samchain/econo-pairs-v1 huggingface dataset:
Turning to the first issue, clear communication about objectives and intent is an important element of effective monetary policy. For example, communicating clearly our intention to return inflation to more normal levels can help keep inflation expectations well anchored around levels consistent with our inflation goals. As the central bank, we and we alone can control inflation – if not precisely in the short run, then over the medium term. By clarifying our intentions, we can reduce the risk of further disinflation – or even an outright debtdeflation spiral that would make it still more difficult to accomplish the necessary balancesheet adjustments. Clear communication on the part of a central bank is important at all times, but it is even more critical when the federal funds rate is at or near its effective lower bound. In this environment, a decline in inflation expectations that drives up the real interest rate and thereby increases the real cost of credit cannot be offset by simply lowering the federal funds rate. Thus, in a very direct sense, a fall in inflation expectations when the target interest rate is at the zero bound represents a de facto tightening of monetary policy and of financial conditions. Such a tightening would clearly be highly undesirable at a moment when unemployment is too high, inflation is too low and the economy has only moderate forward momentum. In this situation, the FOMC must be clear and resolute in its commitment to its price stability objective.

The crisis showed few weakness in the model of growth adopted by the emerging economies of South East Europe, but is also true that, to some extent this behaviour was also encouraged by the development strategies of financial groups in the region, as it is also true that there was also some weakness in the coordination and collaboration between different European Union institutions, such as monetary policies (ECB), fiscal policies (of member countries) and the inexistence of specific mechanisms (such as bailout funds) to safeguard the European Union during difficult economic times. This conference pays homage to these lessons, while acknowledging the importance of coordination, by mutually collaborating in multidimensional institutional levels, within the region and with our common partner countries. We in the region hope that our foreign partners share this same view. BIS central bankers’ speeches  1  The Albanian economy and its financial market share similar characteristics with the other economies of the region. Our main trade and financial partners come from the EU economy. Therefore, developments in the EU are directly and indirectly transmitted and play an important role in economic developments in Albania. Our reliance on EU affected not only our economic development but also constrained the effect of policy measures. Several European banking groups operate in the Albanian financial sector. These entities brought into the Albanian market a lot of valuable know-how and experience, playing, thus, a crucial role in the financial integration of the Albanian economy to the European Union.
Economic Policy Group Report 2012, SNS Förlag, draw the conclusion that there is not sufficiently strong argument to supplement the Riksbank’s inflation target with an explicit target for unemployment, or for raising the inflation target. BIS central bankers’ speeches  7  , where π is the forecast for inflation, π* is the inflation target and y-y* is the forecast for resource utilisation in the economy. The parameter λ represents the importance the central bank gives to stabilising the real economy in relation to stabilising inflation.14 It is thus a question of finding the interest rate that minimises the squared forecast deviations between actual inflation and the inflation target during the forecast period and the squared forecasts for resource utilisation.15 This theoretical description has been very useful in developing the policy of inflation targeting. It captures in an intuitive and relatively simple way the essence of inflation targeting and it has helped to structure our thinking.16 However, the step from theory to practice is far from as simple and straightforward as one might think. One often gets the impression from the current debate that “clarity” in monetary policy means that the central bank should follow this theoretical description very closely. Accordingly, monetary policy decisions should be justified on the basis of a detailed quantified path for both resource utilisation and the deviation of inflation from the target.

