samchain/econo-pairs-v1 huggingface dataset:
The rationale of our regime, i.e., providing support to the currency, does indeed require us to mirror interest rates offered by other currencies – primarily the euro since we moved to a full peg last May – , but in addition we also need to offer a premium to holders of Maltese lira assets to compensate for the small size and vulnerability of our economy. Our judgement on the appropriate size of that premium at any point in time, complemented by considerations relating to financial market sentiment and economic conditions generally, determines our decisions on the Bank’s central intervention rate. The markets have so far judged the interest rate premium on the lira as being appropriate. 4  BIS Review 16/2006  7. It would be ironic if the government were to meet the fiscal criterion for euro adoption, but fail because of the inflation rate. What interest rate policy will the Bank adopt in this regard? I have already explained that the focus of monetary policy in a fixed peg regime is the exchange rate. Unlike most countries with a floating regime, we are not inflation targeters. The Bank’s ability to influence price levels directly through its power to change short-term interest rates in the money market is, therefore, rather limited.

To the one side, falling energy prices are weakening a key driver of underlying inflation pressures. Imported energy prices have played a central role in pushing up inflation for all economic sectors, given the huge energy shock we have faced. This is why measures of underlying inflation that capture the more persistent effects of energy costs are already showing a decline. [2] To the other side, increasing domestic price pressures could offset some of this disinflationary impulse. Measures of underlying inflation that capture items sensitive to the business cycle – such as Supercore[3] – or items with low import content are still strengthening. If this continues and aggregate demand picks up from its current compressed levels, we could see a handover from imported to domestic price pressures that keeps overall price pressures high. The key issue in determining which of these forces wins out will be developments in wages. The euro area has suffered a large terms-of-trade loss owing to rising energy prices, the cost of which must ultimately be shared between firms and workers. And it is important that there is fair burden sharing between them, with both accepting that they cannot fully recover the income that the euro area has paid to the rest of the world and the ensuing loss of output. So far, real wages have decreased substantially, while firms’ profit margins have expanded in many sectors. But the labour market is quite tight, labour shortages are increasing, and the terms-of-trade shock has largely reversed.
But we need to do things in an accountable manner and use our statutory discretion credibly to protect the public trust in us. For that we need to maintain credible procedures for decision-making where the public and courts can scrutinize to judge whether we have made decisions in fair manner considering all available information. In that regard, the Central Bank has long way to go. My initial days of office are spent to put in place these procedures in line with the mandate and nature of public interest. I know it is not easy to change things that have been there for long time. A lot of sacrifices are necessary. Ladies and Gentlemen, I know what I have stated here are confusing you enough. However, I am sure you had some technical insight into the Central Bank. I have no doubt you now appreciate that the Central Bank is the heart of the economy as many state so. Thank you very much for listening to me. 8  BIS central bankers’ speeches

The Initiative includes studies on issues such as new securitised debt instruments, issuance of debt by international financial institutions, regional credit guarantees and enhancement facilities, and the establishment of local and regional credit-rating and credit-enhancement agencies. Another initiative, known as the Asian Bond Fund project, represents collective efforts of the Executives' Meeting of East Asia-Pacific Central Banks, or EMEAP, to broaden and deepen the bond markets in the region. The ABF project will bring about many benefits. First, it introduces and promotes new fixed-income products to the Asian markets. Secondly, it helps improve market infrastructure. Thirdly, the initiative has helped accelerate tax and regulatory reforms in both the regional and domestic markets. The Bank, with its mission as the region's development bank, is well positioned to assist emerging market economies in Asia to cope with the challenges of globalisation. In the past year, the Bank has contributed to the issuance of local currency-denominated bonds in India, Hong Kong, Malaysia and Singapore. The Bank is also providing valuable support to the Asian Bond Markets Initiative through the former Regional Economic Monitoring Unit, which is now known as the Office of Regional Economic Integration. Mr President, your decision to expand this Office and dedicate it to regional cooperation matters is most timely and welcome, as a well defined agenda for the Bank on regional cooperation will enhance financial stability by strengthening regional surveillance and cooperation. Despite these efforts, developments, and - dare we say it - successes, there are many challenges lying ahead of us.
The liquidity of banks, as measured by the ratio of their most liquid assets (central bank reserves, gilts and Treasury bills) relative to total assets, was a fraction of what had been  BIS Review 100/2010  3  normal twenty years earlier and a tiny fraction of what had been normal before the 1970’s (Chart 3). And banks had also become larger. Their assets, relative to the size of the economy, had grown very sharply. Relative to GDP, they had roughly doubled in the 10 years up to 2007 (Chart 4). The UK banking sector had low capital, illiquid assets and was very large when fears about the value of its assets increased. The combination of those things accounts for the scale of the damage that ensued. Chart 4 UK monetary and financial institutions, assets as % of nominal GDP 600  500  400  300  200  100  0 1987  1990  1993  1996  1999  2002  2005  2008  Note: Monetary and financial institutions do not include insurance companies, pension funds and other financial intermediaries. Source: Bank of England, Monetary and Financial Statistics. There are many different proposals to build a more robust banking sector. Some of these involve using conventional monetary policy, that is interest rates. But most proposals are about changes to the way banks do business.

