samchain/econo-pairs-v1 huggingface dataset:
Conceivably, household and corporate debt ratios, which increased rapidly during the expansionary phase, will continue the adjustment on which they have embarked in recent quarters, and this requires that agents' debt should grow for some time at a rate below that of income generated. The strong concentration of resources in the real estate market is also being corrected, with a very swift decline in new housing starts, although this has not prevented the emergence of a sizeable housing overhang and downward pressure on prices as the fall in demand has also been very sharp. Nonetheless, cuts in interest rates and in house prices have placed housing affordability indicators at more moderate levels, which will help boost house purchases. Similarly noteworthy is the reduction in the inflation rate in Spain in recent months, which is proving more marked than in the euro area. This decline is underpinned not only by the greater effects induced by the course of oil prices but also by the fall in the prices of industrial goods and in the notable easing in services prices, which are growing below 2%, after having held at a persistent rate of increase of around 4% for many years. It would be most beneficial for the economy to seize this opportunity to make the appropriate reforms to services markets, so that this pattern in moderation may be maintained when household expenditure picks up.

But what is important is to realise that the deficit generated over these two years has a significant structural component, given that current primary public spending has maintained a high growth rate and the sizeable extraordinary revenue linked to the real estate sector has been lost for good. The deterioration in the fiscal position is manifest in a strong increase in public debt. As our own experience shows, the dynamic of rising indebtedness can prove difficult to break, especially when it is inconceivable that we can count in the future on some of the factors that significantly helped reduce debt in the past, such as interest-rate cuts and high economic growth over a very lengthy period. Overall, all these factors increase the risk that, in the absence of corrective measures, the fiscal position will continue to worsen. Further, they lead to the conclusion that the room for budgetary policy to expand has been completely exhausted, and that it is vital that a credible strategy of budgetary consolidation be adopted for the medium term. If not, the increase in public debt and its influence on the net borrowing costs of our economy, and even on the very soundness of the financial system and its capacity to properly channel resources, may become a very heavy weight holding back our possibilities of recovery. Given the fiscal imbalance that has built up, the scale of adjustment needed is most sizeable and will therefore require the adoption of highly ambitious measures on all budgetary fronts.
It is our sincere hope that this global forum will be rewarding and may the collective wisdom derived from the deliberations lead to more collective actions that will be to our increased mutual benefits. Let me once again express our appreciation to Yang Amat Berhormat Dato' Seri Abdullah Badawi for his presence here this afternoon and for accepting to deliver the keynote address at our Forum today. Thank you. 2  BIS Review 30/2007

Philipp Hildebrand: The global financial crisis – analysis and outlook Summary of a speech by Mr Philipp Hildebrand, Vice-Chairman of the Governing Board of the Swiss National Bank, at the NZZ-Podium, Zurich, 5 February 2009. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  We are currently experiencing the most severe and most complex financial crisis in several decades. It has affected many people around the globe, and finger-pointing and casting blame happen all too easily. Yet only a careful investigation of the responsibilities is likely to point to ways in which our financial system, and ultimately our economy, can be made more resilient once this crisis has been overcome. Financial markets react to incentives, and these incentives were misplaced in the past. It is in our power to start lobbying for clearly defined and risk-limiting conditions. If the responsible authorities wish to enact more stringent regulation, we ought to give them our unconditional support. The National Bank is determined to employ all the means at its disposal to ward off an economic contraction. BIS Review 12/2009  1
Sir Andrew Large: Financial instrument accounting Speech by Sir Andrew Large, Deputy Governor of the Bank of England, to the 13th Central Banking Conference, London, 22 November 2004. *  *  *  Introduction The recent furore over IAS 39 - the international accounting standard for financial instruments - has resulted in a situation which I think all agree is unsatisfactory. We now effectively have two versions of IAS 39, one proposed by the IASB, the other by the European Commission. I probably do not need to emphasise that meaningful accounting standards and their effective implementation are highly relevant to any central bank’s responsibilities for financial stability. They help to ensure the safe and efficient functioning of the financial system. So it is essential that accounting standards have a clear economic rationale, promote comparability and secure adequate disclosure. Only in that way can investors, creditors and others judge the positions and risks being run by financial institutions and hence exert market discipline, and perverse incentives be avoided. Together these can make an important contribution to financial stability. I suggest later that, despite intensive work to improve accounting standards for financial instruments in recent years, fundamental issues with financial stability implications remain to be resolved. One crucial question is: “Who and what are accounts for?” Another more specific issue is the appropriate role of fair value data. So what I want to do this morning is to discuss these issues in turn before commenting on the way forward regarding IAS 39.

