samchain/econo-pairs-v1 huggingface dataset:
In less developed countries, food is a very significant component of overall purchases by consumers. In a developed country such as the United States, food is a much smaller share of overall purchases. Thus the impact of a food-supply shock on the overall inflation rate and on other important economic variables such as wages and total imports can vary widely by country. Given the different impacts of supply shocks, it is not surprising that monetary policy is likely to react differently to a supply shock such as food, depending on the unique characteristics of the particular country. Figure 17 shows that in the United States, the importance of food as a component of inflation measures has been declining over time. And, despite improvements in energy conservation that have lowered the per capita consumption of oil, higher energy prices have contributed to recent increases in the importance of energy in the consumer price index. The fact that food and energy prices have been quite volatile recently, but remain a relatively small part of the entire basket of goods, helps to explain why core inflation rates have not been particularly responsive to food and energy shocks. Concluding observations In conclusion, I recognize that recent supply shocks have caused pressures on many household budgets, and have led some analysts and observers to become concerned about potential long-term inflationary impacts.

Notwithstanding this, and as a natural consequence of credit growth in the past, and of a macroeconomic setting characterised by a cyclical turning point, we should expect continuing rises in bad debts in the coming months. This rise in bad debts should concern us, and indeed it would be alarming if bank regulators and supervisors were unconcerned; but it does so only moderately, bearing in mind the resilience of the banking sector according to the stress tests performed by the Banco de España under assumptions in which extremely adverse scenarios materialise. Nor will I be referring today to the problems that are common to all adjustment processes, the adjustment in the Spanish economy having moreover begun before the turbulence emerged last summer. Rather, I shall be focusing on what for me is the worst effect of this turbulence: the global financial market dysfunctions. So you may better understand my subsequent remarks, I would like to very briefly outline how, starting from a very limited  BIS Review 62/2008  1  segment of the US mortgage market (the subprime mortgage segment), we have reached a generalised situation of international financial market turbulence. The factors behind the current situation are complex. But in my opinion there are two key elements that explain such an intense process of propagation.
But in practice, there is clear evidence that credit or market losses put pressure on the firm, which can push managers into fraud or result in operationally-risky cost cutting. There have certainly been occasions when operational losses have only been revealed because of a market downturn or similar event. As I heard it graphically expressed the other day: “It is only when the tide goes out that you discover who is not wearing a bathing costume”! I am optimistic that, over time, operational risk will become more measurable and that, as was the case for market risk models, a consensus on methods of quantifying it will emerge. The Basel Committee’s framework will certainly have to be flexible in the face of this evolution. However, we should also not lose sight of the fact that the Committee’s announced aim is not just coverage of operational risks, but “other” risks more generally. Episodes of market turmoil over the past couple of years have BIS Review 132/1999  4  demonstrated just how wide is the range of risks that are not currently explicitly covered by regulatory capital; I would include under this heading market liquidity risk, individual bank liquidity risk, correlation risk between credit and market risks, and legal and reputational risk. These types of risk can certainly produce systemic disruptions. My expectation would be that, even with further advances on measuring operational and credit risk, most banks will want to carry a chunk of fairly undefined capital to cover rainy day events.

