samchain/econo-pairs-v1 huggingface dataset:
Monetary policy is not immune from the complexity of the real world. For instance, some unconventional policies may have had unintentional distributional consequences by pushing up asset prices, hence benefiting some households with important financial wealth. On the other hand, fostering economic recovery and reducing unemployment goes in the direction of helping the most vulnerable part of the population. In other cases, strong intervention may raise legitimate moral hazard concerns. Should Central Banks have refrained from acting at the risk of not fulfilling their mandate? Those simple questions remind us that decision making always involves some tradeoffs. It is all the more important that policy makers keep a clear focus on their ultimate objective. Central Banks should do their utmost to avoid any undesirable allocation or distribution effects of their policies. Those policies should be designed as neutrally as possible. This being said, the possibility of unintended side effects should not paralyze decision making when required by the situation in order to fulfill their mandates. The Eurosystem has faced such a situation when deciding on its program of large-scale asset purchases. I believe the decisions taken reflect an appropriate balance between the necessity of achieving the mandate and the desire to avoid undesirable side effects. Key principles underlying the implementation of the PSPP have been the minimization of unintended consequences and full neutrality, as illustrated for instance by the choice of the capital key to allocate purchases between various Governments debts.

With the supervisory pillar in place, completing the Banking Union still calls – as the euro area Heads of State and of Government recently concluded – for a common backstop for the Single Resolution Fund. And, above all, the creation of a European Deposit Guarantee Scheme. 4/5  In the fiscal policy arena, fiscal stabilisation capacity in the euro area needs to be completed through two channels: improving the member countries’ fiscal headroom and developing supranational cyclical insurance instruments. To conclude, I turn once more to the Spanish Royal Academy, which defines “challenge” as an aim it is difficult to achieve and which is thereby an incentive and a test for whosoever faces it. Economic policy-making requires constantly facing the challenges our society throws up. To quote Jean Monnet, “Nothing would be more dangerous than to regard difficulties as failures”.1 Thank you. 1  Jean Monnet, Memoirs, William Collins Sons & Co. Ltd., Great Britain, 1978. 5/5
The  BIS Review 84/2005  3  average inflation rate over the ten years since the inflation target was introduced does not indicate any systematic deviation. The second factor that complicates the picture of a simple relationship between monetary policy and employment is that inflation is not influenced by the output gap only but also by inflation expectations, which in turn depend on the credibility of monetary policy. If there is confidence in the Riksbank’s monetary policy it is often enough to make small changes in interest rates to signal that the Riksbank is keeping a close eye on inflation tendencies. If inflation expectations instead deviate sharply from the Riksbank’s target, more potent measures may be required. Thirdly, inflation and employment are not always affected by the same factors. Many short-term factors have a strong impact on inflation but only a marginal effect on the output gap and employment (e.g. the impact of mad cow disease on meat prices or the rapid rise and fall of electricity prices due to how the weather had affected reservoir levels). Likewise, certain factors and policy decisions affect registered open unemployment more than they influence the output gap (e.g. the National Labour Market Board’s decision to scale back labour market policy measures in 2003). In addition, the relationship between monetary policy and unemployment sometimes deviates fairly sharply from previous historical patterns.

A fixed exchange rate means that the central bank, with the aid of currency market interventions or its policy rate, stabilises the exchange rate around a target, e.g. a price for the dollar, gold or an average of currencies, whereas under a floating exchange rate regime the exchange rate is determined by supply and demand in the currency market. With a fixed exchange rate, you avoid some of the uncertainty in world trade when countries exchange currencies with each other. There is a limit to how much a currency’s exchange rate can vary, which is good for importers and exporters when they are forecasting income and expenditure. The fixed exchange rate can also be seen as a way to achieve price stability. With a fixed exchange rate, inflation in the long term cannot be higher or lower than the inflation rates in the countries with which you have tied your exchange rate. For example, a fixed exchange rate against the dollar would ”force” us to maintain the same inflation rate in the long run as the US and the other countries whose currencies are pegged to the dollar. Were that to fail, our current account balance would deteriorate and we would have to devalue. BIS Review 84/2005  1  Sweden devalued five times between 1976 and 1982 under a fixed exchange rate (1976, twice in 1977, 1981 and 1982). That was because Sweden in the 1970s and 1980s had higher inflation than the other countries.
This would clarify the position of cash as legal tender. It is also important that the legislator takes a stance on the issue of what, in addition to cash, may comprise legal tender and how this relates to the Swedish krona as a currency. Legislation on legal tender should be as technologyneutral as possible so that it will also be applicable to future means of payment issued by the Riksbank. All in all, it would therefore be good if the means of payment issued by the Riksbank is given a stronger position in the future than it has at present. The e-krona will have only minor consequences for the banking system Some critics of central bank digital currencies claim that they create risks that affect the financial system. Some are worried that the Riksbank will compete with the banks and that credit granting might be affected. 9 But this is not true. With regard to supplying money, the Riksbank, like other central banks, has always competed with the banks. We have been offering cash as an alternative for 350 years now. One difference is of course that a digital form of cash in one way or another, such as an e-krona, would be a more effective competitor to the current supply of digital payment services than physical cash is. However, our analysis shows that the consequences for the banks would be very small under normal circumstances.

