samchain/econo-pairs-v1 huggingface dataset:
11  For a detailed analysis see Aymo Brunetti (2003): „Hat die Schweiz ein langfristiges Wachstumsproblem?” Neue Zürcher Zeitung, 31.5./1.6.2003, p.29. 4  BIS Review 44/2003  effective but also more flexible in its ability to focus its efforts beyond the primary mandate of maintaining price stability. 6. Economic and Monetary Policy Outlook  Let me now turn to a brief assessment of current economic conditions in the United States as well as here in Switzerland and conclude with a few comments regarding the outlook for Swiss monetary policy. Recent U.S. economic data confirms that GDP growth has accelerated rapidly in the second half of 2003. Third quarter U.S. GDP growth will be close to 6%. For the fourth quarter, most market participants expect GDP growth to slow to a still robust 4%. This would imply a U.S. growth rate of approximately 3.5% for 2003. Substantial monetary and fiscal stimulus as well as strengthening financial conditions has supported the growth dynamic in the second half of 2003 in the United States. Expectations of moderating growth going forward are linked to the fact that stimulus from fiscal policy is set to shrink. The contribution to consumer spending from this year’s tax cuts is set to decline gradually during 2004. In addition, further substantial increases in the defence budget are unlikely in the coming year, thus dampening the relative contribution to GDP from defence spending during 2004.

Moreover, with the achievement of what constitutes for all practical purposes price stability across many economies, a number of central banks discovered that with it came a new challenge: policy could no longer be directed exclusively to push inflation lower but had to pay at least as much attention to avoid inflation that could conceivably fall too low and thereby undermine the goal of price stability by initiating deflationary tendencies. As has traditionally been the case, vigilance will therefore continue to be the “Leitmotiv” for the world’s central banks. 3. Global Competition and Disinflation  A number of factors have contributed to the striking disinflation since the 1970s.5 Good monetary policy has undoubtedly made an important contribution of which many of today’s leading central bankers have every reason to be proud of. In many cases, a precondition for good monetary policy was institutional independence. Politicians have therefore played an important role as well. They have empowered central banks and freed them from political interference. Fiscal policy probably also contributed somewhat to an improved global macroeconomic environment though the case is not entirely convincing.6 Finally - and this is the point I would like to emphasize today – the global disinflation of the last twenty years has been facilitated by dramatic structural changes in the global economy. These changes are best encapsulated by what is loosely referred to as globalization.
This massive and rapid action was welcomed but raised questions, particularly in Germany: is the ECB not going beyond its mandate, endangering price stability? And even more "fundamentally ", where do these thousands of billions created all of a sudden come from? I will start with the second question: the specific feature of a central bank is its ability to create money virtually and without limits. However, it must be borne in mind that the money created by central banks is never simply “given away” permanently: it is loaned for a limited period; and it is channelled into the economy and eventually comes back to the central bank. The central bank can buy time through its monetary creation, and this is important. But it cannot sustainably increase wealth; only our work and economic growth can. I will now return to the first question, on whether or not we are fulfilling our mandate. In its founding Treaties, and under the legitimacy afforded to it by economic actors and public opinion, the ECB’s measures are bound by two interlinked anchors: its price stability mandate and its independence. They are inherited from the Bundesbank and in my view vital. Independence : the ECB is subject to neither national governments, nor to the pressures of the financial markets nor of passing trends. The ECB’s monetary policy must continue to support economic activity, for the sake of its own mandate of price stability.