BIS Review 57/2008  5  The outlook is far from certain… In the forecast we published just over two weeks ago we assume that the rapid commodity price rises are partly temporary and that they will subside in the future. We are also expecting the krona to be strong. This will contribute to inflation falling. But of course this is uncertain, not least for the reasons I took up earlier this morning. If the international price impulses were to become stronger and longer lasting than expected, inflation would of course be higher. But as I see it, it is not impossible that the international price rises will instead be lower than expected. This would push down inflation more quickly. One possible reason for this would be if international economic activity slows down more quickly than anticipated. We have highlighted these risks in earlier reports. A further factor, which in my opinion contributes to the uncertainty in the assessment, is the increased interest in portfolio investment in commodities. If the expectations of future return on such investments alter, it could contribute to a more sudden slowdown. And this would gradually affect consumer price inflation. It is also possible that such an effect – that capital is withdrawn and invested in other assets – has contributed to the price of wheat falling more rapidly recently. With regard to movements in the commodity markets since the previous forecast, prices have moved in slightly different directions.
Not only may they get it wrong but their risk systems, like their marketing, are  4  BIS Review 21/2009  directed at their competitive advantage and they are not motivated or in a position to look after the system as a whole. Lesson 2: Establish more effective crisis management As Adair Turner set out very clearly in his recent speech, the events of the last year and a half have revealed a number of particular gaps in the international regulatory regime. For example, it gave too little weight to off-balance sheet exposures – the SIVs and conduits in the shadow banking system which were holding huge portfolios of what turned out to be toxic assets. The risks of losses on trading books were underestimated as were the risks in the growing dependence of many banks on brittle wholesale funding markets. I am confident that the G20 summit will endorse a practical set of measures agreed in the Financial Stability Forum and the Basel Committee to tackle these points. But we need also to beware of the dangers of over regulation. Some commentators seem attracted to turning our banks into nationalised utilities. Certainly international capital markets have complicated policy making but that is not a sufficient reason for dismantling one of our most successful sectors. Moreover nationalisation has been tried in many countries and its record is poor. It may reduce the risk of shocks but generally only at a heavy cost in misallocation of resources (and usually a continuing drain on the public purse).

We are now learning a lesson that Japan learned a decade ago. As the Governor of the Bank of Japan recently remarked “if inflation targeting regimes induce market participants to think of monetary policy decision-making process in terms of an inflation number, they tend to overlook the insidious build-up of unsustainable imbalances […]. Inflation targeting works well if it is properly understood… (but this) can be difficult once an economy has attained and maintained a low inflation rate for a number of years.” This is partly a matter of adopting the intelligent approach inflation targeting. We must be willing to “lean against the wind” of asset price booms and credit expansion and to tolerate somewhat weaker growth and lower employment in doing so. But if we need to prevent asset price and credit booms as well as control consumer prices it would be better to have two instruments than one and that is the last lesson I want to discuss – the need to develop instruments which directly dampen the cycle of credit growth and asset prices. 10  BIS Review 21/2009  Lesson 7: We need another instrument to stabilise the economy The first step must be to decide how ambitious we want to be and define the objective. Then we can design the instruments. I don’t think we have all the answers yet.
From a central banker’s viewpoint, moreover, a key benefit of euro area membership will be the elimination of the costs inherent in managing a small, vulnerable currency like the Maltese lira and their replacement by the greater security and credibility afforded by a strong international currency. Euro adoption necessary but not sufficient Viewed from this perspective, therefore, the euro is but one element in a continuum of changes necessary to enhance the international competitiveness of the Maltese economy. The benefits of the single currency will not suffice, especially in the presence of downside risks to global growth such as higher oil prices, a potentially disorderly unwinding of current account imbalances and the rise of protectionism. Although the ongoing preoccupation with the level of the external reserves will cease once we join the euro area, moreover, any imbalance between what we buy and sell abroad will continue to cause the depletion of assets or the accumulation of liabilities, and be reflected in the country’s international investment position. Any loss of competitiveness, therefore, will still result in slower growth. BIS Review 113/2006  1  Raising productivity a key challenge In setting out to overcome this challenge, a primary objective should be the correction of existing macroeconomic imbalances. Output growth must, therefore, match spending growth more closely, and a key element in bridging that gap is increased productivity. Put differently, since we are price takers in the markets that matter, notably those for electronics and tourism, we must have a cost structure that does not discourage investment.