5  See IMF (2010), chapter 2, and references contained in it, for a discussion of balance sheet and asset co-movement approaches to determining systemic institutions. 6  Actually, the SBIF may deny authorization to any bank merger, acquisition of assets of a bank by another banking entity, or taking control of two o more existing banks by the same person or group, or to increase substantially the existing control if the acquiring bank that performs said merger, acquisition or the resulting group of banks reaches a significant market share. In order to deny authorization, the SBIF needs prior approval by the Central Bank Board, issued by the majority of all Board members. 6  BIS Review 124/2010  Figure 1 Net flows of investment funds to emerging economies (billions of dollars accumulated in twelve moving months, weekly data) Equity flows  Total flows  Emerging (1) Latin America Total equity  120  Asia ex-Japan Other emerging (2)  120  80  80  40  40  0  0  -40  -40  -80  Total  Total fixed income  Total equity  -80 06  07  08  09  10  06  07  08  09  10  (1) Global Emerging Markets (GEM). (2) Middle East, Emerging Europe and Africa. Source: Emerging Portfolio Fund Research. Figure 2 Monetary Policy Rates in the world (1) (percent)  Developed economies (2) Chile (4) Survey emerging ec. 35  Emerging economies (3) Survey developed ec.
The minimum is a system that allows the sharing of negative information or some kind of black lists. But one should quickly migrate towards pooling and sharing positive information as well. A well functioning credit information system is not harmful to the consumers. Instead it enables the borrowers on the margin to obtain credit, those who would have been refused in its absence. In Thailand we already have two credit bureaus operating, and the Credit Bureau Act will soon be enacted to govern their businesses. Third, the need to protect the consumers. The charges and expenses levied against them should be made clear and easy to compare between various issuers. Interest rates should be declared as effective annual rates and sufficient lead time should be allowed and communicated to consumers before changes in terms and conditions come into effect. In Thailand, we are planning to set a uniform standard for the whole industry regarding such things as interest free periods, the setting of due dates and calculation methods for past due balances. Finally, if internet transactions become prevalent or poised for rapid growth, there is the need to define its proper legal framework. On this issue, we have just passed the relevant laws and are in the process of drafting the subsidiary regulations at ministerial level. At the micro level, and this is your direct responsibilities, card issuers have to put in place a good system of risk management.

