samchain/econo-pairs-v1 huggingface dataset:
In emerging Asia, the acceleration of spending and increased inflationary pressures appreciate the real exchange rate. Eventually, the foreign exchange regime affects the real exchange rate’s behavior only temporarily, and the adjustment arrives sooner or later by other ways, some times at a greater cost. Improved terms of trade Another factor influencing the exchange rate’s behavior has been the improvement of our terms of trade. Along the past ten years, the ratio between the price of our exports and imports, i.e., the terms of trade, has almost doubled. As of the third quarter of 2010, the terms of trade exceeded the average for the last two decades by more than 60%. Underlying this increment are the higher prices of copper, iron, wood pulp and other commodities relative to manufactured goods, partly attenuated by the oil price increases (figure 3). Improved of trade lead to an increase in the real national income – the sum of wages, profits and taxes – faster than the expansion of our productive capacity. To the extent that this higher national income is perceived as permanent by policy-makers and private agents, it stimulates expenditure and puts pressure on the installed capacity, the domestic interest rate and, ultimately, the real exchange rate. 2  In the case of fiscal earnings, for over twenty years our country has implemented a responsible, prudential fiscal policy, generating fiscal surpluses for most of the period.

Such a policy has sought to save the transitory income from copper, cushioning the impact of terms of trade cycles on fiscal expenditure, demand, and the real exchange rate. When confronted with the worst international recession since the Great Depression, this fiscal prudence allowed putting in place countercyclical measures that had no precedent in our economic history. In the present circumstances where the economy has already gained momentum, it is adequate to withdraw part of the fiscal stimulus. The plan of gradual reduction of the structural fiscal deficit announced by the government will contribute to moderate demand and remove some pressure from the real exchange rate, although its effects will become apparent gradually over time. Beyond the business cycle, it is also worth mentioning that the persistence of high copper prices in the world markets has been translating into better expectations for its long-term price. In the first five years of the fiscal rule of structural balance, the average reference price for copper was, in real terms as of today, $ per pound; now it is more than twice, at $ per pound. The higher earnings from copper have allowed financing an important increase in public spending as a percentage of GDP and greater transfers over the past few years. This situation has consequences also on the real exchange rate.
This change in banks’ balance sheet structure tends to make the banking sector more fragile. There is some evidence to support this argument. For example, Slide 5 reports the results of simulating how banks in the United States adjust their external funding to changes in monetary policy. It suggests that when central banks increase interest rates, banks significantly decrease their external funding for the next two years or so.15 The “Taylor rule”, the “supply shock” hypothesis and the “risk-taking channel” theory all have one common feature. Every one of them acknowledges the possibility that interest rates may have been too low prior to the crisis, though their proponents may disagree as to whether, or to what extent, this was the result of a policy or paradigm failure. There is also consensus that this may have contributed to the financial instability that followed, although only the theory of the “risk-taking channel” clearly suggests how this would have come about. III. “Leaning against the wind”: an unfavourable trade-off between financial stability and output growth  If interest rates were indeed too low in the pre-crisis years, it would appear that by raising them central banks could have helped avoid, or at least contain, the crisis. When this calls for deviations from otherwise optimal policy, one talks of “leaning against the wind”. In economic upturns, this would involve central banks setting higher interest rates than would be necessary to achieve price stability alone.

It will be a more broad-based financial partnership that will provide deeper support to China’s growing connectivity with Southeast Asia. Let me cite four concrete areas of partnership. •  Capital management  •  Risk management  •  Infrastructure financing  •  Asset management  Capital management Chinese enterprises have mostly relied on domestic sources of funds such as bank lending to finance their international expansion. Many Chinese companies have also listed in equity markets in the US, Hong Kong and Singapore. But as Chinese companies grow their global presence, they will have to think harder about how best to raise capital and how best to make use of their capital by tapping into offshore markets. First, bond markets offer a useful alternative to bank lending, especially for long-term funding. Deep capital markets, anchored by a large institutional investor base can help well-rated businesses to achieve efficient cost of funding. Chinese companies are becoming more active in Singapore’s bond market. •  For instance, China Oilfields Services Limited successfully raised $ billion in Singapore last year, including a 10-year medium-term note of $ million. Second, Chinese corporates with income-producing real estate and infrastructure assets could recycle their capital by securitising these assets through a trust vehicle. BIS central bankers’ speeches  3  •  SGX saw its first China real estate investment trust or REIT last year, with Beijing Hualian Group raising close to $ through a REIT.
However, Bank of Albania evaluates that inflation will remain below the target for the most of this period. Its performance will continue to be determined by the degree of recovery in economic growth, supply-side domestic and external shocks, and economic and financial agents’ inflation expectations. The Albanian economy is assessed to have improved in 2014. According to INSTAT data, the economic activity grew by 1.4% during the first nine months of the year. We expect the growth rate to accelerate in the fourth quarter, driven by the strong fiscal stimulus in this period. Due to damages caused by floods in the south of the country, our projections on the performance of the economy during 2015 are revised slightly downwards. However, their effect is expected to be temporary and the economy is projected to remain in an upward trend in the medium term. Economic growth for 2015 is projected to be higher than that in the previous year. The expansion of economic activity will continue to be driven, to a large extent, by private sector growth. Foreign demand is expected to play a small positive role and the speed of fiscal consolidation is expected to be reduced. While upward, our projections suggest that the economic activity at home will remain below its potential in 2015, generating incomplete utilisation of production capacities. Incomplete capacity utilisation is underpinned by a relatively high unemployment rate and is reflected in low pressures on wage increases and production costs.

