samchain/econo-pairs-v1 huggingface dataset:
On the cusp of the pandemic, inflation expectations had just started to go down as we saw them approaching 4%. The pandemic derailed that trend. Inflation expectations this year have grown drastically to a five-year high. What does that mean in practice? It means that people rush to buy everything before prices grow, and are taking out a lot of loans. And that further fuels demand and inflation. Whereas some central banks can afford to take a wait-and-see stance to adjust to demand — thanks to the consumer behaviour shaped by the expectations that price growth will stop, we cannot afford that policy. Conversely, if we miss the right moment to make a prompt monetary policy response, we will then have to raise the key rate even more. Our own experience and some countries’ history prove that. We are in a situation similar to that in the US and Germany in the 1970s and 1980s. The Bundesbank moved to raise its interest rate right away, but the Federal Reserve maintained its accommodative policy for a long time on expectations that the crisis would pass. As a result, while Germany saw a quick drop in inflation and an economic rebound, the US went into stagflation, and the Fed was forced to conduct an extremely tight policy, the consequences of which were felt for many years. Food prices are soaring on the back of a disappointing harvest, a rise in global food prices and in labour costs in agriculture.

This is because the risk to financial stability can come from many sources other than domestic inflation. In the current crisis, it was the housing bubble and excessive risk-taking by financial institutions that precipitated the crisis in the environment of stable prices. Therefore, to maintain financial stability, attention must be paid to all the key sources of risk and imbalance, other than price stability, that can have systemic implications for the economy’s growth and stability. This is the second lesson. The third lesson relates to the importance of having a robust and resilient financial sector at all times. For emerging markets, this means a strong banking sector. In the current crisis, it is the strength of the banking sector that has enabled the Asian economies to cope more successfully with the impact of the global crisis. These strengths are underpinned by the sector’s strong capital base, its limited exposure to subprime-related and other toxic assets, and its low reliance on external funding. Such strength and qualities are no accident. They are the results of deliberate policies to reform the financial system, strengthen supervision of financial institutions, and revamp financial regulation, risk management, and governance after the Asian financial crisis. The point I want to stress here is that these are the qualities that helped us through the current global financial crisis and they are the qualities that we need to keep.
Downside risks to growth include Russia's unjustified war against Ukraine and an increase in broader  2/10  BIS - Central bankers' speeches  geopolitical tensions, which could fragment global trade and thus weigh on the euro area economy. Growth could also be slower if the effects of monetary policy are more forceful than projected. Renewed financial market tensions could lead to even tighter financing conditions than anticipated and weaken confidence. Also, weaker growth in the world economy could further dampen economic activity in the euro area. However, growth could be higher than projected if the strong labour market and receding uncertainty mean that people and businesses become more confident and spend more. Upside risks to inflation include potential renewed upward pressures on the costs of energy and food, also related to Russia's war against Ukraine. A lasting rise in inflation expectations above our target, or higher than anticipated increases in wages or profit margins, could also drive inflation higher, including over the medium term. Recent wage agreements in a number of countries have added to the upside risks to inflation. By contrast, renewed financial market tensions could bring inflation down faster than projected. Weaker demand, for example due to a stronger transmission of monetary policy, would also lead to lower price pressures, especially over the medium term. Moreover, inflation would come down faster if declining energy prices and lower food price increases were to pass through to other goods and services more quickly than currently anticipated.

