samchain/econo-pairs-v1 huggingface dataset:
To sum up, financial innovation is on the whole expected to have facilitated the job of monetary policymakers by accelerating the transmission of monetary impulses to the economy. However, in times of stress, when financial sophistication may have gone further and quicker than risk-management practice, the confidence crunch that may ensue paves the way to non-linear responses of the economy that seriously challenge our common understanding of how monetary policy impulses are transmitted to the economy. Challenges for our reliance on monetary indicators As you know, the Eurosystem’s monetary policy strategy assigns an important role to money, which is based on the premise that monetary developments provide valuable information on future inflation in the longer run. I would like to ground this with two reasons, a well-known stylised fact and a conjecture. The stylised fact first: there is ample statistical evidence, in the euro area and elsewhere, that low frequency movements in money growth are closely correlated with trend inflation, e.g. for frequencies corresponding to cycles of eight to ten years. The conjecture, then, brings us to an issue that will be tackled this afternoon, namely the flattening of the Phillips curve: changing inflation dynamics, which can partly be viewed as a consequence of a successful anchoring by credible monetary policies, tend to reduce the sensitivity of inflation to incipient imbalances in the economy.

Jean-Pierre Roth: Swiss franc and euro - two sister currencies? Speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Swiss-Brazilian Chamber of Commerce, Sao Paulo, 19 November 2004. *  *  *  It is a great pleasure for me to talk to you today about the Swiss franc and the euro after six years of monetary integration in Europe. Looking at the map, you might wonder whether Switzerland, a small spot in the middle of Euroland could still follow an autonomous monetary policy. What are the consequences of the introduction of the euro on the Swiss franc and on the effectiveness of Swiss monetary policy? And what are the effects of this new international monetary order on countries outside the dollar-euro block more generally? I will try to provide some insights on these questions today. First, I will present the change in our monetary framework due to the creation of the euro. Then I will enumerate the main fears that we originally had regarding the effects of that transformation, and our experience with the new environment. Finally, I will share some lessons on the influence of the introduction of the euro for the international monetary system and for the autonomy of Switzerland’s monetary policy. 1. A new international framework  January 1, 1999, constituted a true revolution for Europe. Many observers argue that the introduction of the euro represents the major postwar stage in European integration. They are right.
The MPC has rightly stressed that the timing of the first Bank Rate increase is less important than the path thereafter – that is, the degree and pace of increases after they start. In particular, we expect that eventual increases in Bank Rate will be gradual and limited. That is because the economy will face the ongoing challenges of public and private balance sheet repair, a 10% appreciation of sterling over the past year or so, and muted growth in our main export markets. In addition, in the medium term, higher capital, liquidity and other prudential requirements can be expected to lead to higher spreads between borrowing rates and risk-free rates than before the crisis. Moreover, a highly indebted private sector is particularly sensitive to interest rates.4 Caution over the path of rate increases once they begin is also needed because we start at a point from which interest rates cannot easily be reduced. The effects of an excessive or an excessively rapid tightening of monetary policy could prove damaging and difficult to undo. Perhaps for these reasons, financial markets expect Bank Rate to rise to only 2¼% over the next three years and, on that basis, the MPC expects the economy to move towards internal balance – almost closing the output gap – in the same period. Just achieving internal balance will not be enough to guarantee a durable expansion. It matters how we do so.

The results and any consequences that flow from them will be announced later this year. The second objective is to reduce the risk of excessive indebtedness itself by taking out insurance. Given recent experience, few can now believe that the right policy is to wait to mop  for-one with income, supply constraints are likely to put increasing pressure on prices in a now rapidly-growing economy. 6  That is high relative to other advanced economies. Household debt stands at between 105% and 115% of disposable income across the Euro-area, US and Japan (IMF, 2014). 7  By latest estimates, around 40% of new mortgages were at LTIs of at least 3.5x. 25% at were at LTIs of at least 4x. 10% were at LTIs of at least 4.5x. BIS central bankers’ speeches  5  up the consequences of debt-driven busts after they crystallise. That is even more obvious when Bank Rate is at its effective lower bound. In other words, when you hear the thunder of the falls, it is wise to get off the river. Measures to take out insurance can be graduated and proportionate if action is taken sufficiently early. We can limit risks tomorrow by acting against a loosening in underwriting standards in new mortgage lending today. The value of acting early is reinforced by uncertainty around the precise impact of macroprudential tools.
There was a strongly increasing trend in delinquency between 2004 and 2014, with measured delinquency rising from an overall rate of less than 10 percent in 2004 to 17 percent in 2014. The measured delinquency rate on student debt is currently the highest of any consumer debt product, although for most of the last decade credit card delinquency was even higher. Nonetheless, the measured delinquency rate is somewhat misleading, and the effective delinquency rate as we define below, on student debt is even higher. As noted above, in 2014 the measured delinquency rate among the 43 million borrowers was 17 percent. But many of the remaining 83 percent in fact were not paying down their loan balances. While 37 percent did reduce their balance from the previous quarter by at least one dollar, 13 percent of borrowers had the same balance as the previous quarter. A full 33 percent of borrowers actually saw an increase in their balance. In other words, 46 percent of borrowers were neither delinquent nor paying down their loans. Those borrowers whose balances did not decline are likely not yet in the repayment cycle, meaning that they were either still in school, in deferral, or in a forbearance period delaying their regular payments. This group may also include some borrowers who participate in income-based repayment plans and make only small payments, which are often insufficient to cover the accumulated interest.