I want to briefly describe some ways of trying to calibrate the costs and benefits of higher capital requirements – which do not assume the MM theorem holds. The method I use follows that outlined in the recent Bank of England FSR 7. The methodology followed in the FSR seems to me very sensible. The idea is to calculate the impact of a given change in equity capital – that is an equity for debt swap – on a typical bank’s cost of funding. I assume, as in the FSR, the higher cost of bank funding is passed on in the form of a higher cost of bank loans. To assess what effect that has on the wider economy we then make an educated guess at the effect of a rise in the cost of bank loans on the overall required return on investment. That in turn will affect the stock of capital and economic activity. This impact on economic activity is the cost of higher capital requirements. The illustrative estimates in the FSR indicate that conservative assumptions about effects of higher bank capital on the costs of bank funding and lending generate a marginal cost of about 4% of annual GDP, in present value terms, for a 1% of risk-weighted assets rise in capital. The FSR notes that by relaxing these assumptions the cost may be lower, so that the estimates are probably an upper bound 8. The starting point for my calculations is the case presented in the FSR.
It is assumed that overall activity will decline somewhat when Snøhvit and Ormen Lange are completed, but that the high oil price will contribute to maintaining investment at a relatively high level throughout the projection period. The fiscal rule implies a gradual phasing-in of petroleum revenues into the economy, approximately in pace with the expected real return on the Government Pension Fund – Global, formerly known as the Petroleum Fund. The Government Pension Fund – Global is likely to expand sharply in the years ahead. On the basis of our assumptions for developments in oil prices ahead (oil futures prices), a mechanical application of the 4 per cent rule implies that the use of petroleum revenues will increase by more than NOK 31 billion from 2006 to 2009. This is somewhat higher than expected in the Government’s supplement to the budget for 2006. The difference can partly be explained by the fact that at end-2005 the Fund’s capital was higher than that estimated by the Government, and partly that the Government assumed that oil prices ahead would be lower than current oil futures. For 2007, we assume an approximately unchanged structural non-oil deficit. With continued solid growth in the Norwegian economy, it would be in line with the fiscal rule if the use of petroleum revenues is lower than the expected real return on the Government Pension Fund – Global over a few years.

There will be no additional criteria but neither will there be a relaxation of the criteria that proved effective in steering the process of convergence across the founding members of the euro area. Conclusion Let me underline four points which, I trust, are of the essence in the present situation : First, I would like to stress the remarkable credibility of the euro and of the Central Bank that issues this currency, the European Central Bank. Neither the ECB nor the Euro existed six and a half years ago! Today we have a currency which is as stable as were the best national currencies in Europe, and a Central Bank which is as credible as were the most credible Central Banks in Europe and in the world. Our duty is to fully preserve and enhance this exceptional level of credibility and I am, as President, fully committed to this task. Let me in this respect pay homage today to Finn Kydland and to Edward Prescott, who were awarded yesterday the Nobel Prize in Economics. Their seminal work - as regards central banking - on the importance of time consistency, commitment in advance, and full independence and credibility in the delivery of price stability over time has been very important for institutional developments around the world, including the ECB and the Eurosystem, and instrumental in our success. We owe them a particular debt of gratitude. Second, price stability is a necessary condition to obtain sustainable growth and job creation. It is not, alone, a sufficient condition.
Mervyn King: Monetary policy developments Speech by Mr Mervyn King, Governor of the Bank of England, on the 2012 BBC Today Programme Lecture, London, 2 May 2012. *  *  *  Fifty years of rising living standards came to an end with the financial crisis. As a nation, we are now significantly worse off than we were four years ago. The crisis has cast a long shadow. Of course, the immediate challenge is to get our economy growing again. But fifty years from now will our grandchildren ask why we lacked the courage to put in place reforms to stop a crisis happening again? I hope not – and that’s why I want to speak to you tonight about the changes we need to make. Believe it or not, it’s more than seventy years since the Governor of the Bank of England last gave a talk on radio in peacetime. In March 1939, Montagu Norman spoke to the BBC in the wake of the economic slump that we now call the Great Depression. Just listen for a moment to the 1930s version of Evan Davis introducing the broadcast: AUDIO INSERT: “The Rt Honourable Montagu Norman, Governor of the Bank of England, speaking in the Empire Series on the City of London.” More the presenter of “yesterday” than “today”! In those days, the Bank of England, known affectionately as the “Old Lady of Threadneedle Street”, was a private bank performing the role of a central bank only by custom and practice.

