samchain/econo-pairs-v1 huggingface dataset:
That could potentially create some turmoil for international markets including ours and in the process we could see some potential for dislocation which is why Sri Lanka has decided to reach out to multilateral agencies like the IMF and the World Bank to assist us in terms of sheltering or protecting the economy against any adverse developments that may occur in the near future as a consequence of any turmoil in international capital markets if and when US policy makers decide to raise interest rates. That is one hurdle we have to look at. The second hurdle I would say is the lack of a structural change the way international, particularly developed countries of the world, are managing their economic affairs. A lot of the changes that we have seen in the last 5 years has had to do with monetary policy and the aggressive easing of the monetary policy. But on the fiscal side, you haven’t seen any structural changes in countries like the United States and most European countries that took the world into the great recession in 2008 as a consequence of their housing  2  BIS central bankers’ speeches  bubbles. That structural change in terms of improving productivity, reducing the size of social security programs and retooling their economies to become more productive has still not started and until that happens we don’t have a sustainable basis for global growth to grow apace.

As Professor Lin said we had the great recession of 2008 and its immediate aftermath what you found was that three strands of relatively new economic activism manifested themselves. In the first instance you saw a huge pump-priming effort by the People’s Republic of China, which in its wake created perhaps the strongest commodity price boom that we have seen in recent history. That I think was a key take away from that period and China to some extent prevented the world from falling into a depression by stimulating its economy, and as Professor Lin has now elaborated to us, it falls in line with his perception that in times of recession developing countries are well-advised to go ahead and really stimulate domestic infrastructure construction etc. to take on the slack caused by international events. Secondly we saw the major central banks of the world, that includes the United States, the Europe, the United Kingdom, Japan and Switzerland, creating money on an unparallel basis which for my calculations to date add up to about 8 trillion dollars worth of new money created in the last 5 to 6 years. That is significant. That’s the second strand that emanated from this crisis period. And thirdly what we have seen is that the so called developing economies in a curious twist of their economy fate, actually became the biggest creditors in the world and the so called rich countries, the developed countries, were actually the biggest debtors.
1)  Considered theoretically as risk-free securities, government bonds are usually considered as floor rates and constitute the benchmark for pricing almost all other securities. Thus, rising sovereign yields mechanically shift funding costs upwards for all private agents. Interest rates on government bonds usually include small premia to compensate for liquidity and credit risk. For a proper monetary policy transmission, these risk premia should not reach such level and volatility that the signal from the key policy rates is no longer perceivable and no longer reaches the real economy. In recent months, the tensions rapidly spread to other markets to a point that jeopardized the transmission of monetary policy, as European government bond markets became largely dysfunctional. 2)  The second contagion mechanism goes through the banking system. On the liability side, banks are already suffering from increasing government debt issuance which has a crowding out effect and contribute to steepen the yield curve; it is a real issue as banks debts maturing in the next three years are significant while government support and central banks facilities are expected to be gradually removed. In that tense context, the sovereign debt crisis trigger increasing funding tensions for European banks owing to the contagion of sovereign to banks spreads. It reflects the traditional belief that domestic financial institutions cannot be less risky than the sovereign which are supposed to back them in case of need.

