samchain/econo-pairs-v1 huggingface dataset:
Even if the extraordinary context of the crisis might lead to further reflection on some of these established principles, the ECB has made a public commitment to respect these red lines, and for good reasons. Importantly, PEPP purchases are separate from and cannot be consolidated with APP purchases. This means that the PEPP remains a distinct monetary policy measure in comparison to the APP. In keeping with these safeguards the APP will also not inherit the features of the PEPP. The flexibility embedded in the PEPP cannot be unconstrained, and we must ensure that the ECB continues to operate within the limits of its competence. Collateral easing must be strictly temporary and not come at the expense of fragmentation Another aspect of our response to the crisis was the unprecedented set of temporary collateral easing measures that we announced in April 2020. These measures continue to support our liquidity operations and ensure continued collateral availability. For example, we decided to extend national additional credit claim (ACC) frameworks to include loans benefiting from public guarantee schemes related to the COVID-19 crisis even if they lead to increased fragmentation temporarily. We also took the decision to maintain the eligibility of issuers and marketable assets in the event of a deterioration in credit ratings during the crisis. The legality of these measures is ensured through compliance with all the generally applicable principles I mentioned earlier.

PEPP – a flexible instrument to fight the crisis within our mandate I would now like to take a closer look at the legality of our most far-reaching and exceptional monetary policy decision, the launch of the PEPP. Let me first look at its features. The PEPP was established to act first as a backstop to potential market disruption. In short, it 1/5  BIS central bankers' speeches  has had a stabilising effect to counteract the market fragmentation that was unwarranted on the basis of the underlying economic fundamentals, and to safeguard the transmission mechanism. The PEPP also reinforces the ECB’s monetary policy stance. In so doing, the PEPP is a direct and targeted response to an “extraordinary and acute economic crisis”1 and aims to ensure the ECB’s ability to fulfil its mandate under the circumstances. Notably however, “Due to these exceptional, fast-evolving…circumstances, the PEPP requires a high degree of flexibility in its design and implementation” as set out in the Decision implementing the PEPP.2 Purchases under the PEPP continue to be guided by the capital key of the national central banks as for the APP. But the PEPP allows for fluctuations in the distribution of purchases over time, across asset classes and among jurisdictions. This flexibility has allowed us to effectively stave off risks to the smooth transmission of monetary policy. In view of the pandemic’s exceptional nature, we decided not to apply to the PEPP the same selfimposed public purchase limits that apply to the sovereign purchases under the APP.
In any  2  BIS central bankers’ speeches  event, as it takes a long time for any drive of this nature to mature, it is also in everybody’s interest to set about studying and putting in place the necessary arrangements as soon as possible. Progress in correcting the external imbalance It is in the external sector where the swiftest and sharpest correction of imbalances is being made. The adjustment in the external sector continued in 2012 and, as a result, after posting a surplus in the second half of the year (an unprecedented development since the launch of EMU), the current account was practically in balance, with a deficit of only 0.2% of GDP for the year as a whole. Current forecasts point to surpluses on the current account for 2013, 2014 and successive years. In addition to the contraction in imports attributable to the fall-off in domestic spending, this performance reflects the restoring of the competitiveness lost by the Spanish economy during the expansion that ended in 2008. By late 2012, two-thirds of the gap built up since 2000 between Spanish unit labour costs and those for the euro area on average had already been corrected. These gains in competitiveness have been accompanied, in the most recent period, by notable growth in the number of exporting firms and by greater geographical diversification of our exports, with an ever-increasing weight of those targeted on emerging markets.

Unlike in other economies with problems of excess household and corporate debt, such as the United Kingdom and the United States, in Spain weak nominal growth has weighed on the process of debt re-balancing and has made it reside, above all, on a contraction in lending. The last year in which lending posted a positive rate of change in Spain was in 2008. Since then, net credit flows, both to households and to non-financial corporations, have been  BIS central bankers’ speeches  3  negative overall, although there was a very slight increase in lending to households for house purchase in 2010. In 2012, total lending to the resident non-financial private-sector fell by 5.8%; credit to households fell by 3.7% while that to non-financial corporations decreased by 8%. When total credit to productive activities excluding construction, real estate development and financial services is considered, the decline was not as sharp, standing at 6%. Indeed, credit to productive activities excluding construction, real estate development and financial services was slightly positive in 2010, but has been negative in 2011, 2012 and in 2013 to date. In considering these developments it should evidently be borne in mind that credit for construction and real estate development activities had to shrink as the cyclical upturn ended and the excesses of the period 2004–2008 had to be corrected.
In addition, the Hong Kong Monetary Authority itself has the power to pass on information to foreign regulators to assist them in the exercise of their functions. At present, however, this power to disclose does not extend to information about individual customers, though this is an area which we are intending to review in the light of the recommendations of the Basle Committee. In the meantime, we do not impose constraints on access to customer information in the course of on-site examinations in Hong Kong by overseas regulators. What reservations I have about consolidated supervision therefore relate mainly to how the system operates in practice: first, it may of course be difficult in practice to assess the adequacy of consolidated supervision by a home supervisor and how much reliance should be placed on it by the host supervisor. As mentioned above, the Core Principles for Effective Banking Supervision will provide a useful checklist in this respect, but there will still be the problem of whether the Principles are being effectively implemented. A more active monitoring role by the International Monetary Fund may help in this respect.