As banks enter new markets, create ever more complex products, and pursue customers near and far, the challenge for all of us is, first, to understand how our risk profiles are changing and, next, to find responsible ways to manage them. Whether they compete on a national, regional, or global level, banks have developed countless new tools and processes that promote their competitiveness, strengthen their returns, and control their exposures to credit, market, operational, and other risks. In turn, supervisors must review periodically the tools and processes at our disposal to ensure that our regulations and practices accommodate changes in market trends, the introduction of innovative products and services, and advances in the art of risk management. The current efforts to reform the international guidelines on capital adequacy represent a critical review of the cornerstone of bank supervision. The members of the Basel Committee have devoted substantial resources to this reform because we believe that, when banks are adequately capitalised and well managed, they become more stable and better able to withstand periods of financial distress. But more importantly, when all banks have the proper incentives to manage their risks appropriately and hold adequate levels of capital, we believe that the entire financial sector becomes more resilient, less sensitive to the ups and downs of the business cycles, and better able to serve as a source for the sustainable growth of the broader economy. That is our motivation for proposing the adoption of a New Basel Accord, which I will discuss this morning.
Erdem Başçi: Recent economic and financial developments in Turkey Speech by Mr Erdem Başçi, Governor of the Central Bank of the Republic of Turkey, at the press conference for the presentation of the October 2014 Inflation Report, Ankara, 31 October 2014. *  *  *  Original presentation is on the Central Bank of the Republic of Turkey’s website: http://www.tcmb.gov.tr/ wps/wcm/connect/47fed704-6c8d-48a4-9fce-458bc4bad30b/ER_Ekim_2014_Konu% C5%9Fma_%C4%B0ngilice.pdf?MOD=AJPERES&CACHEID=47fed704-6c8d-48a4-9fce-458bc4bad30b  Distinguished Guests, Welcome to the briefing held to convey the main messages of the Inflation Report. I will now present an overview of the report, which will be published on our website soon. The report typically summarizes the economic outlook underlying monetary policy decisions, shares our evaluations on macroeconomic developments and presents our medium-term inflation forecasts, which were revised in view of the developments in the last quarter, along with our monetary policy stance. In addition to the main text, the report includes six boxes entailing interesting and up-to-date analyses on various topics. For example, the report presents boxes that analyze how the determinants of bond flows into emerging economies change over time and the sensitivity of inflation to output gap and loans. Moreover, there are studies elaborating on current account fluctuations and current account deficit corrections, non-core liabilities, the correlation between capital flows and loan growth across a wide range of economies and the role of macroprudential measures in the elasticity of loans to capital flows. Titles of the boxes are shown on the slide. All of these analyses shed light on noteworthy issues in the Turkish economy.