I would now like to discuss three questions in particular. The first is whether CSR is a stable concept or one that is still evolving? This concept broadly stems from that of sustainable development, which is defined as development that meets present needs without compromising the ability of future generations to meet their own. Its blueprint was set out at the 1992 UN Conference on Environment and Development in Rio de Janeiro (the first Earth Summit). It is based on the principle of development that is economically efficient, socially equitable and ecologically sustainable. CSR, whose initial objective was accountability, still largely appears to be an evolving paradigm closely linked to the current transition towards a new economic model. BIS Review 132/2008  1  In this respect, Rio brought to the fore the need for an ISO standard at the company level in order for companies themselves to take account of their impact and change their processes as part of a preventive approach. The UN addressed this dimension and brings together, under its aegis, the initiatives of the major companies that adhere to a relatively general charter. The Johannesburg World Summit on Sustainable Development (also known as Rio Plus 10 or the Second Earth Summit), largely focused on companies wishing to take centre stage in the protection of the planet and adopt a proactive role. The ethical dimension of CSR lends strength to the questions of stakeholders and employees as to how their funds are used.
For similar reasons to the ECB, we moved from twelve to eight meetings per year, and we began publishing a statement every time we met and releasing Minutes, Inflation Reports and Monetary Policy Summaries simultaneously on the logic that one decision should merit only one news event. The MPC now provides much more detailed information on the assumptions that underlie our forecasts and regularly assesses them versus actual outturns. We release our key judgements for the global economy, domestic demand and the pace of demand relative to supply capacity, and we publish paths for variables that we and others can monitor to see whether the forecast is on track. We also now publish annual stock takes of the supply side of the economy and of the forecast errors we have made over the past year. Last year, the MPC introduced layered communication to reach the broadest possible audience. In addition to the Inflation Report we now publish a visual summary, or top layer, which distils the document down to its main messages with a few accompanying diagrams. It is intended for a non-technical audience. Following  5  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  5  the changes, we have seen web traffic to Inflation Report pages increase by a third and research suggests that public understanding has increased by a quarter.4 The biggest innovation in communication has been the introduction of forward guidance as a tool to influence short-term interest rates once policy rates hit the effective lower bound.

The initial lift from the fiscal stimulus will likely wane over the course of this year. And financial conditions have become less accommodative over the past several months. In addition, we are now seeing some emerging headwinds to growth from the partial government shutdown in the United States and elevated geopolitical uncertainties abroad. Other “data” confirm that the winds in our sails have calmed. The headlines have been about investors’ concerns around growth, which have contributed to volatility in markets. This is also showing through in surveys of households and businesses, who say that they are somewhat less confident about future economic prospects. For example, the latest Empire State Manufacturing Survey and New York Fed Business Leaders Survey both point to slowing growth in the region. And there is no doubt that my colleagues and I are hearing the same thing directly from our business and financial market contacts, who are more focused on the possibility of a weaker economic outlook this year.3 But let me be clear: a softer economic outlook doesn’t mean we should prepare for doom and gloom. On the contrary, it’s likely we’ll see GDP growth somewhere between 2 and 2½ percent this year. That’s a step down from 2018, but still consistent with a healthy, growing economy. Supporting a Strong Economy So, how should the Fed respond to an outlook of slowing growth and one that’s less certain than, say, this time last year? In a word: carefully.
Therefore, should a concrete medium-term fiscal program, which safeguards the sustainability of debt dynamics and budget discipline, be established, it is possible that market interest rates will remain at low levels permanently. Distinguished members of the press, To sum up, growing perceptions that recovery in the global economy will be slow and gradual, saving rates will remain high and global interest rates will remain low for quite some time; enabling monetary policy to provide a more concrete perspective for the future. Within this framework, forecasts are based on an outlook, which envisages that short-term interest rates will be somewhat further eased and not raised until the end of 2010. The monetary policy for 2011 and thereafter will be determined according to the course of variables affecting the inflation outlook. With the end of the crisis, should the fiscal discipline be reestablished in a gradual and forceful manner, short-term interest rates are projected to remain in single-digits throughout the forecast horizon of three years. Distinguished guests, Even if our primary objective is to achieve price stability, I would like to reiterate that we will continue to take all the necessary measures and use all policy instruments available in a timely and due manner should the likelihood arise that problems in international markets adversely affect domestic financial markets. Therefore, strengthening the commitment to fiscal discipline and the structural reform agenda is also critical to facilitate expectations management and to support the effectiveness of monetary policy decisions.

