samchain/econo-pairs-v1 huggingface dataset:
With a strong foundation in place, supervisors can then select the alternatives within Basel II that are most appropriate for their own circumstances. In addition to the steps I have outlined for supervisors, there is also a wider set of preconditions that we as central bankers can help to promote, including appropriate macroeconomic policies which are consistent and sustainable over time. All these considerations allow us to underline the notion that the achievement of financial stability must be based on a broad range of tools which we should all seek to strengthen. I don’t want to play down the challenge of achieving a coherent approach to financial stability that fosters financial innovation, promotes a level playing field and ensures that the banking system can remain resilient in the face of internal and external shocks. Nevertheless, I believe that the effective implementation of Basel II will contribute to the proper functioning of the economy under a wide range of circumstances. Conclusion To conclude, I think that Basel II recognises the importance of a combination of micro and macro factors for achieving greater financial stability. Furthermore, I would say that Basel II incorporates some of the key basic principles that are also built in modern approaches to monetary policy: a flexible and forward-looking approach, anticipatory rather than reactive behaviour to risk, and the need to take into account market views.

We are all in agreement that if a country decides to adopt Basel II, the timing should be determined by its own circumstances, not the timetable for Basel Committee members. Unlike the 1988 Accord, which was relatively simple to adopt, Basel II is more complex and demands more of banks and supervisors. Therefore, we don’t expect Basel II to be adopted as widely and quickly as the 1988 Accord, at least at the outset. However, we expect and hope that the number of countries that adopt the new framework will grow over time. We believe that countries should adopt the options and approaches contained within the framework that are most appropriate for the state of their markets, their banking systems, and their supervisory structures. Basel II is not a “one size fits all” framework. Supervisors can adopt the framework on an evolutionary basis and use elements of national discretion to adapt it to their needs. For any country that is considering adopting Basel II but may not yet be ready, I like to suggest a three-stage approach towards building a foundation for the new framework: (1) strengthening the supervisory infrastructure; (2) introducing or reinforcing the three pillars; and then (3) making the transition from the 1988 Accord to Basel II. The first stage is strengthening the supervisory infrastructure. Basel II is not intended simply to ensure compliance with a new set of capital rules. Rather, it is intended to enhance the quality of risk management and supervision.
José De Gregorio: Exchange rate, macroeconomic policies, and the global scenario Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, before the Senate at a special session on the exchange rate, Valparaíso, 14 December 2010. * I. *  *  Introduction  I am grateful for the Senate’s invitation to analyze exchange rate issues, some of the most complex ones facing our country, as well as Latin American and most emerging market economies. We are thus obligated to carefully evaluate the current economic environment, its implications on the performance of our economy, and the measures that can be taken if deemed necessary. In addition, these instances for analysis are important opportunities to communicate in a very transparent fashion the vision of the Central Bank of Chile. Along the last few decades, Chile has benefited enormously from being open and globally integrated. This has been one of the cornerstones of our economic growth. However, the international economy is at the same time a source of volatility for our economy. The prices of our exports, the economic activity of our trading partners, foreign interest rates and international investors’ appetite for risk fluctuate substantially. These variables affect our national income, fiscal accounts, external demand for our products, and the availability and cost of external financing and, indirectly, expenditure, output, the interest rate and the exchange rate in Chile. It is impossible to eliminate this volatility without sacrificing the benefits of our international openness.

It is clear from this economic integration that the fear of the region’s borders considerably compromising economic development cannot be confirmed. Rather, the diminishing, relative importance of intra-regional foreign trade and intra-regional cross-border direct investment is due more to globalisation and the ensuing increase in the influence of Eastern European and Asian economies than to weakening ties within the Upper Rhine region. Thirdly, the most notable aspect of the relationship between the region’s two currencies since the introduction of the euro in 1999 is its stability. That does not mean, however, that the issue of Switzerland’s ascension to the EU is of no consequence. Having its own currency allows Switzerland to conduct an independent monetary policy that is tailored to suit its needs. Finally, the economic policy can help the region thrive further by removing remaining hurdles, such as those in the labour market and in the exchange of goods and services (Cassis de Dijon principle). A well-integrated economic region is the key to a prosperous future. “Three nations, two currencies, one economic area” - the title of the paper - not only describes the reality, it also maps out the way forward. BIS Review 45/2005  1
Each of these process improvements aims to reduce the resource burden on insurers created by the regulatory regime. This should enable insurers to reallocate more resource to innovation with a view to improving, for example, the quality of their underwriting and investment decision-making, and reduce barriers to entry, thereby improving the competitiveness of the UK insurance sector and its ability to provide long-term productive finance to the economy. Conclusions and next steps The reforms I have discussed today are wide-ranging and aim to achieve a tailored regulatory regime for the UK insurance sector. We will carefully assess the package across the review’s objectives. Does it advance the PRA’s primary objectives of insurers’ safety and soundness, and  Page 8  policyholder protection? Does it effectively remove any unnecessary impediments to bulk purchase annuities firms’ productive UK investments? Does it deliver the material gains in process improvements that can further the competitiveness of the UK insurance sector? We believe the package we are contemplating will achieve the Government’s objectives for the review. And while not an objective in itself, the package is also projected to deliver a reduction in regulatory capital requirements. This net capital release can be used to support additional investment if firms choose, and investment in the productive UK real economy, assuming suitable additional supply. The reforms to investment flexibility, reporting and approval processes are not without risks.