In my remarks, I am going to focus only on the set of unconventional monetary policies that are relevant today in an environment in which central banks are constrained from lowering their policy rate any further due to the zero lower bound. I will not discuss the type of extraordinary interventions that occurred at the height of the financial crisis.1 A starting point is that the independence of the central bank with respect to its budget supports its overall independence. The Federal Reserve’s traditional monetary policy framework has helped to assure this budgetary independence. The liability side of our balance sheet consisted primarily of currency and reserve balances on which we did not pay any interest. The asset side consisted primarily of Treasury securities. There was no meaningful credit risk and the interest rate risk was limited because assets were generally held to maturity. This, combined with the zero cost of the Fed’s liabilities, resulted in the Federal Reserve turning over a large amount of earnings to the Treasury each year after covering all of its operating costs and retaining a small portion of its earnings to maintain a level of surplus capital equal to the amount of capital paid-in by member banks. Thus, one key question is how this budgetary independence might be threatened through the use of unconventional monetary policies. After all, some of these policies do have implications for the Federal Reserve’s remittances to the Treasury and, thus, could conceivably create a potential threat to the Federal Reserve’s budgetary independence.
Second, should regulators be proactive in leading the agenda of change or keep an active watching brief and intervene only 2/6  BIS central bankers' speeches  when necessary? Third, how do we balance between oversight and developmental objectives? And the fourth, what are the right set of guiding principles? I would like to turn to these questions for the second half of my speech. Importantly, I believe that regulators have to play a driving role to foster an enabling environment for an efficient and vibrant payment landscape, whilst actively managing the associated risks. Innovation should be industryled. Regulators should instead focus on building the right preconditions for the payment systems to develop in a resilient and progressive manner. In this regard, I would like to share four key focus areas for the payments regulatory agenda moving forward: First, to preserve trust to safeguard the resilience and integrity of payment systems; Second, to apply proportionate regulation to effectively manage risk, whilst not stifling innovation; Third, to enable connectivity through collaboration towards greater standardisation and interoperability; and Fourth, to promote efficiency and innovation through greater competition. Preserving trust Let me start with the first focus area of preserving trust. Trust is at the heart of any effective payment system. Consumers, businesses and governments must be able to trust that a payment made is final, that it reaches the intended beneficiary, and that the value transferred is accurate. Without these elements, a payment system or service cannot serve its purpose.

In addition, we have seen surges in demand for certain goods that have outstripped available supply. The clearest example is used cars, which are in very high demand, reflecting factors such as the needs of a remote workforce, stimulus payments, and demand from rental car companies. At the same time, the supply of vehicles has been held back by earlier production cutbacks and shortages of semiconductor chips. This imbalance in supply and demand has caused used car prices to soar. Looking forward, supply will slowly come back online, and I therefore expect car prices to stabilize and then decline over time to more normal levels. 2/3  BIS central bankers' speeches  We have already seen this type of dynamic play out in some sectors. The latest data show growth in wholesale used car prices slowing in the first half of June.4 And lumber prices, which soared during the pandemic as housing demand surged and supply struggled to keep up, have declined sharply in recent weeks. I expect that as price reversals and short-run imbalances from the economy reopening play out, inflation will come down from around 3 percent this year to close to 2 percent next year and in 2023. It goes without saying that there is a great deal of uncertainty about the inflation outlook, and I will be watching the data closely. The Fed’s Policy Response It’s clear that the economy is improving at a rapid rate, and the medium-term outlook is very good.
Much will therefore be required initially of the ECB in explaining its policy, presenting the analyses behind its decisions in an understandable way and creating a broad understanding of the monetary policy in every part of the union. This understanding may be tested particularly severely if price pressure in a particular country deviates from the average so that the repo rate is not perceived as appropriate to the national situation. The national central banks in the euro area should be able to lend a hand here, both in communications with the public and by providing sound analyses of tendencies in their home country. This brings me to the discussion about the ECB Governing Council. Concern has been voiced in the debate because the composition of the Council, the ECB’s supreme decision-making body, might lead to policy being influenced by strong national interests at the expense of the total picture. One source of this concern is that so many of the Council’s decision makers are national central bank governors, who might allow for national interests. Comparisons are made with the US Federal Reserve, whose decision-making body has a smaller proportion of regional governors. Another cause of this concern is that political accountability in the European Community is essentially exacted at the national level; it is largely in the national arena that economic policy is discussed. While these problems cannot be dismissed out of hand, I believe they have been exaggerated.

