samchain/econo-pairs-v1 huggingface dataset:
With output some 10% lower than it would have been if pre-crisis growth rates had been maintained, it would appear that the margin of spare capacity ought to be large. But the evidence from past sharp downturns after banking crises is that they can have a significant impact on the economy’s supply potential (Chart 8). Downturns typically lead to less investment, more capital scrapping, fewer business start-ups and more business closures and a restriction in the availability of credit is likely to aggravate these effects. Moreover, lower employment can lead to skills atrophying and the long-term unemployed becoming disconnected from the labour market. Business investment has fallen sharply in this recession – down more than a quarter from its peak – though only part of that is likely to reflect a restriction in the availability of credit. Heightened uncertainty is also likely to have played a part. But against that, both business closures and, as noted earlier, unemployment have risen less than feared. So the overall impact of the downturn on the present and future supply potential of the economy is rather uncertain. In addition, in present circumstances the extent of the downward pressure on inflation from spare capacity is also uncertain. Once one allows for the effect of transient factors such as the restoration of the VAT rate, oil price movements and the likely impact of sterling’s depreciation, underlying inflation has been surprisingly resilient. That could be because the impairment of effective supply as a result of the credit crunch is large.

It is clear, however, that the ambitions of most countries still fall short of the requirements in the Stability and Growth Pact. This is certainly attributable in part to the economic slowdown, with Italy as the clearest example. But it is also notable that the ambitions for budget consolidation are now lower than before the move to Stage Three. The relatively good growth during 1998 ought to have left room for budget consolidation in many countries but it was not used and in certain countries the structural deficit has actually increased. The Ecofin Council has in fact criticised a number of countries, including Germany, France, Austria and the Netherlands, for the low level of ambitions in their stability programmes. In Sweden, the budget position looks comparatively healthy. Our fiscal policy is likewise less restrictive than before but the structural deficit has been turned into a surplus that is now growing and the ambition is still to achieve a budget surplus of 2 per cent of GDP on average over the business cycle. At the same time it should be underscored that some variation in the objective across countries seems reasonable. The degree of fiscal readiness — and thus the requisite size of the surplus — depends on a number of factors. One is the cyclical sensitivity of government finances and another is the level of government debt. It is then reasonable that a country like Sweden has a larger public sector financial surplus than a country where the automatic stabilisers and government debt are smaller.
Thus, we revised our output gap forecasts for this period upwards. Growth composition became much more balanced as we expected (Chart 12). Despite the weak course of the global economy, exports continued to increase, whereas the demand for imported goods and services maintained a downward trend. Consequently, the contribution of net external demand to growth has been positive for the first time after a protracted period. 6  BIS central bankers’ speeches  Chart 11. Chart 12. Final Domestic Demand  Exports and Imports of Goods and Services  (Seasonally Adjusted, 2008Q1=100)  (Seasonally Adjusted, 1998 Prices, Billion TL)  Source: TurkStat, CBRT. * Estimate. Source: TurkStat, CBRT. Indicators regarding the last quarter of 2011 point that final domestic demand remains flat and the rebalancing process in the economy is going on as envisaged. Owing to the monetary tightening, the growth rate of final domestic demand is expected to remain moderate in the forthcoming period, as suggested by the recent loan and orders data (Chart 13). Accordingly, our inflation forecasts are based on the assumption that domestic demand will decelerate further during early 2012. Chart 13. Chart 14. Growth Rates of Business and Consumer Loans  3-Month Ahead Expectations for Orders  (13-Week Average, Adjusted for Exchange Rate Effect, Annual Percent Change)  (Up-Down, Seasonally Adjusted, Percent)  Source: CBRT. Source: CBRT. As I mentioned at the beginning, global growth forecasts have been revised significantly downwards since the publication of the October Inflation Report mainly owing to the euro area.

