samchain/econo-pairs-v1 huggingface dataset:
So it seems to me natural to use interest rates as the active tool to affect the balance between demand and supply in the economy – and so control inflation pressures – and use capital requirements to maintain stability in the banking sector. Regulating bank capital is a natural means for achieving a stable financial system because it directly affects the fragility of the banking sector. If banks do come to hold much more capital this would make the job of setting monetary policy easier. It would do so by reducing the chances of banking crises. We have had to live with the effects of such a crisis over the past few years; they have included great variability in output and unusual (by the standards of the previous ten years) volatility in inflation. But it is a non sequitur that because monetary policy would be much more effective if banking crises were much less common then monetary policy is the right tool to make the financial system more robust. Capital requirements are a better means to that end. BIS Review 100/2010  13

The SNB therefore continues to monitor events on the foreign exchange markets very closely. Impact of negative interest on the money and capital markets  Let me now turn to the impact of negative interest on sight deposits at the SNB on the Swiss franc money and capital markets. As you know, since the introduction of the negative interest rate in January 2015, key money market rates such as the three-month Libor have hovered, as intended, around –0.75% (cf. chart 4). The negative interest rate has ensured that the traditional interest rate differential with other currencies has been at least partially restored. On the secured money market – the repo market – interest rates have also stabilised at a lower level. This applies in particular to SARON, the reference rate for call money. Activity on the  Page 2/7  Berne, 15 December 2016 Andréa M. Maechler  News conference  repo market remains unaffected by negative interest and the very high level of sight deposits. Banks and insurance companies use the market for their short-term liquidity requirements and the efficient management of their collateral holdings. The introduction of the negative interest rate even resulted in an increase in the trading volume on the repo market (cf. chart 5). One reason for this is that repo trades can be conducted in order to use up exemption thresholds. Yields on Confederation money market debt register claims are below interbank levels (cf. chart 4). This is mainly attributable to relatively high investor demand for safe Swiss franc investments.
Particularly concerning is the low degree of export to import coverage, signalling structural problems of this deficit due to still-low competitiveness in our economy. In this direction, a special attention should be paid to checking costs and productivity growth in the economy, by raising investments in education, and by attracting most advanced technologies in production. Also, in the medium run, the macroeconomic policies should be  2  BIS Review 94/2009  prudent in terms of public and private savings level, in order to control the need for using foreign financing resources. The fiscal policy during the first half of 2009 had an expansionary stance, being featured by a rapid growth of expenditures and budget deficit. Budget revenues have recorded a more moderate growth, partially reflecting even the economic slowdown effects. Though remaining within the projected level for 2009, the budget deficit by about ALL 30 billion constitutes a much higher amount than in the same period of the previous year. Under these conditions, the Bank of Albania would appreciate the taking of measures for keeping budget deficit levels and public borrowing in check, helping the maintaining of the internal and external balances in the economy. Preserving the projected budget parameters will impact positively on macroeconomic stability, by controlling the fiscal stimulus on aggregate demand and dampening the pressures on monetary markets. The demand for monetary assets increased during the last months.

Thereupon these countries have been increasingly affected by the crisis. According to IMF, the emerging countries of Eastern Europe are estimated to incur a contraction of about 5 percent during this year. The Albanian economy, in the face of this unfavourable environment, has recorded a comparatively positive performance. There are few data on the real economy. The Bank of  BIS Review 94/2009  1  Albania estimates that a positive economic growth has characterised the first half of year. On the others hand, low growth of credit and money supply, deteriorated business and consumer confidence indicators, slow-down of budget revenues and specific indicators of certain economy sectors, suggest that the economic growth rate has decelerated. It is still early to draw conclusions on the economic performance over the course of 2009 and onward. The Bank of Albania deems that the premises to keep positive economic growth rates in the country are present, among which the macroeconomic and financial stability of the country is of primary importance. Economic activity at home is carried out under the presence of favourable consumer price stability. It is sustained by a soothing tendency of monetary conditions and by an expansionist fiscal policy over this period. The Bank of Albania cut the base interest rate in January and undertook liquidity-injecting operations, raising its quantity in the market.
In any event, the effect of a moderate interest rate rise is not expected to be very significant, in part because of the increase in the share of fixed-rate mortgages observed in recent years, which accounted for 24.9% of the outstanding balance in December 2021. Specifically, it is estimated that the proportion of households with a high net interest burden would rise by 1.2 pp, 2.3 pp and 3.9 pp if interbank rates were raised by 100 bp, 200 bp and 300 bp, respectively. Such effects would be felt more strongly among indebted households between the 20th and 40th income distribution percentiles. High debt levels also make public finances more sensitive to market interest rate movements. However, the recent low interest rates have prompted a continuous decline in the interest burden as a percentage of GDP. At the same time, longer average debt maturities limit the short-term impact of increases in issuance costs. Under a scenario consistent with the latest projections, in which market rates are raised progressively, the debt burden as a percentage of GDP would stabilise. Based on this scenario, an additional  22  The effect of a rise in energy costs is also simulated. 24  100 bp increase in both short and long-term interest rates, all other things being equal, would push up interest payments by 0.4 pp of GDP in 2024.