In particular, the Hong Kong Monetary Authority, which I represent, has the legal powers, monetary instruments and financial resources - including $ 63 billion of foreign currency reserves - to fulfill its role as the central bank of Hong Kong and to maintain the value of the HK dollar. During the four years of its existence, the HKMA has built up a good working relationship with the People’s Bank of China which has made it clear in public that it will not take over the role of the Monetary Authority in Hong Kong after 1997. The separate role for Hong Kong after 1997 is underscored by its separate membership alongside China of international organizations such as the Bank for International Settlements and the Asian Development Bank, and its participation in the IMF’s New Arrangements to Borrow. BIS Review 55/1997  -2-  Of course, what matters is not what I say but what the market actually thinks. Judged by this criterion, there is genuine confidence about the future. This is shown by the consistent stability of the HK dollar; the strength of the stock market, though it has its ups and downs in line with expectations about US interest rates; the growth in HK dollar deposits of about 20% over the last year; and the decline in the margin of our 10-year Exchange Fund Notes over US Treasuries to around 50bp compared with 90bp at the end of 1996.
We have also published a working paper entitled: “Studies on the Validation of Internal Rating Systems” Although validation is foremost the responsibility of banks, supervisors must have a thorough understanding of validation in order to ensure the overall integrity of banks’ activities in this area. I think these principles set out clearly what supervisory expectations are, and should provide a useful guide to the industry. Our work on validation will accelerate over the coming months, although our focus will be more on sharing and cataloguing information and approaches, and not on trying to develop a prescriptive method. Close dialogue with the industry in our work will be of great importance. Let me finish by saying that we, the supervisory community, continue to devote significant resources and efforts to improving the consistency of cross-border implementation. Consequently, the excellent dialogue between supervisors, organisations such as the IIF, and the industry more broadly, must continue in the coming months and years ahead. I welcome the discussions that we have been having, both inside and outside this conference, and look forward to hearing more of your thoughts and perspectives. BIS Review 23/2005  3

A careful assessment needs to be made of the potential medium and longterm effects of the proposed reforms on market structures and behaviour. These considerations are equally relevant in the context of Islamic finance. The assessment on the aims and relevance of each of the proposed reform measures needs to take into account the two important considerations in Islamic finance; the need to support sustainable and responsible innovation, and secondly, to leverage on its inbuilt strengths that set Islamic finance apart in performing its role in supporting the efficient mobilisation and allocation of resources to generate real economic activities. Given the damaging effects of complexity and opacity associated with the recent unfettered innovative activities in the conventional financial markets, it has resulted in a reassessment of the role and benefits of financial innovation. In Islamic finance, innovation is key in pushing the frontier of market development to generate the range of products and services, processes and functions. The key lies in preserving the benefits of innovative initiatives and activities whilst ensuring that they do not result in negative externalities. In considering the relevance of the global regulatory reform to Islamic finance, there is therefore a need to consider the underlying elements that guide the process towards sustainable and more socially-responsible financial innovation. This comes in the forms of its strong paradigm in governance, disclosure and transparency, as well as its emphasis that innovations are anchored in the objectives of Shariah and thus are for the benefit of the people.
If the Committee on Finance or the foreign reviewers had considered the inflation target of 2 per cent to be inappropriate, it is reasonable to assume that this would have been communicated at some point over the twenty-five years or so the target has been in force. But this has not happened. Thus, elected representatives played a key role in the introduction of the target, they have always supported it, at least a majority of them, and there is nothing to  7 [17]  suggest that this is no longer the case. 9 As I see it, this is approximately the criterion for being able to call the inflation target “Sweden’s” inflation target. So it is not just the “Riksbank’s” target, even though it is of course the Riksbank’s task to try to attain it. Good target attainment in recent years With that, I will return to the debate on the monetary policy framework. The Riksbank has performed its task rather successfully in recent years. In terms of the target variable CPIF, inflation has been very close to 2 per cent over the past two years as well as during the first half of 2019, albeit with some help from an increase in energy prices. It is only in the most recent months that inflation has fallen back somewhat and it has done so largely as a result of a lower contribution from energy prices.