BIS central bankers’ speeches  9  At this point, I would like to emphasize that any new data or information regarding the inflation outlook may lead to a change in the monetary policy stance. Therefore, assumptions regarding the monetary policy outlook underlying our inflation forecasts should not be perceived as a commitment on behalf of the CBRT. 4. Risks and Monetary Policy  In the last part of my speech, I would like to share our assessment of the risks on inflation outlook. The first of these risks is the possibility of second round effects that might stem from inflation hovering at high levels in the short term. Three-month accumulated increase in consumer prices in the final quarter of 2011 was 5.66 percent. This will stay in annual inflation figure for another three quarters. Therefore, it is highly likely that annual inflation will stay significantly above the target until the last quarter of the year, even if the underlying trend in the forthcoming period eases to levels consistent with the target. Although the monetary tightening delivered by the CBRT since October has reduced the possibility of second round effects, I would like to emphasize that inflation expectations and pricing behavior will be monitored closely and necessary measures will be taken to keep medium-term inflation outlook consistent with the target. Ongoing uncertainties regarding the global economy call for a continuation of a flexible approach in monetary policy.
Since 2010, the cumulative positive effect of these companies on the trade balance is about Euro 200 million, or 2.6% of GDP. This reduces the external vulnerability and improves the risk profile of the country and its foundations. The raised technological level, the increase in manpower, the improved access to capital, the spillover effects on domestic companies (which is already visible in our country), the absorption of the workforce, are also significant favorable effects. In the medium term more positive effects should be expected. The second key factor that significantly contributes to achieving solid rates of economic growth is the fiscal stimulus, through the increased number of investments in infrastructure projects. Large investments in road, rail and energy infrastructure are, on the one hand, an important impetus for growth in the short run, while on the other, they improve the competitiveness of the economy and contribute to the increase in the potential growth. The public sector share in the investments during the crisis has increased (from 20% in 2007 to 34% in 2010), offsetting the smaller investments from the private sector and providing positive stimulus for the economy. It is expected that Government’s announcements of infrastructure projects will continue to provide significant support for the growth in the medium term. What is also important is that the growth in recent years has created preconditions for improving the conditions in the labor market.

European heads of state agreed to the principle of a single supervisory mechanism at the end of 2012, and we are in the process of actively preparing its implementation. By November, the main banks in the euro area will be supervised by a federalized system headed in Frankfurt. A Supervisory Board will be established to plan and carry out the ECB’s supervisory tasks, undertake preparatory work, and propose complete draft decisions for adoption by the ECB’s Governing Council. Moreover, the entire European banking system, including Hungary of course, will be supervised on the basis of a single set of principles – the Single Rulebook – which has been compiled by the European Banking Authority. This is a huge step towards a more unified and consistent European banking system, and one that is therefore more robust and efficient. The move towards a Single Supervisory Mechanism is firmly on track. Last October, we reached another important milestone with the announcement by the ECB that European banks will be subject to a Comprehensive Assessment prior to the set up of the SSM in November 2014. 2  BIS central bankers’ speeches  This exercise is now underway. We must be aware that the exercise is an unprecedented one: about 130 participating banks – including 13 French banking groups – representing 85% of the total assets of European banks, will simultaneously undergo a thorough asset quality review (AQR) using a common methodology, and this will be followed up with stress tests this summer.
To echo the words of the poet William Butler Yeats: “Though the leaves are many, the root is one.” As a community of bankers, we should have one overriding root purpose – to serve and steward our community. The services we offer are to serve the larger interest of the community. We do not originate a loan merely to meet business targets, but to enable individuals to own homes, businesses to create jobs and for overall societal wellbeing Finance exists for society, not society for finance. We can no more detach ourselves from this social purpose than we can separate humanity from humans. It ought to be an inherent part of us, our profession’s DNA. This sense of identity and purpose should ground all our pursuits. It is also the thread that ties all 3/4  BIS central bankers' speeches  functions of banking together. Whether you are in the credit, compliance, IT, risk management or audit functions, you share a common purpose to society and duty to serve the public interest. As we reflect back over the centuries, the first banks in the ancient world made grain loans to farmers and traders who travelled between cities. During the 15th – 18th century, banks also catalysed the financing of international trade, subsequently ushering in a new age of maritime discovery and exploration. The banking world then served the real needs of the economy.

