samchain/econo-pairs-v1 huggingface dataset:
The other point has to do with the fact that it becomes easier to produce consistent forecasts and scenarios. This is particularly important when preparing estimates and developing scenarios in a somewhat longer-term perspective than the usual two years, which can sometimes be valuable in order, for example, to show the effect on inflation of shocks that are judged to be temporary. The assumption of a constant repo rate becomes generally more unrealistic the longer the forecast horizon is extended. When the difference between the market’s view of the future repo rate and the assumption of an unchanged repo rate has been large, it has also been complicated to link assumptions about short-term interest rates to a reasonable picture of, for instance, future long-term rates, since long-term rates depend on expectations of how short-term rates will evolve. Up to now the Riksbank has chosen to highlight forecasts based on an unchanged repo rate; this has basically worked well, not least in terms of communication. Little by little, however, the Bank's monetary policy work has evolved to the extent that there are now sufficient analytical resources with which to deepen the discussion in this area. The approach used so far has also, as the Bank’s analysis has developed, felt like a bigger restriction in the internal work than before. The perceptions of how the Riksbank acts seem also to have become so well established that the communication risks of presenting forecasts with different interest rate scenarios appear smaller today than before.

Figure 2 shows our interest rate adjustments on the vertical axis and our inflation forecasts’ deviation from the target two years ahead on the horizontal axis. As we can see there is a clear relationship between forecast deviations from target and our decisions, but there are also points in Figure 2 that deviate from the average behaviour. These points chiefly relate to the forecasts we produced when we chose not to counter the effects of energy prices on inflation. So it seems that we have essentially acted in line with how we have said we will normally act. Yet another way to evaluate the result of our policy is to investigate whether it is credible. The most important factor here is that inflation expectations 2 years ahead and beyond have been firmly anchored to our target since the regime was stabilised in 1997-1998. That conclusion holds up fairly well regardless of the method used (see Figure 3). Our ambition to be transparent derives, among other things, from a desire to avoid unnecessary movements or unease in the financial markets. To illustrate our performance in this regard the Riksbank has conducted a number of studies over the years, of which some have been published.3 The picture we’ve received is that our policy has essentially been intelligible and that it hasn’t resulted in any sharp fluctuations in financial prices that could have been avoided.
The euro area faces a complex macroeconomic scenario, marked by an outlook of moderate growth and very low inflation, recently compounded by uncertainties such as those arising from the assimilation of migrant flows and the referendum on the United Kingdom’s continued membership of the EU. The ECB’s monetary policy is providing considerable stimulus through the easing of financing conditions, but it is necessary for other policies to accompany monetary policy if we wish to anchor the recovery and improve the medium-term outlook. In this respect, the fiscal policy of the member countries and of the EU as a whole should use the room for manoeuvre allowed under the Stability and Growth Pact to promote activity and, in parallel, the structural reforms aimed at improving our economies’ potential should be deepened. Turning to the Spanish economy, it has in the past three years moved back onto a path of economic growth, showing greater dynamism than in most of the EU countries. But it has not managed to overcome the imbalances I talked about earlier to the extent necessary. 4  BIS central bankers’ speeches  Spain still has an unemployment rate of over 20% and a very high proportion of very longterm employment; we have financing maturities arising from our external debt that each year exceed 45% of our GDP; and our long-term demographic outlook threatens the sustainability of our public pension system.

Zeti Akhtar Aziz: Renminbi and China’s global future Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the HSBC Reminbi Forum “Renminbi and China’s Global Future”, Kuala Lumpur, 17 August 2015. *  *  *  The increasing role of the renminbi in the global financial system from a trade currency to an investment currency and now its potential role as a global reserve currency will have significant global implications. I am delighted to be here this morning to speak at this Renminbi Forum. The renminbi sphere has indeed extended beyond the Asian region, extending to other continents, to Europe, Latin America and the Middle East. The renminbi is no longer an Asian story, but it has now become a global story. It reflects China’s importance and influence in the changing contour of the global economic and financial landscape, and the steps that have been taken to enhance its international role. My remarks today will focus on the increasing trend of the internationalisation of the renminbi despite the recent challenges faced in the Chinese economy; the implications of this trend to the region and finally on the steps that Malaysia has taken as the region transitions into this environment. Long-term prospects for the Chinese economy and the renminbi After decades of rapid growth, the Chinese economy is now transitioning to a growth path that is more sustainable.
Zeti Akhtar Aziz: Statistical science for a better tomorrow Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the International Statistical Institute Regional Statistics Conference 2014 “Statistical Science for a Better Tomorrow”, Kuala Lumpur, 18 November 2014. *  *  *  Introduction It gives me great pleasure to welcome you to this inaugural International Statistical Institute Regional Statistics Conference. This conference takes place at a time of major transformative change in our region and in the world. The contribution of statistics in this new and rapidly changing environment has become of even greater importance. In this increasingly complex world, the availability of high quality statistics is vital in facilitating decision making for both the private and public sectors. The world is also seeing greater demands for higher levels of transparency. This has become key for building trust and confidence regardless of the line and nature of business. The statistics community has responded to these changes. Immense progress has been achieved in developing the methodology for generating consistent economic and financial statistical systems. In a world that has also become more globalised, such progress has brought great benefits to businesses and policymakers in terms of the availability, comparability, and broad consistency of economic data across countries. For any economic and financial community, detailed and comprehensive data are highly important to understand the implications of the developments taking place.

