samchain/econo-pairs-v1 huggingface dataset:
In turn, freer capital movements, the ongoing cross-border financial integration, and the 1  growth of private capital flows that followed undermined pegged exchange rates and thus contributed to the spread of flexible exchange rate regimes and inflation targeting in many parts of the world, but in the European Union this development provided part of the rationale for a monetary union. The current international monetary system and the official part of the global financial safety net largely reflect the contours of the global economy as they were before global financial integration and private capital flows reached the level we have seen in this century. Back then, the global macroeconomic problem was related to global current account imbalances and asymmetric adjustment. Keeping your own house in order was in most cases both necessary and sufficient for maintaining economic stability in individual countries. IMF facilities to lend to sovereigns of debtor countries facing balance of payments difficulties were the most important part of the global financial safety net (GFSN). The world we currently live in is different. Financial imbalances in both net and gross balance sheets can be more important than current account imbalances and certainly were so in the build-up to the great financial crisis (GFC). This is a world of cross-border spillovers and spillbacks. It is a world where, for small and open economies (SOEs), keeping your own house in order is certainly necessary but no longer sufficient, at least not if we restrict ourselves to traditional demand management and prudential instruments.

This should include “an IMF standing liquidity facility.’’ The global financial safety net is the best insurance we can get against the risks created by economic divergence and it comes at a limited cost. ** So, in conclusion, we as central bankers should be predictable without being pre-committed. In other words, we should give clarity without pretending to certainty. Voltaire summed this up nicely in 1770: “Doubt is an uncomfortable condition, but certainty is a ridiculous one.”4 In these times of doubt, the Governing Council of the ECB is committed to give as much clarity as possible; clarity, not certainty, which is neither possible nor desirable. Thank you for your attention. 1 Brainard, W. (1967), « Uncertainty and the effectiveness of policy » the American Economic Review, Vol. 57, No. 2, Papers and Proceedings of the Seventy-ninth Annual Meeting of the American Economic Association, May, pp. 411–425. 2 Blinder, A. (1999), Central Banking in Theory and Practice, the Lionel Robbins lectures, MIT Press, Cambridge  Massachusetts. 3 Rey, H. (2013) “Dilemma not Trilemma: The global financial cycle and monetary policy independence”, Jackson  Hole conference proceedings, Kansas City Fed. 4 Letter to Frederick William, Prince of Prussia (28 November 1770). 3/3  BIS central bankers' speeches
Rachel Lomax: Inflation targeting - achievement and challenges Speech by Ms Rachel Lomax,1 Deputy Governor of the Bank of England, to the Bristol Society at the University of the West of England, Bristol, 18 February 2004. *  *  *  Ladies and Gentlemen, it is a great pleasure to be here in Bristol tonight. Bristol and the Bank go back a long way. Our Agent in the South West, the late Michael Knight, was a founder member of this Society. And nearly two centuries ago - in 1827 to be exact - Bristol was one of the first branches that the bank established outside London. Not that it was plain sailing. The Bank’s first Agent in Bristol, Mr John May, resigned after only a few years complaining of the unhealthy situation of the branch premises, situated as they were next to the City Poor House and a pool of stagnant water, at risk of cholera and - this was the time of the great Reform Bill - riots and fire. By these standards, our present Agent, Kevin Butler, has no grounds for complaint. My subject tonight is a more recent episode in our economic history: the improvement in economic performance associated with the adoption of inflation targets just over a decade ago. I’ll look first at why this approach to monetary policy seems to work, and then consider what challenges remain for policy makers.

And it works by setting clear limits on the role of governments themselves. This is of course a caricature. But it is certainly true that the 1990s were a period of considerable reform and innovation in central banks across the world; many new central banks were established and many established central banks were given greater independence from their governments, often in exchange for a clear commitment to meet specific targets for inflation. From the time when we left the Exchange Rate Mechanism in 1992, the UK has led this wave of change. Looking back, the adoption of formal inflation targets in 1992 marks a decisive break with the past. The other key date is 1997, when the Bank of England was granted operational independence; the institutional framework then put in place entrenched and enhanced the credibility of inflation targeting, and has been widely admired. Moreover, in the UK, as in many other inflation targeting countries, a  1  I would like to thank Jens Larsen for research support and Luca Benati, Melissa Davey, John Power and Sally Srinivasan, whose work I have drawn on extensively. I have also benefited from comments from many colleagues at the Bank, especially Peter Andrews, Charlie Bean, James Proudman and John Keyworth. The views expressed here are mine, and do not necessarily reflect those of the Bank of England or the Monetary Policy Committee.
(a ) Le ve ra ge ra tio de fine d a s to ta l a s s e ts divide d by to ta l e quity e xc luding m ino rity inte re s t. (b) Due to da ta lim ita tio ns , the c ha rt o nly pre s e nts info rm a tio n o n A&L, B &B , B a rc la ys , HB OS , HS B C , Llo yds , No rthe rn R o c k a nd R B S . (c ) The re is a bre a k in the s e rie s due to the intro duc tio n o f IF R S in 2004.