Christian Noyer: Sovereign crisis, risk contagion and the response of the central bank Speech by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Global Interdependence Centre (GIC) Conferences, Paris, 17 June 2010. *  *  *  Ladies and gentlemen, I am very much honored to open this second session of conferences in Paris and I would like to thank the Global Interdependence Centre for having Banque de France as a partner of this full week conference. I will give the point of view of a central banker on the recent events on sovereign markets, the major implied risks and challenges for financial stability and the recovery process. Finally, I will briefly touch on the latest actions of central banks and public authorities to contain those renewed tensions. I am confident that this opening address will give rise to valuable discussions in the panels where distinguished speakers will express views from different perspectives: central banks, rating agencies, investors and academia. Sovereign crisis: origins and dynamics The sovereign debt turmoil is the most recent episode of a crisis that started more than two years ago yet. Some European States are the latest actors of a protracted debt crisis after i) US subprime mortgage borrowers, ii) financial institutions with weak funding situation and iii) non financial companies and households unable to finance their capital needs.
The latest ECB staff projections foresee annual real GDP growth at –8.0% in 2020, 5.0% in 2021 and 3.2% in 2022. Euro area real GDP is only expected to recover to pre-crisis levels in late 2022.2 The strength of the recovery remains, however, highly dependent on the evolution of the COVID-19 pandemic and the success of containment policies. The public health crisis will continue to weigh on economic activity and poses downside risks to the economic outlook. The sharp drop in economic activity earlier this year has weakened price pressures. Annual headline inflation in the euro area stood at –0.2% in August and is expected to remain negative over the coming months, reflecting the effects of earlier declines in energy prices, a stronger euro, and a temporary reduction in the value-added tax rate in Germany. ECB staff project annual inflation to gradually increase, from an average of 0.3% in 2020, to an average of 1.0% in 2021 and 1.3% in 2022. The ECB’s monetary policy The monetary policy measures that we have taken since early March are providing crucial support to the economic recovery and are helping to safeguard medium-term price stability. Without our measures, we would be facing a deeper economic contraction and more severe 1/4  BIS central bankers' speeches  disinflation. Our policy support during the crisis has been structured along two main axes: liquidity operations and asset purchases.

The ECB’s Governing Council has now decided that, from 2021, the Eurosystem will accept bonds with coupons linked to certain sustainable performance targets as collateral for credit operations and outright purchases for monetary policy purposes, provided that they comply with all other eligibility criteria. Building on these three criteria, we should continue to do what we have been doing all along: ensuring that our accountability practices remain commensurate by letting them evolve in a flexible manner and by adapting them in line with the demands for scrutiny from European citizens. And because we can only make improvements if we are aware of people’s expectations and concerns in relation to the ECB and its policies, we are inviting everyone in the euro area to share their ideas and comments through the ECB Listens portal on our website. Conclusion Let me conclude. Our regular exchanges are crucial in explaining the ECB’s actions to people across Europe and to you as their representatives. This is even truer in testing times when the people of Europe expect the EU to rise to the challenge. A recent survey commissioned by this Parliament shows that more than two-thirds of Europeans would like to see the EU have more competences to deal with crises such as the COVID-19 pandemic. Citizens clearly look to the EU for answers and you play a central role in ensuring that such answers are forthcoming. The measures adopted thus far by national governments and the European institutions are reinforcing our policies.
Indeed, the need to guard against this risk is one of the reasons for the faster monetary normalisation that our latest decisions entail. Another risk relates to possible second-round effects, i.e. when high inflation passes through to wage increases and these, in turn, push up consumer prices to the extent that firms seek to maintain (or widen) their margins. Again, this would make inflation far more persistent and increase the likelihood of the feared de-anchoring of inflation expectations. As I said, while there is no evidence of such effects occurring at present, at least on a widespread basis, the current high inflation does make this more likely. Naturally, the extent of the economic downturn – over which, as I indicated earlier, there is significant uncertainty –, and its effects on wages and profit margins, will be a key determinant of the medium-term inflation outlook and, therefore, of our monetary policy decisions. Ultimately, our next decisions will be based on the incoming data and their implications for achieving our medium-term inflation target, in line with the “meeting-to-meeting” approach that we have adopted. 9  In any event, interest rates will have to reach a level that allows us to ensure a gradual convergence of inflation to our medium-term target, and how quickly we reach that level will be conditioned by the same target. Whether this means reaching interest rates at levels close to neutral or higher will therefore depend on that target. The normalisation of monetary policy is prompting a tightening of financial conditions.