But in the light of rising defaults and falling house prices – first in the United States and then elsewhere – investors reassessed the risks inherent in these securities. Perceived as riskier, their values fell and demand for securitisations dwindled. For the same reason, the value of banks’ mortgage books declined. Banks saw the value of their assets fall while their liabilities remained unchanged. The effect was magnified by the very high levels of borrowing relative to capital (or leverage) with which many banks were operating, and the fact that banks had purchased significant quantities of securitised and more complex financial instruments from each other. Not only were these assets difficult to value, but the distribution of losses across the financial system was uncertain. Banks’ share prices fell. Capital was squeezed. Markets were sending a clear message to banks around the world: they did not have enough capital. At the Annual Meetings of the IMF and World Bank in Washington ten days ago, the message was reinforced by our colleagues from Japan, Sweden and Finland, who, with eloquence and not a little passion, reminded those present of their experience in dealing with a systemic banking failure in the 1990s. Recapitalise and do it now was the lesson. Recapitalisation requires a fiscal response, and that can be done only by governments. Confidence in the banking system had eroded as the weakness of the capital position became more widely appreciated.
The paradox of the present scenario is that the banking system, whose objectives should be to intermediate credits and hedge against risks, seemingly concealed the risks in a complex web of derivatives (and notes) thanks to regulations that didn't measure up to the challenge. Another aggravating circumstance is the transition of the bank-based financial system to a system based on tradable, short-run-debt certificates. This scheme opens the door to a bank run that differs from the old ones where customers stood in line to withdraw their deposits. The recent incorporation of safety-net policies for institutions (Primary Dealer Lending and bankarization of investment banks) and securities (guarantees to Money Market Mutual Funds), are the offspring of this change in the financial system. The lessons learned in the 1920s, which led to the creation of the Fed is being "relearned" now. It is worth recalling that before the Fed came to life, the United States endured a major banking system crisis every three years (Gorton, 1988). World inflation and growth China’s sustained growth for many years already has been at the core of the world economy’s evolution. The Chinese incorporation to the global world was great news, because it brought with it economic growth and low prices. The continuous migration of millions of people from the countryside to the city boosted world output. They not only could produce at lower prices but they also were the cause of the increase in savings in that country.

On the other hand, and as has been made apparent by the financial crisis, the world lent to the US, to a large extent to finance overvalued houses that were sold to families that could not afford them. Now we see confirmation that such an expansion was not a healthy one. Real-estate boom and financial crisis For several years, housing prices spiraled up in a number of developed economies (figure 3). There were lengthy debates whether a bubble was forming, that is, if prices were beyond what could be warranted by fundamentals (housing services provided by homes). For example, the World Economic Outlook of September 2004 (Terrones, 2004), analyzed what could happen if interest rates increased. This was three years before the collapse, which occurred within the context of a mild increase in US interest rates. First were subprime mortgages and banking losses, then the monoliners and Bear Sterns followed suit, as did mortgage credit providers (Freddie Mac and Fannie Mae), insurance companies, other  1  This is Bernanke (2005)’s well-known saving glut, although it seems to apply mainly to China, because the fall in investment dominated in the rest of Asia (Laxton and Milesi-Ferretti, 2005). 2  See De Gregorio (2007). The depreciation would be larger if it did not consider that, as the US liabilities are in dollars, the depreciation reduces its debt (valuation effect; see, for example, Gorurinchas and Rey, 2007). Calculations are similar to those in Obstfeld and Rogoff (2007). 2  BIS Review 124/2008  investment banks, and so on.
Yet at the same time, he saw possibilities: “Successfully solving them in a satisfactory manner will undoubtedly have far-reaching consequences in the economic and financial spheres, and the year might end better than it began.” While times are difficult abroad in our day too, there are bright spots. Growth in Asia remains robust and some figures for the US economy have been positive recently. Europe is facing the challenge of remedying economic imbalances in the face of weak growth prospects. For many countries, demographic developments will in a few years add to the pressure on fiscal budgets. While austerity measures will improve government finances, in the short term they will stifle activity and delay a recovery. This is a very difficult balancing act. But euro area countries have no choice. There is a need to agree on measures to restore confidence in financial markets. Just like 80 years ago, it is difficult to predict where we are heading. The Norwegian economy should be able to hold a steady course. But we will have to take into account that the return on the Fund’s investments may be lower than expected a decade ago. And wage and price inflation is likely to be low for some time to come. Rygg’s hopes were partly realised. In Europe the crisis bottomed out in 1932. Cycles and confidence may shift rapidly and when we least expect it. After hard times come good times. Come what may.