Which leaves us with the question: is that a price worth paying in order to avoid the fall-out when a bubble eventually bursts? And that leads us to the second judgement that underpinned the non-intervention doctrine. Prior to the latest crisis at least, many policymakers believed that the costs of allowing a bubble in financial markets to run its course were relatively small. Interest rates could always be cut after the event to “mop up” the damage. Blinder and Reis summarise the received wisdom beautifully in their review of the decision to loosen policy when the DotCom bubble burst: “If the mopping up strategy worked this well after the mega-bubble burst in 2000, shouldn’t we assume that it will also work well after other, presumably smaller, bubbles burst in the future?” The large and coordinated cut in interest rates at the start of this decade almost certainly contributed to the build-up of an ever larger bubble. So its not at all clear that the post-2000 mopping up strategy worked that well in retrospect – it just stored up more trouble for the future. And even if it did work well last time around, I hardly need to add that mopping up the fall-out from the latest crisis is stretching the world’s policymakers to the limit. It is evidently not safe to rely on being able to mop up after the crash. Lesson 6: Inflation targeting is necessary but not sufficient A more fundamental question is whether the Inflation Targeting regime itself needs to be rethought.
Jacqueline Loh: The FX Global Code – one year on Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the 14th FX Week Asia Conference, Singapore, 29 August 2018. * * * Ms Eva Szalay, Editor, FX Week, 1 Ladies and gentlemen, good morning. How time flies. It did not seem too long ago when I was invited to speak at last year’s conference and I am very happy to be here again at the 14th FX Week Asia Conference. 2 Last year, I shared the launch of the FX Global Code (or the Code), its unique features and the elements that have been put in place to promote industry adherence. One year has passed, and it is timely to review developments since the launch of the Code and its impact on the global FX industry. More importantly, I would like to share with you, the priorities ahead to further embed the Code within the global FX market. FX Global Code: Overview 3 I am sure that by now, most of you would have heard of the Code. But for the benefit of those who may not have, let me provide a quick overview. 4 The Code was launched in May last year by the Bank for International Settlements (or BIS) as a single, global code of conduct for the wholesale FX market. It was developed over 2 years through a public-private partnership between central banks and key FX market participants.

Constantinos Herodotou: Introduction - 13th Limassol Economic Forum Introduction of Mr Constantinos Herodotou, Governor of the Central Bank of Cyprus, at the 13th Limassol Economic Forum, Limassol, 21 October 2022. *** I would like to start with thanking Yiannis and Mario for accepting my invitation to participate in this panel discussion with me. – Mario, Obrigado por aceitar o meu convite. It is a pleasure to discuss the inflation challenges during these difficult times of high inflation and elevated economic uncertainty with my Governing Council colleagues and friends Mario and Yiannis. The war in Ukraine has disrupted the return to normality that we expected after the end of the pandemic lockdown periods. Central Banks around the world are facing the challenge to put under control excessive and persistent inflationary dynamics. So it is informative to look at the main components of these inflation dynamics, in other words which items drive inflation up the most. The war exacerbated massively cost push inflation, primarily through the energy price shock. In measuring energy inflation we include among others the prices of fuel, gas as well as electricity prices. This inflationary dynamic continues to persist with energy price pressures, in the most recent measure last month, being extraordinarily high at 40.7% compared to 38.6% in August. The second major contributor to inflation is food prices which grew by 11.8% in September compared with 10.6% in August. This is attributed to higher input costs related to the energy price increases, disruptions to trade in food commodities and adverse weather conditions.
I would say that the delay in adopting reforms for public social protection systems reinforces the need to achieve healthier positions in the short term, providing for further cuts in the public debt ratio or, alternatively, for making appropriations to the pension reserve fund with greater speed and intensity. Moreover, this need increases in the absence of more ambitious reforms in the labour market to further promote the use of still-idle labour resources, despite the progress in increasing participation and reducing unemployment. I talked earlier of the advisability of having more efficient cost- and price-setting mechanisms to smooth the adjustments the economy has to make in the context of EMU. In this respect, the fact that issues relating to the structure of collective bargaining have been relegated on the agenda of potential labour market reforms is a cause for concern. The wage bargaining arrangements included in the Inter-Confederal Agreements for Collective Bargaining, habitually signed by social agents, restrict the capacity to adjust wage increases to industry- or firm-wide productivity developments, in addition to setting a floor for the increase in nominal wages. The indexation clauses included in a high proportion of agreements have particularly harmful effects when exogenous price-rise shocks occur, as with the current hike in oil prices, since they tend to reinforce the upward inertia of wages.