One reason for this is that our data allow a more comprehensive description of student debt delinquency and repayment rates than was previously possible. Our data come from consumer credit reports 4  BIS central bankers’ speeches  for a 5 percent random sample of the population – that is for 12 million individuals aged 18 and older. Instead, existing knowledge of student federal loan defaults is based mainly on the three-year cohort default rates computed and released by the Department of Education each year. An institution’s cohort default rate is calculated as the percentage of borrowers in a cohort who default before the end of the second fiscal years following the fiscal year in which the borrowers entered repayment. In research that will be released later this month in a series of blog postings on our Liberty Street Economics blog, we use our data and a slightly different definition to compute comparable 3-year cohort default rates. Importantly, we find that three years out, we haven’t seen the full picture of borrowers who will default. Our calculations indicate that the 3-year default rate for the 2009 cohort rises by more than a third by year 5. This is also true of earlier cohorts. The 2005 cohort had a 3-year default rate at 13 percent – but this is only half of the defaults that we see nine years out. Taken together, these findings indicate that the student loan delinquency problem is much worse than currently understood.
When the time comes for me to write an open letter to the Chancellor because inflation has deviated by more than one percentage point from target – and it is very surprising that such a letter has not been required in the eight years since the MPC was set up – I will welcome the opportunity to explain how  BIS Review 36/2005  7  we expect to bring inflation back to target and over what horizon. Such letters are an integral part of the policy framework, not an indication of its failure. Conclusions In this lecture I have advanced three propositions. First, expectations are of fundamental importance to monetary policy. Second, the strategy of policy is more important than any of the individual monthly decisions on interest rates. Third, in designing a strategy be aware of the likely role of heuristics in forming expectations, and so keep it simple. From those perspectives inflation targeting appears a natural way to conduct monetary policy. And experience of inflation targeting suggests that a managed monetary standard can lead to stability – of both inflation and the economy as a whole – without the straitjacket of a gold standard, currency board or rigid fixed exchange rate target. Inflation targeting anchors inflation expectations, yet allows a flexible response to economic shocks. Is inflation targeting the last word in monetary policy? Almost certainly not.

Fernando Restoy: Bank credit developments in Spain Speech by Mr Fernando Restoy, Deputy Governor of the Bank of Spain, at the European Association of Public Banks (EAPB) Annual Congress, Barcelona, 10 November 2015. * 1. *  *  Introduction  Good morning everyone. It is a pleasure for me to be here today participating in the Annual Congress of the European Association of Public Banks, which is being held this year in Barcelona. Allow me to thank the organisers and, in particular, the Institut Català de Finances and its CEO, Josep-Ramon Sanromà, for his kind invitation. I will focus my remarks on the developments in bank credit in Spain during the recent crisis and the current recovery. I really cannot think of a more qualified audience to share my reflections on these issues, given the active role played by national promotional banks in the recent crisis in facilitating the flow of credit. As is well known, bank credit flows have contracted markedly in many advanced countries over much of the recent crisis. In Spain, the outstanding amount of bank lending to households and firms has been decreasing, in real terms, since 2009. The current process of deleveraging marks the sharpest contraction in bank credit in this country since the 1980s. The persistency of the adjustment of the stock of credit is likewise remarkable. In particular, even after emerging from the last recession in mid-2013, the outstanding stock of credit has continued contracting, albeit at a rate that has moderated significantly in recent times.
Uncovered interest rate parity (UIP) does not hold except over long horizons. On the contrary: Interest rate differentials give rise to widespread carry trading, which is by nature a bet against UIP. Exchange rates thus diverge from fundamentals for protracted periods, followed by sharp corrections. So the exchange rate often seems to be as much a source of shocks and instability as a tool for adjustment and stabilisation. Ultimately, these cycles take the boom-bust form and, in extreme cases, result in serious financial instability or crisis. So this is basically a macroeconomic problem that can turn into a financial stability problem. Another reason is related to vulnerabilities deriving from the size and composition of countries’ gross capital positions and, behind that, of banks, governments, corporations and households. These are currency mismatches and maturity mismatches in terms of foreign currency. While current account imbalances and wayward exchange rates can be termed the net capital flow problem, we can call this the gross capital problem. Of course, the second of  BIS central bankers’ speeches  1  these will turn into a net flow problem at the critical moment, thus affecting the exchange rate; for instance, when there is a run on foreign-denominated gross liabilities that were previously matched with more illiquid gross assets.