I do not intend to use my remarks this evening to recall our many private conversations – they shall remain private – nor your many achievements: we all know what they are. I would like instead to focus on three of the qualities that I have personally witnessed, and that have marked you out as one of the pre-eminent leaders of your generation: your commitment, your rigour and your statesmanship. Wolfgang is receiving this award tonight in recognition of his commitment to a unified Europe and stable democracy in Germany. Commitment is a quality that has run like a thread throughout your public life. On this very day 30 years ago, only a few blocks from here, a million people demanded reform, democracy and freedom in the largest demonstration East Germany had ever seen. The fall of the Berlin Wall ushered in a profound transformation of German and European history, and you, as Minister of the Interior, were at the heart of this process. Your commitment to your own country was always matched by a commitment to Europe – and you understood that each made the other stronger. You saw immediately that German reunification could trigger optimism at home but anxiety abroad. You knew that the best way for Germany to demonstrate the strength of its historical responsibility to Europe was to share a currency with its neighbours. At the same time, a single currency would safeguard the single market against the risk of competitive devaluations.
The savings glut has in turn had a contribution into the increase in prices on the stock exchanges in the US, and subsequently to the increase of property prices, which has in turn lowered the level of savings of American households. The International Monetary Fund argues against the hypotheses of Bretton Woods 2 and the global savings glut by stating that the source of the current account surplus is an exceedingly low level of investments in Asia, except for China. Therefore, one should speak of a global investment draught rather than anything else, 30 as over the five years following the Asian crisis in 1997-1998, the investment level was by 7 percentage points lower than in the five-year period preceding that crisis. Considering the above, an appropriate recommendation for those countries is not limiting their savings rate, but rather improving their investment climate. There are numerous theories that attempt to explain the occurrence of global imbalances. According to some of them, the major reason behind global imbalances is the low level of savings in the US household and public sectors, 31 i.e. the fact that Americans spend more than they earn, and that the budget deficit, from a substantial surplus in the year 2000, turned into a level estimated at 4.7% of the GDP in 2004.

Chart 5: Debt instruments outstanding in the international financial market USD billion 16 000 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Bonds issued in the international market Debt instruments issued in the international market Source: BIS  4  BIS Review 60/2006  Chart 6: Volume and structure of global financial assets (USD trillion) USD billion 250 209  200 58.5  150 96  100 53  50 0  5.4 12 2.2 1.7 2.8  1980  16.4 10.6 11.7 14.3  20.0 13.1 15.9 20.0  119  35.4  35.7  20.1  21.4  30.7  29.8  31.9  32.1  33.4  60.6  25.0 14.4 20.2  69  118  56.4  36.5  1993 1996 1999 2003 2004* Bank deposits (CAGR* - 7,8%) Government debt securities (CAGR - 6,9%) Private debt securities (CAGR - 10,2%) Equity securities (CAGR - 8,6%)  2010**  CAGR – Compounded Average Growth Rate. * - preliminary data. ** ― forecast by McKinsey Global Institute. Source: McKinsey Global Institute. As opposed to green-field investments, the portfolio capital is very mobile and, depending on the situation (macroeconomic or political) it may move easily among local markets. This may lead to high instability on the FX market causing significant exchange rates fluctuations. One of the methods of hedging against the risk of currency appreciation or depreciation is taking positions in derivatives.
I would now like to address the objectives that we are yet to complete. The most pressing problem is lending to business owners. The standard N25 restricting financing of one’s own projects was introduced this year but is still only applied in a preferential mode. Lending to owners is dangerous for two reasons. First, the bank will turn a blind eye to risks linked to its own company when issuing it a loan i.e. the risk of non-return. Second, our practice has shown that if the owner’s project really experiences difficulties the last place it returns money is the affiliated bank. These are not marketable loans but loans extended by unwritten rules. Banks cannot refinance or resell them. In the end, this is the cause of bankruptcy for many banks. It is one of the factors that led to the collapse of relatively large banks, whose licenses we revoked. We want the banking community to know that our intentions in this field are serious and we will continue to take a tighter stance. Therefore, I advise those whose business model is built on lending to owners to seriously consider finding alternatives. Yet another problem is the quality of banks’ capital. We need to be confident that our banks have real, not borrowed, capital. Therefore, as of this year we will be introducing tighter regulation on the quality of capital. When calculating a bank’s capital, we will not take funds from nontransparent sources into account. There is another whole host of problems associated with collateral.