That all shows how important it is for the economy to have flexible price- and wagesetting mechanisms. And there is a general need to reinforce the capacity of the productive system to compete, through improvements in specialisation, efficiency and higher productivity gains. As earlier indicated, the growing mismatch between household and corporate expenditure and income last year has been accompanied by fresh increases in these sectors' debt. What has proven conducive to this has been the maintenance of financial conditions which have continued to be markedly loose for the situation of strong demand pressure in the economy. This growth in household and corporate liabilities is naturally bearing on the financial position and burden of both sectors. The financial pressure borne by households has, however, been alleviated by the increase in their net wealth, sustained by the growth of stock market prices and, above all, of house prices. In the case of companies, the notable increase in profits has strengthened the sector's capacity to withstand the increase in their financial commitments. Accordingly, the financial position of both sectors, considered overall, remains sound and does not therefore pose a serious obstacle to the continuity of the economic upturn currently in train. The foregoing should not, however, conceal the evident fact that the expansion of domestic spending, particularly in the case of households, will not be able to base itself for much longer on growth in debt at rates such as those currently seen.
The ECB’s active participation in the ongoing process aimed at strengthening the international financial architecture is to be seen against this background. The Eurosystem supports such a process for two reasons: first, since the achievement of its primary objective of safeguarding price stability in the euro area would be facilitated by a sounder and more resilient international financial system; and, second, because the Eurosystem is expected to contribute to the smooth conduct of policies relating to the stability of the financial system. BIS Review 72/2000  4  Putting one’s own house in order must be at the basis of the stability of the “global village”. In this context, I should like, if you would allow me, to draw attention to the fact that the introduction of the euro also contributes to international financial and economic stability in a more subtle way. The process towards EMU is not only concerned with irrevocably merging 11 national currencies. It also means building up a sound institutional framework based on monetary stability and fiscal sustainability. The EMU process provides evidence of how effective properly organised policy and institutional cooperation can be in fostering economic stability in each individual country. In addition, EMU shows that regional policy cooperation may go well beyond trade matters. One should not be surprised by the number of countries that regard EMU as a relevant example of regional cooperation. In Europe, EMU represents a powerful magnet for many central and eastern European countries.

However, by maintaining price stability, the ECB almost automatically fosters the attractiveness of the euro as an international currency. Third, the international use of a currency is a complex phenomenon that does not lend itself to ad hoc promotion measures. A currency can be used not only for different functions, but also by different groups of economic agents. In this context, the use of the euro by private agents as an investment and financing currency, as well as a payment and vehicle currency, plays a prominent role. Although the euro is also used by the public sector as a nominal peg and reserve currency, the behaviour of the private sector dominates the internationalisation of the euro. The amount of financial assets managed by the private sector is many times larger than official reserve holdings. In addition, private agents usually adjust their asset management strategies more rapidly than most public sector institutions. But what are the factors behind the internationalisation of a currency? In principle, two basic factors might eventually determine the international role of the euro - size and risk. With regard to the size factor, a broad, deep and liquid euro area capital market may lead to a greater use of the euro through lower transaction costs. This may, in turn, facilitate the development of the euro as a vehicle currency for trade and commodity pricing. Already at this early stage, the introduction of the euro has brought about fundamental structural changes in euro area capital markets.
And the flow of credit outside the banking system may improve, helping to support a recovery in nominal demand. Over the next quarter or so, amongst other indicators I will therefore be looking at what happens to firm and household money holdings, as well as credit flows and risk premia. The Bank’s Asset Purchase Facility schemes for corporate paper are designed to help catalyse that process. The fact that the Bank is buying relatively small amounts of paper may have been misunderstood by some. As the central bank, we are not operating the schemes in order to lend in scale to the real economy, but rather to help revive the markets. Some have described this variant of liquidity insurance as acting as “Market Maker of Last Resort”, and I recently aired some thoughts on the kind of principles that might guide central banks in this area. 1 They include consistency with monetary policy; avoiding undue risk to the central bank; acting as a catalyst; and avoiding attempts to prop up markets that would not be fundamentally viable once peacetime resumes. Yesterday, the Bank issued for consultation some ideas on how we might be able to extend our liquidity insurance, through the APF, to facilities for working capital finance. They cover a possible facility for secured commercial paper, where the underlying assets would be portfolios of SME trade-finance credit, and a facility for supply chain finance.