But even 150,000 job gains per month would be consistent with gradually using up any remaining slack present in the U.S. labor market. Although I expect business fixed investment to begin to grow again in the second half, it will likely remain soft as profits have stagnated and election year uncertainty could act as an additional depressant. All else equal, investment tends to be weaker when uncertainty rises because this creates an incentive for businesses to delay decisions until the uncertainty is resolved. Also, trade seems likely to exert a net drag on growth. There are two factors at play here: the sluggish growth rate of aggregate demand abroad and the continuing impact of earlier dollar appreciation on U.S. export competitiveness. With respect to downside risks to the growth outlook, one that is hard to gauge is the potential fallout from the result of the recent U.K. referendum. It is widely anticipated that U.K. growth will slow as a consequence. Although the direct impact of slower U.K. growth on U.S. trade will almost certainly be very small – total U.S. exports to the U.K. are only about 0.7 percent of U.S. GDP – there are a number of other channels that could amplify the impact of the Brexit decision on U.S. economic activity. These include the potential adverse effects on European economic activity, on the perceived health of the global banking system, and on broader financial market conditions.
Further, since the start of 2013 liquidity conditions at Spanish banks have improved, and there has been a re-balancing of their funding sources. This is the outcome of the diminished tensions on the sovereign debt markets and of improved confidence, along with the lesser fragmentation of euro area money and capital markets. In this respect, retail deposits, which fell, especially in the summer months of 2012, have since been faring better. Since early 2013, they have been posting positive rates of change. The pick-up in deposits has seen the retail funding gap – i.e. the percentage of credit that banks cannot cover with deposits – narrow. That allows them to reduce the need to resort to less stable funding sources, such as the wholesale markets. Against this backdrop, the resort to Eurosystem funding, though holding at still-high levels, has diminished most significantly from its peak last summer, registering a decline of 31% in the first eight months of 2013. In terms of profitability, the exceptional drive by banks in 2012 to comply with provisioning requirements exerted a significant impact on their profit and loss accounts. Indeed, for the year as a whole, losses of over € billion were recorded. The first half of 2013 has marked a change in this tendency. Banks' consolidated profit rose to somewhat more than € billion, despite the fact that provisions continue to adversely affect profit and loss accounts in a period in which the proportion of non-performing assets remained high.

That has contributed to easing the pressure on the risk premium and smoothed the way for agreements in Europe, under the Stability and Growth Pact and the Excessive Deficit Procedure. The European authorities agreed last July to allow a milder fiscal adjustment path for Spain, in particular for 2013 and 2014, which is more consistent with the current macroeconomic conditions and those that will prevail in the coming years. For this improved credibility to take root, the deficit targets must be met. Information on the budget outturn in 2013 is still limited. In the first half of the year, the deficit improved relative to the same period a year earlier (without considering the impact of the assistance to the financial sector which, as is known, does not count for these purposes). The budget outturn in the second half of the year must, therefore, be very strict at all levels of government if slippage is to be avoided at the end of the year. While there are risks, I trust we can meet the target this year of cutting the deficit to 6.5%. The headway in budgetary consolidation should not mask the fact that the effort needed to ensure Spanish public finances are redressed is still most considerable. Let us not forget the distance still existing between the present situation and the requirement set in the Stability Pact and in the new Budgetary Stability Law for the medium term, which is to have a structural balance in equilibrium.
But it is unlikely that disclosure can be the sole response, and, thus, this initiative will have to be flanked by other measures targeted specifically at practice-based deviations.   Our latest policy proposals stemming from the fundamental review of the trading book were released at end-October, and incorporate a number of proposals that flow directly from the findings on practice-based variation in the trading book. For example, certain modelling choices with respect to the choice of stressed periods and the scaling of short-horizon estimates to longer horizons have been constrained in the latest proposals, along with more gudiance on expected supervisory practices.   More generally, within the policy framework, we are looking at how far greater constraints on the modelling practices of banks are needed. This could involve enhancing the data requirements on which models are built, limiting certain modelling assumptions or techniques, and/or strengthening validation requirements.   To make a more direct impact, we are also examining the role of floors and benchmarks within the regulatory framework. Floors are not a new phenomenom in the capital framework, but we need to look at whether existing floors are effective, and whether there is a case for their greater use, particularly for products and markets where data are limited, or other characteristics that make them hard to model reliably. BIS central bankers’ speeches  5    Finally, as I mentioned earlier, we also intend to ensure that the leverage ratio fulfils its intended role as a backstop to the risk-based regime.

But given the importance of the issue, we have to move ahead because the consensus is building that the status quo cannot be maintained, as it helps neither banks nor supervisors. Hence the title of my speech today: Strengthening bank capital: Basel III and beyond. The Basel III reforms themselves deliver two of the four characteristics that I said were essential – higher quantity and quality of capital. They are important, but not enough on their own. It is the Committee’s current and future work programme on implementation and consistency that will ensure that the full benefits of the regulatory reforms of bank capital can be achieved. 6  BIS central bankers’ speeches
The need to strengthen market infrastructures for credit default swaps (CDS) stems from the importance of CDS markets for overall financial stability, for three reasons. First, the systemic importance of CDS markets comes from the high degree of interconnectivity between CDS markets and credit and cash securities markets, the embedded financial leverage of CDS, and the significant level of CDS exposures in relation to the total assets and capital cushions of the banks involved. Second, the associated financial risks, for example when compared to interest rate and foreign exchange derivatives, are more difficult to manage. This stems from the greater underlying complexity and the correlations between different CDS exposures when market-wide strains occur. Third, specific risks to financial stability stem from the high degree of market concentration where very sizable financial risks are held by a small group of major market players. Therefore – as we have seen not only with the default of Lehman Brothers, but also the earlier near-defaults of Bear Stearns and AIG – the default of one major CDS counterparty can put these markets under very severe strain. A natural inference from our experiences during the current turmoil is, therefore, to improve the resilience of OTC derivatives markets through a more widespread adoption of central counterparty clearing or exchange trading.

