samchain/econo-pairs-v1 huggingface dataset:
For the credibility of monetary policy, this objective must be maintained: this 2% target is a medium-term “anchor”, at a time when there is so much volatility and short-termism affecting the economy. 2) What are, with regard to this objective, the challenges central banks are facing? Today, the Eurosystem is faced with two main challenges: deflationary pressures on the one hand, and the risk of an unanchoring of expectations, on the other. a) First, a certain number of factors are currently contributing to low inflation. Primarily, the euro area is faced with deflationary pressures associated with a series of economic shocks: firstly, the fall in oil prices, from over EUR 80 per barrel in mid-2014 to EUR 34 in early March 2016, or more than 2.5 times lower, as well as the decline in commodity prices; secondly, the slowdown in growth in emerging economies and chiefly China; and, lastly, inadequate growth in the euro area with persistently high unemployment, which curbs wage rises and weakens demand and price growth. Moreover, structural factors, such as the ageing population, are likely to exert downward pressure on the “natural” interest rate, a term coined by the Swedish economist Knut Wicksell over a century ago. This rate can be defined as the interest rate consistent with the full employment of the factors of production. In this case, in order to achieve the right balance between savings and investment, markets rates must come down too.

To conclude on this estimate of effectiveness, the IMF – regarded as an objective judge of the relevance of economic policies – was unequivocal in its assessment at the last G20 meeting in Shanghai at the end of February, saying, “The ECB’s asset purchase programme has supported the recovery by improving confidence and financial conditions [and] monetary policy should remain accommodative”. 3) What about the risks? I talked earlier about the risks of doing nothing: we need to take action in order to bring inflation back up towards 2%. That said, we also need to keep a close eye out for any possible negative side-effects of our monetary policy, notably for financial stability. We are actively monitoring the financial cycle, including in France where the task falls to the Haut Conseil de Stabilité Financière (High Council for Financial Stability), set up in 2013: I will be taking part in its 8th meeting at the Finance Ministry tomorrow. For the time being, there are no signs of any bubbles forming in the main financing markets: on the whole, developments in the equity markets appear in line with corporate profit forecasts, while evolutions in bond yields also seem consistent with the outlook for inflation and growth. Nor are there any signs of excessive credit growth in the financial system. Nevertheless, we remain vigilant over all aspects of the current macroeconomic and financial environment.
Despite the measures taken, however, imbalances continued to build up in 2012. Against this background, the Federal Council decided in February 2013 to activate the countercyclical capital buffer, at the proposal of the SNB. In the light of this risk situation, the fact that the capitalisation of domestically focused banks is significantly above the regulatory minimum requirements is a welcome development. Indeed, compared to the previous year, these banks have even improved their regulatory capitalisation slightly. Moreover, most domestically focused banks already meet FINMA’s capital buffer requirements, which go beyond Basel III. However, figures on regulatory capital may overestimate the true resilience of these banks. For one thing, the risks in the real estate market in particular are not or only partly taken into account in the regulatory capital requirements. For another, neither interest rate risk nor the low diversification of these banks – whose activities are centred on the domestic mortgage market – are fully reflected in the capital requirements. These aspects are currently of particular importance for three reasons. First, as already mentioned, mortgage and real estate markets have seen a further build-up of risks since June 2012. Second, there has been further significant growth in mortgage lending at domestically focused banks. Although growth momentum has declined year-on-year, the volume of mortgage claims at these banks has increased by around 5%. Third, banks’ risk appetite in lending has remained persistently high.