The greatest challenge to these emerging markets is how to achieve a more balanced and sustainable growth in the midst of globalisation. As more economies in the region move to the middle-income category, I urge the Bank to proactively consider ways and means to help them meet the new challenges of changing times. Sustainability of the region’s future growth seems to lie in the growing trend of intra-regional trade and economic interdependence. Asia is highly integrated in trade. Propelled by vertical integration of the production process, intra-regional trade grew by 14% a year between 1995 and 2003, while world exports increased only 7.5%. Compared to trade, integration in the financial sector has been progressing at a much slower pace. As a result, the very substantial volume of foreign reserves accumulated in the region, of some $ billion last year alone, goes mainly to the developed rather than the regional markets. When some of the capital from the developed market is recycled back to the region, it is of a more volatile and repercussive nature, and can be difficult to cope with as we saw it in the late 1990s. To reduce the reliance on the recycling of domestic savings through the developed markets, Asian governments have put in place several initiatives to strengthen financial intermediation. A notable example is the Asian Bond Markets Initiative under the ASEAN+3 forum.
Because construction projects are long-term in nature, real estate investment reacts particularly sensitively to interest rates. Consequently, mortgage loans were growing at a rate of 5–6% in 2003 and 2004, when our monetary policy was firmly expansionary. These growth rates then declined gradually as we tightened our monetary policy in 2006 and 2007. Last April, they settled at around 3.3%. The growth rate of other loans – a particularly heterogeneous category – remains high, confirming that the underlying trend in the economy remains dynamic. In December, we emphasised the need to give particular attention to conditions in the credit market in the light of the sub-prime crisis. In order to do this, the SNB conducted a survey of 20 banks in March, in which they provided us with information on their intentions and expectations. This survey completed the analysis of credit volumes. It reveals, first, that banks have not significantly tightened lending conditions with respect to either households or companies over the course of the last few months. Second, the banks state that, in broad terms, demand for credit has remained unchanged. Third, they do not expect any significant change in either supply or demand in the months ahead. Thus this survey confirms the conclusions of the analysis of credit volumes which, as we have seen, are continuing to rise. Unlike similar surveys conducted in the US and the euro area, it shows that, for the time being, the sub-prime crisis has not led to a deterioration in credit conditions in Switzerland.

Inflation of more than 4 percent is usually a sign of economic instability. If unemployment in a country is persistently above 4 percent, there is probably something wrong both with the functioning of the labour market and with the level of political ambition. And the financial crisis has shown that total banking sector lending in the most heavily indebted countries has often been more than 4 times GDP.18 In this situation, any rescue packages would be too expensive for taxpayers – Ireland and Iceland are two examples. This is a familiar element in our everyday lives. Speed limits are an example of such a rule. Calculating the optimal speed for a specific car on a specific road is extremely complicated. It would require considerable knowledge of both mechanics and physics. Speed limits help us. Of course, it might be optimal to drive faster or slower than the speed limit, but the rule is simple to understand and easy to enforce. This simple rule helps to shape our behavioural patterns to ensure efficiency and safety in the traffic system. Simple rules can also make it easier to resist the temptation to postpone problems. Economists call this the time inconsistency problem. Odysseus solved his time inconsistency problem by having himself tied to the mast and instructing his crew to plug their ears with wax and ignore him when he would later ask them to steer the ship towards the song of the Sirens. That was an easy rule for the crew to follow.