Monetary policy The European Central Bank (ECB), which will be accountable for EMU’s single monetary policy as of next January, was established on July 1st. The monetary policy objective is price stability. The objective has not yet been defined more specifically but statements suggest that there will probably be an intermediate money supply target and that price stability will be represented by an inflation rate of 2 per cent or less. The latter has raised the question of whether Sweden ought to revise its inflation target. The question is somewhat premature in that the ECB’s target formulation has still to be finalised. Moreover, the suggested formulation is in line with what has applied in Germany, where on average in recent decades monetary policy has not resulted in a rate of inflation below 2 per cent. In view of this, together with the advantages of an inflation target that is symmetrical, there are no grounds at present for considering any change in Sweden’s inflation target. The ECB has been given a high degree of independence in fulfilling the price stability target without any short-run political considerations. The institutional conditions for monetary policy credibility are accordingly good. By itself, however, this is not enough. Credibility must also be achieved continuously, through a responsible monetary policy that is properly understood and supported by society in general. At first there may be considerable uncertainty about how the single monetary policy functions and how signals from the ECB should be interpreted.
One feature that may cause global investors to rebalance their portfolios in the future is a reappraisal of the prevailing outlook for inflation and, hence, for monetary policy across advanced economies. Such a reappraisal may occur as we are currently observing that the long period of very low global inflation may have affected investors’ deep-seated beliefs about the future. This is most visible when looking at current levels of long-term inflation risk premia in both the United States and the euro area. You can see this on my next slide. Here we have a decomposition of long-term inflation-linked bonds and swaps into the same two components that I showed for nominal bonds on my second slide, namely expected future inflation and an inflation risk premium. The interpretation is identical: just as investors demand a premium for interest rate uncertainty, they also demand a premium for the uncertainty around the expected future inflation rate. And while in the past this premium tended to be positive on average – even during the most turbulent times of the great financial crisis – it fell sharply in 2014 and is still in negative territory in the United States today. In other words, investors are willing to pay a higher price for nominal bonds because they value them as a hedge against low inflation. So, this slide conveys two messages. The first is that markets do not question the credibility or ability of central banks to steer the economy towards their inflation aims.

Operational independence of the Bank of England – with which I was heavily involved while at the Treasury, played a major part in this. But there is clearly something more going on here. 1  The long-term rate used here is the ten-year instantaneous forward rate. 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  I want therefore to use two concepts of the interest rate to explore what may be going on and what we have learned and relearned about interest rates. The first concept is the trend real rate of interest and the second is the natural real interest rate (R*). The trend real rate of interest  The trend real rate is a long-term interest rate, 10 years or more. It is the interest rate, or to put it another way, the price which balances the demand for investment with the supply of saving when the economy is growing at trend – that is when supply and demand are in balance and inflation is at its target. The level of the trend real rate depends on structural, long-lived factors that determine the supply of savings and the demand for investment. This trend real rate cannot of course be observed directly. We can observe the long-term nominal rate of interest on bonds. This includes compensation for inflation that might occur over the duration of the bond. It also includes a variety of so called nominal and real ‘term premia’.
Naturally, these policy actions have been underpinned by assessments conducted by specialists with expertise in very different areas, this in cooperation with the broader membership. Inclusive working methods and broad expertise I think the ESRB has a good work process in the sense that it combines two features: First, all members are free to send participants to an ESRB workstream. This is an inclusive working method where different perspectives meet, where there is a “buy-in” for the members and where peer pressure is exerted. Second, there is the procedural aspect which I mentioned earlier, that the decision-making body eventually votes on what road to take. Notably, the ESRB has been able to publish a quite extensive amount of work and has contributed actively to the general debate. This is, in my view, very important for implementing a macroprudential culture in a broader sense, reaching outside the circle of the ESRB membership. Simply by shedding light on some of the macroprudential issues we are dealing with, and explaining why we see a need to tackle them, may contribute to managing expectations; making the job of safeguarding financial stability just a little easier. The ESRB’s contributions also cover very complex, and in some respects sensitive, issues where the parties involved may have started from views that are very far apart from one another. Being capable of getting results even when dealing with difficult tasks like that is an important quality of a body like the ESRB.

