samchain/econo-pairs-v1 huggingface dataset:
8  BIS central bankers’ speeches  Table 2 Domestic scenario (annual change, percent)  2014  1.9  GDP  2015 (e) Dec.15 Report 2.1  2016 (f) Dec.15 Report  Mar.16 Report  2017 (f) Mar.16 Report  Mar.16 Report  2.1  2.0-3.0  1.25-2.25  2.0-3.0  Domestic demand  1.1  2.0  1.3  2.5  1.5  2.3  Domestic demand (w/o inventory change)  -4.2  0.7  -1.5  1.7  0.5  1.0  Gross fixed capital formation  2.8  2.4  2.2  2.7  1.8  2.7  Total consumption  1.1  -1.7  -1.9  1.0  0.6  2.40  Goods and services exports  -5.7  -1.4  -2.8  1.6  -0.6  2.10  Goods and services imports  -1.3  -1.7  -2.1  -2.6  -2.5  -2.0  Current account (% of GDP)  20.9  20.0  20.4  19.1  19.9  20.2  Gross national savings (% of GDP) Nominal gross fixed capital formation (% of GDP)  23.0  22.0  22.7  21.9  22.6  22.1  23.0  22.0  22.7  21.9  22.6  22.1  (e) Estimate. (f) Forecast. Source: Central Bank of Chile.

Figure 8 Interest rates on Central Bank of Chile documents (percent)  9  9  7  7 BCP-10  5  5 BCP-5  3  3  1  1 05  06  07  08  09  10  11  12  13  14  15  16  Source: Central Bank of Chile. BIS central bankers’ speeches  11  Figure 9 MPR and expectations (percent)  6  6 MPR Financial asset prices in Dec. 2015 Report  5  5  4  EES  FBS 3  4  3 Financial asset prices in March 2016 Report  2  2 11  12  13  14  15  16  17  18  Source: Central Bank of Chile. Figure 10 Latin America: Nominal and real MPR (*) (percent)  9  15 8  Brazil (right axis)  Brazil  8  Colombia Chile  6  12 5  5  Peru  Colombia  3  9 Mexico  0  6 13  14  15  16  2  Indonesia New Zealand Peru Mexico Chile  -1 Australia  2  -1  (*) Calculated as the current MPR minus expected inflation one year out. Sources: Central Bank of Chile and of respective countries. 12  BIS central bankers’ speeches
Ardo Hansson: Nordic-Baltic financial linkages and challenges Opening remarks by Mr Ardo Hansson, Governor of the Bank of Estonia (Eesti Pank), at the conference “Nordic-Baltic financial linkages and challenges”, Tallinn, 13 December 2013. *  *  *  I am honored to welcome you here in Tallinn at the conference Nordic-Baltic Financial Linkages and Challenges jointly organized by the IMF, Riksbank and Eesti Pank. Jean Monnet once famously said that Europe will be the sum of the decisions taken in crises. We hope to have soon put one of these crises behind us. We now know that inadequate assessment of risks and weaknesses in the regulatory and supervisory framework were among the causes of the crisis. We hope that the lessons learned from the crisis will be profound and lasting enough to provide the energy for us to follow through with the fundamental reforms we have initiated in the EU. We also now understand the need to remain vigilant and ready to act against possible new risks to financial stability. Today’s conference will take a close look at the challenges and rewards involved in the evolution of a new paradigm in the operation and regulation of the European financial sector. The financial sector in the Nordic-Baltic region is regularly used as an example of regional integration and cooperation. In my remarks, I would like to highlight the key features of the region and put them in the broader context of European developments.

