samchain/econo-pairs-v1 huggingface dataset:
Moreover, falling interest rates have lowered house mortgage interest costs. Then there is the Government’s proposed reduction of tobacco tax. However, the price shocks from the supply side are mainly transitory and tend to lower the CPI temporarily but not necessarily inflation’s underlying trend. It follows that these effects probably should not have much influence on monetary policy. This holds even though the CPI change figures are likely to move outside the lower tolerance limit for a time during 1998, mainly on account of the lower tobacco tax. How strong is the upward trend? As I mentioned earlier, the primary concern for monetary policy is inflation’s underlying rate and trend. In that the monetary conditions have been expansionary for some time and both economic activity and resource utilisation are rising, Sweden should be moving BIS Review 35/1998  ˝  -8-  towards a situation with some increase in underlying inflation. This phase may not be imminent or involve anything dramatic but rising resource utilisation will ultimately lead to it. But there are some factors which may defer it. They have to do with the momentum in the Swedish economy and the impact that may come from the crisis in Asia. Another central factor is the exchange rate’s underlying trend. In addition there is the increasingly discussed uncertainty about the sustainability of international share prices. To sum up, most of the evidence suggests that economic growth in Sweden will become stronger in the coming two years.

To date, however, the upswing has been accompanied by subdued price movements. This mainly reflects a number of favourable transitory effects but there may also be signs of a somewhat lower inflation propensity. The strength displayed by productivity may perhaps enable the Swedish economy to expand somewhat faster without immediately generating inflationary pressure. But it is still too early to form a more definite opinion on whether the productivity trend has changed. It is now important that incoming statistics are still followed closely and assessed. As I just said, there is no reason at present to alter the repo rate. BIS Review 35/1998  ˝
As we discussed at our briefing last October, part of reason for the more moderate decline in jobs in New York during the recession was a less pronounced boom-bust housing cycle. Indeed, as a percentage, the city and state lost fewer jobs during this recession than they did during either of the last two downturns. By contrast, the downturn in employment in New Jersey in the current cycle was more severe. About 250,000 jobs were lost, or roughly 6.0 percent of total state employment – about the same as in the country as a whole. This decline is comparable to the job losses during the most severe recent recession in the state, that of 1989–1992. Fairfield County in Connecticut, also part of our District, saw declines comparable to the nation, while Puerto Rico experienced much deeper and longer job declines than the nation. In fact, employment in Puerto Rico began declining nearly two years before the onset of the recession on the mainland. Now, as in the nation, a labor market recovery has begun across much of the region. Over the past year, the tri-state region added roughly 100,000 private-sector jobs. Within the region, however, the recovery has been somewhat uneven. New York City, upstate New York and Fairfield County have been gaining jobs for more than a year now – at roughly the same pace as the nation. However, employment in New Jersey has only begun to expand during the past few months. In Puerto Rico, job growth has yet to be firmly established.

A range of measures will be introduced to accelerate the pace of migration towards e-payments, including driving the adoption of the mobile phone banking and payment transactions, increasing the number of point-of-sale terminals, and introducing a pricing structure that incentivises the use of e-payments. Conclusion Let me conclude by expressing the Bank’s appreciation for all the valuable contributions received from the industry, Government agencies and other stakeholder groups with whom the Bank engaged over the course of this year to develop the recommendations in the Blueprint. In total, the Blueprint sets out 69 recommendations to achieve the vision for the financial sector in 2020. The Blueprint provides the vision and direction to secure a financial system that will firmly support and drive Malaysia’s long-term growth potential and aspirations. It will be our shared commitment that will result in its success. 4  BIS central bankers’ speeches
Michael C Bonello: Malta's economy on the path to the euro Remarks by Mr Michael C Bonello, Governor of the Central Bank of Malta, at a Round Table organised by the Austrian National Bank, Brussels, 13 June 2007. *  *  *  This Round Table is being held shortly after the release of the Convergence Reports which the European Commission and the European Central Bank prepared at the request of Cyprus and Malta, and the recommendation of the Commission to the EU Council to allow these two countries to adopt the euro on 1 January 2008 on the grounds that they have achieved a high degree of sustainable convergence. And yet, only four years ago as Malta was preparing to accede to the EU, qualifying for euro area membership seemed a distant and uncertain prospect. This evening I propose to illustrate the nature of the challenge that Malta faced, how the task has been approached and what measures are being taken to ensure a smooth integration into the euro area. The Central Bank of Malta has been at the forefront in advocating an early adoption of the euro, and for good reason. With a GDP of around € billion and a population of 400,000 living in an area of 316 km2, Malta is the smallest and most densely populated EU Member State. It has no natural resources and is one of the most open economies in the EU, with average import and export-to-GDP ratios of over 80%.