Nor Shamsiah Mohd Yunus: Reshaping Malaysia's future - setting the goal for greater governance and transparency Keynote address by Ms Nor Shamsiah Mohd Yunus, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the 10th International Conference on Financial Crime and Terrorism Financing "Malaysia's Future – Setting the goal for greater governance and transparency", Kuala Lumpur, 30 October 2018. * * * A very good morning to all of you. It is my pleasure to address all of you today at this very important conference. Financial crime. Terrorism financing. Corruption and money laundering. These are heavy words that carry the feelings of outrage and displeasure, amongst others. The United Nations Office of Drugs and Crime estimates that every year globally, a staggering amount of USD2.6 trillion is stolen through corruption. Yet, I suspect, in reality, figures like these are so large that many may find it hard to relate to it. To put it in perspective, the figure is around eight times larger than the Malaysian economy. Let us also take the UN Sustainable Development Goals that aims to improve the lives of the poor, improve governance and address inequality. Some estimate that it will take around USD5-7 trillion to meet all the SDGs. This represents 2-3 years’ worth of money lost to corruption. In other words, the money lost through financial crimes is a devastating opportunity cost, draining the resources that could have been used to permanently uplift the lives of billions in this world.
Another example, which has recently led to new legislation in the United States, is the role of analysts in investment banking. An analyst has the task of providing investors with advice, but if the bank is more interested in gaining business for its corporate finance activities than safeguarding the investor’s interests, the analyst’s assessment may be influenced by this. Here there should traditionally be a “Chinese wall”, but this has in some cases been fairly low and probably eroded considerably over time. Before I go on to more bank-specific issues, I would like to say a few words about conflicts of interest in general, and how these can be handled - to the extent that they should be handled. I shall then move on to more specific conflicts of interest between different types of banking operations, particularly given the developments in the United States. Finally, I shall draw some conclusions concerning Sweden. The fact that different people have different interests is quite natural. A buyer and a seller usually have different interests in a business transaction. A difference of interest is actually one of the most important driving forces in a market economy. A difference of interest only becomes a conflict of interest when one person or organisation has to take into account several different interests and can promote one at the cost of another. Conflicts of interest are thus based on an agency relationship. BIS Review 47/2004  1  These conflicts exist in almost all businesses.

Although the market itself can manage most of the conflicts of interest, it may take some time before a common practice is established. Experience also shows that good practice and good ethics can be eroded rather quickly in certain market situations. This is where the supervisory authority can help to develop and maintain confidence  4  BIS Review 47/2004
The main proposals by the Ministry of Public Finance to enhance Government Emergency Ordinance 46/2014 refer to: (i) rendering the rescheduling mechanism and the maturity more flexible vis-à-vis borrowers’ financial capacity, (ii) extending the scope of eligible debtors, (iii) simplifying the administrative procedures for loan rescheduling, (iv) strengthening borrower protection in relation to banks, which remain bound, during the rescheduling process, not to tighten contractual terms regarding the interest rate, the level of commissions, or fresh collateral. With a view to tailoring banking prudential regulations to the new financial market conditions, the NBR has initiated several legislative changes to facilitate the conversion of foreign currency-denominated loans into lei and to ensure the effective enforcement of Government Emergency Ordinance 46/2014 with the amendments proposed by the Ministry of Public Finance. Summing up, we at the National Bank of Romania remain open to dialogue for clarifying the issue of CHF lending, finding solutions and getting involved in accordance with the legislation in force. 10  BIS central bankers’ speeches

Prasarn Trairatvorakul: Thai monetary policy in the environment of excess global liquidity Speech by Dr Prasarn Trairatvorakul, Governor of the Bank of Thailand, at the Thailand Focus 2011 – Enhancing Thailand’s Competitiveness over the Next Decades, Bangkok, 28 March 2011. *  *  *  Ladies and Gentlemen, It’s an honor to speak before you today at the Thailand Focus conference. Early this morning you heard Prime Minister Abhisit Vejjajiva speak on Thailand’s competitiveness; and later Finance Minister Korn Chatikavanij on fiscal policy. To close the circle, I will speak on monetary policy to complete your view on the investment opportunities and prospects of the Thai economy. As international investors, I believe, you want to have a firm understanding of the country’s policy environment. This is what I will discuss today – the monetary policy options going forward in light of my assessment of the global economy and the Thai economy. The assigned title of my talk today is “Thai Monetary Policy in the Environment of Excess Global Liquidity”. Let me stress that I have a different opinion on the issue of excess global liquidity than most. Global liquidity is currently problematic in the sense that it is fluid, rather than excessive. Let me discuss why. First, let me give you my assessment of the global economy. The global economy has entered a phase of fluid global liquidity amid uneven recovery and shifting risk appetite.
It puts all three into equilibrium, in terms of savings and investment, current and future labour employed, current and future preferred leisure, etc. If monetary policy does not in broad terms “respect” the evolution of the real interest rate, it can create imbalances one way or the other. If you go too high above the real interest rate and the actual real interest rate is above the natural one, you create recessions, unemployment, falling investment and declining asset prices. And if you go lower or substantially below the equilibrium interest rate, you create overheating, excessive debt and rapidly increasing asset prices. Even more importantly, moving the statutory interest rate has fundamental effects on the financial sector. The financial sector is a time-transforming sector – every second, it transforms the present into the future (short-term liabilities into long-term assets – typically done by banks) or vice versa (long-term liabilities into short-term assets – typically done by insurance or pension companies). Whenever you take the policy rate above the equilibrium interest rate, you create a problem out of what happened in the financial sector in the past. Whenever you go substantially below, you create problems in the future. I have chosen non-performing loans as an example that is, I believe, quite easy to understand. If you substantially increase rates now, many projects from the past become unviable and non2/5  BIS central bankers' speeches  performing. If you go substantially below, many of the currently new projects will become unviable in the future when rates return to equilibrium.