The broader concept of the “home market” should be developed further. One of the challenges will be to ensure strong competition in retail markets so that the benefits of integration could be felt by consumers across the region. Fostering sustainable growth in the region requires us to take a systemic view when designing harmonized regulation for the financial sector, and this is where the quality and proactivity of macro-prudential supervision becomes so important. The Nordic-Baltic dimension adds two nuances to the design of macro-prudential policies. First, our own experience of the past decade was a stark reminder of the particular challenges of managing capital flows in highly integrated economies and financial sectors. Second, most of the large Nordic banking groups have been considered as too big to fail in almost all countries in the region. BIS central bankers’ speeches  1  Diversity in the financial sector structures is a challenge for cross-border cooperation As I said earlier, the economies and financial sectors of the Nordic-Baltic region are diverse as well as closely integrated. Different countries in the region have opted for different policy frameworks; the structure of the financial sector also differs by country. It turns out that in a region of only eight countries, some of which are very small, one needs to tackle very much the same array of problems that make the coordination of financial sector policy and supervision so challenging in Europe. There are home and host countries; there are non-EU member states, EU member states, and euro area member states.
These may include cyber risks and the impact of this new form of money on the financial sector, primarily banks, and on the monetary policy. We are now taking efforts to carry out a comprehensive discussion of these benefits and risks with the business community, the financial sector, and lawmakers. You are also welcome to join this discussion. We have plenty of formats to take part in it. At the moment, we can see that these are banks who are concerned the most about a digital ruble — they perceive it as a factor that may decrease their profits. Just as the FPS, for instance, that levels out even the possibilities for banks and trade and service companies to negotiate cooperation terms to process payments and strengthens the competition in the market, a digital ruble decreases costs for businesses, but, on the other hand, may seize a part of banks’ fee income from transactions. We believe this to be a natural trend in the development of the financial system: financial intermediaries should become increasingly cheaper for the economy and should earn their revenues owing to new products and services convenient to and requested by customers, and not because clients have no other options, as was the case with acquiring fees. Therefore, a stronger competition in this area will benefit the economy and businesses. In our opinion, SMEs will definitely benefit from this.

This is a very acute topic for businesses, and we have already discussed it many times. The second issue is how the Faster Payments System evolves and what benefits it can provide to SMEs. The third topic I may not ignore and which is currently widely discussed is a digital ruble and what it can give to businesses. As regards AML/CTF problems, we hold, and I hope that you also comprehend it, that these antimoney laundering procedures are absolutely crucial since they protect the banking system and the economy in general against ‘dirty’ business and crime. However, these procedures have their drawbacks. Banks may behave suspiciously even towards lawful companies, and we have observed this. Banks are not ready to investigate the situation when these are small clients that do not bring high profits, such as small and medium-sized enterprises. It is easier for banks just to block transactions than to consider them carefully. As a result, this affects bona fide businesses. We have been employing the mechanism for rehabilitating such affected companies for a while already, but we are aware that the entire system requires redesigning and costs need to be lower. Of course, it is now possible for a firm to be rehabilitated, but it would be better to avoid such a situation where companies have to undergo all these procedures, including an examination by the commission, since this is stressful for any market participants.
331; Eichengreen and Gupta (2014), “Tapering Talk: The Impact of Expectations of Reduced Federal Reserve Security Purchases on EMEs”, World Bank Working Paper, No. 6754. [3] Volatility of capital flows in EMEs rose from an average USD 1.2 billion in 2006-2008 to USD 2.1 billion  in 2009-2011 based on a 12-month rolling standard deviation of GDP-weighted capital flows. [4] While economies tend to experience additional capital inflows in response to exchange rate  appreciation, these inflows could create additional appreciation pressures on the exchange rate. Ehlers and Takats (2013), “Capital flow dynamics and FX Intervention”, BIS Papers No. 73. [5] Exchange rates are sensitive to imbalances in financial markets and seldom perform the shock  absorption role that is central to traditional macroeconomic analysis. Gabaix and Maggiori (2015). “International Liquidity and Exchange Rate Dynamics”, Quarterly Journal of Economics, 1369-140. [6] “Implications of USD Dominance on Capital Flows and Financial Stability in EMEs”, Special Feature 1,  MAS’ Financial Stability Review, Dec 2020. [7] Williams J, (2016), “Measuring the Natural Rate of Interest: International Trends and Determinants”,  Journal of International Economics 108, S59-S75 [8] Finger et al (2019), “Facing the Tides: Managing Capital Flows in Asia”, IMF Asia and Pacific  Department Paper Series No. 19/17. Other studies find that some central banks’ monetary policy space has been eroded by capital flows even under floating rate regimes.

