samchain/econo-pairs-v1 huggingface dataset:
Strong domestic demand and diminishing excess capacity will surely lead to price pressure as producers compete for scarce resources. And as the recovery goes from strength to strength and inflationary pressure rises, so must the monetary policy stance regain its poise – poised at a neutral rate that is neither too accommodating nor too tight. After all, monetary stimulus can only do so much and excessive stimulus can lead to financial imbalances. Let me share my view on the surge in oil and commodity prices and, in particular, how we should respond to this challenge. The brief answer is that monetary policy stance continues to be one of regaining poise with increased vigilance over inflation. The long  2  BIS central bankers’ speeches  answer is a bit more complex. The first-round supply-side shock of a rise in oil price should be allowed to pass through into domestic prices. Central banks should take care not to overreact to such price changes as they only reflect the welcome process of market re-balancing demand and supply. However, there is a possibility that a supply shock, especially if it is long-lived, may result in second-round inflation. By second-round inflation, I mean a persistent and general rise in prices. Second-round inflation may materialize if inflation expectations become unanchored and result in a change in price setting behavior fueled by strong domestic demand such that prices rise across the board – something that every central bank must pre-empt by anchoring expectations to short-circuit the vicious cost-price spiral.

In my view, also shared with many others’, monetary policy should be poised, pre-emptive and perceptive taking into account the central scenario, let me say more concretely what this means. First, on poise. Last year was the year of transition as the Thai economy moved out of crisis toward recovery. This year is the year of regaining poise as the balance of risks shift to inflation amid a selfsustaining recovery. A self-sustaining recovery means robust and broad-based growth. Indeed, we have seen expansion across consumption, investment, and exports. Economic performance beat expectations throughout last year. For 2011, we project 3–5 percent growth as the economy returns to its long-term average growth. The surge in oil and commodity prices is projected not to weigh on the growth prospects of the Thai economy, due to falling oil intensity and strong and broad-based growth. The oil price spike this time round is also not as severe as previous episodes. On the recent and unfortunate Japan crisis, we believe it will have a limited impact on the Thai economy. As a share of Thai exports, the Japanese market accounts for only about 10 percent. But of course, there is a risk of a protracted nuclear crisis dampening economic activity with adverse implications for global growth. In such an economy with strong growth prospects, there is less need for policy to accommodate growth going forward but more need to be concerned about inflation.
The construction industry is showing a positive trend in the south-eastern region, primarily due to public building projects, while western Oppland is experiencing weaker activity. On the whole, enterprises providing services to the household sector are faring better than those oriented towards the business sector, primarily due to weak developments for customers in the construction industry, corporate customers that are in competition with foreign companies or dependent on customers in these categories. Employment is stable, but many enterprises, particularly in the public sector and the construction industry want to downsize in response to higher costs, lower budgets or as part of general, planned workforce cutbacks. Developments in Raufoss may have a considerable impact on the local community. Pay increases are expected to be considerably lower in 2003 than in 2002. Wage growth is highest in the public sector. There are wide regional variations in unemployment. At end-April, 3.2 per cent of the labour force in Hedmark and 2.9 per cent in Oppland had registered as unemployed. This is well below the national average of 3.9 per cent. The increase in unemployment on a national basis in 2002 primarily occurred in the service industries. In January, manufacturing took over the lead as the industry with the highest increase in unemployment. Manufacturing unemployment is now 3700 higher than a year ago. Agriculture and forestry account for a larger share of employment in Hedmark than in other counties. Because of the large tracts of forest in this county, forestry is a particularly important sector.

