samchain/econo-pairs-v1 huggingface dataset:
China alone has been responsible for a third of the growth in global oil demand over the past four years. Meanwhile supply has struggled to keep pace – partly because of policy decisions by oil producing economies, but partly because it takes quite a long time for investment in extra production capacity to come on stream. What are the risks that oil prices will stay around their current level for a time – and maybe go even higher? It’s hard to say – but the market is not discounting the possibility of even higher oil prices. Options prices point to an increase in near-term uncertainty – and an increasing concern about further large price rises. 3  Using US consumer expenditure deflator to adjust for inflation. BIS Review 136/2007  3  There are risks on the downside too: the last time the world economy slowed significantly, oil prices slumped. Could a slowdown in the world economy cause oil prices to collapse again? Projections for the growth in oil demand over 2007 and 2008 have been revised downwards a little recently. But much may depend on the pattern of any slowdown – and in particular whether China continues to expand strongly even as the US economy slows. What’s the likely impact of higher oil prices on the UK economy? Twenty or thirty years ago, sharp increases in energy prices coincided with much higher inflation and much lower growth.

I am not advocating for a vast expansion of the role of the compliance function. It is tempting to think that vesting compliance officers with greater and greater authority over business will lead to better outcomes—at least in terms of the safety and soundness of the financial institution. But, I am very sensitive to the risk that as compliance becomes more involved in business decisions, it loses its independence. That independence is critical to effective governance and, ultimately, to the safety and soundness of an institution. What’s more, there is some point at which compliance becomes an end in itself, detracting from broader corporate and social purposes. I will return to this thought later. Here is my point: Most if not all firms could use greater clarity about who is responsible for what within their organization. I offer this observation based, in part, on the compliance enhancements required in many Federal Reserve enforcement actions. Many compliance professionals have a very clear understanding of their own role—in terms of both duties and limitations—and strive to maintain their independence. I am less confident about the degree to which others in an institution are aware of what the role of compliance is, and what it is not. A shared understanding between business and compliance about this is critical. A misunderstanding of roles can lead to confusion of responsibility (or diffusion of responsibility), laying the groundwork for control failures. Let me explain how confusion about rules might play out.
One can thus imagine that part of the explanation as to why an alternative repo rate scenario may give a smaller mean squared gap than the main scenario could be that it is only a purely model-based adjustment of the main scenario. This raises another question: If one were also to supplement the alternative repo rate paths with personal judgements, would one always conclude that the main scenario would give the lowest loss? The answer to this question should reasonably be “yes, at least most of the time” – there are some reservations, which I will discuss in a moment. We try to conduct the policy we judge to be the best or “best balanced” and if we judged that another repo rate path than that in the main scenario would give a better outcome, we would of course choose that one instead. This should be visible in the mean squared gap analysis, that is, there should not be alternative repo rate paths that give a dot that lies south-west of the main scenario. Consideration to developments beyond the forecast horizon and risks There may also be other reasons why the main scenario does not necessarily provide smaller mean squared deviations than an alternative repo rate scenario. One is that the calculations are based on forecasts that extend no further than three years ahead. But there may sometimes be reason to consider what might happen beyond this time horizon, even if this is difficult to capture in a normal quantitative forecast.