We have experienced that partial reinvestment now for a few months because it was decided back in March. It has been well-absorbed by markets. We have not observed any disruption. Given the amounts that we are talking about, we have reasons to believe that it should be absorbed also in a smooth manner. But, of course, we will be very attentive. We will look at this process. We will, as I said, always have the means to take action and to use all the tools that we have available if it was needed. You've touched on the problem of the wage increases. At your speech at the European Parliament, you touched on the problem of corporate profits. If you take these both together, how confident are you that the relevant parties actually start to be more moderate on this, in particular as both of them start to criticise that interest rates are already too high? The second question: I'm also a bit puzzled about the real severity and persistency of this core inflation. May I ask you as well, please, to elaborate a little bit more where the Governing Council sees the reason for this really strong persistence? The labour market situation and the employment situation is the good news in Europe, and we have never seen the unemployment rate be so low. Actually in our forecast we see the unemployment rate go from this 6.5% that we have now, to 6.3%. We see the level of unemployment continuing to decline.
There is consensus among the scientific community that the Iberian Peninsula could be significantly affected by 21  the physical risks associated with climate change and that this impact would be highly uneven across regions. Addressing this challenge calls for the implementation of an ambitious strategy to mitigate and adapt to climate change in Spain, driving a profound structural change in our economic growth model with major implications for practically every sphere of activity. This transformational process will also foreseeably have a very unequal impact on Spain’s different regions, industries, firms and households, and it may affect some more vulnerable households and firms more severely. All economic policies and agents need to contribute very actively to the green transition. Governments in particular have a leading role to play, essentially through green taxation (far less prominent in Spain than in our fellow European countries), the roll-out of compensatory measures to temporarily mitigate the transition costs for the most vulnerable groups, and via public investment and the regulation of economic activity. In particular, the RTRP should act as a key lever for driving public and private investment in Spain in the coming years. Once again, when it comes to addressing the global challenge of climate change, a comprehensive European response would be most effective. This should come through tax coordination and a common European financial instrument that facilitates the investments needed to meet the net zero emission targets and dispel the climate-related risks, regardless of the fiscal space available in each country.

For their part, inflation rates in April 2022 stood at 8.3% and 7.4%, respectively, that is, 6.9 pp and 6.5 pp higher than in early 2021. According to the earliest leading preliminary data available for the euro area, corresponding to May, inflation has risen once again, to 8.1%. Although the Spanish economy saw a gradual recovery over 2021, which extended to early 2022, this recovery is still incomplete and uneven by sector. In early 2021, the primary 1  conditioning factor was the epidemiological developments, as they required maintaining measures to contain the disease. The swift headway made in the vaccination campaign allowed a more buoyant phase to begin in Q2, but this was tempered from mid-2021 by the bottlenecks and higher energy prices, which were compounded towards the end of the year by the spread of the Omicron variant. In the opening weeks of 2022, with this wave of the pandemic subsiding and the first timid signs of relief in the bottlenecks, it appeared that the path to recovery was beginning to clear once and for all. However, the Russian invasion of Ukraine in late February has provided a further negative shock, which I shall refer to later in detail. GDP growth stood at 5.1% in 2021 as a whole, which slowed to 0.3% quarter-on-quarter in 2022 Q1. During this period there was an intense shift in the strength of activity, with the hospitality and leisure sectors becoming more dynamic as headway was made in vaccination.
I am most grateful to   His Excellency, The President Dr. Ernest Bia-Koroma    The Honourable, Vice President Chief Alhaji Sam Sumana    The Minister of Finance and Economic Development    The Honourable Speaker and Members of Parliament    The President of the Bankers’ Association  The many Heads of States and Governments, many former Governors, heads of financial institutions, as well as heads of international and regional organisations that have contributed to enhancing the role of the Bank in promoting economic and social progress, in particular, financial stability in Sierra Leone. Their varied contributions are a testimony to the achievements of the Bank and the high esteem it is held today. They also underscore the major reforms that the Bank, supported fully by all the stakeholders, has implemented since 1964, covering operational, financial, and governance matters. I would like to thank members of the Board of Directors, the Deputy Governor, Management and Staff of the Bank for the guidance, support and cooperation throughout 2010. Let me also extend my gratitude to my family and friends for their prayers, continued support and guidance, not forgetting the Fourth Estate for the work they have done in sensitizing the public on the role and policies of the Bank. I thank you for your attention. My very best wishes to you all for a peaceful 2011 and hope that it brings good health and contentment together with prosperity. God bless. 10  BIS central bankers’ speeches

