samchain/econo-pairs-v1 huggingface dataset:
The credit for this clear paradigm shift, elevating our economy into new heights, goes to our development strategy articulated under the “Mahinda Chintana: Vision for the Future”, which was first introduced in 2005 and then redesigned in 2010, aligning strategies to overcome the challenges in the post-conflict economy. Our dream of transforming Sri Lanka into the “Wonder of Asia” is an important topic that is being broadly discussed among the academia, international agencies and many Heads of Governments. Ladies and gentlemen, I hope most of you can remember our 60th Anniversary Oration Series held in 2010. There, one of the eminent speakers was Dr. Ngozi Okongo-Iweala, then Managing Director of the World Bank and former Finance Minister of Nigeria. She spoke on the topic “Becoming the Wonder of Asia: Accelerating the Inclusive Growth in Sri Lanka”. She had carefully studied the development plan of the Government, the “Mahinda Chintana: Vision for the Future” released in 2010, prepared just one year after the ending of the civil conflict. She was highly impressed about our development plan and explained the actions needed to make our vision a reality. She said, I quote, “It’s bold and ambitious. It’s good to be ambitious. It is the right time for Sri Lanka to think big”. She further said, “The vision is very clear and reminds us of a Japanese proverb ‘A vision without action is a day dream; action without a vision is a nightmare’”.

As we strive to reach these new milestones, our current macroeconomic indicators are bound to undergo a massive transformation. As a part of this transformation, the greater challenge would be to make Sri Lanka a popular, emerging financial centre in the region, where setting up a financial hub in Sri Lanka would be a key task. To strengthen and expand the dynamism, the financial sector will have to possess technology-leveraged financial services to improve operational efficiency while diversifying funding sources by tapping the international capital markets to mitigate risks and improve cost efficiency. Further, expanding delivery channels and business networks beyond domestic territories, enabling them to grow and exploit opportunities while addressing external vulnerabilities and spillovers are also essential. Meanwhile, a stronger capital base, a high quality pool of human capital and a high level of corporate governance to meet the enhanced regulatory framework are required in the financial system to steer the country towards attaining a sustained growth. To facilitate accomplishing this task, it was identified that the financial sector of the country has to be strengthened and stabilised further by implementing an appropriate set of policies in a timely manner. Reason 2: Necessity of maintaining stability in the local financial system amidst the growing complexity in the global financial system Ladies and gentlemen, we all accept that a stable financial system is a crucial element for a conducive business environment supportive of sustained economic growth.
In all these occasions, once the asset prices reversed down, there was an abrupt relaxation of the monetary policy. 2 This implicit insurance, popularly known as the Greenspan put, certainly makes the creation of bubbles more likely. This strategy, which worked in some earlier episodes, failed miserably during the biggest collapse in decades. A monetary policy strategy that used to provide insurance to speculation in episodes of limited financial turbulence proved incapable of confronting a financial crisis of systemic proportions. This strategy to deal with bubbles is a prescription derived not from inflation targeting, but from a need to insure financial stability. In my view, financial stability must be addressed first with appropriate regulation of the financial system that limits the excesses we saw before the crisis. There may be situations in which it might be appropriate to deviate transitorily from an inflation targeting regime in order to ensure financial stability, but this must be an exception, which in normal times should not arise. I think a first lesson for the conduct of monetary policy is to avoid providing insurance to speculators, which creates enormous moral hazard problems. In emerging countries we have lived this, with much milder consequences, when we attempted to manage exchange rates disconnected from fundamentals for a prolonged period of time. Therefore, an examination of monetary policy and financial dislocations around the world suggests that the culprit of the current crisis was related more closely with the functioning of financial systems than with monetary policy.