This correction is the result, in particular, of the less favourable economic outlook for Europe compared with the last assessment. For 2011 it is marginally higher, due mainly to a higher price for oil. Assuming an unchanged three-month Libor of 0.25%, average inflation for 2010 is expected to amount to 0.7%, for 2011 to 0.4% and for 2012 to 1.0%. The conditional inflation forecast shows that there is no threat to price stability in the short term. However, the rising path in 2012 and 2013 shows that the current expansionary monetary policy cannot be maintained over the entire forecast horizon without compromising long-term price stability. The inflation forecast is still associated with a very high level of uncertainty. Global economic outlook  I would now like to take a closer look at the economic situation and at monetary conditions. Overall, the recovery in the global economy continued, encouraged by expansionary economic policies and vigorous economic activity in the emerging economies. In the euro area, however, growth slowed markedly in the third quarter. The favourable developments in Germany’s economy differ from those in the peripheral countries of the euro area, with their weak growth. The recent financial market turmoil is likely to hamper activity in the euro area. Although domestic demand is gradually firming up in the US, the momentum is insufficient for a sustainable reduction in unemployment, which remains high. In addition, construction investment is suffering from the situation on the real estate market. Consequently, GDP growth in the US will remain modest.
It is also possible that, in addition to the distribution  8  of the costs and benefits of the reserves, which is built into the current regulatory framework for the financial interactions between the Treasury and the Central Bank, ways could be found for banks and even other financial institutions to participate in the cost of financing the reserves, as these institutions enjoy the benefits of them, including better credit ratings and lower foreign financing costs. The worst that we could do in this context would be to sacrifice the long-term benefits of price stability and economic equilibrium in order to increase the Central Bank’s profits in the short-term. The monetary policy framework I would now like to turn to two related topics: the pros and cons of independent monetary policy, on the one hand, and possible changes to the monetary policy framework and implementation, on the other. I must be brief because the clock is ticking, but I am more than willing to answer questions about this and other points later on. “Is independent monetary policy too costly?” is the topic of this meeting. Presumably, the question implied is whether the benefits of such monetary policy are outweighed by the costs. To my mind, this question can hardly be answered without reference to the various options available because we must have some sort of currency regime, and all of them have pros and cons. If there is a currency union, it is the monetary policy of the union’s central bank that carries the day.

This will depend on developments, including exchange rate developments and the stance of other economic policies. In addition, nominal interest rates could change in response to developments in inflation and inflation expectations. Under current conditions, however, it must be borne in mind that the economy is not in balance but in the boom part of the cycle. Furthermore, the contribution from other economic policies is uncertain at the moment because a new Government has yet to be formed after the Parliamentary elections and next year’s fiscal budget proposal has yet to be presented. Moreover, it is too early to say what the impact of capital account liberalisation is. One thing is certain, however: if steep interest rate cuts are made without being warranted by economic conditions, it is clear that the real rate would decline for a while. But because credibility would undoubtedly suffer as a result of poorly grounded measures of this type, it would have to rise again, to a higher level than before, and for a longer period than would otherwise have been needed to bring inflation and inflation expectations back down to target. Is it a lost cause, then, that Iceland’s interest rates might with time become similar to those in trading partner countries? Not at all. First, we must hope, for their sake, that neighbouring countries will not need to  6  maintain such abnormally low interest rates for the long term.
And, once the capital outflow had started, adjustment needed to be more abrupt than might otherwise have been necessary, in order to re-establish confidence. But there are real dangers in extreme market movements or in excessively severe macro-economic adjustment to contain them. That could cause a vicious circle of domestic default and systemic financial weakness in the affected country. And it would have seriously adverse implications - in terms of both financial and economic knock-on-effects - for the global economy. That, essentially, is why it is in the self-interest of the international community to attempt to mitigate the market and macro-economic adjustment pressures in Asia by providing financial support. It is why the international community responded to the crisis in Asia by promptly offering very large amounts of official assistance - $ billion in the case of Thailand, $ billion for Indonesia and $ billion for South Korea. But such official financial help cannot be unlimited and it cannot be provided without strings. It, too, has real dangers. If it were too readily forthcoming it could encourage “moral hazard”, partly by encouraging macro-economic laxity in other potential borrowing countries, but especially by encouraging commercial lenders - particularly foreign currency creditors - in the belief that they will be bailed out if things go wrong. That would be likely to add to the problem of potentially volatile capital inflows next time around.