We try to do our work as best as we can, which is to ensure price stability in the euro area. And I don’t think we have to be negative 1/2  BIS central bankers' speeches  about Europe. Not everything is going very well. There are plenty of things which don’t work well and which need to be improved. But what would we say to the millions of eastern Europeans who have returned to prosperity thanks to Europe, if Europe didn’t exist today? What would we say to the millions of French people who work in companies which are exporting to Europe? And when you travel round the world, Europe is admired. Why? Because it is a prosperous region, but also because it is a place of security, and of social protection. Europe is one of the few places in the world where, if you go to hospital, you won’t be asked for your credit card. That’s what we need to safeguard, but we need to safeguard it together, as Europeans. Emmanuel Macron wants a euro area budget and greater solidarity between the Member States. Will that be achieved soon? It’s necessary because the Member States have to regain budgetary firepower. It would not be reasonable to expect the European Central Bank to sort out all of Europe’s economic problems indefinitely. Economic capacity and budgetary capacity have to be recreated. But that won’t happen overnight; French ideas won’t be imposed on Europe by magic, it will be a long discussion.
Macroeconomic scenario In February, annual CPI inflation was 2.7%, while core inflation—CPIEFE; CPI excluding energy and foodstuffs—was 2.2%, driven mainly by its goods component, whose annual growth fell to 0.4% in February, in line with the nominal exchange rate,  which is now below its year-ago level. The services component of the CPIEFE posted an annual change of 3.4% in February, a quite milder fall than its goods component, reflecting its greater inertia (figure 1). About this, it is worth noting that one feature of the CPI services basket is that 75% of its prices are either managed or linked to another indicator or to past inflation, meaning that they are indexed. This fact in practice augments their inertia and causes the effect of any change in the activity gap to take longer to show up. Of course, this is not the case for every service price, as non-indexed or non-managed prices tend to show a more visible effect from changes in the gap. One of the boxes in the Report is devoted to this, showing how the differences in the recent evolution of services inflation appear when these recently mentioned price groups are taken separately. In this Report’s baseline scenario we foresee that headline inflation will continue to decline for some months, to return to 3% by year’s end and hover around that mark until the first quarter of 2019, when the current projection horizon ends.

17  Figure 10  Probability of MPR hikes implicit in market assets (*)  Breakeven inflation, 5 in 5 years (percent)  (percent)  2,4  2,4  100  1,8  80  1,2  60  0,6  40  0,0  0,0  20  -0,6 ene.16 16  -0,6  0 16 Aug.16  U.S.  1,8  Germany  1,2  Japan  0,6  jul.16 Jul. ene.17 17  100 Fed (Dec.17)  80 60  Fed (Jun.17)  40 20  ECB(Mar.18) 16 16 Oct.16 Dec.16  0  17 Feb.17  (*) Fed fund future contracts are used for the Fed; OIS for the ECB. In parentheses, the month at which the hike is expected. Source: Bloomberg. Figure 11 Exchange rate (1) (2) (accumulated change since January 2013, percent)  60  60  OER  45  45  30  30  15  15  MER-X RER  0  0  -15  -15 Multilateral dollar  -30 13  14  15  16  -30 17  (1) Increase (decrease) indicates depreciation (appreciation). (2) March 2017 data contain information up to the statistical cutoff date. Sources: Central Bank of Chile and Bloomberg. 18  Table 2 International scenario 2.015 €  2016 (e) Dec.16 Report  Mar.17 Report  Terms of trade Trading partners' GDP World GDP at PPP World GDP at market exchange rates United States China Eurozone Latin America (excl.
We also continue to monitor and improve our system of banking supervision, in recognition of the fact that one reason we did ride out the Asian financial crisis was undoubtedly that banks were strong. Some observers have suggested throwing some sand in the wheels of international finance. By limiting capital flows, the argument goes, it becomes easier for central banks to maintain monetary and financial stability in turbulent times and to cope with the potency of international finance that comes with globalisation. Indeed, control in one form or another has become quite popular in this region. But, for an international financial centre such as Hong Kong, whose main source of income stems from an ever-growing economic and financial integration with the rest of the world economy, such a policy is, to us, clearly undesirable. Moreover, the Basic Law of Hong Kong also bars any foreign exchange control policies and any restrictions on the free flow of capital within, into and out of Hong Kong. Others suggest that the Hong Kong economy would be better able to withstand economic shocks and disturbances if the currency board was adjusted or gave way to something else: different observers have different pet ideas and there seems to be no agreement on what that alternative would be. I have spoken a great many times on this topic and I do not propose to do so again today.