And I am proud to have been along for the ride, not least in my role as Chair of the ESRB’s Advisory Technical Committee. The beginning of the road, in terms of when “a blueprint” of the ESRB reached the public eye, was back in 2009. A high level group chaired by Jacques de Larosière recommended, among other things, that a Union-level body be established with a mandate to oversee risk in the financial system. The aim was to address one of the fatal flaws revealed by the financial crisis – the lack of a truly macroprudential approach for safeguarding the stability of the diverse and interconnected EU financial system. Before the crisis, the quality of supervision varied substantially between countries, and its coordination within Europe was anything but sufficient. The concepts of macroprudential oversight and policy were largely unheard of and it is probably fair to say that most supervisors (or anyone else for that matter)  |1  could not see the woods for all the trees, let alone knowing how they were connected to the “vegetation” in other countries. Part of the remedy would be an EU body that in a holistic way brings together a representation and expertise as broad as its system encompassing mandate. The ESRB was created more or less on the basis of this blueprint.
But I should first say this: while the HKIMR was established by the HKMA, its Council of Advisors, of which I am not a member, determines its programme of activities. It therefore enjoys professional independence. Thus, I was not a party to the Council’s deliberation of, and its decision to support, Professor Crosby’s proposal to hold the Workshop here. But I am very pleased that the Council of Advisors decided to do so. I will start from the observation that Hong Kong’s economy - like many Asian economies - is a small ship in a big ocean. While the weather today may be placid, the winds can pick up without warning and the waves can be forbidding. You all know about the series of massive speculative capital flows that Asian economies, and even Australia and New Zealand, were exposed to during the Asian financial crisis, and how Hong Kong finally rode out that storm. In times such as those, policymakers naturally ask what is the right course to steer, what are the right policies to follow. One policy is clear - to ensure that the boat is as seaworthy as possible. This, of course, we have sought to do. Following the Asian financial crisis we took a large number of measures to improve the functioning of the currency board, and the efficiency of the financial infrastructure in Hong Kong more broadly.

Speeches  Published Date: 31 May 2022  "Gearing Up for Climate Action - The Road Ahead for the NGFS" - Opening Address by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore, Chair, Network for Greening the Financial System, at the Green Swan Conference 2022 on 31 May 2022 Distinguished guests, ladies and gentlemen. It is an honour and a pleasure to address the Green Swan Conference again. As chair of the Network for Greening the Financial System (NGFS), I would also like to express my gratitude, on behalf of the NGFS, for the opportunity to co-host this conference with the Bank for International Settlements, the European Central Bank, and the People’s Bank of China. From a climate perspective, 2020 to 2030 is the “critical decade”. While everyone is busy making net zero commitments for 2050, let us not forget that the trajectory towards net zero will be substantially determined by 2030. Looking at where we are in our transition journey, the urgency to act is greater than it has ever been. Global greenhouse gas emissions are continuing to rise. In 2021, fossil fuel use and associated carbon emissions rebounded in tandem with the global economic recovery. The demand for coal has risen, not fallen. Fossil fuels continue to account for more than 80% of global primary energy consumption. Renewable energy generation capacity has grown significantly in recent years, but the current pace is not sufficient to reach net zero by 2050. Global temperatures have already risen by 1.1 degrees Celsius above pre-industrial levels.