José De Gregorio: Monetary policy and financial stability – an emerging markets perspective Presentation by Mr José De Gregorio, Governor of the Central Bank of Chile, at the Brookings Institution, Washington DC, 17 September 2009. *  *  *  It is a pleasure to participate in this meeting and to speak about the lessons for monetary policy the current crisis is teaching us. The big difference between the current crisis with previous ones in emerging economies is that this time “it was not our fault.” The evidence on the performance of emerging countries facing an unprecedented global downturn shows that some lessons have been properly learned. Today I would like to concentrate on inflation targets, especially in the context of strongly rising and strongly falling commodity prices, financial stability and exchange rate fluctuations. Many of the issues I will be discussing today I have covered in recent presentations elsewhere. Indeed, there is not much new material, but I think those are important issues in conducting monetary policy in emerging countries. 1. The causes of the crisis: was it monetary policy or was it financial fragility? The argument blaming monetary policy for the current crisis claims that low interest rates combined with large current account surpluses in emerging economies, particularly Asian and oil-exporting ones, created an abundance of liquidity that triggered excessive increases in asset prices (bubbles). This was particularly acute in the housing market. When the bubble burst, the crisis erupted.
Bulgaria remained one of the few EU member states, where not a single credit institution needed to be rescued with taxpayers’ money. Banks in this country not only could never be blamed for the economic downturn and have not been a source of systemic risks but just the opposite – they continue to be one of the main pillars of the macroeconomic and financial stability in the country. As a logical outcome, the stability of the banks in Bulgaria has won the confidence of domestic depositors – by the end of February the deposits of households increased year on year by 13.2%. Owing to this, an important structural trend is noticeably confirmed – gradually and with no significant upward pressure on the interest rates on deposits, the dependence on attracted resources from external sources has been reduced to an acceptable minimum. For example, at the end of February around 12% of total attracted resources were from foreign parent banks, compared to almost one fourth at the end of 2008). When we look back we realise that the current state of the banking system in Bulgaria is largely due to what was done over the years immediately preceding the global crisis. Instilling a prudent behaviour in the banks in that period through BNB’s conservative and anti-cyclical supervisory policies, regardless of the pursuit of market shares and profits, equipped the banks for the ensuing crisis with solid liquid and capital buffers.

Because you are well aware that the BNB makes no compromises with safety. The President of the Republic of Bulgaria is present today, so I am tempted to take advantage and draw the attention of the responsible State institutions to some significant gaps in the commercial legislation. Legal and subjective obstacles get in the way of reducing the share of non-performing loans. Bulgaria is no exception among the countries of Central and Eastern Europe where the winding-up and insolvency proceedings, as well as the sale of the collateral, are relatively more sluggish. Regretfully, in Bulgaria the cases of unethical debtors taking advantage of some weaknesses of the existing insolvency proceedings, which allow them to manipulate the initial date of insolvency and nullify the pieces of collateral  BIS central bankers’ speeches  3  pledged after that date, are becoming more and more frequent. The problems with the insolvency and winding-up court proceedings in the corporate sector inhibit the rehabilitation of banks’ books (i.e. that part of banks’ balance sheet assets which has been hit the hardest during the crisis). This prolongs the procedures and increases the costs for managing the so-called “bad loans”, which negatively affects banks’ capacity to take new credit risk at an acceptable cost. Hampering the lending processes in turn impedes the economic growth in the country, and hence – employment and people’s living standards.
The Fed System is comprised of the Board of Governors in Washington, D.C. – a federal agency currently led by Chairman Ben Bernanke – plus 12 regional Reserve Banks that span the country. For example, the district overseen by the New York Fed includes all of New York, the 12 northern counties of New Jersey; Fairfield County, Connecticut; Puerto Rico and the U.S. Virgin Islands. Each Reserve Bank is distinct, with its own charter and a board of directors drawn from its district, but overseen by the Board of Governors. The law that created the Federal Reserve made the central bank independent so that policymakers could make decisions about monetary policy – such as whether to adjust interest rates – in the national interest, somewhat insulated from political pressure. However, the Fed is accountable to Congress. Congress has set an explicit objective for monetary policy: To pursue the highest level of employment consistent with price stability. This objective is often referred to as our “dual  BIS central bankers’ speeches  1  mandate,” because it combines two goals: high employment, and low and stable inflation. In order to promote these objectives, we also pay close attention to financial stability, because without financial stability, it is very hard to achieve our goals for jobs and inflation. The Federal Open Market Committee consists of the Board of Governors plus the presidents of each of the 12 district Banks.