The Basel Committee has been criticised by those who claim that introducing the leverage ratio creates a regulation that favours risk taking, as the measure deals with the banks in the same way irrespective of the risks they take. However, the leverage ratio is intended to 2  BIS central bankers’ speeches  complement the risk-based capital measure and to act as extra protection to ensure that the level of capital at the banks does not fall too low. It can, for example, limit how much the capital can fall in relation to the bank’s total assets if the models the banks use to calculate risk weights fail to capture risk to a sufficient extent and the risk weights therefore become too low. As yet, the Basel Committee’s agreement on the leverage ratio does not specify any quantitative requirements. However, from the beginning of next year, large banks all over the world will need to publish their leverage ratios. The idea is that the Basel Committee will monitor developments when the banks begin to report their leverage ratios with a view to migrating to a minimum requirement from 2018. However, in most cases the risk-based capital requirement will continue to be the binding capital requirement, and not the leverage ratio. However, the opposite may of course apply in some cases. This is also reasonable because, when all is said and done, a requirement that can never be considered binding is not particularly meaningful.
Let me also remind you of the political troubles that are observed in some countries in the Middle East and North Africa. The factors I have noted are factors that have added to the uncertainty for the outlook for inflation and growth worldwide and in the euro area. Let me also point out the following. Once again, we are observing an increase in food and energy and other commodity prices. This is adding to the risk of upward pressures of inflation. At the same time, it is a dampener on growth. These are real factors that I believe have raised the uncertainty for the outlook both for inflation and for growth. Q. How do you see the inflation and growth outlook? We constantly monitor developments in the outlook for growth and inflation. Our mandate is to maintain price stability over the medium term. We always try to balance the upside and downside risks of deviating from our mandate, so with new developments we always revaluate the situation. The developments since the March projection staff exercise give me reason to believe that the near-term pressures on inflation are elevated. In the near-term, the risks are to the upside. That said, we continue to observe that longer-term inflation expectations remain well anchored. I do not think we have evidence of inflation pressures persisting beyond the near term. Over the longer term I see price stability being maintained in line with our mandate.

Do you believe Greece can manage without restructuring its debt, and how likely is it able to do without one? Let me first point out that I am saddened by the fact that this public discussion and market speculation is taking place because it is quite damaging to the euro area overall. As you know the Greek government at the moment is implementing a tough but appropriate programme of reform for the Greek economy. This programme was evaluated by the IMF and the European Commission, in liaison with the ECB. This evaluation has determined that the debt-deficit dynamics of Greece are indeed sustainable, as long as the programme is being successfully implemented. With this in mind, I am puzzled by the continuing questioning of the sustainability of the Greek debt. In my mind, restructuring of the Greek debt is not necessary as long as Greece continues to implement the programme that is in place. But more importantly, I believe that a restructuring of the Greek debt would be unwise. Under the circumstances, restructuring would be quite damaging to the Greek economy. In addition I believe it would be quite damaging to the euro area overall because of the possibility of contagion effects. Since restructuring is both undesirable and unnecessary I believe that it is not helpful for officials in the EU to keep bringing it up. Q. Even though officials continue saying that restructuring is undesirable, this does not appear to have convinced the markets.
Technology-driven innovation in the financial sector has a long history ranging from the development of double-entry book keeping, to the establishment of modern payment systems, and the more recent introduction of complex asset markets and retail financial products. Thus it seems that the emergence of fintech is only the latest wave of innovation to affect the financial industry. Then, why is fintech getting increased focus nowadays? In fact, in the last decade, a radical change has occurred in the way in which technology is used leading to proliferation of new financial products offered outside the banking system, which has brought significant competitive pressure on banks as traditional players, and created environment in which disruption can happen extremely quickly, thus urging traditional players to adjust faster to maintain market share. There are a couple of other factors that have contributed to proliferation of financial innovation besides the advancement in technology itself. Changing consumer behaviour, especially by trendy millennials, is by far the biggest driver, on the demand side. They want to engage in their own way with financial services providers, who must respond to changing demands, or risk being disrupted by entrepreneurial innovators. In a recent global study, the World Bank reported that COVID-19 is accelerating change across the board on how people interact with financial services.