The other scant quantitative indicators that are still available for the quarter, such as new car registrations or the retail trade index, on the demand side, and the industrial production index, on the supply side, tend to confirm the loss of momentum in activity. Among the confidence indicators, the August PMIs show signs of moderation in both services and manufacturing. Manufacturing, in particular, evidences the decline in new (both internal and external) orders. Industrial activity has continued to be weighed down by global supply problems (which are affecting the automotive sector above all) and by the escalation of input prices since 2021 H2 (which have affected a very high number of products). Economic projections have been revised down notably for growth and up for inflation The latest ECB projections for the euro area, in contrast to those published in June, include, in particular, new developments in the gas market. First, gas prices were revised up in accordance with developments in the gas futures markets. Second, and for the first time, a degree of gas supply rationing, albeit moderate, is assumed. This would be more significant in the countries that are more heavily dependent on Russian imports, which could even see some production cuts in the winter. By contrast, demand for gas is expected to decline. Euro area economic activity is expected to slow in the coming quarters, as a result of the loss of purchasing power stemming from higher-than-expected inflation, the decline in confidence and, in general, greater uncertainty.
In emerging Asia, domestic demand is holding up, but growth is vulnerable to developments in America and Europe. The full extent of weakness in exports, and its effects through regional production and trade linkages, has probably not filtered through completely. I must add that our forecast is based on three assumptions: no recession in US, no significant escalation of the Eurozone crisis, and no “hard landing” in China. If one or more of these assumptions do not pan out, Singapore’s GDP growth could dip below 1% for 2012. But growth of 1–3% should be seen in perspective. The economy is operating at full employment and capacity utilisation is high. The Singapore economy has expanded by an average of 5.8% over the past five years, faster than economy’s underlying potential. The moderation in growth thus brings the economy closer to its sustainable level of output, and will help relieve cost pressures. Let me touch on inflation now. CPI-All Items inflation for 2012 is expected to come in at 4.0– 4.5%, but Core Inflation will continue to come down and approach 2% by end of the year MAS is narrowing forecast range for CPI-All Items inflation in 2012 to 4.0–4.5%, but the forecast for Core Inflation remains unchanged at 2.5–3.0%. 1  Refers to average growth on a quarter-on-quarter seasonally-adjusted annualised basis. Growth for Q2 is based on Advance Estimates of –1.1%. BIS central bankers’ speeches  1  Bringing down inflation remains one of MAS’ top priorities.

This has started to feed through to domestic food inflation, which came down from 3.8% y-o-y in January to 2.3% in June. Recently, there has been spike in global corn and soya bean prices due to a drought in US. But we do not expect a broad-based surge in global food prices in coming months, and so domestic food inflation should remain relatively contained for rest of year. Third, domestic wages. The 6% increase in domestic wages last year passed through quite strongly into a variety of services costs earlier this year. We can expect some continued pass-through of wage costs for the rest of this year, but at a more restrained pace compared to early this year. Like Core Inflation, Headline Inflation – or inflation in CPI-All Items – is also expected to be lower on average in the second half of the year compared to the first half. But, unlike Core Inflation, CPI-All Items inflation will remain elevated at well above the historical average. As mentioned, MAS is narrowing its forecast for CPI-All Items inflation in 2012 from 3.5–4.5% to 4.0–4.5%. This largely reflects two factors. First, imputed rentals on owner-occupied homes are expected to remain high compared to a year ago. This essentially does not involve an actual increase in spending by households. Imputed rentals on owner-occupied homes are based on actual rentals but, as you know, only a small segment of the population rents their homes. We expect continued tightness in the housing rental market, especially in the HDB segment.
As I have said from the start, public debt may not be able to play that role to the same extent as before. The ultimate safe asset, therefore, will be the currency itself. Markets and lenders will trust those currencies that, whatever the circumstances, are managed with one overriding priority: preserving price stability and the intrinsic value of the currency unit. On this fundamental basis, we can look at the future of the euro with strong and realistic optimism. I see the  BIS central bankers’ speeches  3  recent decision by the Swiss central bank to peg the CHF to the euro as a confirmation of this statement. A few words on the banking sector, and, of course, French banks. I would remark, first, that banks have been hit in all advanced economies by the downward revision of growth prospects. Since August, CDS premia on major banks and BOR-OIS spreads have risen in all regions, although to a larger extent in Europe, displaying everywhere a sharp rise of counterparty risk. By the same token, banks’ share prices fell in all major economies, with French banks being particularly hit. This overreaction of share prices can be explained by a simple amplification mechanism: slower growth means lower profits, thus lower projected dividends. At the same time, banks are required to build additional capital buffers, which further constrain their pay-out ratio. So dividend prospects are doubly affected and that explains why, in the current period, share prices are reacting so strongly to negative news on growth.