A number of elements support this view: •  Our accommodative monetary policy stance – which will remain so for as long as necessary – should contribute to underpinning this recovery;  •  Recent developments in economic sentiment survey data have shown some improvement from their low levels;  •  Looking ahead to later in the year and to 2014, euro area export growth should benefit from a recovery in global demand, while domestic demand should be  BIS central bankers’ speeches  1  supported by our accommodative monetary policy stance and by the recent real income gains due to lower oil prices and lower overall inflation. •  Furthermore, the significant improvements in financial markets seen since last summer boost confidence and generate wealth effects and should work their way through to the real economy, as should the progress made in fiscal consolidation. Nevertheless, the Governing Council continues to see downside risks surrounding the economic outlook for the euro area. They include the possibility of weaker-than-expected domestic and global demand and the slow or insufficient implementation of structural reforms in euro area countries. Overall, the June 2013 Eurosystem staff macroeconomic projections for the euro area foresee annual real GDP declining by 0.6% in 2013 and increasing by 1.1% in 2014 thanks to three main drivers: export growth, accommodative monetary policy and low inflation. 2. How can we boost growth further in the euro area? A strong fiscal stimulus obviously appears unfeasible, given the necessity to rebalance public finances.
BIS Review 131/2009  3  Output in Norway fell through two successive quarters and although unemployment picked up last autumn, it is still lower than in previous downturns. Norwegian banks felt the impact of the turnaround in the economy, but government measures have prevented the liquidity crisis from becoming a crisis in the real economy. Norwegian banks primarily experienced a liquidity crisis and not a solvency crisis. The Icelandic bank Glitnir’s Norwegian subsidiary received a short-term loan from the Norwegian Banks’ Guarantee Fund. But there has never been any risk that distressed banks would overstretch our fund-based guarantee scheme. Lessons from the crisis – the work ahead The global financial crisis has revealed weaknesses in the financial system. The Basel Committee on Banking Supervision and the EU are working on proposals for revising the regulatory framework and introducing new regulations. Banks will be required to build up larger capital and liquidity buffers and to strengthen the quality of bank capital. The proposals also aim to reduce the procyclicality of bank behaviour. Banks should build up buffers in good times that can be drawn on in periods of stress. The authorities will focus in particular on methods of regulating systemically important banks. Bank capital Banks play a key role in ensuring that depositors’ savings are managed securely, in extending credit and providing payment services. Banks are commercial enterprises, but they are also similar to public utilities.