Matters to do with world economic development and what should be done - not just to mitigate the short-run effects but also to construct systems and institutions so that similar events can be avoided in the future - have been high on the agenda for economic policy discussions in various fora this autumn. The latest instance is the 1998 Annual Meeting of the International Monetary Fund in Washington D.C. earlier this week. In connection with that meeting, finance ministers and central bank governors from all over the world assembled in various groups to discuss the situation. Background to the global economic problems Just a year or so ago, many observers foresaw a golden future for the world economy. There was talk in some places of a new economic era, with strong growth and permanently low inflation, at least in the United States. Today, the discussion has shifted in general to deliberations about the risks of a world economic slowdown. The challenges the global economy is facing at present are a combined result of several factors. One of these factors is, of course, the situation in Japan, where the economic problems, as I just said, have been at work throughout this decade. The inability to take sufficiently resolute action has led the Japanese economy into a serious decline. Japan has the world’s second largest economy and is of primary importance for the outlook in Asia as a whole. A crisis in other Asian countries then materialised almost a year ago.
In my view, we best prepare for the unexpected in two ways: we need to be operationally ready to change course when needed, and we need to remain analytically focused so we know when to recommend to policymakers that they do so. For example, the FOMC has made it clear that it stands ready to resume reinvestment if a material deterioration in the economic outlook were to warrant a sizable reduction in the federal funds rate. The FOMC also indicated that it would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate. Also, unexpected operational demands could emerge from technical developments within the Treasury and agency MBS markets. Even though it is shrinking, the Federal Reserve’s portfolio is and will remain large, and market participants will look to the Federal Reserve to lend out on a collateralized basis some of its holdings of Treasuries and MBS from time to time in order to facilitate settlement, as is done by most other large fixed-income investors.13  Conclusion Let me conclude now by reiterating the message of confidence with which I began my remarks.

It improves on the 1988 Accord by aligning risk weights with a borrower’s creditworthiness as indicated by an external credit rating. The IRB approach goes further and is one of the most innovative features of the New Accord. It has been constructed to build upon and further encourage investments banks are already making in their internal risk management systems. As you know, these systems have been developed and further refined to promote a bank’s competitiveness and to protect it against loss - and not just to respond to a regulatory mandate. Banks using the IRB approach will be permitted to quantify key measures of a borrower’s creditworthiness in determining the corresponding capital requirement. This will include estimating the likelihood that the borrower will default. Many banks will also be able to provide internal estimates of other key variables, such as the recovery rate if a borrower were to default and the likelihood of a credit line being drawn upon. While banks adopting the IRB approach will have the flexibility to rely on their own estimates of key risk parameters, those estimates will be subject to a set of minimum operational requirements. The aim of these standards is to ensure that these critical inputs have integrity and are the product of a system the bank relies upon to perform its day-to-day operations. Further, through pillars two and three, the new framework builds in additional checks and balances to ensure that banks’ systems will generate accurate and timely credit assessments.
This relates to an international discussion on whether the policy rate can play a role in stabilising the credit cycle, even when macroprudential policy is in place. 16 One reason why it might play a role is that it can be difficult to design a system for macroprudential policy that functions efficiently enough and cannot be circumvented by innovative market participants. If, for instance, the policy rate is kept low for a long period of time at the same time as macroprudential policy is relatively restrictive, there is a risk that a grey credit market will arise. The interest rate is of course a blunt instrument to use in stabilising the credit cycle, as it has a broad impact on the economy and a substantial effect on the economic cycle. However, one advantage of the broad impact of the policy rate is that it is therefore difficult to “avoid”, even for those who might be able to circumvent macroprudential policy. 17 Some countries are also fairly explicit about giving the policy rate a role to play in subduing the credit cycle, as a complement to macroprudential tools. 18 In the same way as macroprudential policy can help ease the pressure on monetary policy, monetary policy can give support to macroprudential policy by leaning against the wind. Thus, there are a number of questions regarding the interplay between macroprudential policy and monetary policy that require further consideration.