And our goal, in the moment of the transition, was to fully respect the promise made to the people of the euro area namely: “The new currency will be at least as credible and as confidence inspiring as was your own national currency.” In this perspective it was very important to explain in real time our decisions to be as clear as possible on our diagnosis and reasoning with a view to convince observers that the new currency deserved fully this very high level of credibility. Secondly we also had to take into account the fact that we were issuing a new currency for eleven countries, eleven cultures and (soon to become twelve and then later on thirteen and fifteen today) and many languages. In this framework it was indispensable to have extremely clear single terms of reference from the very moment of the collegial decision. Otherwise it would have been unavoidable that various interpretations would have been given through the grid of various cultures and different languages. Had we waited for five of six weeks to give detailed explanations we would have been facing information and communication issues that would have been very difficult to solve. Thirdly, as explained before, and totally independently of the previous two reasons which are specific to the euro area, academic research had, particularly in the 90’s, made important advances in permitting to understand better the decisive role of transparency in establishing and consolidating the credibility of central banks and in helping them to solidly anchor inflation expectations.
8  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  8  Uncertainty is very high From the rising spectre of global terrorism to intensifying geopolitical tensions and financial crises, for too long, for far too many people, the world seems to be getting riskier. They are right. Currently, on average across Europe and the US, policy uncertainty is around 1.5 standard xx  deviations above its historical average. In the UK, we expect currently elevated levels of uncertainty to cut 7% from investment over the next three years and 1% from GDP. Higher uncertainty has contributed to what psychologists call an affect heuristic amongst households, businesses and investors. Put simply, long after the original trigger becomes remote, perceptions endure, affecting risk perceptions and economic behaviour. Just like those who lived through the Great Depression, people appear more cautious about the future and more reluctant to take irreversible decisions. That means less willingness to put capital to work and, ultimately, lower growth. These dynamics are clearly visible in financial markets. As one illustration, for two-and-a-half centuries, the prices of government bonds and the prices of equities tended to move together: the typical bull market entails rising equity prices and falling bond yields, with the reverse in bear markets (Chart 11). Since the mid-2000s, however, this pattern has reversed and bond yields have tended to fall along with equity prices.

Their forecast for global growth for 2019 is now 3 percent, which is the lowest since 2008–09, and it’s not hard to think of scenarios in which growth slows even further.1 In the old days, central bankers used to worry about inflationary pressures being too great. Old habits die hard, and I’m always on the lookout for signs that inflation is rising too fast. But in the current climate it’s inflation that’s too low that’s of greater concern. You see, my five-dollar cup of coffee masks an inconvenient truth: inflation in the United States is below target and has been for some time. Beyond sluggish inflation, we’re starting to see signs of slower global growth playing out in the U.S. data. While consumer spending is holding up, other parts of the economy—including manufacturing, exports, and business investment—have seen growth stall or experienced outright declines. Geopolitical Tensions The third and final issue I want to discuss—the rising geopolitical tensions around the globe— further complicates an already complex picture. When it comes to the economic outlook, the word of the day—and probably the year—is “uncertainty.” Trade negotiations, civil unrest, and tensions in a number of corners of the world are driving many businesses to take a wait-and-see approach to investment, thus putting a further dampener on growth prospects.
More recently, the Central Bank has encouraged banks to draw up Business Continuity Plans (BCPs), focusing on their core banking solutions, back-up systems and Disaster Recovery Sites (DRS). The Central Bank, being the owner and operator of the core payment systems, is keen to ensure that the banks have put in place adequate processes and systems to deal with any disruption to core banking and payment services. It took a considerable length of time to convince banks of the importance of having BCPs, back up systems and DRSs. Evidently, the establishment of these systems has given confidence to the customers that banks are in a position to deal with emergencies that could occur at any time. 5.2 With the advancement of IT and customers becoming comfortable with new technology, they demand greater convenience, reduced transactions costs and higher quality banking products and services. The reliability of the products and services are assured to a large extent by the attention paid to BCPs by banks. While these have increased productivity in the banking sector, banks have had to spend more money for the acquisition and installation of new IT systems. 5.3 Another risk faced by the banking industry due to its becoming a major user of technology, is the risk of failures to systems. The fact that “hackers” can get into banking IT systems, with or without inside help, demonstrates the magnitude of the problem. Specially, plastic card operations have been plagued with such risks.