Yet, looking back, the crisis also has its silver linings: the painful adjustments that followed prompted governments to strengthen economic fundamentals, enhance banking systems, deepen local bond markets, and build up foreign reserves to cope with potential external shocks. Because of these developments, the region has been able to emerge from the recent global financial crisis relatively unscathed and is now one of the key driving forces supporting the global economic recovery. 5. But we cannot afford to be complacent, as we are now confronted with a new round of challenges in uncharted waters. The unprecedented monetary easing in the advanced economies has led to global excess liquidity. And with the robust recovery of the emerging  BIS central bankers’ speeches  1  markets, there are powerful push and pull factors driving investors to search for yields in developing economies including Asia. From Q3 2009 to Q4 2010, the net capital inflows to emerging Asia1 amounted to $ bn, the largest inflows in recent years. 6. The strong capital inflows and resultant abundant liquidity have led to exchange rate appreciation, fuelled credit growth and driven up asset prices in the region. With output gaps closing, inflationary pressures are accelerating in a number of Asian economies. Capital flows also complicate the macroeconomic policy responses. While exchange rate appreciation and monetary tightening could theoretically cool down the economy, in practice, they may attract even more speculative inflows to profit from interest rate arbitrage and currency appreciation. 7.
We have come a long way from the uncertainty that has seemingly dominated the past few years. But we need to remain conscious of the new challenges and opportunities that are on our horizon. Alongside the European process the wheels have been turning in the international space. A common set of global standards for systemically important insurers are being worked on as we speak. Throughout the development of these standards, the Bank of England will continue with its strong history of international engagement. We have made great strides in Europe with Solvency II and we aim to ensure the complementarity of upcoming global standards with what we have achieved with Solvency II. Continued interaction with the industry is an essential part of good policy making so I’d like to again thank you for your participation today. I hope that we can continue to work together towards achieving a policy outcome at all levels that fulfils our objectives and in turn ensures the stability, resilience and ultimately the prosperity of the insurance sector in the UK. BIS central bankers’ speeches  3

But after financial crises, economies often take much longer to recover. Indeed, the evidence suggests that output typically stays well below a continuation of the previous growth path for many years thereafter. For instance, a study by the IMF 2 found that across 88 past crises, output per head was, on average about 10% below such a path fully seven years after the onset of the crisis, though there is considerable heterogeneity in the experience of individual countries (Chart 1). Unless crises are also associated with an equivalent impairment of supply capacity, that implies an increase in the margin of unused resources. 1  http://www.bankofengland.co.uk/publications/speeches/2008/speech342.pdf  2  IMF World Economic Outlook, October 2009. BIS central bankers’ speeches  1  The primary reason for such a slow recovery is that the unwinding of earlier financial excesses takes time. Moreover, banking crises are also frequently associated with a subsequent deterioration of the public finances, as governments provide support to vulnerable financial institutions and tax revenues drop back. Both these features are, of course, present today in many of the advanced economies, including in the United Kingdom. UK banks have made considerable progress over the past year in improving their balance sheet positions, but funding costs remain elevated and over the next two years they face the challenge of replacing around £ billion of maturing wholesale funding. Credit availability to larger corporates has improved significantly, but small and medium-sized enterprises still face difficulties in securing affordable credit.
The first DSGE models were developed in the early 1980s, and were closely linked to real business cycle theory which Kydland and Prescott pioneered. These models included elements of classical theory such as perfect competition, flexible prices and market clearing. A main thesis of real business cycle theory is that not only is long-term economic growth, but also the business cycle, driven from the supply side, specifically by an uneven development in technology. Lags in the economy were linked to real variables in these models, for example that it takes time to install new capital. A result of this theory was that stabilisation policy is superfluous. The one-sided focus on technology shocks as a driving force of the business cycle drew criticism from many economists. The DSGE models have been further developed over the past decade and they have gained a more prominent role. Important additions are Keynesian elements such as monopolistic competition and nominal rigidities. Monopolistic competition means that firms have market power and set prices as a mark-up on their marginal costs. In the more recent DSGE models, prices and wages are also rigid in the short term, partly reflecting contracts and costs associated with price adjustments. These two assumptions imply that production is determined by demand in the short term and that monetary policy affects the real economy. Therefore, more recent DSGE models have features that combine elements of both Neoclassical and Keynesian models.

To provide you with some insight into how we work when we make projections for the Norwegian economy, it may be practical to use a tripartite approach: the short-term or current situation, the medium-term or projection period and finally what we call the long-term. The dividing lines are not clearly defined, but are to some extent overlapping as indicated in the chart. Knowledge about the current economic situation is absolutely essential to making projections of economic developments that are useful for monetary policy. We must form a picture of capacity utilisation in the economy and whether it is increasing or decreasing. We must also try to identify the driving forces or disturbances that influence developments. A macroeconomic model will be a useful tool in this connection. Nevertheless, thorough analyses of available economic statistics are the most important source when we are assessing the current situation. To obtain a good picture of the current situation, it is important to consider developments in context and to distinguish between genuinely new information and noise. There is always uncertainty associated with statistics and the quality can vary depending on the source. Frequency and the time from measurement to publication also vary considerably. Economic data are published with a time lag and are often revised. A very useful cross-reference and alternative information channel to official statistics is therefore our own regional network which consists of enterprises, organisations and local authorities throughout the country.
BIS Review 50/2002  5