For many families, this distress was compounded by losses of wealth from declining home prices. Since that low point of employment, job creation has resumed, albeit at a slower pace than we would like, and unemployment has retreated by a percentage point. As in other parts of the country, employment in our region declined substantially during the recession. But, the various parts of our region had very different experiences. Employment in much of New York State, including the Hudson Valley, declined less severely than the nation. Both the state and city lost about 3.8 percent of their jobs. Part of the reason for the more moderate decline in jobs in New York during the recession was a less pronounced boom-bust housing cycle. Indeed, as a percentage, the city and state lost fewer jobs during this recession than they did during either of the last two downturns. Now, as in the nation, a labor market recovery has begun across much of the region. Over the past year, New York State has added roughly 100,000 private-sector jobs. Within the state, the recovery has been somewhat uneven. New York City has been gaining jobs for  4  BIS central bankers’ speeches  more than a year now – at roughly the same pace as the nation, while to date, the Hudson Valley has seen little overall job growth. Conditions in the Hudson Valley Continuing to drill down geographically, let me talk in more detail about conditions here the mid-Hudson Valley.
And we can see this clearly when we study developments adjusted for absence due to sickness (Figure 8). Here we can see that the average working hours have shown a declining tendency even when adjusted for people who have not worked due to illness. Compared with the period 1994-1995, average working hours have declined by around 3 percentage points and the negative tendency is particularly strong after 1999. Moreover, the other curve in my diagram - for the number of employed shows that the growth in working hours last year was curbed by a lower increase in employment. This was in turn a result of the economic slowdown no longer affecting just manufacturing, but also the services sector. The decline in working hours appears to depend on three main factors, apart from increased absence due to illness. The first factor is an increase in other types of absence than illness, e.g. holidays or looking after sick children. The second is a decline in the amount of overtime worked and a reduction in the working hours agreed between employers and employees. The third factor is a shift where more people choose to move over from full-time to part-time work. The relative significance of structural and economic factors in this context is again difficult to assess. There are many indications that variations in overtime are particularly affected by economic activity. Although it is more difficult to determine how this relates to the other factors.

Some analysts in other countries have claimed that the market has already downgraded its ratings for the Icelandic banks some way below those issued by international ratings agencies. They claim that the ratings agencies cannot avoid moving into line with these market perceptions sooner or later. In a recent interview with [business paper] Viðskiptablaðið, I mentioned that if the financial institutions act appropriately, the outcome could turn out much more favourable for them. Once all the explanations have been made and the reforms are finished or close to completion, the market will be more likely to move into line with the rating agencies’ outlook, and not vice versa. Since then, Standard & Poor’s has issued sound ratings for Glitnir. Secondary market terms for Icelandic bonds improved as a result. The ratings companies have better knowledge of the Icelandic economy and financial sector that most other institutions that discuss them. I have mentioned a number of issues here which Icelandic financial companies cannot avoid addressing. But in this respect we must not just preach to the banks. We need to take a critical look at ourselves and the other regulatory and supervisory agencies, monitor compliance with regulations and create a solid framework for the financial sector. It must be ensured that the institutions involved in these tasks can compete for capable staff who can soon tackle delicate issues and enjoy the confidence and respect of the markets.
The sizeable purchases of foreign securities by Swedish investors have a similar effect; recently, these purchases have mirrored the opportunities provided by the new pension system. Flows that are comparatively small in this context have also been occasioned by the repayment of government external debt. At the same time, purchases of kronor have presumably decreased in that export receipts have fallen significantly for a number of large companies this year and big concerns have increased their cash holdings in foreign currency accounts. Moreover, in recent years increased unrest in the international financial markets has tended to hit the Swedish krona; this was particularly evident during the financial crisis in autumn 1998. It seems to be a consequence of a generally heightened aversion to risk in the major financial centres, such as New York and London. Money is then withdrawn from countries whose currencies and economies took a beating in similar situations in the past; since the crisis in the early 1990s Sweden is unfortunately included in this category even though the current macroeconomic situation does not warrant this. Finally, the generally stronger dollar should be mentioned as a partial explanation for the weak krona. Many economists consider that according to conventional theory the dollar’s strength is inexplicable and the dollar is markedly over-valued. In this situation the Swedish krona, like most other currencies in the OECD area, has depreciated against the dollar. One problem with explanations of this kind is that they come and go. It is also easy to show that they lack universal validity.