While the range of policy is extensive, the key thrusts are strengthening of risk-based microprudential regulation, and emergence of the explicit importance given to macroprudential supervision to tackle the problem of procyclicality and systemic risk. As we can see, there will be a new paradigm and context to international supervisory standard. While the macro orientation is in fact not new, and has always been in the classic tool-kit of central bank in ensuring financial stability, the current explicit articulation and specification of such tool as global standard is. The key macroprudential policy framework that has received wide support to deal with procyclicality problems includes the followings. First, there is a proposal on the build-up of capital buffer in the good times to be run down in the bad times and to prevent excessive credit growth. Second, as being discussed with accounting standard setters, provisioning should be linked with expected loss rather than incurred loss, which is the prevailing practice. Finally, the primarily simple and transparent “leverage ratio” should be applied as a complement to risk-based capital requirement under Basel II. Implementation of many such policies is still subjected to significant work on calibration as well as qualitative issues such as consistency with risk-sensitive capital framework, and international level-playing field. Such problems magnify in the case of emerging markets, which face constraint on data and institutional capacity. Moreover, much of the work done on calibration would tend to serve the need of IRB rather than SA banks that are the core in emerging market.
This feeling that we’ve built a strong fortress able to withstand any onslaught may create a mood of complacency and detract attention from the dangers that could be growing within the walls of financial institutions. This problem is aggravated by the fact that the hard numbers studied by regulators and supervisors should look great when the economy’s doing well. Profits are high and loan losses low when the economy is humming along. But, strong numbers in a strong economy don’t give you the full picture. They can’t always tell you whether people are cutting corners, taking excessive risks, or violating rules and regulations. Even worse, they can distract you from digging into the truth and unearthing unethical business practices and misconduct that may hide below the surface. The well-known challenge with culture is that, in contrast with things like capital and liquidity, culture feels “softer” and, therefore, more difficult to measure. And often in finance there’s a tendency to disregard what can’t be quantified. But just because it’s hard to measure doesn’t mean we should ignore it or downplay its importance. As we heard throughout today’s conference, culture shapes every conversation, every decision, and every action; it is at the root of whether an organization performs in a manner consistent with its mission, or not. How to Achieve a Better Banking Culture This brings me back to the issue of culture as a long-term investment that can’t be “fixed” overnight.

The crisis severely eroded people’s trust in the industry, both here and abroad. Governments and regulators quickly got to work fixing the main deficiencies in the existing regulatory framework. These included requiring much stronger loss-absorbing capital to weather severe economic downturns, demanding greater liquidity cushions to withstand market and funding disruptions, and creating a robust resolution framework to protect both the economy and the taxpayer in the event of a failure of a systemically important firm. These changes were appropriate and necessary. We must not lose sight of their importance in safeguarding the soundness of the financial system and in ensuring that future generations do not have to suffer the economic trauma that we lived through this past decade. Bringing us to the present day, we are in a much, much better place, in terms of both the financial sector and the overall economy. We have a more robust regulatory regime in place, and banks are well positioned to survive future storms. Furthermore, our economy’s in great shape; we’re in the second-longest expansion in history, and economic data from both the United States and countries around the world continue to trend upwards. As a policymaker, solid growth, a strong labor market, and inflation near our target are all exactly what I want to see. Paradoxically, it’s precisely this sense that things have gotten so much better that worries me most.
Conclusion: policy should be flexible but don’t over-react to low inflation We’ve heard a lot about the risk that deflationary expectations persuade people to defer spending. We’ll no doubt hear it again if inflation were to dip below zero over the next couple of months. But it’s at best a partial point. All else equal, the incentive to save depends not on inflation expectations per se but on how far away they are from the nominal interest rate, i.e. the real interest rate. By any measure – even if you use the near-term household surveys as measure of inflation expectations – the real rate is extremely low, and still negative (Chart 15). The extensive empirical evidence for this “inter-temporal substitution” channel is in any case relatively weak – as the Governor pointed out recently, the more important threat, particularly in developed economies with large balance sheets, is debt deflation. And in that regard, it’s the gap between interest rates and nominal income growth that matters. Notably, nominal income growth has not declined of late. Real interest rates still need to be low. Our inflation target is 2% not zero: what makes the current position “good” is not low inflation per se but the fact that, in this particular instance, it’s been caused by something (a drop in oil prices) that improves real incomes.

3  If b is the ratio of debt to income then its growth rate is given by r − g − s/b, where r is the ex post interest rate, g the growth rate of income and s the proportion of income used to pay off debt. So if g falls and r does not either debt starts rising faster than income or debtors must save more; if r and g change by the same magnitude b and s don’t have to. e  BIS central bankers’ speeches  3  than the interest rate, and therefore when servicing debts requires much more of their incomes than people had expected, that problems can arise 4. When (mild) deflation doesn’t matter: a high neutral real rate I think you can see the importance of these considerations in the UK, both in recent history and, as it happens, over a much more distant period. In the second half of the 19th century, and up until the First World War, Britain and much of the advanced world were on the Gold Standard: the price of gold was fixed at £ Deflation was commonplace. Discoveries of gold occurred only intermittently, and because the global economy – and therefore the demand for currency – was generally expanding, its real price often came under upward pressure. With the nominal price fixed, the only way that could happen is if the denominator of that real price – the price of goods and services – declined.
Dominant academic paradigm may restrict those who radically incorporate lessons of these days into their studies. And of course, central banks, as always, will be criticized for spoiling the party at its hottest moment by taking away the punch bowl. We should be aware that keeping the old habits will only give us a new and may be more severe crisis in the near future. Thanks to the global efforts, lessons derived from the crisis have already started to initiate dramatic changes in the global financial governance. There have been encouraging developments in recent months to design a new global financial system to prevent future crises. In the recent meeting of G-20 finance ministers and central bank governors, member  BIS Review 120/2009  1  countries confirmed their commitments to the principles of strengthening transparency and accountability, enhancing sound regulation, promoting integrity in financial markets, and reinforcing international cooperation. I believe the establishment of Financial Stability Board with increased participation of emerging countries is a critical step in achieving these objectives. In recent years, as a byproduct of market-oriented structural reforms and prudent macroeconomic policies, the share of emerging countries in world output and their role in global financial markets has significantly increased. Now, we are faced with a more diversified group of countries with different objectives and interests. Since the rise of emerging economies has dispersed economic power, decision-making process and international cooperation has become more complicated.