Our assessments on economic outlook suggest a continuation of economic growth for the rest of the year. Foreign demand and public sector demand continue to provide positive contribution to aggregate demand upsurge, although more moderately than a year earlier. Private sector demand remains an important factor to determine economic growth in the future. Fiscal consolidation measures and the unfavourable situation in global markets and our trade partners will shift the short-term focus of economic growth to the internal demand: private consumption and investments. The capacity of these aggregates to compensate for the slowdown of the two main promoters of the insofar growth, will condition Albania’s economy performance over the upcoming 2–3 quarters. In the longer run, the performance of the Albanian economy shall be determined by its competitiveness and productivity as well as expansion of Albanian goods and services in foreign markets. This requires intensification of structural reforms at macroand microeconomic level as well as financial and macroeconomic stability in the country. *** Taking into account the information set out above, the Supervisory Council of the Bank of Albania deemed that inflationary pressures are downward and remain controlled in the medium run. Developments in the Albanian economy will continue to generate weak inflationary pressures, as a result of the negative output gap action. On the other hand, pressures generated by developments in global economy are expected to be downward. Economic agents inflation expectations remain anchored around the Bank of Albania target.
In particular, regional arrangements, such as the Chiang Mai Initiative, if correctly designed and disciplined, can be an important supplement to the existing IMF facilities. 2  BIS Review 24/2006  For those of you not familiar with East Asia, the Chiang Mai Initiative, or CMI, was set up in the aftermath of the Asian financial crisis in the year 2000 as a regional arrangement of the ten ASEAN member countries plus Japan, China and Korea. The Initiative comprises a process of economic and financial surveillance at governmental level and a voluntary financing arrangement in terms of a network of bilateral swaps, which now amounts to US $ 55.5 billion. Twenty percent of the agreed bilateral swaps can be drawn to meet emergency liquidity needs unrelated to an IMF program. The CMI is now under review, with a view of making it more useful and more relevant to the needs of the region in the longer-term. I see regional arrangements, such as CMI, as an important regional financial architecture that complements and supports the Fund’s works on crisis prevention and resolution. First, in addition to IMF surveillance, the surveillance undertaken under CMI provides a new dimension of peer review that draws on regional knowledge and expertise in the surveillance process. Second, the drawdown of the bilateral swaps under the first tranche provides an important liquidity support facility.

The first point is how the Fund can improve its surveillance by focusing on how best to reduce the likelihood of crises in emerging markets, in particular, how to help emerging markets better cope with the challenge of the next crisis. The second is our view that the Fund’s surveillance and its works on crisis resolution should recognize the usefulness of national and regional self-insurance efforts that are being pursued by a growing number of countries. And the third is our suggestion that the Fund’s works on crisis prevention and crisis resolution can benefit from a clear separation of these two functions in terms of duties, responsibilities, and decisionmaking, so as to achieve greater effectiveness and accountability. To begin, the consensus seems to be that the Fund has not been doing a good-enough job on crisis prevention and crisis resolution. This is evidenced by a string of financial crises in emerging markets that had happened, which does not reflect well on the Fund’s surveillance mechanism. In addition, dissatisfactions were expressed in the Fund’s perceived lack of consistency and coherence in its approach to crisis resolution, in the shortcomings of its program design and conditionality, and most importantly, in the way political pressure from the major economies were allowed to influence the program content and decisions. In the Thai case, our own experience with IMF involvement was not dissimilar.
And that counts, both when it comes to organising the debate between nine experts, and when it comes to explaining the basis of policy to a non expert public. But forecasts are highly fallible, so our forecast centred approach to inflation targeting has gone hand in hand with a determined effort to illustrate the wide range of uncertainties around any central projection and a systematic attempt to factor the Committee’s own judgements about the risks into decision taking. That, for me, is a key reason for resisting recent calls by the IMF and others for the Bank to ‘publish numerical projections for a broader range of key variables’. Detail is seductive – but it can also be highly misleading, and a committee that spent its time debating the details of the forecast rather than using it as a tool to address big picture issues would be at risk of losing its way. Forecasts are indispensable – but they should be handled with care. 10  BIS Review 17/2005  Table 2. Interest rate surprises  A. Are rates changes evenly spread over the months of the year? Rate changes IR months non-IR months Whole period 1997-2000 2001-present  15 6 9  14 10 4  B. Are rates changes expected to be spread evenly over the months of the year?

But in an uncertain world, France appears as a rather stable country, seen from the resilience of its economy, the strength of its financial sector, as well as the solidity of its political institutions. 3/3  BIS central bankers' speeches