The central banks that target inflation can be said to have three main approaches. •  One alternative is to assume that the exchange rate will be unchanged during the forecast period, quite simply to adopt a cut-off rate. This, however, raises a number of problems. As exchange rates are liable to shift rather rapidly and the assumed rate is of considerable importance for the forecast rate of inflation, this approach may entail sudden changes in the assessment of inflation and thereby in the repo rate. Another problem is the risk of being trapped in a game situation with the market. So there are sound reasons for not resorting to a more short-term pattern of reactions. Sooner or later, other central banks have generally come to the same conclusion. •  Another alternative is to base an exchange rate forecast on market pricing or other assessments of market expectations. This approach, which is used by a number of central banks, reduces but does not eliminate the risks associated with rapid fluctuations and speculation. Another problem here is that the picture of expectations is liable to vary with how they are measured. On the other hand, this approach has the advantage of presumably being most credible in the eyes of market players; it is, after all, based on their assessments! •  The Riksbank has chosen a third alternative, which is to make an independent assessment. Here the initial position - the cut-off rate - is naturally one important component and so are the market’s expectations.
As the e-krona is something new, it will take time to analyse and perhaps develop such an alternative. This work must therefore be initiated in  The Riksbank sent out a consultation over joining TIPS on 5 June 2018. See Consultation on instant payments and the Riksbank's role in the payment infrastructure. www.riksbank.se. 4  2 [8]  good time, before cash usage has declined to such a point that cash is no longer a generally accepted means of payment in Sweden. The Riksbank's e-krona project: results and the way forward In my speech, I introduced the discussion of the e-krona by asking whether the Riksbank should adapt the money we issue to the modern, digital economy. I emphasised then that the e-krona should be seen as a complement to cash, which was in the process of becoming marginalised. I also pointed out the need of working in parallel in three areas: investigating the technical possibilities, analysing the consequences for, among other things, monetary policy, and reviewing the legal issues to which a possible e-krona would give rise. After two years, I can say that we have come quite far within all of these areas, but also that we still have some way to go until we reach our goal. We have discovered that it would be possible to develop an e-krona using existing technology, but we will have to start constructing and testing a finished product to learn more and to establish different alternatives for the Riksbank in the future.

Unlike Norway and Denmark, Sweden has no card network of its own. At the same time, new technology is leading to new, convenient ways of paying becoming available, such as the mobile application Swish, for example. In Sweden, 6.5 million of 10 million inhabitants are connected to Swish. As the rest of society becomes digitalised, demand is increasing for digital payments and, above all, for rapid payments that can be made in real time. For the Riksbank, this means adjusting or complementing the RIX system so that it is able to manage instant payments in a secure and efficient manner. It is important to ensure that all participants involved in payments act under equal and equitable rules. At the moment, we are busy analysing whether we can take advantage of our European cooperation by joining the European Central Bank’s system for instant payments. 4 We are aware, however, that this would mean that part of our infrastructure for payments would thereby end up outside Sweden’s borders and are thus mulling over whether some kind of domestic back-up would be needed and over how the ekrona could be paired with this as a complementary means of payment. This is particularly important as we expect instant payments to become increasingly important in the future. The trend towards a cashless society has also continued – a trend that risks leaving Sweden without functioning cash in the near future. My speech two years ago was part of a proactive strategy to create different alternative courses of action from this trend.
What I suggest is a slight evolution in our analysis – the data mix – and in our implementation – the instrument mix. Page 8 sur 9 On the data mix, the Governing Council already has to ensure its decisions comply with the proportionality principle and so has to consider the side effects of its policy actions. However, it does pose a more difficult analytical challenge: financial stability, unlike price stability, is not easily summarised by one statistic (inflation in the case of price stability), so we need in any case to look at a range of indicators. To respond to this challenge I believe we should broaden the current monetary second pillar into a monetary and financial pillar. This second pillar would be responsible for deepening research into the origins of the financial cycle. More specifically, let me mention a few examples of variables that could be monitored under this new pillar: -  Indebtedness of firms and households;  -  Bank balance sheet information, which is useful for assessing the functioning of the bank lending channel (including in a forward-looking way);  -  Indicators of excess risk tolerance and excess credit, which provide information on the risk-taking channel;  -  Stock and house prices, which provide information on the asset price channel. On implementation and the “instrument mix”, we now have quite an arsenal of unconventional policy instruments. With multiple monetary policy instruments, we now have a set of combinations that can deliver the required stance with respect to inflation.

From the perspective of developed countries, the main risk arises from the possibility the prolonged very low inflation, or the occurrence of deflation, to produce  BIS central bankers’ speeches  3  significant negative effects on the economic activity and public debt sustainability. This risk is particularly pronounced in the euro zone, where the longer underperformance of inflation in comparison with the target would cause a decline in longer-term inflation expectations, which in the absence of room for loosening the monetary policy would lead to higher real interest rates and consequently, to lower economic activity. In the medium run, the risks to the global economy arise from the possibility of lower potential growth of developed economies and developing countries, as well as the possibility of prolonged economic stagnation of the developed countries (the so-called secular stagnation). The risk of secular stagnation is particularly pronounced for the countries of the euro zone, where the constantly low domestic demand due to lower investment and higher private savings would have negative effects on economic growth and productivity in the long run. Yet, the challenges for growth in the forthcoming period are not related only to the external environment. Namely, this is a period in which it appears that the room provided by the macroeconomic policies for supporting further growth is largely exhausted. Macroeconomic policies have played a key role in the post-crisis economic recovery, but they require gradual consolidation in order to prevent the emergence of imbalances in the economy.