SPEECH DATE:  2017-01-17  SPEAKER:  Deputy Governor Cecilia Skingsley  SVERIGES RIKSBANK SE-103 37 Stockholm (Brunkebergstorg 11)  LOCALITY:  World Economic Forum, Davos in Switzerland  Tel +46 8 787 00 00  How the Riksbank encourages innovation in the retail payments market∗ Speaking points at the session Financial stability, innovation, economic growth initiative. We live in interesting times. At least if you are interested in questions about how financial services can be organized in a society. Technological in-  novation are driving change, but so are economic logic and regulatory measures. With change come new opportunities and new risks. We can be sure of that. But that is pretty much where certainty ends. What we don’t know is the full potential of these new opportunities, which of them will actually materialize and consequently, which stability risks we will be struggling with in the next decade or so. My message to the regulatory community is that we must be ready not only to talk about these matters, but also to walk the talk if we want to have an impact on this transformation. Let me illustrate with an example. In particular, I would like to share with you our experiences from Sweden and how the Riksbank has encouraged innovation in the retail payments market. As you may be aware, Sweden is a low cash society on the verge of becoming a very, very low cash society. Decreasing cash usage is, of course, mirrored in increasing use of electronic payments.
In recent quarters, however, this relief has come about more through the channel of lower imports than that of more buoyant exports, which is attributable to the parallel weakness of some of our main European customers. BIS central bankers’ speeches  3  In these conditions, the outlook for 2012 is not favourable and remains subject to a high degree of uncertainty. Broadly, the Banco de España’s view does not differ greatly from that of the Government implicit in the macroeconomic table accompanying the Budget. The process of adjustment of national demand will continue. Private consumption will be affected by the decline in employment and by the lower support that general government will be giving to household income. However, the impact of these two factors will be partly offset by more moderate price increases and, probably, by a continuation of the decline in the saving rate, although the margin available for this to smooth the pattern of private consumption is increasingly limited. Business investment will undoubtedly be affected by the slackness of domestic spending and because many firms will continue aiming to reduce their level of indebtedness. Nor are significant changes in the ongoing adjustment of residential investment foreseeable. On the demand side, no improvement can be expected in affordability conditions given the outlook for private sector income and wealth and, on the supply side, the overhang of unsold housing will continue to hold back the launching of new construction projects.

And for those of you who are newcomers, I hope my talk today will give you reasons why you should invest in Thailand. My talk today will be divided into three parts. In the first, I will touch on how the Bank of Thailand sees the Thai economy evolving at the moment as well as in the longer term. In the second, I will talk about the role of capital market in the economy’s long-term growth. The final part will then highlight the Bank of Thailand’s roles to promote capital market development. Let me start with the current picture of the Thai economy. As you all know, our real GDP growth moderated from 6.1% in the first quarter to 5.3% in the second quarter of this year. Thailand however was not alone in this development, as most countries in the region, with the notable exception of Indonesia, all experienced growth slowdown at varying degrees. In fact, when compared to Hong Kong, Singapore, and Taiwan which saw their growth rates cut down sharply from 7.3% to 4.2%, 6.9% to 2.1%, and 6.3% to 4.3%, respectively, Thailand fared much better with respect to the magnitude of the slowdown. The fact that we managed to hold on a satisfactory growth performance given the surrounding circumstances is a testament to the resiliency and the underlying strength of the Thai economy. Two major negative developments were behind the slowdown in the second quarter. On the external front, crude oil prices surpassed the 120USD mark for the first time in history.
Complying with regulations, submitting to supervision, and churning out disclosure documents for the markets is not always an appealing prospect. 7 In short, the Goliaths of the financial world have become more nimble-footed, and are both competing with and partnering the Davids. 8 That said, we are still at an early stage of FinTech, globally. It has spurred greater competition in every segment of the value chain of finance. It is too early to say who the winners will be. 9 The traditional financial institutions have the advantage of scale and a reputation amongst customers. But those that fail to keep up with technology will see part or all of their business models disrupted. Consumers are cautious about shifting their wallets to new players, but they are also looking out for services that offer the best value. 10 But many FinTech start-ups will also fail. It is in the nature of innovation that few new ideas and technologies will develop scale, sustain funding and end up as winners in the market. The 1/3  BIS central bankers' speeches  collapse of many peer-to-peer lending platforms in the US, UK, and China is a reminder that it will not be plain sailing for FinTech companies. A growing FinTech ecosystem in Singapore 11 Singapore’s strategy is not to choose between financial institutions and new FinTech players but to provide the conditions for both to innovate, compete, and collaborate. Our aim is to create a FinTech ecosystem where innovation thrives.