Considering that the increases in unprocessed food and tobacco prices – which are beyond the control of monetary policy account for 5 percentage points of current annual inflation, it is clear that there is sizeable room for disinflation from this channel (Figure 31). BIS Review 159/2010  13  Factors that are beyond the control of monetary policy, such as fluctuations in unprocessed food prices and tax adjustments related to tobacco products, created significant forecast uncertainty by increasing the volatility of consumer inflation. This, in turn, has created a challenge for us to understand the underlying inflation correctly and to manage expectations. In this context, I believe that it would be useful in terms of transparency and predictability, to share with the public the assumptions we make relating to the said groups while making forecasts and our inflation expectations excluding these groups. Accordingly, we assume that annual inflation in unprocessed food products will be 17 percent for end-2010 and 9 percent for the following two years. Meanwhile, the annual rate of increase in the tobacco and alcoholic beverages group index is expected to be 24 percent at end-2010 and to hover around levels consistent with inflation targets in subsequent years. Within this scope, we expect the inflation indicator excluding unprocessed food and tobacco and alcoholic beverages to follow a volatile trend in the first half of 2011 due to the base effect and to gain stability slightly above 4 percent in the medium term (Figure 32).
Eric S Rosengren: A US perspective on strengthening financial stability Speech by Mr Eric S Rosengren, President and Chief Executive Officer of the Federal Reserve Bank of Boston, at the Financial Stability Institute High-Level Meeting on the New Framework to Strengthen Financial Stability and Regulatory Priorities, St Petersburg, Russia, 24 May 2011. *  *  *  Of course, the views I express today are my own, not necessarily those of my colleagues on the Board of Governors or the Federal Open Market Committee (the FOMC). Good morning. I would like to thank Josef Tosovsky and the Financial Stability Institute for inviting me to speak today on financial stability and on regulatory and supervisory priorities in the United States. I would also like to thank Sergey Ignatiev and the Central Bank of the Russian Federation for hosting this very important event.1 I think it is crucial that we continue to share perspectives on financial stability and related issues. Clearly the events of the past four years have heightened our awareness of how interconnected our economies, our financial institutions, and our financial markets have become. When large global financial intermediaries become troubled, it impacts not just home country borrowers and, potentially, taxpayers; but increasingly can also have collateral impacts on host countries and their financial markets. Much has been learned in the United States over the past four years about gaps in our regulatory and supervisory framework.

Minouche Shafik: The interaction of monetary and macroprudential policy Speech by Ms Minouche Shafik, Deputy Governor for Markets and Banking of the Bank of England, at the IMF panel on “Revisiting Monetary Policy Frameworks”, Lima, 10 October 2015. *  *  *  I would like to thank David Aikman, Angus Foulis, Grellan McGrath and Alex Varadi for input to the preparation of these remarks and Don Kohn for comments on an early draft. •  The “lean or clean” debate used to be one of the most contentious in monetary policy until the crisis. Should monetary policy “lean against the wind” in the expansion phase of the credit cycle? Or should it remain solely focused on delivering the inflation target and “clean up” after the credit cycle contracts? The crisis taught us that cleaning up afterwards is a very expensive proposition. But are we confident enough in macroprudential tools to prevent the emergence of unmanageable risks during the credit cycle? The debate remains very much live, in part because macro-prudential policies are still nascent and we have not yet accumulated sufficient evidence through a credit cycle to make definitive judgements about optimal policy. “Lean versus macropru” remains an area in which perfectly reasonable people can have very different opinions. •  At one end of the spectrum there are those – such as Lars Svensson – who argue that the cost-benefit calculus is likely to be tilted heavily away from directing monetary policy at credit bubbles.