Investment as a share of output and demand is now lower than the average for the past 20 years, but now appears to be stabilising. It may therefore take some time before the turnaround occurs and investment picks up again. Strong investment growth has contributed to a build-up of overcapacity in US manufacturing. Capacity 1 utilisation in manufacturing is low. Low capacity utilisation also reflects the overinvestment that took place at the end of the expansionary period. The household saving ratio has picked up somewhat since 2000, probably as a result of the decline in the equity market - although it is still low. Similarly, the federal government budget deficit - as a result of expenditure in connection with war combined with substantial tax reductions - will increase. The current account deficit in the last quarter of 2002 was equivalent to 5¼ per cent of GDP. The low saving ratio and the substantial current account deficit has contributed to a depreciation of the US dollar. Conditions in the US today are more conducive to growth than they were six months or a year ago. The low interest rate will support an increase in both consumption and investment. Corporate profits and financial balances have improved. Companies’ liquidity is solid. At the same time, however, it is 2 uncertain how far shortfalls in corporate pension schemes will weaken growth impulses. And with low capacity utilisation, it may take time before investment gains momentum.
In such a crisis, however, prompt action is vitally important. The central bank initiative contributed to this. Lessons Swedish banks were never directly involved in these problems, though they did feel certain effects of the developments in U.S. financial markets. Even the Swedish market became less liquid. However, the involvement of Swedish banks might have been greater and that is why the Riksbank needs to analyse the origins of such problems. Our function of promoting a safe and efficient payment system cannot be performed properly without a good capability for analysing and understanding the implications of the crises that occur around the world. The results can lead to conclusions that underpin the stability of Sweden’s financial system. The Riksbank has in fact been working on these matters for a long time; risks of the type that caused problems last autumn were considered in the Financial Market Report that was published in November. In the case of LTCM, the threat of a systemic crisis came from the combination of extensive counterparty risks and a high risk concentration. Counterparty risks occur when there is uncertainty about the ability of counterparties to meet their commitments. One of the problems was the large number of banks that had provided loans to LTCM. This gave a concentration of risks to a particular counterparty, which had large positions of its own. Such a concentration can have several causes. The high profits—probably also the reputable status of executives—no doubt made the fund attractive as a counterparty.

To begin with the strategy was notably successful; high profits were obtained with a low capital input. In 1995 and 1996 the annual profit was over 40 per cent. This performance and the confidence that the fund management enjoyed made many banks willing to provide loans or invest in the fund. In time, however, the financial markets moved in the opposite direction to what LTCM—and others—had expected. Russia’s debt moratorium on 17 August was followed by markedly increased financial turbulence as investors became more nervous and withdrew from other markets that could be perceived as risky. A uniform tendency developed, with falling share prices, widening interest rate spreads, growing unrest and decreased liquidity. There was a flight to quality of a kind that had not been observed before in the financial markets. Instead of narrowing, interest rate differentials became markedly wider. The diversity of risks on which LTCM had relied ceased to provide protection. The market movements were such that, if anything, it was a source of increased losses. The rumours of problems in LTCM contributed in turn to even greater turbulence in the financial markets. In that market prices would be depressed by a winding-up of positions, investors tried to close positions in those markets where they feared that LTCM was also involved. It can be mentioned, for example, that Risk Magazine estimated that LTCM’s positions in the interest swap market totalled 5 per cent of the global market, which says something about the size of the fund’s positions.
Through its Fintech Innovation Hub, which has welcomed over 400 innovative players since 2016, the Banque de France promotes active and open dialogue with all market stakeholders, with the aim of building streamlined regulation for digital innovation. The Banque de France is also committed to leveraging new technologies for its own digital transformation. We are already running an interbank blockchain called “MADRE” to automate the generation of creditor identifiers. I am convinced that by conducting their own experiments, central banks and regulators are more capable of designing relevant policies and regulations for digital finance. ***  A second structural challenge is climate change, which is perhaps less tangible than the digital revolution but certainly no less significant. The transition to a low-carbon economy requires shifting thousands of billions of dollars from carbon intensive industries. As a result, beyond green bonds, we also have to develop new 2/3  BIS central bankers' speeches  financial products to bridge this green finance gap. I am thinking of green securitisation, green covered bonds, and green loans accessible to individuals, SMEs and start-ups. France is at the forefront of this challenge. Four out of the world’s top ten green bond book-runners are French banks. France is among the top three green bond issuers. This trend is being supported by public action: a law has been introduced requiring investors and listed companies to disclose their climate-related risks; the French State issued the largest green sovereign bond in 2017.