Other challenges are specific to the Eurosystem, like the completion of the single market with a single currency and a successful enlargement. The people of Germany as well as all 329 million fellow citizens in the euro area, can count on the ECB and on the Eurosystem. You can count on us to continue providing a solid and reliable anchor of stability and confidence. Particularly in the current environment both these elements are essential. I thank you for your attention. 8  BIS Review 16/2009
Part of this borrowing is used to finance mortgages in Swedish krona and the foreign currency therefore needs to be converted into krona on the FX market. I do not intend to go into this in depth; merely to observe that this has further increased the complexity of the Swedish financial system in that the number of intermediaries has increased. At the same time, the banks have become dependent on the FX market functioning smoothly. Households’ high indebtedness could jeopardise the banks’ funding opportunities Swedish household debt has been rising in line with the increase in housing prices since the mid-1990s. The fact that households today are so heavily indebted means, for instance, that they are sensitive to changes in their personal finances and to disruptions in the housing market, for instance. If housing prices were to fall, this could affect the banks’ possibilities to fund Swedish mortgages. Let me try to explain why. Funding using covered bonds is closely linked to the housing market Around one half of the Swedish banks’ market funding comes from covered bonds. When the banks issue these bonds, they earmark collateral that is only for the market participants investing in bonds. The investors often require a particular extra buffer of collateral, and so the banks often earmark more collateral than is required by the regulations. It is primarily mortgages that are earmarked, and funding with covered bonds is therefore closely linked to developments on the Swedish housing market.

One cannot rule out the possibility that investors might reduce their holdings or perhaps no longer wish to own Swedish mortgages through covered bonds when housing prices are falling heavily. Although the risk of direct loan losses on the banks’ mortgages is initially small, investors who perceive the uncertainty to be great and who have poor knowledge of the credit risk might wish to sell their holdings. If a general expectation of increased sales pressure also builds up, a large number of more well-informed investors 4  BIS central bankers’ speeches  might choose to sell their holdings of Swedish covered bonds to avoid large falls in value. This type of herd behaviour could create very negative price fluctuations on the bond market and perhaps even disrupt the functioning of the market. The stress tests carried out by both the Riksbank and other analysts indicate that the Swedish banks would be able to cope with a large fall in housing prices without the earmarked collateral declining significantly. But regardless of this, we can be sure that the uncertainty regarding the covered bonds would increase if housing prices were falling and it is always international confidence in the Swedish housing market that is important here. However, it is difficult to predict at what loan-to-value ratio the Swedish covered bonds would begin to be perceived as less safe by the market. Perceptions of what is acceptable may suddenly change.
Against this backdrop, we continue to expect the economy to grow by around 1.5% in 2019. As is the case with the global economy, the risks for this scenario remain to the downside. In particular, an unexpectedly sharp slowdown internationally would quickly spread to Switzerland. Exchange rates, interest rates and inflation expectations  Let me now move on to address monetary conditions – that is to say, exchange rates and interest rates – as well as inflation expectations. My comments here relate to the developments since our last news conference in December, and not just those during the past quarter. Monetary conditions are similar today to six months ago. The Swiss franc remains highly valued. The situation on the foreign exchange market is still fragile. When the trade dispute between the US and China escalated again in May, the Swiss franc and the Japanese yen appreciated. Both currencies are sought after as safe havens in periods of uncertainty. In light  Page 4/5  Berne, 13 June 2019 Thomas Jordan  News conference  of the high valuation of the franc and the fragility of the situation, our willingness to intervene remains necessary, as does the negative interest rate. This brings me to the development of interest rates since December. At the beginning of the year, the US Federal Reserve signalled that it would be patient with regard to raising interest rates further.

The article was intended to serve as a basis for public debate; in our opinion it provided the best foundation that was then available for discussing the krona’s long-term value. The krona’s equilibrium value is naturally something that the Riksbank considers continuously and the analysis is constantly being developed. Accounts of various aspects of the exchange rate have been presented in the Inflation Report. The material that will be produced in the event of Sweden deciding to participate in ERM2/EMU will have to incorporate the additional information since 1996. It should also be noted that the levels and intervals that were presented in the article refer to the krona’s trade-weighted exchange rate and are therefore not directly applicable to the question of a reasonable central rate for the krona against the euro. Furthermore, the euro is a new currency. Arriving at just the right future exchange rate for the krona against the euro is therefore not exactly easy. Although the financial markets are naturally eager to know, at this stage it is too early to allow the discussion of the krona’s path to focus on specific intervals or levels. But the course is clear—in the event of a euro peg, the rate for the krona will be stronger than the current level. Current monetary policy In conclusion I should like to say something about the monetary policy situation in Sweden. International economic prospects gradually deteriorated during 1998.