Indeed in the data collection exercise we have just launched we ask for data on a calibration that combines 35% of medium term average index spreads with just 17.5% of excess spot spreads. Similarly, a lower calibration for the average spreads combined with a higher calibration of the excess spot spreads could achieve the same outcome. We are keen to read responses to the DP and to discuss stakeholders’ views on the CRP and its calibration. The breadth of application of the MA by UK insurers has been a unique aspect of our implementation of Solvency II (Chart 1 ): preserving and, indeed, expanding it further underpins the competitiveness of the sector in the UK. This uniqueness has understandably sent MA reform in different directions in the UK and the EU. The EU has chosen to leave the MA calibration untouched. But, in contrast to our focus on widening investment flexibility and MA eligibility, the  Page 6  EU’s approach is looking to tighten their MA eligibility requirements, particularly for structured assets. Prior to Brexit, the UK regime had already been more accommodating of a broader range of assets as appropriate for MA portfolios, including those that were internally rated. Further divergence in the practical use of MA is now possible, as part of the overall package of UKspecific MA reforms, in a way that preserves the same high level prudential outcomes. Reforms to the risk margin are at a more formed stage than those to the MA.
Since price stability is the Bank’s main objective, monetary policy will not be applied to achieve other economic targets such as a balanced current account, high level of employment or specific exchange rate, except insofar as these are compatible with the Bank’s inflation target. Inflation rose in 2004 after being close to or marginally below the 2½% target since the end of 2002. The rate of inflation was 4% from the beginning to the end of the year. At the beginning of March this year, inflation measured 4.7%, having moved above the 4% tolerance limited defined in the joint declaration by the Government and the Central Bank from March 2001. When inflation moves beyond the tolerance limit, the Bank is obliged to submit a report to the Government explaining the reasons for the deviation, how the Bank intends to react and how long it will take to reach the inflation target again in the Bank’s assessment. The report shall be made public. Such a report was sent to the Government on February 18 and published the same day. There are a number of explanations for the recent rise in inflation. Large investments in aluminium smelters and power sectors have built up demand pressures in the economy. These investments will be stepped up this year, when they will peak instead of in 2006, as assumed under earlier plans. Investment cost this year is estimated at 85 b.kr., or almost 10% of GDP in 2004. New conditions in the credit market have also driven inflation.

Caleb M Fundanga: Financial sector challenges and progress in Zambia Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the Information Exchange Forum on Sources of Finance, Lusaka, 10 December 2007. *  *  *  • Mr Chairman • Representatives of International Financial Institutions • Chief Executives and representatives of Financial Institutions • Distinguished ladies and gentlemen I am greatly honoured to be given an opportunity to make some remarks at this forum. I wish to extend a warm welcome to all participants gathered here today, particularly those who have travelled from outside the country. I hope that you will not only have fruitful deliberations but also find time to explore the beautiful scenery and experience the warm hospitality that Zambia has to offer. Mr Chairman, Ladies and Gentlemen, this forum is more than timely as Zambia is working tirelessly towards financial deepening, wealth creation and reducing the levels of unemployment. In order to achieve this, affordable financial services should be available to the majority of businesses. In fact, the forum has come at an opportune time when the economy has shown signs of macroeconomic stability and growth. The financial sector in Zambia is considered relatively under developed. In spite of this status, post independence governments have always recognised the importance of the financial sector to national economic development. This is the reason why the activities of the sector had up until 1992 been controlled by the state.
But it goes wider than that to encompass the possibility that reactions to Brexit, or indeed other forces, could lead to more general restrictions and to moves to manage risk and to ring-fence business activity at the jurisdictional rather than the international level. To be clear, that this is not primarily a concern about economic activity in the UK following Brexit. Important though that is, it is not an issue for regulators. And despite perceptions in some quarters to the contrary, the UK’s role as the leading international financial centre does not rest or depend exclusively on the EU single market in financial services. The UK has the largest asset management industry in the EU. But this is not built primarily on the management of the pool of European savings. Well over 50% of the roughly $ assets under management in the UK are pensions, insurance and investments of UK citizens. Another 20% comes from the rest of the world beyond the EU. Less than 20% of assets managed in the UK, are domiciled in the rest of the EU. 20  Looked at another way, estimates suggest that UK located asset managers manage around 10% of the $ of assets of funds domiciled in the rest of the EU. Asset managers domiciled outside the EU – many in the US – manage a much larger proportion, at least some 20%, of non-UK EU assets. 19 20  21  Hoggarth et. al. (2016) Based on Investment Association 2016 data.