Spencer Dale: QE – one year on Speech by Mr Spencer Dale, Executive Director and Chief Economist of the Bank of England, at the Centre for International Macroeconomics and Finance (CIMF) and Money Macro and Finance (MMF) Research Group Conference “New Instruments of Monetary Policy: The Challenges”, Cambridge, 12 March 2010. *  *  *  I would like to thank Rohan Churm, Chris Kubelec, James Smith and Jing Yang for their considerable help in preparing these remarks. The views expressed are my own and do not necessarily reflect those of other members of the Monetary Policy Committee. Introduction This has been a truly extraordinary year for our economy and for economic policy. A year ago – almost to this very day – the Monetary Policy Committee (MPC) conducted its first gilt auction as part of its asset purchase programme or its policy of quantitative easing as it became known. The need for policy action was clear. The three months to March 2009 are estimated to have seen the sharpest quarterly contraction in GDP since comparable records began in the 1950s. Manufacturing output was contracting at an annualised rate of close to 20%. Claimant count unemployment was rising at the fastest rate on record. And financial markets remained in a state of shock.
All in all, one may therefore expect a general increase in bid amounts and bid rates in tender operations, as well as adverse selection in the participation to these operations. Would this imply a changed risk profile of the Eurosystem’s balance sheet? In principle no, as the central bank is protected by its risk management framework, including a haircut schedule calibrated to the credit and liquidity risk of pledged securities. But higher average haircuts could imply a higher level of asset encumbrance on the balance sheets of banks, with potential feedback loops onto the perception of credit risk at counterparty or even at country level. Let me give a second example of how the interaction between liquidity regulation and monetary policy implementation might be expected to be complex, especially for the Eurosystem. On one side, the regulation aims at reducing banks’ undue reliance on central bank liquidity, which is an intended consequence of the regulation. On the other side, the regulation might lead to a situation in which some euro area banks, presumably the most fragile, would rely more on the Eurosystem than otherwise. The central bank then risks becoming a “lender of first resort”. Still, on this note, let me recall that the Eurosystem implements monetary policy in normal times in an environment of a large and structural liquidity deficit by using temporary liquidityproviding operations in the form of reverse repos. This implies that some reliance on central bank funding is not undesirable, but rather wanted.

Hoerova and Monnet (2011) view market  6  BIS central bankers’ speeches  money market (as demand might not be fully matched by supply) and segmentation in the market between maturities over and below 30 days. At the same time, by reducing liquidity risk, the LCR may lead to lower liquidity risk premia. The overall effect of these two countervailing forces is unclear though. While there could be an overall impact on the difference between short and longer-term rates, to assess the overall impact on the monetary policy transmission, one would need to see whether the transmission from short to longerterm rates would be also affected. However, it remains to be seen whether unsecured lending beyond 30 days will revive after the crisis. As mentioned, this new set of liquidity requirements is expected to have important consequences for limiting solvency risk and encouraging good risk management. In fact, the regulation is expected to bring an overall positive effect on the functioning of the money market by internalising the negative externalities for financial stability and monetary policy, i.e. reducing information asymmetries concerning banks’ liquidity risk exposure and their liquidity risk bearing capacity, creating the conditions for a better functioning of the money market.17 This has to be combined with actions ensuring a proper functioning of the money market (such as oversight of reference rates along the lines recently proposed by the European Commission).
They therefore want to make it clear that they are endeavouring to attain an average inflation rate of 2 per cent – “average inflation targeting”.17 However, they have not committed to any specific formula for calculating the mean value, for instance, over which period this will apply – hence the term “flexible”. The second important change refers to the view of how the labour market should affect monetary policy decisions. Previously, the wording was that monetary policy was guided by deviations from maximum employment. These deviations could of course be both positive and negative. According to the new wording, decisions will in future be based on an assessment of shortfalls from maximum employment. In practice, this means that low unemployment or high employment as such will not be trigger factors for monetary policy tightening, if inflation is not on its way up. The Fed is thus saying that it will not risk putting the brakes on too early in economic upturns, but will allow them to proceed longer than has perhaps been the case previously. One reason is that if a strong labour market can be retained over a longer period of time, this will benefit weaker groups, which would otherwise have problems obtaining employment. This increases total employment but, interestingly enough, distributional aspects are also considered. These are certainly interesting solutions.

