchange rates to adjust in response to changing fundamentals. The global nature of these requirements does not imply that the United States can put the principal burden for adjustment on others, or that we can expect the broader global adjustment imperative to easily alter the forces in countries outside the United States that have contributed to these imbalances. If we focus adequate political capital on the factors within our control, we will have more credibility internationally in encouraging policy changes outside the United States that might reduce our collective risks in the adjustment process ahead. The increase in macroeconomic stability in the United States over the past two decades, or the reduction in the volatility of growth and inflation, has contributed to what seems to be a significant reduction in expected future volatility of asset prices. And the U.S. economy is in many ways in a relatively favorable position to manage through the risks in the adjustment process ahead.

The size of the imbalances and the persistence of the forces supporting them probably mean that we will be living for a prolonged period of time with the tensions that could come with the need for adjustment. The risks associated with this adjustment process may be magnified by changes in the household balance sheet in the United States. The average household in the United States today has a higher level of debt to income and is somewhat more exposed to interest rate risk than in the past. The sustained rise in housing prices and the scale of borrowing against housing assets raises the possibility that a rise in risk premia could have a greater impact on household spending that would have been true in the past. The adjustment process is also complicated by the fact that the rest of the world does not appear likely, even over the medium term, to be in a position to provide a sufficiently strong offsetting source of demand growth to compensate for the necessary slowing in U.S. domestic demand. Policy actions to promote structural reform in the labor, product and financial markets could potentially change this, but the policy changes required are politically difficult, and their effects on net savings over time might be offset by demographic and other forces working the other direction. A number of observers have suggested that we can live comfortably with these imbalances for a long time, with very little risk to the U.S. and world economy.
In the first year of the inflation-targeting regime, some supply-side shocks were experienced, which caused inflation to materialize above the path consistent with the target. The Central Bank explained the reasons of this deviation through open letters written to the Government, took the necessary measures to put inflation back on track consistent with the target and shared its evaluations pertaining to the timing of convergence to the target with the public in a transparent manner. These implementations not only strengthened the communication framework of monetary policy, but also played an important role in shaping the expectations. Although the inflation rate has stabilized at around 10 percent-level for a long time due to the supply-side shocks experienced in 2006, the fact that the inflation expectations for the next 24 months is around 5.5 percent as of today is a clear evidence of the success achieved in the inflation-targeting. However, being ultimately focused on price stability, the Central Bank cannot be content with what has been achieved until medium-term expectations are consistent with the target. As a result, important steps were taken in 2006 on the way to transparency, accountability and predictability, which are the main principles of the inflation-targeting regime. This press release aims to review the strategic as well as the operational framework of monetary policy in light of the first year’s experience and to lay down the principles for 2007.

Accordingly, the maximum daily amount to be purchased in the auctions has been set at USD 45 million, with USD 15 million for auction amount, and USD 30 million for optional selling amount (200 % of the total amount sold). As of 12 December 2006, the total amount of foreign currency purchased via auctions and interventions is USD 9.4 billion, while the total amount sold is USD 3.1 billion for the whole of 2006. The total amounts of foreign currency purchased and sold by the Central Bank are shown year by year in the table below:  Table 2: The Central Bank’s net foreign exchange purchases and sales (2002-2006; million USD) FX Buying Auctions  FX Selling Auctions  FX Buying Interventions  FX Selling Interventions  Total Net FX Buying  2002  795  -  16  12  799  2003  5.652  -  4.229  -  9.881  2004  4.104  -  1.283  9  5.378  2005  7.442  -  14.565  -  22.007  2006*  3.961  1.000  5.441  2.105  6.297  Total  21.954  1.000  25.534  2.126  44.362  Year  * As of 12 December 2006  BIS Review 1/2007  7  Unless extraordinary differences are observed in foreign exchange liquidity conditions, FX buying auctions will continue in 2007 in the framework of the aforementioned program.
Productivity growth usually slows down when economic activity slows down, but in recent years productivity growth has been unusually low. It is also unusual that productivity growth falls as long as eight quarters in a row, as it has now. It is difficult to find a simple explanation for the low productivity growth in recent years. The National Institute of Economic Research has studied the composition effects, to put it simply, if the composition of industries with different rates of productivity has changed, and it finds no great effect on productivity. 13 Another possible explanation could be that the recent increase in employment has meant that new groups with a lower productivity than others have entered the labour market. For instance, it can take time to train new employees. It may also be the case that companies have prepared for coming retirements by employing additional staff so there are currently two to a job in some cases. When productivity slows down, unit labour costs increase, and this puts further pressure on companies to raise prices. There is thus risk of higher inflation. We are currently facing a situation where it is difficult to predict how companies will adjust to high unit labour costs. It is always difficult to dismiss staff, but indicators such as job vacancies, redundancies, companies’ employment plans, etc. point towards an adjustment having begun. At the same time, a general decline in demand makes it difficult for companies to pass on cost increases to consumers.