One reason for Iceland’s limited success in keeping inflation in check has been precisely that the impact of the Central Bank’s policy rate hikes has not been transmitted in full to the mortgage loan market. In particular this is because one of the players there, the HFF, enjoys Treasury guarantees on its borrowing, enabling it to meet its funding requirement by issuing bonds at very long maturities with lower yields than on shorter issues, so that it can avoid raising interest rates on its new lending, which under normal circumstances would have been warranted and called for by the Central Bank’s monetary stance. Since autumn 2005, market yields on indexed bonds have risen in the range ½ to 2 percentage points, depending upon the issues involved. At the same time, HFF interest rates have gone up by half a percentage point. So it cannot be said that Iceland faces the same conundrum as the US about why long-term interest rates have not risen in the wake of policy hikes. House prices began to increase significantly again last spring, in the teeth of general expectations, and have been the main driver of the CPI in recent months. It is not unlikely that the latest wave of price rises in the housing market is at least partly due to decisions by  2  BIS Review 111/2007  the government and HFF last winter to raise the loan-to-value ratio and mortgage ceilings and to lower interest rates on new lending.
I particularly express my gratitude to the Bank’s staff, the banks’ managers and shareholders who were the first to experience the effects of our decisions, to the media which facilitated the necessary two-way interaction with the public, to the government authorities with whom we necessarily cooperate, to the international financial organizations, particularly the IMF, the World Bank and the EU Delegation, with whom we have exceptionally useful cooperation, to the business community, which, with some exceptions, showed high positive sensibility and understanding for the National Bank policy, to the diplomatic representatives in the country who, in their distinctive way, often expressed their support and understanding for the work of the National Bank. I also thank all the critics of the decisions we have made all these seven years who, regardless of their opinions, made us more cautious in the decision making process and helped expand the knowledge of the market participants, including the households, on the National Bank activities and on the importance of its decisions for the everyday life. I know well that these special occasions are not suitable for longer speeches on our accomplishments. Actually, we were doing that regularly through the monthly reports, quarterly and annual reports, regular press releases of the sessions, through press conferences and the NBRM website which is becoming richer and better from day to day.

Turning to the debt burden of households and firms, as we noted in our Financial Stability Report of the second half of last year, the financial indicators of the corporate sector look favorable, with a stable and limited currency mismatch. The household average shows no financial deterioration because the increase in private consumption has been accompanied by an increase in labor income. However, households as well as firms must keep a watchful attitude facing possible risk scenarios. As for banks, the sector has adequate capital levels to absorb the materialization of a severe risk scenario. As shown in our last Financial Stability Report, stress tests indicate that the banking system’s current levels of capitalization would permit it to absorb an episode of sharp GDP slowdown, an increase in the cost of credit in pesos and an exchange rate depreciation. Meanwhile, the State keeps a net creditor position, contributing to the access to external loans at low spreads. Our terms of trade, although lower than some months ago, are high by historic standards, and our external credit access conditions are good, also by historic standards as well as compared with other emerging economies. Annual inflation is somewhat above 4%. The latest monthly CPI figure was unexpected, but given its characteristics it does not change our evaluation of the medium-term inflation trend, which remains centered on 3%, just as we stated in our Monetary Policy Report. Private inflation expectations are also stable around 3% y-o-y.
But how do we explain the episode of the sell-off this January when the market already knew in December that tapering would proceed? 3. Conceptually, it is not very difficult to understand the spillover effects of the UMP on EMEs in the five years after 2009. There was the first phase of spill-over, which entails a period of heavy capital inflows, through the banking and bond market channels, to the EMEs. This was a “happy” phase of the spill-over of UMP because the EMEs basically enjoyed apparently pleasant outcomes in investment, consumption, job creation and economic growth. At the same time, EME currencies appreciated and their foreign reserves increased. However, this period also saw the build up of vulnerabilities in the EMEs. The inflow of capital, including the carry trade in search of yields, created easy monetary conditions, which encouraged rapid credit expansion amongst the households and corporates. While domestic consumption and investment became buoyant, most EMEs experienced a significant deterioration of their current account positions. Needless to say, inflationary pressure and overheating in the asset markets also built up in most EMEs. This was why some EMEs, Hong Kong included, have introduced macroprudential measures to tackle the spill-over  BIS central bankers’ speeches  1  effects of the UMP of advanced economies. While it is too early to tell whether these macroprudential measures were effective, the EMEs seem to be entering the second phase, which I would call the “unhappy” period, of the spill-over.