While this is a unique crisis, it brings in tow unique opportunities for us to recalculate our approach, correct structural imbalances, and construct economic components on stronger, firmer foundations so that we may build a brighter future for our homeland and ensure sustainable prosperity for all. We hope that everyone stays safe. Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬  -9-  Sources:           International Labour Organization. International Monetary Fund. Google COVID-19 Community Mobility Report as of 25 May 2020. Bensirri Public Relations COVID-19 Kuwait Business Impact Survey 13 May 2020. McKinsey Kuwait Business and Employee Sentiment Survey 26 April 2020. Ajar Report on Boosting Rent Collection in the Coronavirus Crisis. World Health Organization. Official press statements. Press coverage of official press releases. Central Bank of Kuwait - Public ‫ عام‬- ‫بنك الكويت المركزي‬
It was, for example, the subject of the Macmillan Commission in the 1930s and the Wilson Committee Review in the 1970s. 4  And it is true that for UK banks nowadays lending to business is a relatively small proportion of their activities. In the century after Geach’s day around 80% of bank lending was to businesses, albeit loans of very short maturity. Today, the great bulk of UK banks' lending is to households, predominantly for mortgage financing. Lending to non-financial businesses accounts for around 18% of UK banks’ domestic lending; if one excludes the real estate sector, however, the figure is closer to 12%. And lending to SMEs accounts for only 4%. Businesses borrow for many reasons not simply for investment, and business investment in the UK as a whole is the result of millions of UK businesses assessing the merits of individual investment opportunities, financing options and other considerations. In 2015, in order to get a better understanding of the supply of finance for productive investment and to support the government’s productivity plan, the Bank initiated research into ‘productive finance’. Our aim  3  See IMF (2015) ‘Uneven Growth‘, World Economic Outlook, April 2015.

Today this is the case in just a few countries, of which Sweden is one. Monetary policy’s interaction with fiscal policy will be important, at both national and EMU level, for the perceived credibility and consistency of economic policy in general. A constructive dialogue is therefore needed between the ECB and the governments of the euro countries. The arrangements are not yet clear but an intense discussion of this and other matters is now under way in Europe. The Treaty provides a number of opportunities for contacts between the two spheres. Functional economic structures must also be in place so that the single monetary policy can establish low inflation without eliciting unnecessary economic tensions. A matter of particular importance in this context is the workings of the labour market. A labour market that functions properly reduces the risk of regional unemployment and thereby of political problems that could ultimately pose a threat to the monetary union. Temporary factors  BIS Review 68/1998  -5-  The discussion of the euro’s development has included the point that the introduction of the single currency will trigger widespread portfolio rearrangements, mainly by private investors but also in public reserves. The euro will alter the composition of exchange risks in investors’ portfolios and this could result in flows to restore the degree of diversification. Investors who achieved diversification previously with holdings in German marks and Italian lire, for example, will have to adjust their portfolios when both these currencies are replaced by euro.
Our monetary policy since then has been based on two elements: the negative interest rate of –0.75% on banks’ sight deposits held at the SNB and our willingness to intervene in the foreign exchange market, as necessary. The negative interest rate in Switzerland has at least partially restored the original interest rate differential and thus reduced pressure on the Swiss franc. As Chart 6 shows, the real external value of the Swiss franc has been on a gradual downward trajectory since mid-2015. Even in times of increased market volatility, as in the aftermath of the British EU referendum in June this year, the Swiss franc has remained broadly stable against the euro and the US dollar. Without negative interest and our willingness to intervene, the Swiss franc would have appreciated, growth would have slowed, and inflation would have fallen further. The impact of negative interest rates on the exchange rate is crucial for us because Switzerland is a small open economy and foreign trade is a very important factor in our economic performance. In 2015, exports contributed over 50% to GDP, while imports accounted for about 40%. Movements in the Swiss franc therefore have a big impact on domestic economic developments. The Swiss franc is still significantly overvalued and this represents a major challenge for many sectors. Imported goods and services also have a high weighting in the Swiss consumer price index basket. The appreciation of the Swiss franc since the financial crisis was therefore also directly reflected in the inflation rate.

This has a direct bearing on ensuring financial stability. But because Basel II is developed from the current practice among banks in developed countries, some banks in emerging markets may have a large gap to fill. For example, in moving away from collateralbased to credit-based loan approval, banks must focus more on the ability to pay of customers and to make loan decisions in a forward looking manner. This requires a different set of expertise that focuses on risk assessment in the environment changing economic cycle and asset quality. (ii)  Information system and resource and capacity building  Next is the information system which is the most important foundation for achieving financial stability through capital adequacy. Whereas developed countries generally already have in place the necessary infrastructure in this regard, financial institutions in emerging countries have to build the system from the ground up, involving areas such as data collection, storage, analysis, and ways to effectively embed the information in the decision making process. This step may take more time and effort because it involves building a knowledge base for quantitative analytical skills and ability to apply international best practices to the unique local settings of emerging market. (iii)  Involvement of stakeholders  Another difficulty in Basel II implementation is that other players in the wider financial industry will be playing more active role in the banking sector’s risk assessment.