The relationship between economic activity and inflation is not particularly stable either. In the difficult deliberations we had to make in September we Executive Board members reached different conclusions, with a majority voting to raise the repo rate while the minority to which I myself belonged voted to hold the interest rate unchanged. On this occasion I shall not go into the various reasons for my stance in depth; they were clear from the separate minutes of the monetary policy meeting and I discussed them in a speech I held a couple of weeks ago. 6  BIS Review 121/2008
One is that the ability of supervisors to make plans to co-operate across borders, and thereby to reduce the regulatory burden on an individual bank during the transition to the new framework, depends to a great degree on the clarity of a bank’s own implementation plans. Another finding is that in some cases the overseas branches and subsidiaries of the bank may know very little about its own plans to adopt Basel II. This may be true even in some institutions that plan to adopt advanced approaches. Because the bank’s local managers may lack knowledge of how Basel II will be implemented internally, supervisors in the host jurisdiction may be uncomfortable with the bank’s overall readiness for Basel II. It may simultaneously increase the host supervisor’s need to contact the bank’s head office or its home supervisor for more information - something that might duplicate requests for information. The bottom line is that for home and host supervisors to work toward a more consistent application of Basel II, each bank’s own plans for adopting the approaches in the new framework should be clear and comprehensive. Equally important, banks should communicate those plans not just to their supervisors, but also to their own overseas branches and subsidiaries. And now, if you will permit me, before concluding my remarks today I would like to put on a different hat for a moment, and speak from my perspective as a banking supervisor from a European Union country.

If these issues are left unresolved, the image of the industry will be severely dented. In charting the way forward, two imperatives in capacity building are worth thinking. One, we need a pool of high-calibre leaders who are equipped with the right skills to resolve challenges and sustain the momentum of the industry’s progress. Also critical is the creation of an efficient system of succession planning to groom future leaders that will take the corporation and the industry to the next level of progress. Two, is for leaders to be supported by a team of dedicated and diverse talents. The leaders of tomorrow would most likely face challenges that are much more challenging than what we had faced before. They need to be flexible and adaptable to the new operating environment,  BIS central bankers’ speeches  1  new business regulation and able to communicate well. The issue confronting the industry however is in attracting the right talents who are committed to make insurance and takaful a career of choice. Talent is a scarce commodity. The industry needs to be competitive in its remuneration package. The salary package at the entry level must be attractive enough to get the right talent. The financial services sector is not the only competitor for the insurance and takaful industry but other sectors within the economy as well.
At the same time, GDP and disposable income become just over one per cent lower than they would otherwise have been, while unemployment becomes just over 0.5 percentage points higher, which corresponds to about 25,000 jobs given the current number of individuals in the labour force, approximately 5 million. The debt ratio’s numerator is thus just over 2 per cent lower and the denominator just over one per cent lower, so that the debt ratio is just over one per cent lower than it would have been otherwise. Thus, a one per cent lower debt ratio costs about 25,000 jobs. This is roughly the same relationship that I have mentioned earlier (Svensson 2012c), that 10 per cent on housing prices costs 6 per cent of GDP and 3 percentage points unemployment, that is, 150,000 jobs.9 As far as I can see, there is thus no support for the view that monetary policy could tangibly limit the debt ratio in the short run without major costs in the form of lower inflation and higher unemployment. Other means must be used to influence the debt ratio, such as mortgage caps and tax regulations; means that can affect the loan-to-value ratio or long real mortgage rates after tax in both the long run and short run. What does a tight monetary policy cost? As I mentioned earlier, CPI inflation measured using real-time data has averaged 1.4 per cent since 1997, that is, 0.6 percentage points below the target. Has this had any consequences for the real economy?

…and gives vulnerable groups of unemployed a better chance of getting jobs It is also often said that more of those in vulnerable groups with a high rate of unemployment, such as young people and people born abroad, have entered the labour market and that this, rather than the business cycle, explains why unemployment has increased.18 However, it is the vulnerable groups that are most sensitive to economic fluctuations. They are the first to be given notice of redundancy if they have a job, and they are the last to be offered a job if they are unemployed. They are thus more vulnerable to fluctuations in the demand for labour and if they are to get jobs and work experience if they are unemployed, we need to have a very large demand for labour and thus very expansionary monetary policy. As a large share of the labour force now has job chances that are sensitive to demand, one could claim that employment as a whole has now become more sensitive to demand fluctuations. Increased demand could then have greater effect on employment and unemployment than it did before. The fact that more people in vulnerable groups have now entered the labour market is thus an argument in favour of a more, not a less, expansionary monetary policy. High unemployment over a long time requires more expansionary monetary policy to bring down unemployment The fact that unemployment has been high over a long period of time has meant that longterm unemployment has increased.