Carlos Massad: New economy, old cycle? Remarks by Mr Carlos Massad, Governor of the Central Bank of Chile, in a panel discussion organised by the Bank for International Settlements, Basel, Switzerland, 10 June 2001. * 1. *  *  Introduction  The new economy involves changes: faster and cheaper communications, higher labor productivity, savings in the supply chain in the business to business sector, and improvements in inventory control. It also involves growing integration of world markets. As a counterpart, we are experiencing increased volatility in stock prices and terms of trade. Krugman has gone even further, to assert that “growing 1 integration does predispose the world economy to more crisis” . What are the consequences of these changes on emerging market economies? Furthermore, we Central Bankers have faced many changes, and must be prepared for changes, whatever their source. How should these economies respond to those changes? These are critical issues today for almost every emerging economy. 2. Any impact on the real economy? Globalization of international financial markets over the last decade, a by-product of cheaper and faster communications, has led to an increase in asset return correlation around the world. Swings in the Dow Jones, NASDAQ and in fixed rate instruments lead to adjustments in portfolio decisions the world over that have implications for the real economy. The higher the correlation of returns, the lower, on this ground, the incentive for short-term capital movements.
With this in mind, the European Commission is reviewing the European fiscal rule framework. In my view the framework needs to be simplified, by establishing an expenditure growth rule and a debt-to-GDP ratio anchor, and countries’ capacity to build up fiscal buffers in good times for use in crises needs to be reinforced. In the case of Spain, shoring up the sustainability of public finances calls for a medium-term fiscal policy strategy. This should involve immediately setting out a multi-year fiscal consolidation plan for implementation once the economic impact of the pandemic and of the war in Ukraine has been overcome. The plan should have broad political consensus and be accompanied by an efficiency review of public spending and the tax system, including all tiers of general government. In addition to the medium and long-term benefits of such a strategy, defining the plan early on would generate greater certainty and trust in public policies, which is particularly important against the backdrop of the monetary policy normalisation I have described. In any event, the course of the war in Ukraine and the subsequent sanctions and retaliatory measures have laid bare the EU’s vulnerabilities and dependencies in key sectors, such as energy, as well as the disparities between Member States in their exposure to such tensions. A challenge of this magnitude underlines the importance of a joint response to common risks. The response to the war in Ukraine must, once again, be more Europe.

Inflationary pressures are stronger than expected and are spreading across expenditure items, exacerbating the loss of purchasing power Inflationary pressures in the euro area have been more intense and more persistent than expected throughout the year. Euro area inflation stood at 9.1% in August. Higher energy prices are the main factor behind these high inflation levels. Indeed, it is estimated that, between their direct impact on energy goods in the consumption basket and their indirect effect through other goods and services, they are responsible for somewhat more than 60% of the growth in inflation. Yet the increase in food prices is also very significant; in fact, food prices are directly responsible for almost 25% of the increase in inflation. In any event, inflationary pressures have gradually spread to the less volatile prices in the consumption basket. Higher production costs have passed through to consumer prices  2  faster than expected, against a backdrop of manufacturing bottlenecks and demand pressures associated with the economic reopening. Underlying inflation in the euro area was over 4% in August, and over 3% in all euro area countries. Moreover, inflation was over 4% in more than half the underlying inflation components (in 41% of them in Spain).
The two-year horizon provides scope for flexibility while at the same time setting a limit for how far we can permit inflation to deviate from the inflation target in normal circumstances. However, situations can arise where it is neither possible nor desirable to attain the inflation target within a two-year perspective. This applies, for instance, when the economy has been exposed to a disturbance that makes inflation deviate sharply from the target and a rapid return to the target would expose the real economy to excessive strains. In this case, we should explain our intentions as clearly as we can in connection with our monetary policy decision and point out that inflation will not be on target within the normal time horizon and state the reasons for this. The significance of the interest rate assumption for the inflation forecast As I said before, our inflation forecasts were previously based on the assumption that the repo rate would not change during the forecast period. The assumption of an unchanged repo rate in some ways made it easy to justify changes in monetary policy. Guided by this assumption, monetary policy could, somewhat simplified, be described by the following rule of thumb: if the forecast inflation, given an unchanged repo rate, deviated from the target, the repo rate should normally be raised or lowered. Even though this arrangement worked fairly well from a communication point of view, there are clear advantages in basing forecasts on a more reasonable assumption of the development of the repo rate.