And my main conclusion for monetary policy is that flexible inflation targeting – applied in the right way and in particular using all the information about financial conditions that is relevant for the forecast of inflation and resource utilisation at any horizon – remains the best-practice monetary policy before, during, and after the financial crisis. A related conclusion is that neither price stability nor interest-rate policy is sufficient to achieve financial stability. A separate financial-stability policy is needed. In particular, monetary policy and financial-stability policy need to be conceptually distinguished, since they have different objectives and different appropriate instruments, even when central banks have responsibility for both 1. So today, I will first briefly summaries my view of the causes of the crisis, and then discuss what the possible lessons are for future monetary policy, and finally I shall emphasise the distinction between monetary policy and financial-stability policy. The financial crisis had little to do with monetary policy As I see it, the financial crisis was caused by factors that had very little to do with monetary policy. The factors were the macro conditions; distorted incentives in financial markets; regulatory and supervisory failures; information problems; and some very specific circumstances, such as the US housing policy to support home ownership for low-income households 2.
Prices for credit insurance and funding costs have risen, although to a smaller extent than for many US and European institutions. As a result, Norwegian banks now have to put more effort into procuring deposits and a little less into selling loans. Such a change in banks' behaviour may help to curb growth in demand and output in the period ahead. In addition, there may be further repercussions for the Norwegian economy if weaker developments in the US lead to a broad-based pause in global growth. First, a downturn in the world economy may have a negative impact on activity and profitability in export industries and perhaps even the oil sector. It may be more difficult to sell goods in a falling market, and prices for domestically produced goods may fall. Second, turbulence and the prospect of weaker growth may increase uncertainty among Norwegian households and businesses. As a result, new projects and investments may be postponed, or enterprises may be reluctant to recruit new employees. Third, the financial market turbulence has a more direct impact on the business sector. Banks and investors now apply a higher premium and higher prices for providing capital for acquisitions, restructuring and investment, and highly leveraged companies have to pay high loan risk premiums. We still do not know what the full impact of the turbulence will be. The US authorities have taken measures, both fiscal and monetary, to address weaker growth prospects. Interest rates are shifting down in the US and many other countries.

In this respect, the strong krone is a sign that the Norwegian economy is faring well. Looking ahead, the outlook and balance of risks suggest that the key policy rate may be raised further in the period to summer. The prospect of higher price and cost inflation will in the short term outweigh weaker growth in the world economy. At the meeting on 13 March, Norges Bank’s Executive Board held the interest rate unchanged at 5.25 per cent and presented the interest rate path shown in this chart. The Board’s strategy is that the key policy rate should be in the interval 5-6 per cent in the period to end-June, unless the Norwegian economy is exposed to major shocks. The projections are uncertain. New information may reveal aspects of economic developments that indicate that the Norwegian economy is moving on a different path than projected. On the one hand, unexpectedly high cost inflation, higher import prices or a weaker krone may result in higher-than-projected inflation. On the other hand, if the global downturn has a stronger-than-expected impact on the Norwegian economy or if the krone appreciates markedly, inflation may be lower than projected. The uncertainty surrounding the interest rate ahead is illustrated by the shaded areas in the chart. The Government Pension Fund – Global Now, let me turn from the financial turmoil and economic developments in Norway to the Government Pension Fund – Global and the issue of sovereign wealth funds.
The Saudi economy is an integral part of the global economy and is thus susceptible to systemic risks, although Saudi Arabia did not feel the financial turmoil and liquidity crisis experienced by the rest of the world as a result of the recent sub-prime crisis, we are, nonetheless, vigilant in our efforts to continually monitor the domestic market and to ensure continuation and stability of policies and regulations. I wish all success to your forum and a good stay in the Kingdom. Thank you for your attention. 4  BIS Review 150/2007

The good news is that today isn’t the beginning of this process. Over the past seven years, a huge programme of reform has been underway to fix the fault lines that led to the crisis and to build more resilient sources of finance to serve the real economy.3 The UK has played a leading role, consistent with our position as the pre-eminent global financial centre. 40% of global foreign exchange trading goes through London. Half of all trades in OTC interest rate derivatives. Two-thirds of trading in international bonds. And more international banking activity is booked here than anywhere else. 2  Bank of England survey results. Bank of England survey results. Respondents were asked for their views on the statement ‘I believe that financial markets work in the interest of society’. Possible responses were: strongly agree, agree, neutral, disagree, strongly disagree. 3  See the FSB Chair’s letter to G20 Leaders, available at http://www.financialstabilityboard.org/2015/11 /financial-reforms-achieving-and-sustaining-resilience-for-all/. 2  BIS central bankers’ speeches  Great strides have been made in making the system more resilient. The banks that sit at the centre of many markets are safer, with capital requirements that have increased ten-fold and liquid assets on balance sheets that have risen four‐fold. A new, simple leverage ratio requirement protects the system from risks that we think are low but in fact are not. Banks’ trading assets have fallen by a third since the crisis, and their interbank borrowings have been cut by almost a half.