However, speaking for myself, I have always seen the repo rate path as a component of our ambition to be transparent as it shows which repo rate we include in our forecasts. And we always emphasise that the repo rate path itself is a forecast and not a promise. One important source of the difficulties that Goodfriend and King point out is the unclear allocation of roles, responsibilities and instruments for managing the work of financial stability and macroprudential policy in Sweden. As I have already mentioned, I consider sorting this matter out to be a matter of great urgency, considering that Sweden has one of Europe’s largest banking systems in relation to GDP. 6  Goodfriend, M. and King, M., “An assessment of Swedish monetary policy 2010–2015”, Riksdag Committee on Finance, Sveriges Riksdag, 2016. 7  “Time to improve the inflation target?”, published 3 December 2015. BIS central bankers’ speeches  7  This spring, Goodfriend and King’s assessment will provide an excellent basis for the discussion of monetary policy and the issues that a modern central bank must manage. These unusual times are placing great demands on both monetary policy and macroprudential policy. It is important that we are able to meet these challenges in the right way. 8  BIS central bankers’ speeches  Figure 1. Inflation targeting has made inflation lower, more stable and more predictable. Note. Annual percentage change. Sources: Statistics Sweden and the Riksbank  Figure 2. Average mortgage rate and corporate rate, and repo rate  Note.
During the past year, the Albanian financial system and its supervisory framework were subject to an appraisal by the International Monetary Fund and the World Bank (FSAP programme). This process consisted in the performance appraisal for all the segments of the financial system, the supervision method, and approximation with international standards. It evidenced, among others, the capacity of public authorities to identify and manage diverse risks and the inter-institutional cooperation to maintain the stability of the country. From this perspective, interconnection of financial system segments that are supervised by different institutions was underlined as very important. Similarly, it was pointed out that the responsibility to safeguard financial stability depends on policy coordination by all relevant authorities. The process concluded that the financial system is able to withstand the international financial crisis and that the actions taken by the authorities to identify and manage risks have been on the right direction and extent. Moreover, it found that the supervisory process at the Bank of Albania is highly compliant with Basel’s core principles for effective banking supervision. Year 2013 was a challenging year for the supervisory process of the banking system. In addition to direct involvement in evaluation processes of the financial stability, the Bank of Albania is involved in other main projects related to: addressing non-performing loans case by case, guidelines on loan restructuring and real estate appraisal, guidelines on recovery and resolution plans, developing credit instrument for development policies, and improving reporting standards.

This trend began later than the decline in real interest rates, but Swedish inflation began to fall slightly before that in other western countries such as the United States and the euro area. The most recent downturn in inflation in the euro area can to some extent be explained by the fall in energy prices. However, underlying inflation has also fallen in the wake of both the banking crisis and the euro crisis. It is necessary to take into account the decline in both real interest rates and inflation in the monetary policy deliberations. The fundamental reasoning regarding the stabilisation ability of monetary policy with a floating exchange rate is based on the assessment of a normal nominal interest rate, simply described as an interval for a nominal interest rate that neither speeds up nor slows down the economy. To estimate how high the normal nominal interest rate should be, we look at the real interest rate and add to this the inflation target. If the real interest rate is 2 per cent and the inflation target is 2 per cent, then the nominal interest rate should be around 4 per cent. If the real interest rate rises to 3 per cent, and the inflation target remains unchanged at 2 per cent, the nominal interest rate will be 5 per cent, and so on. But as I have just shown, developments are instead showing a downward trend. Lower real interest rates and lower inflation and inflation expectations are pushing the nominal interest rate downwards.
30  In spite of the cold war, proxy wars and several wars of independence of colonies, the period after the Second World War remains one of relative peace in the developed world, compared with any other period in history. 31  Most of the sub-periods during which debt grew fastest have coincided with periods of economic slowdown. But what is remarkable is that we have not generally seen a reduction in debt levels in good times that would match the increases in debt in downturns. 32  What the graph hides is the fact that most of the increase in the average OECD public debt-to-GDP ratio in the late 1990s has been driven by the steep debt increases of Japan in the 1990s. Taking out Japan from the sample shows a slight drop in the average debt ratio during this period. BIS Review 106/2008  7  Gallatin’s debt reduction efforts look even more remarkable when viewed through the prism of current fiscal developments throughout the developed world. If Albert Gallatin had been in charge of OECD public finances during the decade prior to the onset of the current financial turmoil, we might be in a more comfortable fiscal situation today. As it stands, our longerterm fiscal challenges are formidable and will demand courageous political and fiscal leadership. Albert Gallatin’s adopted home country is no exception. Regardless of who moves into the White House in January 2009, the new President’s longer-term fiscal policy options will be constrained by the legacy of the past.