Last, but certainly not least, is the element of trust. In the panic and chaos during crisis situations, feeble coordination and communication arrangements will falter easily. This can  2  BIS central bankers’ speeches  occur even with well-established frameworks and dynamic resource persons at hand. Communication failures during Robert Hall’s expedition were not caused by the lack of infrastructure or defined channels for information dissemination. It stemmed from a more fundamental issue. Those involved in the final climb were complete strangers until several weeks before. Unfamiliarity among team members generated communication barriers, distrust and uncertainties. This did not engender efforts to create a robust co-dependency and coordination structure to collectively weather extremities faced on Mount Everest. Strong policy frameworks and institutional arrangements only make interagency coordination and communication feasible. But it is entrenched mutual trust, fostered during stable times, that makes them credible in challenging times. Trust ensures that collaboration arrangements, secured in good times, remain firm and functional in the face of crises. Trust nurtures confidence and enables reliance on the competence of others. Without trust and symbiotic crisis networks within and across agencies, a crisis framework offers little more than false comfort during crises. The Bank’s own experience in the management of crises, as well as global reforms that are taking place in this area, continue to be useful in guiding us as we navigate this increasingly demanding policy domain. We have continued to make important progress.
However, such time-varying regulation also contributes to stability by increasing the costs of borrowing when credit growth and other financial variables suggest that systemic risk has increased, and reducing the interest rate margin in financial crisis situations when the buffer can be used. We can illustrate the time-varying part by adding a time index also for the regulation variable ( z ):  itlending  it   t ( zt ) . If time-varying regulation is introduced, the variations of the interest rate margin will be different over time, which can affect the monetary policy transmission mechanism. At the same time, a central bank must, irrespective of macroprudential policy, understand how the financial sector determines various financial prices in order to understand how monetary policy affects the economy through the lending rate. Credit markets are often not entirely homogeneous, but consist of several different segments or sectors. The development within different sectors can vary tremendously. Although many other factors affecting the lending rate and other credit terms are of an aggregate nature, sector-specific factors are often important too. It is therefore important to have a macroprudential policy tool focusing on individual sectors. This is not least important in attempting to reduce the costs of leaning into the wind.

2  BIS central bankers’ speeches  2007, I took part in a panel debate in Jackson Hole, and indicated then that it is better to attempt to prevent the risk of a financial crisis than to clean up afterwards. The main argument as I see it – now as it was then – is that cleaning up is extremely costly and takes a long time. Experiences in Sweden from the crisis of the 1990s are an example of just how painful it can be. Because, reducing major debts often takes a long time, and during that time possibilities of stimulating demand through monetary policy are limited. It doesn’t matter much if the debts are in the private sector, i.e. among households and companies, or in the public sector. In both cases, a trend build-up of debt in relation to income is always unsustainable in the long term. A question is then how central banks more tangibly can lean against the wind. The policy rate is a tool that can be used. We therefore need to develop the monetary policy framework so that it takes greater account of financial stability. At the same time, financial stability policy is changing, and a new policy area, macroprudential policy, is emerging which also aims to lean against the wind. Hence, we are facing two changes in the areas of responsibility of central banks, both of which create new possibilities to manage the trade-offs between price stability, resource utilisation and financial stability.
My main conclusion is that the international monetary system should be seen not as a series of bilateral relationships, but as a multilateral arrangement, albeit one where a small number of the key players can usefully communicate with each other. I believe that we need to rethink the role of the IMF in the international monetary system. I encourage the Fund to articulate a positive vision for the management of the international monetary system in its forthcoming strategic review. I am not convinced that the future of the Fund is primarily as an occasional international lender of last resort for middle-income countries suffering financial crises. At this Conference the emphasis is naturally on ways to promote productivity and enterprise. Monetary stability at home is now widely recognised as a necessary condition for a successful economy. It provides, as I said at last year’s conference, a springboard for enterprise. But international monetary stability is no less important if trade is to prosper. In The Importance of Being Earnest, Cecily is instructed by her tutor, Miss Prism, to read her political economy. But Miss Prism continued, “The chapter on the Fall of the Rupee you may omit. It is somewhat too sensational. Even these metallic problems have their melodramatic side.” What would poor Cecily have made of the recent melodrama surrounding the values of the dollar, the euro and other paper currencies?