Yesterday we learnt that inflation in May rose to 3.3%. In line with our remit, I sent an open letter to the Chancellor. As I said in my letter, inflation is set to increase further over the next few months. Oil prices have doubled since the beginning of last year, and, in real terms, are now as high as they were in the 1970s. And further sharp increases in domestic gas and electricity prices are probably on their way. So what should the Monetary Policy Committee do in the face of this rise in inflation? The immediate cause of the current pickup in inflation is increases in food and energy prices relative to other prices. They are caused by the pressure of demand on the supply of food and energy in the world as a whole. Part of that pressure may well reflect expansionary monetary policy in the world as a whole. But the rise in commodity prices cannot, by itself, generate sustained inflation in the United Kingdom unless we allow it to. We will not. So although inflation in the UK will rise in the short term, inflation will then fall back. That means that the rate of increase of other prices and domestic costs, notably pay, must remain low. The MPC does not take that for granted. Surveys – including our own – indicate that expectations of inflation have risen, meaning that inflation is likely to have some tendency to persist.
BIS Review 49/2009  3  as well as to the commercial and residential property sectors. Moreover, financial markets – despite recent positive developments in equity markets worldwide – remain vulnerable to swings in investor confidence and risk aversion, which could adversely affect liquidity and asset prices in some markets. Against the background of these very difficult conditions, significant policy measures have been taken by central banks and governments in Europe to improve market liquidity and replenish capital buffers. Governments created schemes for guaranteeing new bank debt, injected capital and, more recently, provided asset relief. These measures were successful in preventing a meltdown of financial systems and they helped to bolster confidence. The Eurosystem provided important input into the design of these measures, in the form of recommendations aimed at ensuring that such measures would help to safeguard financial stability and restore the provision of credit to the private sector, while at the same time maintaining a level playing-field within the Single Market to the maximum extent possible, and also containing their impact on public finances. It is still early to accurately assess the impact of these government measures on the longerterm funding and the recapitalisation of banks as well as their effectiveness in fostering bank lending to the private sector. This is because the evidence is relatively limited, as the implementation of the measures has been gradual over the past few months.

Lucas Papademos: Presentation of the ECB’s Annual Report 2008 to the European Parliament Introductory statement by Mr Lucas Papademos, Vice-President of the European Central Bank, to the European Parliament's Committee on Economic and Monetary Affairs Strasbourg, 21 April 2009. *  *  *  Madam Chair, Honourable members of the Committee on Economic and Monetary Affairs, It is a privilege for me to present to you the Annual Report of the European Central Bank (ECB) for 2008. This presentation is an essential element of the ECB’s democratic accountability and is therefore of the greatest value for us. In my introductory remarks, I will first briefly review the economic and monetary developments over the past year, present our current assessment of the macroeconomic outlook and explain our monetary policy decisions. I will then focus on a number of topical policy issues, in particular those pertaining to financial stability and supervision. But before doing so, I would like to highlight some important events that have taken place over the previous 12 months. Last year the ECB, and at the beginning of this year the euro, celebrated their tenth anniversaries. We can look back at the past ten years with pride, and we can justifiably say that the euro has been a success. We have delivered a stable and credible currency that enjoys the confidence of now 329 million fellow citizens in 16 EU countries.