Finally on regulation, I note with regret that far too often the discussion appears to focus solely on the notion of introducing so-called “green supporting factors” to seemingly “incentivise” banks to favour greener loans and investments. As I mentioned previously,  4/6  the Committee will not pursue such an approach, but will rather be led by its mandate. Accordingly, we will be focused solely on the risk profile of different asset classes when it comes to climate change. To the extent that there is clear and rigorous empirical analysis pointing to different climate risk profiles across different asset classes, the Committee will then consider whether additional regulatory measures are warranted to mitigate such risks. More generally, there are a lot of ongoing initiatives globally, and we are acutely aware of the potential fragmentation when it comes to different supervisory and regulatory initiatives, which in turn would undermine the global level-playing field. As such, it is crucial that there is broad agreement among the larger set of global public and private-sector bodies when it comes to issues such as consistent definitions, taxonomies and approaches. These are crucial prerequisites to any subsequent disclosure, supervisory or regulatory initiatives pursued by the Committee. Therefore, it is extremely important to maintain global coordination and seek global measures where relevant. Stress testing as a silver bullet?
Mr. George discusses the prospects for the euro and the attitude towards the single currency in the United Kingdom Speech by the Governor of the Bank of England, Mr. E.A.J. George, given to the Financial Forum of West Flanders in Bruges on 21/10/98. Britain in Europe It’s a great pleasure to be here in the beautiful city of Bruges, and I am honored to have this opportunity to address the Financial Forum here in West Flanders. Mr. Chairman, in just 50 business days’ time - on 1st January next year - eleven European countries will take the long-awaited, truly historic, step of merging their national currencies into a single “euro”. The United Kingdom will not be among them, but we have a vital interest in the euro’s success. I should like to explain to you this evening Britain’s attitude to the euro, and then say something about the prospects for the new single currency as an element of stability in today’s turbulent global financial and economic environment. Let me make clear at the outset that, of course, I recognise that monetary union is fundamentally a political issue. It necessarily involves some deliberate further pooling of national sovereignty over important issues of public policy - monetary policy and overall fiscal policy - just as the single market involved the pooling of sovereignty over aspects of trade and competition policy and so on. As a central banker I have nothing to say about the politics of monetary union.

But it is also, of course, about economics, and the economics of monetary union could go either way. I can see that if it goes well it will contribute to a broader cohesion within Europe; but equally if the economics were to go wrong, then that could blow back on the politics of Europe and give rise to tensions. I shall concentrate my remarks this evening on the economics of monetary union. The economic pros and cons have in fact been exhaustively debated in the United Kingdom and the arguments are now reasonably well defined, even though different opinions inevitably attach different weights to them. On the positive side, the crucial and unique economic advantage of monetary union is nominal exchange rate certainty within the euro area - not just the reasonable de facto stability that might result from each EU member state individually pursuing disciplined macro-economic policies in parallel - but nominal exchange rate certainty for the indefinite future. And that is a very real economic advantage as any UK exporter who has suffered from the exaggerated strength of sterling over the past two years or so will readily tell you! One can argue that such exchange rate certainty is not an essential complement to the European single market - any more than exchange rate fixity is essential to achieving benefits from free trade more generally.
This remarkable de-coupling of inflation expectations from economic disturbances is the single most encouraging indicator that the new monetary policy framework is doing its bit to ensure continued economic stability. The importance of reliable information In monetary policy as in business, reputations that have taken decades to build can be lost with distressing speed: it only takes one banana skin to turn a confident stroll into a painful tumble. And while monetary policy may be a matter for experts these days, it is very far from being a precise science. Any honest assessment of the economic outlook comes with very large health warnings. That’s why, in its quarterly Inflation Reports the MPC discusses at some length the main economic risks that may knock its central projection off course. These tend focus on events beyond our control - the state of the world economy for example - or gaps in our understanding of key economic relationships - such as the link between house prices and household spending. The minutes of our policy meetings reflect a lively awareness of the range of possible outcomes which need to be factored into decisions taking. But few subjects consume more of our time and energy than another, more insidious, source of uncertainty: one with which the MPC does daily battle - the data. As the last Governor liked to remark, “There are three kinds of economists - those who can count and those who can’t”.

The fastest pace of sales in the previous business cycle was 17 million units for all of 2005. While there may be some additional upside potential to these sales given the quite long period over which they were depressed  2  BIS central bankers’ speeches  relative to fundamentals, it seems unlikely that they will continue to grow at the rate they have over the past few years. Housing is another area where the upside risks are likely to be less than what we might expect under more normal conditions. We have seen an impressive recovery of multi-family housing starts over the past few years. However, starts of single-family homes continue to languish at relatively low levels despite the fact that home prices have risen substantially over the past two years and mortgage rates remain quite low. Mortgage lenders continue to be extremely risk averse and mortgage credit to those with lower credit scores is still significantly constrained. There is nothing on the horizon that would lead me to believe that situation will change in a material way any time soon. Lastly, over the past few months the exchange value of the dollar has appreciated while growth prospects of key trading partners, particularly the Euro Area, have dimmed. Of course, the appreciation of the dollar is likely due in part to increasing confidence that growth prospects in the U.S. have improved. Therefore, this development does not mean we should abandon the consensus forecast.