Inflation targeting, or following Svensson “inflation forecast targeting,” has placed the forecasting process at the heart of monetary policy decision-making. Under inflation targeting, the forecasting process centres around future price developments. This does not necessarily mean, though, that central bankers are obsessed with inflation. In fact, inflation targeting requires assessing all the available information, including real economic developments, monetary analysis and external balance of the economy, in a systematic and complex way. It is hence more demanding from this point of view than the alternative monetary strategies. The inflation forecast is not only an important internal decision-making tool, but also a crucial communication device. Monetary policy has become considerably more transparent over recent decades. It is now commonly believed that open communication of monetary policy is beneficial to the stability and predictability of its transmission into the economy, and is also crucial for the accountability of an independent central bank. As a result, the inflation forecast, including its underlying assumptions and policy implications, is openly explained to the public. Nonetheless, we must always bear in mind that even highly developed, technically advanced and wellorganised forecasting procedures are not an automatic pilot for inflation-targeting central banks. They are no more - but also no less - than an important input into the monetary policy process. Eventually,  BIS Review 11/2004  1  the decision is always based not only on the central forecast itself, but also on the decision-makers’ discussions about all the associated risks.
Third, the impact of climate change on MONETARY POLICY. The NGFS will seek to gain an understanding of how climate change and mitigation actions should be considered in the conduct of monetary policy. From a central bank perspective, climate change is the ultimate supply-side shock. The effects of climate change and mitigation actions are likely to be of a scope and intensity that will affect the economy across both cyclical and structural dimensions. This is a complex endeavour, given the considerable uncertainty surrounding these effects. The NGFS will seek to provide central banks with the requisite tools to make sense of the implications of climate change for monetary policy. We will focus on macroeconomic modelling of critical transition issues, to help central banks better analyse their impact on the economy. We will explore climate-related adjustments that central banks could implement to ensure the smooth conduct and efficacy of monetary policy operations. We will explore how monetary policy operations could potentially support the transition to a net-zero economy. Fourth, NET ZERO FOR CENTRAL BANKS. The NGFS will provide guidance on how central banks can make the transition to a net zero environment. It is important that we central banks who are part of the Network for Greening the Financial System “lead by example” and make an effort to green ourselves. This would include adopting some of the good sustainability practices central banks and supervisors have been espousing to financial institutions.