Instead, I want to pose this question: Supposing that all countries had free capital movements, freely floating exchange rates, and first-rate macroeconomic policies aimed at internal balance, would everything then be fine, at both the national and global level? I think there are strong indications that it would not be. There are a few reasons for this. First of them is the tendency of exchange rates to move away from equilibrium values for extended periods, with sharp corrections at the end of the process and with excess volatility throughout. The research on this phenomenon is still ongoing, but there are strong indications a number of factors suggest that the process is related at least partly to how asset markets function and how expectations are formed, and would not disappear even if macroeconomic policies were perfect. There will be net capital flows associated with this process, as well as swings in current accounts and effects on domestic financial systems that can ultimately lead to serious financial instability. In a small, open, and increasingly financially integrated economy, the process runs as follows: Domestic interest rates at the longer end of the maturity spectrum tend to become more closely correlated with the global rate, or the rate of the largest trading partner, and less correlated with the domestic policy rate. This means that monetary transmission tends to go increasingly through the exchange rate channel, which is only a problem, however, if the exchange rate behaves badly. Unfortunately, there is copious evidence to suggest that it is a problem.
To date, the inflation targeting policy must be said to have done well on the whole in this respect; today, the inflation target seems to function as a credible benchmark, a nominal anchor, for price and wage formation. That wage formation does not yet seem to have been fully adjusted unemployment in Sweden remains high - is another matter. It probably has more to do with structural factors. For asset markets, however, there is no such clear benchmark. So neither is there anything to prevent psychological factors - irrational exuberance, if you like - from continuing to inflate various asset prices beyond what is reasonable in relation to underlying economic conditions. The path of the American stock exchange in recent years demonstrates that low inflation is often not sufficient to ensure a restrained development of asset prices. That this can be seen as something of a dilemma is understandable. Does this imply that monetary policy should in fact be used more than hitherto for actively and directly countering sizeable price increases in asset markets? There is no obvious answer to that question but the dominant opinion at present is that the answer should be no. This is because central banks would find it difficult to identify true bubbles in the development of asset prices and judge the BIS Review 127/1999  4  appropriate measures correctly. Still, I would like to leave the door ajar. Situations may arise that are hard to foresee today and where monetary policy may need to play a part.

Irma Rosenberg: The current monetary policy situation Speech by Ms Irma Rosenberg, Deputy Governor of the Sveriges Riksbank, at Handelsbanken, Stockholm, 29 January 2004. *  *  *  Thank you for the invitation to come here and speak about monetary policy. In recent months there have been many comments on what the Riksbank should decide with regard to the repo rate at the next monetary policy meeting on 5 February. We at the Riksbank have nothing against discussions on monetary policy arising. On the contrary, we find it useful as it forces us to sharpen our arguments and our reasoning and to work on improving our methods of analysis. However, to avoid any misunderstandings, it is important for us to inform others of how we work. I shall therefore begin with some general words on the Riksbank’s inflation target and monetary policy strategy before going into the current situation. The Riksbank’s objectives and working methods Our monetary policy objective is to maintain price stability, which the Riksbank has defined as an increase in the consumer price index of 2 per cent a year with a tolerated deviation interval of +/1 percentage point. When the inflation target was first introduced, it was rather controversial and many regarded it as unrealistic. Now there is general support for the inflation target and we have a good record of target fulfilment. There is also considerable confidence in the inflation target, judging from households’ and firms’ expectations of the future inflation rate.
Christian Noyer: The situation in the euro area Introduction by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, at the Paris Europlace Financial Forum Luncheon, New York City, 23 April 2012. *  *  *  Ladies and gentlemen, It is a great pleasure for me to host this luncheon together with Lawrence Leibowitz. I would like to thank Paris Europlace for organizing this very interesting Forum and the NYSE for welcoming us here, at the very heart of the global financial world. I would like to focus my short address on the situation in the euro area where the important steps already taken to exit the crisis now need to be further enhanced. ********* 1. The important steps to exit the crisis already taken by the euro area are beginning to bear fruit. Indeed, when you compare the situation of the euro area in the first quarter of this year with that in the second half of 2011, the contrast is striking:   Conditions in bank funding markets are much better. For instance, euro area banks have already issued about 70 billion euro in senior unsecured debt so far this year, which is well in excess of what they did in the whole of the second half of last year.