14 It offers a conducive physical space dedicated to the infrastructural needs of FinTech startups, here in the heart of Singapore’s financial district. It reduces costs for start-ups, gives them convenient access to data centre and other services, and even has a nursing room. 15 Let me cite two FinTechs starting up residence here in LATTICE80: Percipient, a local start-up, has successfully developed a customised digital solution for the State Bank of India. Percipient’s big data technology allows for efficient management of the bank’s database of over 500 million accounts, and translating into large potential cost savings. Sparks Systems builds new generation trading platforms for hedge funds, banks, financial institutions and other high volume institutional participants in the foreign exchange market. It aims is to develop an efficient market place for emerging market FX. 16 This innovation village also promotes collaboration and co-creation. Even in an age of Tweets and Snapchats, face-to-face interaction remains a source of new ideas, and a way to suss out potential partners. 2/3  BIS central bankers' speeches  R3 LRC, a specialist in distributed ledger research supported by a consortium of more than 70 financial institutions, will set up its first physical presence here. R3 Asia Lab will promote the cross-pollination of ideas between Singapore FinTechs and leading technologists around the world. The Fintech Association Singapore, another resident here, is a cross-industry initiative to facilitate collaboration among all stakeholders in the FinTech ecosystem.
It was now visible to the naked eye, without requiring sophisticated econometric models, that distortions from relatively high inflation are second order relative to losses from financial sector distortions (Stiglitz, 2010). That being said, it is safe to assume the crisis also shattered the illusion that the great challenges to the monetary policy decision-making framework have been overcome at least in part. Reality proved much too complicated to be managed based strictly on ideal theoretical schemes. In other words, textbook economics was no longer in tune with financial market realities. This also calls for rethinking the connections or retracing the boundaries between price stability and financial stability. The global crisis has once again drawn the attention of economic policymakers and theorists to the issue of separating or integrating price stability and financial stability tasks. The idea that the two tasks should be completely separated had gained ground before the outbreak of the crisis. The rationale behind this view was to free the monetary policy conduct from conflicting objectives and thus render policymakers’ mission and life easier. Following this line of thought, it was considered that two distinct entities should be in charge of the two tasks respectively. In particular, it was advocated that banking sector supervision should no longer be assigned to the central bank, but rather to an independent agency (which might also ensure the consolidated supervision of all financial markets).

Mugur Isărescu: Monetary policy during transition. How to manage paradigm shifts Presentation by Mr Mugur Isărescu, Governor of the National Bank of Romania, at the Annual Conference of the European Association for Banking and Financial History, organised by the European Association for Banking and Financial History and the National Bank of Romania, Bucharest, 7–9 June 2012. *  *  *  Ladies and Gentlemen, I started my career back in August ’71, the day after President Nixon announced the suspension of gold-convertibility of the US dollar and the introduction of a 10 percent surcharge on American imports, thus marking the dismantling of the Bretton Woods System. We all know what happened next: in an attempt to preserve a system of fixed exchange rates, the Smithsonian arrangement – which set a fluctuation band of +/–2.25 percent – was introduced in December 1971. It only lasted for six months, so that during 1972–73 fixed exchange rates were replaced by floating regimes in most economies around the world. Exception made the countries of the European Economic Community, which decided to implement a joint floating arrangement and introduced rather funny concepts such as the “snake in the tunnel”. Those were also years of intellectual controversy – I remember reading alternatively the Newsweek articles of Samuelson and Friedman, one preaching the virtues of Keynesian policies, while the other praised free markets and non-intervention. I witnessed the end of an era and the dawn of another.