Moreover, I suspect he would conclude that the political commitment to fiscal discipline should have been much more pronounced during the last few years when the global economy enjoyed broadly robust growth. As the world is entering what looks like a protracted period of lower growth, it will be extremely difficult to keep public debtto-GDP ratios constant, let alone reduce them. 5. Conclusion  After this very brief fiscal detour let me conclude by returning to Albert Gallatin. Anyone who loves the city of Geneva has many reasons to be proud of the achievements of Albert Gallatin. To my knowledge, he is the only son or daughter of Geneva who is honored in the form of a prominent statue in Washington D.C. He stands at the entrance of the Treasury building, and only a few steps away from the White House. On the statue, he is described simply as a “Genius of Finance”. As Secretary of the United States Treasury, he made a crucial contribution to the stability and development of the nascent United States financial system. Above all, he was deeply committed to reducing the size of the federal public debt during his first seven years in office. Only when tax revenues declined, as the threat of war loomed, did he allow debt reduction to be relegated to a secondary objective. 29  See Paul R. Masson and Michael L. Mussa, Long-term Tendencies in Budget Deficits and Debt IMF Working Paper No. 95/128, 1995.
Three alternatives for supervision The first alternative is to give the home supervisor the role of lead supervisor with full responsibility for EU operations, branches as well as subsidiaries. This is the proposal from the European Financial Services Roundtable (EFR). The lead supervisor would be the single point of contact for reporting and would validate and authorise internal models, approve capital and liquidity allocations, decide about on-site inspections. In short, the lead supervisor would have full supervisory responsibility. The role of host supervisors would be as advisers in a college of supervisors. However, host supervisors would have no formal power. Also, when it comes to financial stability and crisis management, the lead supervisor would only have a national mandate. Thus, there would still be a need for cross-border regulatory cooperation. The second alternative, which is put forward by the two authors, is to give the home supervisor the role of lead supervisor with an EU mandate. The lead supervisor would work as in the EFR model, with the difference that the lead supervisor is given a “European mandate to ensure that the interests of all depositors/countries are taken into account”. In this model there is a decision-making agency of European Financial Supervisors at the centre, which is delegating the task of supervision to each respective home supervisor. Regarding financial stability issues, the home country central bank would also be involved, acting on behalf of the European System of Central Banks (ESCB).

If we are establishing a central decision-making body anyway, why act through 25 different authorities? Both the first and the second alternatives are half-way compromises trying to please different interests. My own view is that the third alternative, although radical, is the logical solution. There are two main arguments against the idea of a European Financial Supervisor – one relevant and one not very relevant. The not very relevant argument is that the supervisor needs proximity to have knowledge about the markets where the institution operates. First, this is already a problem with the home-host model. Second, this is an organisational problem that can be solved. An EU supervisor would certainly employ staff from all EU countries and have local offices in the national financial centres. For instance, for a regional cross-border banking group, I imagine the supervisory team to be based in the relevant region, perhaps in the same premises as the national FSA, and to consist of staff from that region. The relevant argument against an EU supervisor is that supervisory power ultimately needs to be backed by financial muscle. In the present set-up, the financial muscle derives from the national central bank’s ability to act as a lender of last resort and the government’s ability to raise taxes. The EU lacks such power. However, this problem is hardly unsolvable. For instance, one could think of the EU building up a deposit insurance fund for cross-border banks supervised by the EU supervisor, which would be able to handle all but the largest banking failures.