The German government has announced a package of measures which aims to increase the share of renewable energy in Germany’s energy mix to 80% by 2030, up from an earlier target of 65%. Concerted action by policymakers, corporates, financial institutions, and individuals will be key in the drive to mitigate climate change. It is in the name of facilitating such concerted action, that we are gathered here today at the Green Swan Conference. The financial system can be a powerful lever to enable a credible and inclusive transition to net-zero. Central banks and financial regulators, whatever their mandates, have a role to play in greening the financial system to support the net-zero transition. It is this vision that led to the formation in 2017 of the Network of Central Banks and Regulators for Greening the Financial System, or NGFS. The NGFS has grown significantly, from 8 founding members to 114 today, representing a diverse group of advanced, emerging, and developing economies. The Network has accomplished much in the last four years, breaking new ground and providing valuable guidance on integrating climate and environmental risks into the work of supervisors and central banks. The integration of climate-related and environmental risks into financial stability monitoring and prudential supervision is becoming a reality. The next phase of the work of the NGFS is to move from awareness to action. The NGFS Glasgow Declaration, issued at COP26 in November last year, reiterated our commitment to expand and strengthen our collective efforts towards greening the financial system.
Nominal and real wage growth, 1995-2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 BUSINESS SECTOR Blue-collar workers  4.7  5.4  4.7  3.4  2.6  3.3  3.8  3.6  3.1  2.6  White-collar workers  3.5  6.4  4.2  4.7  3.7  4.1  4.5  4.1  3.3  3.2  Blue-collar and white-collar workers  3.3  6.0  4.5  3.7  3.4  3.7  4.4  4.1  3.5  3.3  CPI  2.5  0.5  0.7  -0.3  0.5  0.9  2.4  2.2  1.9  0.4  Blue-collar workers  2.2  4.9  4.1  3.7  2.1  2.4  1.4  1.4  1.2  2.3  White-collar workers  1.0  5.8  3.5  5.0  3.3  3.2  2.0  1.9  1.4  2.8  0.9  5.4  3.9  4.0  2.9  2.8  1.9  1.9  1.5  2.9  WHOLE ECONOMY  REAL WAGE GROWTH  BUSINESS SECTOR  WHOLE ECONOMY Blue-collar and white-collar workers  Sources: National Mediation Office, Statistics Sweden and Sveriges Riksbank. Structural unemployment Developments in the labour market have been weak despite several years’ firm economic growth, historically low interest rates and strong public finances. So far, the growing economy has not managed to create enough jobs.

The most recent episodes when inflation has been below target – at the end of the 1990s and the start of this decade – have been characterised by unexpectedly high productivity, unexpectedly low imported inflation and other more temporary supply shocks. The low inflation has not been because we have actively tightened monetary policy and dampened demand. In reality, monetary policy has been very expansionary. With the aid of the repo rate the Riksbank can influence demand. How companies then meet this demand by varying the number of employed depends on how productivity develops, and that is nothing that monetary policy can control. Nor have we any possibility to govern how many people enter or leave labour market policy measures. Is Swedish wage formation competitive? When an economy is in balance, with wage and profit shares constant, companies’ real wage costs increase in parallel with productivity growth. But the relationship between wage increases and competitiveness is different under a fixed and floating exchange rate. With a fixed exchange rate, competitiveness is determined first and foremost by how big wage increments in Sweden are compared with other countries. If wage costs increase too rapidly, costs crises arise that can result in higher unemployment or that force the country into devaluations with a view to restoring competitiveness, as was the case in Sweden during the 1980s. The problem with the repeated devaluations was that they eroded the fixed exchange rate’s credibility.
Without firm guidance on the goals of monetary policy, market participants could lose their point of reference which could result in them adjusting their longer-term inflation expectations as a mere reflection of current circumstances rather than taking into account the ability of the central bank to achieve its goal over the medium term. By contrast, in an economy in which inflation expectations are solidly anchored, each person can make well-informed financial decisions. A genuine understanding of monetary policy and its goal – price stability, and therefore the preservation of the purchasing power of the euro – also creates the best conditions for correct price and wage formation in markets, whereby all parties concerned meet their obligations and second-round effects on wage and price setting stemming from transitory price increases (e.g. oil, commodities, food) are thus avoided. Second, effective communication also enhances short-term predictability. 3 Through their actions, central banks can directly control very short-term interest rates. However, given that for consumption and investment decisions the longer-term interest rates are more relevant, the whole yield curve is relevant for the effectiveness of monetary policy. Medium- and longterm interest rates largely depend on private expectations regarding future central bank decisions. Lack of effective central bank communication would eventually lead to higher, more volatile, levels of long-term interest rates, which could be detrimental to economic activity.

Or (as in the MPC’s May 2022 monetary policy summary) entertain dissenting views not just on votes on Bank Rate but also on the communication reflected in the summary. 16. For a discussion of these risks and their potential consequences in a previous interest rate cycle, see Pill (2019). Page 13 17. See Bank Rate increased to 1.25%, Bank of England, 16 June 2022. 18. The views expressed in this speech are not necessarily those of the Bank of England or the Monetary Policy Committee. I would particularly like to thank Saba Alam and Nick Bate for their help in preparing the speech. I have also received helpful comments from Andrew Bailey, Tom Belsham, Ben Broadbent, Fabrizio Cadamagnani, Alan Castle, Andrew Hauser, Neil Kisserli, Catherine L Mann, Nick McLaren, Dave Ramsden, Michael Saunders, Fergal Shortall and Silvana Tenreyro, for which I am most grateful. The responsibility for all remaining errors is my own. Returning inflation to target - slides