Central counterparties (CCPs), by concentrating all outstanding derivatives positions of the participating buyers and sellers in one place, enable a significant reduction in counterparty risk: firstly, through the diversification and netting of risk exposures; secondly, through the application of stringent risk-based margining procedures to ensure adequate management; thirdly, through collateralisation of outstanding exposures on at least a daily or even intra-day basis. In addition, CCPs also contribute significantly to market transparency and integrity and bring significant operational efficiency gains, e.g. through the standardisation of risk management processes as well as via multilateral netting and collateral management. 1  Financial Stability Forum, “Report of the Financial Stability Forum on Enhancing Market and Institutional Resilience”, April 2008. BIS Review 74/2009  3  As a result, public authorities and industry bodies worldwide have embraced the establishment of CCPs for CDS markets as a top priority and we expect a number of solutions in both the EU and the United States to be up and running by the end of July 2009. In view of the role of the euro for the derivatives market, I would welcome a CCP in the euro area. The effective and timely implementation of the respective roadmaps and full dealer commitment to making the maximum possible use of these facilities will be essential. Looking ahead, it will also be vital to ensure close convergence between the requirements and approaches of the overseers and regulators involved so as to maintain a level playingfield between the different CCPs and pre-empt possible regulatory arbitrage.
Both the leverage ratio and the calibration of MREL are not intended to focus on the riskiness of a firm’s balance sheet. The leverage ratio is a relatively simple metric of capital over a firm’s total 3/5  BIS central bankers' speeches  exposures, and in this way it acts as a guardrail against uncertainties in the measurement of risk, which – from bitter experience of the problems which can sometimes arise from risk-weighting – I consider very important. As a backstop to the system, the MREL calibration focuses heavily on the potential impact of a failure, rather than the likelihood of the failure. This is in line with the resolution authority’s objectives and mandate. It is not surprising then that when you combine the two, the resulting capital requirements may feel high to mid-tier firms that are not designated as systemic and, on the face of it, appear to engage in lower risk activities. The third link between the two reviews is that both reviews are also considering the scope of each framework. When the PRC and FPC finalised their leverage ratio framework in 2015 we decided to apply the framework to our largest and most systemic firms and return to the question of whether to include other firms in scope in the future.

Percent 8  80  6  60  4  40  2  20  0  0  2020Q1  2021Q1  2022Q1  2023Q1  2024Q1  Imported goods Domestically produced goods and services Energy products (rhs)  2025Q1  Sources: Statistics Norway and Norges Bank  And even if Norges Bank cannot influence global prices in foreign currency terms, we can influence the exchange rate. A higher interest rate normally leads to a stronger krone exchange rate and weaker imported price inflation. Inflation does not come down on its own. The chart shows our forecasts from December (Chart 8). We expect energy prices to fall further out and imported inflation to ease, thereby curbing consumer price inflation ahead. Domestic inflation is likely to remain elevated for longer. The labour market is still tight, and business costs have increased. The effects of this will persist for a while and will contribute to propping up inflation. Had we not raised the policy rate, we would have run the risk that households and firms had started planning for high inflation in price and wage setting. In that case, it could have been necessary to tighten even more at a later stage to bring down inflation, which we want to avoid. The policy rate is being set with the aim of bringing inflation down towards the target of 2 percent. We could have raised the policy rate higher and faster than we have so far. Inflation might then have come down faster.
Again, there is an important underlying principle here. If we are to take risk with our collective public money, then government funds must be used. And the decision to do so must be taken by a democratically elected body. Third, both the scale and duration of support measures targeting financial markets should be limited. Large-scale and protracted support schemes can impair normal market mechanisms. In keeping with the third principle, the extraordinary measures that Norges Bank introduced to support the smooth functioning of financial markets during the pandemic have now been unwound. THE PRIMARY OBJECTIVE OF MONETARY POLICY IS LOW AND STABLE INFLATION Low and stable inflation is a main objective for Norges Bank. Persistently high inflation is costly for society. It leads to uncertainty about the value of money and is an obstacle to planning. At the same time, some inflation is beneficial because it provides economic flexibility. During Nicolai Rygg’s time the krone was pegged to gold, the anchor. Today, we aim to keep annual consumer price inflation at close to 2 percent over time (Chart 3). But our eye is not focused on the inflation target alone. As long as there is confidence that inflation will remain low and stable over time, variations around the inflation target entail limited economic and social costs. 3 Norges Bank (2021) “Norges Bank’s liquidity policy: principles and design”. Norges Bank Papers 2/2021. 4  NORGES BANK  Chart 3 Low and stable inflation is a primary objective  ECONOMIC PERSPECTIVES 17 FEBRUARY 2022  Consumer price index.