Ladies and Gentlemen, Since I have been given the floor I now wish to take this opportunity to briefly share with you the Zambian experience with regard to the microfinance market. Despite its land-based wealth, Zambia faces very significant development challenges. The rapid structural adjustment process that took place during the 1990s has had a harsh impact on our people, with the result that poverty is now widespread in our country. Currently, a significant number of the 10 million or so Zambians strive for survival on far less than one US dollar a day and like in many other African countries there are high HIV/AIDS rates and indebtedness which have contributed to persistent low economic performance. Thus, our government’s focus with assistance from cooperating partners has to increasingly be on poverty alleviation via income generation and micro enterprise stimulation, using small business development and microfinance as mechanisms to improve household standards. Following the structural adjustment period, particularly from the early 1990s, affordable and publicly funded rural financial services have collapsed. A private microfinance movement, though still in its infancy, has had to emerge offering modern microfinance services. Today in Zambia we have an interesting blend of microfinance institutions that are private sector, for-profit firms, and non-profit, non-governmental organizations (NGOs). Although expansion is much slower in rural areas, growth is evident along the line of rails and the peri-urban areas of our country.
The improvements in the functioning of markets, together with wage moderation, have contributed to strong employment growth and a considerable reduction in unemployment over the past couple of years. This is clear proof of the benefits of committing to a rigorous implementation of the agenda agreed in Lisbon and confirmed in Barcelona. However, while a number of initiatives were taken in this direction in the course of last year, it is of the utmost importance that further progress in these areas be achieved. To conclude my statement, I should like to express my confidence that the euro will prove a stimulus for further economic and financial integration. The introduction of the euro banknotes and coins has not only enhanced price transparency, it will also highlight the fact that the European Single Market is not yet complete and that a number of regulatory, administrative or legal impediments to the free circulation of goods, the cross-border provision of services and to labour mobility still exist. It is my belief that the euro, as a visible symbol of European identity in everyday life, will increasingly bring these obstacles to light and stimulate efforts to eliminate them. In this way, the euro will accomplish one of the pre-eminent functions of the single currency, namely to "crown" the establishment of a single market in Europe. Finally, I should like to mention that this is my last appearance in this forum as Vice-President of the ECB.

In this environment, the concern over second-round effects via wages arising from the high annual rates of increase in the HICP dissipated gradually. As information stemming from both pillars of the monetary policy strategy indicated lower inflationary pressures over the medium term, the Governing Council decided on 10 May and 30 August 2001 respectively to lower the key ECB interest rates by 25 basis points. The terrorist attacks in the United States on 11 September 2001 were a major shock to the world economy. Immediately after the attacks, the Eurosystem took measures to ensure the normal functioning of the financial markets. At the same time, the attacks created an exceptional degree of economic uncertainty, undermining confidence. This weakened economic growth further, thereby also lowering inflationary pressures. This general assessment of lower upward pressure on inflation was not contradicted by the analysis based on monetary data. Although M3 growth increased significantly in the second half of 2001, this rise was not interpreted as implying risks to inflation. In fact, it was related to portfolio shifts from longterm to liquid short-term assets included in M3, which were initially linked to a relatively flat yield curve and a continued decline in stock prices and subsequently reinforced by the high financial market uncertainty caused by the terrorist attacks of 11 September. The continuous decline in the annual credit growth to the private sector also supported this assessment.