In the same manner, interest rates will normally need to be raised in situations in which future inflation tends to get excessive as a consequence of a too high resource utilization. Consequently, when an inflation forecast shows that future inflation does not appear to be in line with the target, policy must be altered. In these situations there is a balancing problem. The question is how forceful the interest rate change should be. If it is dramatic, the adjustment in the rate of inflation to the established target may be faster, but the repercussions in the short term in the form of fluctuations in production and employment will probably be bigger also. Figure 1  P r ice Sta b ilizatio n : Alte r n a tive Pa th s  πt  2%  t+4  t+8  t  The reasoning can be made clear with a simple diagram (Figure 1). By choosing interest rate path 2 rather than path 1, the adjustment to the inflation target will be somewhat slower; however, the development in the economy will also be less spasmodic. BIS Review 56/1997  -3-  The fact that the Riksbank--when the price stability objective was introduced in 1993--chose to postpone its application for about 2 years (the decision that evaluation would only be made when the direct effects of the krona’s weakening had died away in 1995) can be said to have been a way of taking into consideration the above reasoning.
As regards housing loans, fixed rate loans - which fortunately represent almost 98% of outstanding loans -  Page 3 of 9 are an essential protection for borrowers, and therefore ultimately for the banks as they limit their default risks. And more generally, rest assured that we will never take any prudential decision that could increase the risk of overindebtedness or of non-repayment of housing loans. The average solvency ratio of the six main French banking groups reached 14.9% at end-2022, still a high level, well above regulatory requirementsi. I welcome the publication yesterday of the report by the Observatoire du financement des entreprises ii, which notes that for this very reason, their access to financing has remained favourable despite the crises. French insurance groups also show high solvency ratios, around 250%, thanks to their dynamic activity and financial results. Page 4 of 9  II. ... and of our regulation and supervision model There are two other reasons why the US banking crises did not affect the euro area this time - although we must remain vigilant: our regulation and supervision. As regards regulation, Basel III in its entirety applies to all European banks, but only to 13 banks in the United States.

In addition, under the EBA's Interest Rate Risk of the Banking Book (IRRBB) guidelines - as part of the rigorous application of the Pillar 2 provisions - published in 2018 and enhanced in 2022, European banks are required to conduct regular prudential stress tests to measure the impact of interest rate changes on their interest margins and the economic value of their capital; US regional banks such as SVB are not subject to this requirement. As regards the regulations of insurers, the general approach adopted in June 2022 by the European Council on amendments to the Solvency II Directive is in line with several of the ACPR's objectives: overall neutrality of quantitative requirements on the French market, support for long-term investment with more stringent requirements in terms of sustainable finance, better rules for crossborder transactions and better application of the principle of proportionality. It is now very important that the European Parliament adopt this directive as soon as possible, so that it can be implemented quickly and without being diluted. III. Areas to be enhanced in the short and medium term Resolution is another cornerstone of the Banking Union. However, the fact that the Swiss authorities opted for a merger in the case of Credit Suisse raised new questions about how to make resolution more operational and reliable. Let me share just two thoughts at this point. The first concerns the resolution of large or even systemically important banks.
If we were convinced of the existence of a bubble and had the necessary instruments available, we should act. But it is not our conviction that monetary policy can in any meaningful way control asset price developments. Low and stable consumer price inflation is the operational target of monetary policy. There is, however, an ongoing discussion on how best to capture the cost of housing in the CPI. It might very well be that our present methods could be improved. 13  Financial Times January 17 2008. El-Erian is co-chief executive and co-chief investment officer of Pimco. 14  Kenneth S. Rogoff (2006, see footnote 8) and M. Lettau, S. C. Ludvigson and J. A. Wachter (2004) “The declining equity premium: What role does macroeconomic risk play?” NBER Working paper 10270. 15  Proponents of this view are Claudio Borio and Philip Lowe in some BIS studies, se for example Working Paper 114/2002 “Asset prices, financial and monetary stability: Exploring the nexus” and Working Paper 216/2006 “Monetary and prudential policies at a crossroad? New challenges in the new century.”  6  BIS Review 14/2008  While monetary policies aimed at nominal stability have stood us in good stead, and can continue to be pursued also in a world where markets are truly global, the sailing might very well be less smooth ahead.

There is uncertainty about the exchange rate, in connection with the settlement of the failed banks’ estates and the liberalisation of the capital controls. There is little I can say about that at this point, but the aim of the work the authorities are doing at present is to minimise that risk. It can be done, but it is a risky process, and one that could be derailed at many points along the way if great care is not taken – and perhaps even if great care is taken. And now I will turn to monetary policy. Yesterday the Monetary Policy Committee decided to lower Central Bank interest rates by 0.25 percentage points, in view of recent developments and the near-term outlook for inflation and the decline in inflation expectations, which I mentioned a moment ago. If the Bank’s interest rates had remained unchanged, its real rate would have been higher than is warranted by where we are in the economic cycle and by the near-term outlook, particularly in view of the fact that it could rise still further in coming months. Estimating the Central Bank’s real rate is not always a simple matter, as different measures of inflation and inflation expectations give differing results. According to an estimate based on the average of various measures of inflation and inflation expectations, the Bank’s real rate was about 2½% before the recent reduction, and it had risen by approximately a percentage point in the previous year, which is a large change in terms of real rates.