Dimitar Bogov: A new normal? The global economic expansion, inflation dynamics, financial stability and its meaning for asset management Speech by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the High Level International Conference on Monetary Policy and Asset Management, Skopje, 16 February 2018. * * * Distinguished guests, Ladies and gentlemen, It is my great honor and pleasure to welcome you to the High-Level International Conference on Monetary Policy and Asset Management. The conference has been organized as a joint effort of the National bank of the Republic of Macedonia and Reinventing Bretton Woods Committee. We are delighted for this partnership whose results have been built into the conference program that is both rich in the topics to be covered and in many prominent speakers to lead the discussions. The title of the conference is “A New Normal? The Global Economic Expansion, Inflation Dynamics, Financial Stability and its Meaning for Asset Management” that comes as a timely event to draw upon the lessons learned of the GFC, to assess the current state of the global economy and its future prospects and advice on the challenges facing central banks and asset managers. This decade has been a truly challenging time for policymaking and asset management. The world has gone through financial, economic and debt crises. We have witnessed major central banks using unconventional policies and ultra-accommodative monetary policy stance.
What I think is what’s new is we have to do a better job in terms of retraining people, getting people the mobility they need so they can actually feel that they have a place in the new economy. I was thinking about this question about technology and you think about the U.S. farm sector. You think about how many people in the United States worked on farms in 1900 and how few people work on farms today. Same kind of tech, same science and process of technological transition, but the good news is we were able to find things for those people to do. 4 / 13  BIS central bankers' speeches  People always have for many, many years, talked about how technology is going to put everyone out of work, and everyone’s just going to have a lot of leisure. That has not panned out up to now at all, and so I’m just a little bit skeptical that now we’re at that critical turning point. I could be wrong. This time could be different. But if you think about how long we’ve had these conversations about technology obsoleting everyone’s skills and leading to massive unemployment, this has been a conversation that we’ve been having for hundreds of years, literally. Maureen O’Hara: It’s tricky now, though, isn’t it? I mean in the past, I think you used to think about technology as taking away some of the lower-skilled jobs, and yet now we’re seeing it kind of marching its way up.

The evolution of the Eurosystem’s monetary policy operations in response to the crisis featured all these activities. Our risk management framework has evolved accordingly, guided by our stable principles. First, the “gusty winds”: during the early stages of the financial crisis, we increased the amount of liquidity we provided to the banking system without tightening the risk control framework, despite the onset of stress in the system. In this respect, our risk management framework followed a through-the-cycle approach – thereby avoiding further distress to the banking system. It also stood in stark contrast to the more pro-cyclical nature of the commercial banking sector’s risk management approach – and was thus part of the central bank’s duty to lean against such potentially self-reinforcing winds. It was possible to avoid tightening the framework without exposing the Eurosystem to undue risks because the pre-crisis framework had been calibrated in a sufficiently prudent manner. In fact, the framework proved to be robust enough to protect the Eurosystem from losses resulting from counterparties defaulting, such as Lehman Brothers or the Icelandic banks – although the complexity of the collateral in some of these cases led to lengthy liquidation processes. This experience certainly merited a careful review of the collateral rules for complex securities and financial innovations. More broadly, it justified taking steps towards reducing the reliance on external credit ratings, in line with the G20 agenda.