One way of subduing the effect on the trend of variations in individual years is to estimate the trend as a mean value of the period's actual growth. This procedure gives a trend growth of 2 per cent, which I have also indicated in the diagram. If one believes that the truth lies somewhere midway between the growth rates we had before and after the changeover in our economic policy, one can instead calculate the mean value of the mean values during the periods 1980-1992 and 1993 onwards. The result is then 2.2 per cent. No procedure is perfect, of course. As I mentioned initially, the estimate results vary significantly depending on which method is applied and this is one of the reasons why the Riksbank has chosen not to specify an exact figure for potential growth. We have instead chosen to work with an interval of 2 to 2.5 per cent, which has emerged gradually as we have endeavoured to refine our analyses and improve our knowledge. The interval indicates that we have been influenced by the strong growth figures during the latter part of the 1990s, but that we have been cautious in stipulating to any great degree our assessments of some form of "new economy". A further reason for not specifying potential growth in more detail than this is that new information is received continuously and this affects our assessment.
Norman T L Chan: Master’s degree 2009–2010 graduation ceremony Speech by Mr Norman T L Chan, Chief Executive of the Hong Kong Monetary Authority, at The Chinese University of Hong Kong master’s degree 2009–2010 graduation ceremony, Hong Kong, 17 December 2010. *  *  *  Professor Wong, Professor Lee, Faculty Members, Graduates, Ladies and Gentlemen, It is a great honour to be invited to speak at today’s Graduation Ceremony. I am so happy to see so many fine men and women graduating today. All of you have made well earned accomplishments that make your parents and families feel very proud. On this joyful day, it is clearly a time for celebrations and photograph-taking with families and friends. However, some of you may, when you have a few quiet moments of your own, ask yourselves these questions : What would I become in 10, 20 or 30 years’ time? Have I chosen the right field or career? What does it take to succeed and make a name in the society as so many of my CUHK seniors have done before me? These are very pertinent questions and certainly I did ask myself these questions when I attended my own graduation ceremony in the CUHK some 34 years ago. In talking about successful people, I am sure all of us have our own idols. But very few people will disagree with me if I refer to Bill Gates as a prime example of success.

This will add a fresh boost to the growth of the global Islamic Finance industry, complementing the domestically driven growth of Islamic finance markets in Asia and the Middle East. First, both the Middle East and Asia will continue to post robust growth relative to other parts of the world. This gives incentive for economic and financial players to participate more actively in each others’ economies. The GCC economies have held up well despite weak global growth, suffering limited impact from slowdowns elsewhere in the world. IMF estimates that growth in the GCC countries will moderate slightly but remain robust at 4.0% in 2013 and 2014.4 Growth will be largely driven by increased domestic demand, and further spending on infrastructure to address present shortfalls and facilitate economic expansion. IMF has projected Asia to grow by 5.7% in 2013, and 6.0% the following year, exceeding the outlook for the global economy.5 Growth in Asia over the medium term will be supported by continued urbanisation, favourable demographics and increased intra-Asian trade and investment. Second, multilateral Islamic finance agencies are making steady headway in addressing issues that contribute to some fragmentation of the Islamic finance industry. Work by the IFSB in setting international standards and best practices for the industry is providing greater uniformity of regulatory environment for Islamic financial players globally. The International Islamic Financial Markets (IIFM) is collaborating with ISDA and industry players to develop standardisation of Islamic financial products, documentation and related processes that will facilitate cross-border Islamic hedging, risk management and money market activities.