In all options, the Bank of Cyprus will need to create an organisation to manage nonperforming loans. The bank is already moving in this direction, and should it remain as a single entity it is likely that there will still be a dedicated focus on managing the workout of troubled loans. Splitting the Bank of Cyprus into a commercial bank and an asset management/development bank would create a legal and management separation. This – as any other option – has a number of merits and challenges. Two institutions would provide specialisation. The asset management/Development Bank could focus on maximising value through the restructuring of the loan book with no immediate time pressures. It could also act as a specialist bank focussed on real estate and development related activities. The remaining commercial bank could focus on serving the domestic economy. However, a split could be operationally disruptive in the immediate term, even if it was beneficial over time. Substantial progress in the restructuring of the banking system has been made. This has not been easy, and market conditions remain fragile. In determining the way forward any solution should look to meet four objectives; Restoration of Confidence – It is essential that any solution furthers the restoration of confidence. Customers must have confidence in the future of the Bank of Cyprus whether it is one bank or two. As confidence is re-established we can further ease and ultimately lift capital controls. Funded Balance Sheet – The Bank of Cyprus’s reliance on emergency support is well known.
As the digital asset ecosystem grows, it will be natural for linkages between the traditional banking system and digital assets to grow. There is risk of contagion to financial markets through exposures of financial institutions to digital assets. MAS is working closely with other regulators to design a prudential framework for banks’ exposures to digital assets. This framework will provide banks with clarity on how to measure the risks of their digital asset exposures, and maintain adequate capital to address these risks. This will reduce risks of spillovers into the traditional banking system. INNOVATION AND REGULATION HAND-IN-HAND Singapore wants to be a hub for innovative and responsible digital asset activities that enhance efficiency and create economic value. The development strategy and regulatory approach for digital assets that I have described go hand-in-hand towards achieving this. Innovation and regulation are not incapable of co-existing. We do not split the difference by being less stringent in our regulation or being less facilitative of innovation. MAS’ development strategy makes Singapore one of the most conducive and facilitative jurisdictions for digital assets. At the same time, MAS’ evolving regulatory approach makes Singapore one of the most comprehensive in managing the risks of digital assets, and among the strictest in areas like discouraging retail investments in cryptocurrencies. I hope this presentation has made clear that MAS’ facilitative posture on digital asset activities and restrictive stance on cryptocurrency speculation are not contradictory.

Our special focus is currently on information coming in from regions using our network. Leaders of the Bank of Russia’s regional branches are invited to each of our rate-setting meetings. They update us on the situation in their regions; ultimately, our estimates and outlooks are not solely based on the data provided by Rosstat. Rosstat data should indeed be treated as a reliable source of information, considering that alongside authorities virtually all market participants also use them. So, the more trust in Rosstat’s professionalism and independence the better. There are a variety of options on how we may address this. At the end of the day I believe this is up to the Government. I would rather reserve my judgement here. Thank you. QUESTION from Bloomberg: Two questions, again, please. One, following up on the question from my colleague, we heard both the economic development minister and the finance minister mention that the ruble is stronger than its fundamental values. In this connection, what does the Bank of Russia make of this; is the ruble close to its fundamental values, or is it actually stronger? And my second question, which is in some way related to the first. You mentioned that purchases of foreign currency are a possible means to replenish reserves, provided these purchases do not do damage to inflation targets. All indications are, we are on track to meet the 4% inflation target by mid-year. Can the Central Bank launch foreign currency purchases to replenish its reserves? Thank you. ELVIRA NABIULLINA: Thank you.
Basis for the interest rate forecast In forecasting economic variables, Norges Bank uses an approach that captures and juxtaposes many different elements. The chart provides an illustration of the structure of forecasting. One important source of information on the current situation is current statistics. In addition to official statistics, information from our regional network plays an important role. In the course of a year, around 1400 interviews are held with leaders from various parts of the corporate and public sectors about economic developments in their enterprises and institutions. In our forecasting, we seek to build a bridge between our assessments of the current situation and the knowledge we have about long-term relationships in the economy. As a tool in this work, the Bank uses several macroeconomic models: one core model and a number of smaller models. Central to this process is the use of judgment. The macroeconomic models provide a very simplified description of the economy and only serve as a forecasting tool. The forecasts for inflation, output, the interest rate and other variables in the economy must be perceived as a result of the Bank’s best judgment. There is no mechanical relationship between the models the Bank uses and its forecasts. Nevertheless, the models are a very useful tool in the conduct of monetary policy. In the process of arriving at an interest rate forecast that in the Bank’s opinion provides a reasonable balance, a model system is needed where the interest rate and other variables in the economy are interdependent.

Thomas Jordan: Current monetary policy and its significance for the real economy Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, at the General Meeting of the Aargauische Industrie- und Handelskammer, Wettingen, 20 May 2010. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the current situation, the challenges for the SNB’s monetary policy remain formidable. On the one hand, against the backdrop of the economic recovery we have witnessed since mid2009, there is a danger of inflationary tendencies and the renewed formation of a bubble. This is because the current monetary policy is too expansionary in the long term. On the other hand, downside risks are still present or are again reappearing, and should not be underestimated. They relate, in particular, to the further development of the debt crisis in Europe. A deterioration of this situation entails the danger for Switzerland of renewed deflation and recession as well as the risk of another destabilisation of the global financial system. Between these opposing risks the SNB must walk a fine line, moving in terrain that is constantly and rapidly changing, depending on which risk gains the upper hand. With a monetary policy strategy aimed at maintaining price stability, the SNB is well equipped to face these challenges. What are the short and medium-term consequences for the real economy of addressing these challenges?