Is the dominance of the dollar in world reserves a reflection of historical factors that are less and less relevant today? Or are there fundamental reasons for the world's central banks to continue using one main currency as a source of liquidity? Second, given that each bloc’s policy choices reflect domestic objectives, what could be achieved through international meetings? The starting point is the need to find a common analysis. Domestic policies should at least be based on mutually consistent assumptions. Only when there is agreement on the nature of the risks inherent in current international monetary arrangements will there be the possibility of a cooperative outcome that is an improvement for all, not just for some. Third, how might we arrive at such a common analysis? The G-7 arose out of an earlier episode of concern about exchange rate movements in the 1980s. Most smaller countries can choose their exchange rate regime without worrying about its impact on the rest of the world. But the large countries – especially the three blocs I identified at the outset – cannot ignore their interdependency. That is why it is important to expand the group of countries that discuss these issues beyond the G-7 to include those, such as China and India, whose actions increasingly have global economic consequences.
At the same time, the Bank of Russia still lacks the mandate for supervision over bank holding companies and, in a wider sense, over financial groups made up of non-state pension funds, insurance companies, and the so-called parallel banks – which have the same owners. The lack of supervision over such associations, together with the lack of their responsibility to comply with prudential standards, is behind the current concealing of problems, which gives rise to an incentive for their owners to structure associations of finance companies, in an arrangement allowing them to escape compliance with required ratios, internal control or risk management requirements. The Bank of Russia believes it is time to do away with the unequal regulatory field that is subject to an association’s organisational structure. As a result, it would make no difference to owners of financial institutions, whether their financial institution’s parent company is under Bank of Russia supervision or whether a holding’s parent company is established by the owners. BIS central bankers’ speeches  9  Our position is that financial groups should have regulatory standards and requirements to enable control of risk and capital management systems, as well as requirements for business reputation of a parent organisation’s Board members and executives. There are good reasons to enable the central bank to take corrective actions against a parent organisation or participants in financial groups if they violate regulations.

And, we work with area schools to improve students’ understanding of monetary policy, the Fed and economics. It is also important to me that I visit different parts of our District on a regular basis and talk directly with the people who live and work here. For example, last fall I visited Western New York and saw the many positive changes helping to revitalize what has been a slow growing economy for some time. Earlier this year, I met with companies on a visit to Brooklyn and observed some of the new hi-tech jobs that are being brought to the City – a good precursor to today’s presentation. While in Brooklyn, I also visited Brownsville, a neighborhood which underscores the reality of the challenges that many face and the fact that the economy is not improving for everyone. Later this year, I have similar trips planned to Puerto Rico, the Bronx and Albany. Obtaining on-the-ground intelligence is valuable and helps shape my view of the region, the economy and my outlook on policy. As you may know, the District we cover is quite diverse. It is not just a single regional economy, but rather many different local economies. Let me talk a bit about how the different parts of our region have been doing. Regional economic conditions Since our last briefing in November, the economic recovery has been variable across the region – strong in some places but weaker in others. Let me begin with the area that has struggled the most.
In the words of the authors: “This evidence, together with recent experience during the financial crisis, leads us to conclude that there is a pressing need to reassess the relationship of finance and real growth in modern economic systems. More finance is definitely not always better.” Last month, the IMF released a paper that essentially reaches the same conclusions. It identifies Ireland, Japan and the US as countries that have “too much finance” for their own good. In Malaysia, the Financial Sector Blueprint clearly recognises the role of the financial system in serving the real economy. The economy is not subservient to the needs of the financial sector. 6  BIS central bankers’ speeches  Regional cooperation The final thing I wish to mention with respect to reaping the benefits and mitigating the risks of financial globalisation is regional cooperation. During the Asian Financial Crisis, we found out that contagion can occur when our neighbours experience difficulties, even if our financial systems are not closely linked. More recently, the European countries, even those that are not in the euro area, have found themselves in a similar position. The key factor is whether a country’s financial system is linked to the global financial system. Herding behaviour and generalisation among international investors and lenders will make the crisis in one country transcend borders and also affect neighbouring countries.

The banks restraint over crediting is a result of several factors. One is the economic crisis in the Euro area, the deceleration of our economy last year, the banks prudency, the rise of the bad placements. Another very important factor is the condition in the parent banks of some of the owners of our banks, you know that they mainly come from the Euro area, some of them have serious problems in their own countries and they face with serious challenges, although their banks in Macedonia have extremely good quality and they are in good condition, since the strategy is developed at the level of the group, the problems in the parent bank prevail so they can have conservative strategy also in our country. This exactly was the reason that caused panic in the public, that some banks have problems in their main offices. Has the situation been stabilized a little in this regard? The situation here is mainly stable. Although there are occasional rumors in the public, the data do not mirror that, and we did not have registered, in any moment, that the deposits plunged with the banks the main offices of which are facing with problems. The deposits, generally, were increasing during all these past several years.