Gordon, Paul, Piotr Skolimowski and Craig Stirling (2019), “Lagarde’s ECB Toolkit Threatened as Subzero Skepticism Grows”, Bloomberg, 31 October. Jansson, Per (2016), “Time to scrap the inflation target?”, speech at Swedbank, Stockholm, 7 December. Jansson, Per (2017), “The ideological debate on monetary policy – lessons from developments in Sweden”, speech at Fores, Stockholm, 6 December. Jansson, Per (2018), “Monetary policy in less favourable times – what are the options?”, speech at Insurance Sweden, Stockholm, 4 December. Milne, Richard (2019), “Riksbank set to exit negative rates with December rise”, article in Financial Times, 24 October. 14 [17]  Orphanides, Athanasios and John C. Williams (2003), “Imperfect Knowledge, Inflation Expectations, and Monetary Policy”, NBER Working Paper No. w9884. Weiss, Ittay (2017), “Nothing matters: how the invention of zero helped create modern mathematics”, The Conversation, 20 September, https://theconversation.com/nothing-matters-how-the-invention-of-zero-helped-create-modernmathematics-84232  15 [17]  Figure 1. Inflation, 1350-2018 CPI, annual percentage change 300  300 CPI  200  200  100  100  0  0  -100 1350  1450  1550  1650  1750  1850  1950  -100  Source: The Riksbank  Figure 2. Share of employed persons in industry and mining and private service sector respectively Per cent  35  35 Private services Industry and mining  30  30  25  25  20  20  15  15  10  10  5  80  85  90  95  00  05  10  15  5  Note.
In my view, these should remain the priorities of economic policy if we intend the incipient recovery in our economy to strengthen and be sustainable over time. Thank you. 4  BIS central bankers’ speeches

Looking back, one can notice that a protracted period of rising food and energy prices have led to a significant over shooting of the inflation targets since the adoption of the inflation targeting regime. This has increased the stickiness in inflation expectations, as economic agents have become more backward looking. Under normal conditions, supply shocks are expected to alter relative prices rather than the underlying inflation trend. Nevertheless, the fact that several long lasting shocks appeared concurrently has increased the risks to the price setting behavior. Our revised projections incorporating the latest developments suggest that it will take a relatively long time for inflation to reach 4 percent level. Even more importantly, current inflation target no longer seems to serve as a nominal anchor in the short term. Inflation targeting regime is one of the monetary policy regimes and all regimes have their own rules and frameworks. Our main policy document published in December 2005 describes the framework of our inflation-targeting regime. 24th paragraph of that document states that: “A pre-announced inflation target shall only be changed in the event that very sharp and long-term deviations from the target are expected or medium-term targets no longer make sense due to factors beyond the control of monetary policy. At this point, a new target will be set with the government with respect to the Law.” The paragraph that I have just read completely defines the recent conditions and explains why we revised the inflation targets for 2009 and 2010.
At its meeting in June, the MPC voted to increase the stock of asset purchases by a further £ billion, to £ billion, with the programme expected to be completed around the turn of the year. 19  IMF (2020). 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  Through these policies, the Bank of England’s balance sheet has so far expanded by close to £ billion, with a further £ billion expected during the remainder of this year due to additional asset purchases and TFSME drawings.20 This would take the Bank’s balance sheet to around 45% of (2019) UK GDP by the year-end, more than double its previous high-water mark (Chart 16). It would take the Bank’s balance sheet to almost double its highest-ever previous level relative to the Government’s net debt stock (Chart 17). Chart 16: Bank of England balance sheet relative to GDP Per cent 50 Banknote convertibility to gold reinstated Banknote convertibility to gold suspended  South Sea bubble  Amalgamation of Treasury and Bank note issues  Covid-19 crisis Failure of Lehman Brothers  45 40 35 30 25  WW1  WW2  20 15 10 5 0  1700  1750  1800  1850  1900  1950  2000  Sources: Bank of England (available here), ONS and Bank calculations. Notes: Chart from Hauser (2020) but updated to reflect most recent MPC announcement of further asset purchases and TFSME.