Such recovery plans should: •  Identify actionable options that the firm can take in response to financial weakness that will restore the confidence of the firm’s counterparties in the firm without the need for extraordinary official sector support;  •  Incorporate processes that analyze the root causes of their problems and identify longer-term strategies that will need to be employed as other recovery options to restore capital and liquidity are being executed; and,  •  Be regularly tested and updated to ensure they remain reasonable. For some types of firms – like financial market utilities, recovery planning is actually an even more important issue. Because FMUs provide critical services to the industry, experiencing a major disruption that could lead to resolution – or dissolution – is unacceptable. It is important, then, that a CCP be structured in a way, and develop and have tools available, to enable it to recover from losses and continue operations under extreme scenarios. Simply put, the debate on ‘less complex’ for financial market utilities is much more about recovery than it is about resolution. Steadfast resiliency may include casting a more critical eye on the resources needed for a single CCP to withstand a plausible, severe shock. Conclusion While there is still work that needs to be done to make financial institutions more resilient, better managed and less complex, we have also made a great deal of progress.
Our country posted a very successful and strong economic activity performance during the pandemic compared to other countries. As you know, economic activity in many countries declined in that period, and growth in many economies remained close to zero. However, the Turkish economy, which normalized rapidly in the succeeding period, ranked among the top economies in terms of high growth rates. Accordingly, our economy grew by 11% in 2021, posting a very strong growth performance compared to other countries. The conflict between Russia and Ukraine that started in the first quarter of 2022 aggravated the effects of ongoing negative supply shocks and increased the uncertainties. Nevertheless, domestic economic activity remained strong in a sustainable and uninterrupted framework despite negative supply shocks. Accordingly, the annual growth rate stood at 7.3% in the first quarter of 2022. We expect that growth will also be close to this rate in the second quarter. Net exports and machinery-equipment investments have a very remarkable share in this strong growth. On the expenditures side, net exports have contributed positively to growth for the last five consecutive quarters. Machinery-equipment investments have  1/5  BIS - Central bankers' speeches  also made an uninterrupted positive contribution to growth in the post-pandemic period. On the production side, the services and industrial sectors continued to contribute to growth. We see that machinery-equipment investments continue in a sound and sustainable framework. Investments that support productive capacity, particularly machineryequipment investments that drive industrial output, point to a stable and strong growth.

We, as the Central Bank, will continue to stand by you with our industry-friendly targeted policies aiming to create the financial conditions that will support continuity of supply as well as our current account surplus capacity. I will be pleased to answer your questions. 5/5  BIS - Central bankers' speeches
A clear lesson from events last spring is, in any event, the value for market observers of constructing independent forecasts of inflation as a foundation for their repo rate predictions. For the Riksbank, what happened has prompted us to work even more on continuously monitoring market opinions so as to be able to react in good time if the assessments of market players seem to be deviating from our own. Main scenario and balanced risks BIS Review 81/1998  -5-  Now for a look ahead in the context of our current assessment of inflation. In the latest Inflation Report, published at the end of September, the Riksbank emphasised that inflation prospects contained a large element of uncertainty. The cyclical picture had changed somewhat since June in that growth was judged to be strongest this year and then slacken somewhat. But we still counted on reasonably good activity, with annual growth in the coming years averaging almost 3 per cent. Inflation, measured as the 12-month change in the CPI, was assumed to be below 2 per cent in 1998 and 1998 but to reach approximately 2 per cent at the end of the period. The composition of demand had also undergone a shift. The international crisis was expected to render net exports weaker than assumed earlier, while domestic demand was likely to be somewhat stronger than foreseen in June.

Consequently, Switzerland – unlike other countries – was able to avoid introducing state-guaranteed bonds. With the drastic reduction in key rates and the subsequent decline in mortgage rates, the burden on households and companies was eased. In this way, the severity of the recession was somewhat alleviated and the risks of deflation reduced. However, the interest rate is now at a historic low and this means medium-term risks for the Swiss real estate market and financial stability. Experience shows that periods of low interest rates provide scope for excesses on the mortgage and real estate market. Consequently, in the current environment in particular, attention should be given to ensuring that past mistakes are not repeated. Caution must remain the watchword when granting loans. BIS Review 140/2009  1