The Norwegian State Finance Fund and the Norwegian State Bond Fund were established to bolster the supply of bank equity capital and loans to enterprises. In addition, the Storting allocated funds to central and local government authorities for maintenance and investment in order to support activity. 4  BIS Review 69/2010  Economic growth in Norway came to a halt in autumn 2008, and output fell in both the fourth quarter and the first quarter of 2009. Growth resumed from the second quarter. The substantial decrease in the key policy rate, combined with increased public spending and high oil investment has contributed to supporting activity. Capacity utilisation is nonetheless still lower than normal, although the downturn appears to have been mild so far. Without low key rates, inflation would have fallen too far. Unemployment rose less than we projected last year. Firms retained employees despite the fall in activity and many young people exited the labour force in favour of education. The mild downturn in Norway is also reflected in the wage settlements, which have provided for appreciably higher pay increases than among our trading partners. BIS Review 69/2010  5  In late spring last year, liquidity premiums in money and bond markets started to fall in Norway. As these markets began to normalise, the extraordinary measures could be phased out. Long-term loans were no longer provided after February 2009. After May, foreign exchange swap agreements were no longer provided. Spring 2009 saw the first signs that the covered bond market was beginning to function.
The Bank is working, together with other institutions, to make this happen. Thank you. ***  8  Figure 1 VIX and EMBI global  Commodity prices  (basis points)  (USD/lb; USD/barrel)  100  3.6  1,000  84 Oil (WTI-Brent) (right axis)  80  800 EMBI global (eje der.) 60  3.2  68  600 Cobre  2.8  40  400  20  200  52  2.4  36  VIX 0  2.0  0  20 01 18  06 08 10 12 14 16 18 20  07 Jul. 01 19  07 Jul. 01 20  Source: Bloomberg.

In itself, comparing the long-term forecasts with the inflation target would have justified raising the policy rate rather than leaving it unchanged. And subsequently some people have asked: Given the probability and arguments supporting such a decision, why wait? However, the Governors referred to the more benign short-term and long-term inflation outlook since the publication of the previous forecast [in July] and that in many important respects it seemed more positive than was considered likely then. Inflation developments were more favourable than expected. Wage rises and wage drift were also lower and housing market activity more subdued than had been projected. In addition, oil prices have been on the decrease and credit growth has slowed down. In view of these developments, although in many ways they involve only short-term changes in indicators that are known to be volatile, the Governors felt there was ample reason to wait, at least for the time being. A large amount of information will of course reach the Board of Governors before December 21. If the pointers continue in this direction, there may conceivably be no need to increase further what is already undeniably a tight monetary stance. On the other hand, if nothing of particular note is reported, the analysis at hand when the current interest rate decision was made will determine the decision on December 21 and a policy rate hike could be in the offing. As far as can be seen, there is reasonable consensus on the Central Bank’s decision among the main observers in Iceland and abroad.
Systemic stress-testing As financial markets evolve and new vulnerabilities are exposed, it becomes increasingly important that both market participants and the public authorities improve their understanding and assessment of threats to financial stability, and take steps, where appropriate, to contain and lower them. The Bank of England has been active in the development of models to identify and assess potential sources of major vulnerability to the UK financial system 2 and is, with the Financial Services Authority, engaged in a dialogue with practitioners, both to understand better current approaches to measuring risks under stressed conditions and to encourage improvements and the sharing of best practice in stress testing techniques. Recent distress in the US sub-prime lending market, and the collapse of the hedge fund, Amaranth, have exposed weaknesses in risk management, including in the management of contingent, or offbalance sheet, exposures. Although developments in the sub-prime market of course continue to unfold, the impact on conditions in broader financial markets has to date been relatively contained. But, in a more severe stress scenario, perhaps in a more significant market such as corporate credit, or one in which several areas of vulnerability were exposed in combination, the impact could have more serious consequences for the financial system. This highlights the potential value of a more rigorous assessment of tail-end risks. In particular, stresstests by financial institutions should attempt to incorporate the behavioural responses of other firms which may have a substantial impact on market conditions.

Another big myth about Bulgaria was the imminent “collapse” of our banking system (because of the “avalanche” of bad loans and the “dependence” on foreign banks which would have run away in panic and withdrawn their capital from Bulgaria). None of all these apocalyptic prophecies has happened. Our banking system kept sizable buffers and demonstrated impressive for the whole EU ratios of capital adequacy and liquidity. Given the high level of domestic depositors’ trust (only in one year, until March, total deposits increased by over BGN 5 billion), the dependence on foreign sources of funding diminished considerably – at end-March less than 13% of total attracted resources comes from parent banks abroad, as opposed to nearly 1/4 at end-2008. Ultimately, unlike some of the more advanced economies, no bank in Bulgaria needed to be rescued. And the very frequent headlines about “bad” loans do not reveal the true picture in Bulgaria as compared with the other economies in the EU. The reason is that the legal framework, financial reporting standards and regulatory practices in the various countries are rarely the same, and this seriously hampers any comparisons across countries (as an example, some countries directly write off and keep off-balance sheet a large part of their non-performing loans).