The Bank of Albania asserts that the financial markets and agents have sound and liquid balance sheets, but they continue to be risk averse into undertaking long-term investments. In conclusion, the Supervisory Council decided that the actual monetary policy stance is appropriate and decided to keep the key interest rate unchanged at 2.0%. The new information analysed at the meeting does not change our evaluations for the current situation of the economy and financial markets, and expectations for their outlook. The current monetary conditions are adequate for ensuring the return of inflation to our 3.0 % target in the medium term. Judging from the expected developments and the balance of risks surrounding them, the Supervisory Council deems that the monetary policy of the Bank of Albania will continue to maintain its stimulating nature, for some quarters ahead. 2  BIS central bankers’ speeches
1 Beverly Hirtle, The Economic Health of the Region, Remarks at the Waterfront Alliance Regional Symposium:  Recovery and Resiliency in a New Era (delivered via videoconference), January 14, 2021. 2 Jaison R. Abel and Richard Dietz, “Some Workers Have Been Hit Much Harder than Others by the Pandemic,”  Federal Reserve Bank of New York Liberty Street Economics, February 9, 2021. 3 David Dam, Meghana Gaur, Fatih Karahan, Laura Pilossoph, and Will Schirmer, “ Black and White Differences in  the Labor Market Recovery from COVID-19,” Federal Reserve Bank of New York Liberty Street Economics, February 9, 2021. 4 3/4  BIS central bankers' speeches  4 Small Business Credit Survey: 2021 Report on Employer Firms, a collaboration of the twelve Federal Reserve  Banks (2021). 5 Claire Kramer Mills and Jessica Battisto, “Double Jeopardy: COVID-19’s Concentrated Health and Wealth  Effects in Black Communities,” Federal Reserve Bank of New York, August 2020. 6 Outreach and Education, Economic Inequality & Equitable Growth hub, Federal Reserve Bank of New York. 7 Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC Statement, January 27,  2021. 4/4  BIS central bankers' speeches

We feel that this situation has not only come about because of the globalisation of the financial markets, but also because international banks have become increasingly vulnerable over the last few years – vulnerable because of their thirst for profit and their underestimation of the ensuing risks. Second, the banks’ risk measuring and management instruments could not cope with the crisis. Consequently, the actual losses incurred in the area of mortgage-backed securities (MBS) clearly surpassed the potential level calculated by the sophisticated statistical models, and the liquidity haemorrhage suffered by the banks was greater than the most pessimistic scenarios had suggested. In other words, the risk measuring systems failed despite the fact that they were being monitored by the best-informed experts around. This summary may sound a little harsh, but is not intended to put the blame on the banks. Instead, it illustrates that no model can do complete justice to the complexity of financial instruments and the economic environment in which banks operate these days. Third, the events of the last few months raise question marks about the efficiency of the banking supervision standards applied so far. The call for more sophisticated risk measurement systems, supervision and regulation of banks is understandable. There is room for improvement in these areas, and it must be exploited. Nevertheless, it should be pointed out that more extensive regulation on its own represents an unsatisfactory response to the growing complexity of banking activities.
A recent Economist article even asked, “Can central banks talk too much?”15 It essentially argued that forward guidance on interest rates could complicate price dynamics in the bond market as the central bank simultaneously signals its intentions to the markets, while taking its cue from them. As policy decisions are ultimately a judgement call made against an inherently uncertain backdrop, there is naturally a limit to how much transparency can do to make central bank action predictable. Communication is also context-specific, where a standard rules-based approach will not work. Discussions at forums like this are extremely valuable because they provide the opportunity to share experiences from real-life settings, including what has worked and what has not, as well as the pitfalls and the nuances. Hopefully, some general guiding principles can emerge, that will prove useful for practitioners gathered here today. In conclusion, the guidelines for monetary policy communications are probably due for a refresh given the increased complexity facing the formulation and implementation of monetary policy. For 3/5  BIS central bankers' speeches  sure, central banks must continue to talk, engage, and be accessible and accountable. How we do it could evolve, and this high-level seminar serves to help us do just that and hone our communication skills. I wish you a most productive session. Thank you. References Bernanke, B S (2007), “Federal Reserve Communications”, Speech at the Cato Institute 25th Annual Monetary Conference, Washington, D.C., 14 November.

Giving more information may induce not more, but less, clarity among market participants, as there are limits to how much information can be digested effectively.6 The public may not easily understand the uncertainty and conditionality surrounding central bank forecasts.7 Or worse still, agents might come to realise how uncertain the central bank is about economic conditions.8 Sometimes, it is just not feasible to provide that degree of clarity out in the public. Second, central bankers need to think about the potential interaction of greater transparency with the path of future monetary policy decisions. Policy expectations engendered by communication may unduly constrain policy action. Indeed, empirical evidence suggests that there can be too much of a good thing, although anchoring the optimal degree of central bank transparency still proves elusive. A number of studies have found diminishing returns to central bank transparency on market expectations.9 Others also found that disseminating specific and detailed information, such as full meeting transcripts, provides little marginal value over more concise communication, such as policy meeting minutes, in terms of guiding market expectations.10 2/5  BIS central bankers' speeches  There are a set of papers showing that more information can result in destabilising market expectations.
Improvements are urgently needed here so that we can tackle risks in good time and such procedures have also been recommended by the EU’s macroprudential policy body, the European Systemic Risk Board (ESRB). 16 Secondly, the Swedish structure falls short also when it comes to clarity in the division of responsibilities. Via its instruction, Finansinspektionen was given the responsibility to “take measures to counteract financial imbalances with the aim of stabilising the credit market”. No definition of what Finansinspektionen’s overall macroprudential policy task comprises has been formulated, however. This problem is highlighted by the decision process for the upcoming amortisation requirement. The Government has indeed tasked Finansinspektionen to produce regulations that more closely define the amortisation requirement but at the same time requires these regulations to be approved by the Government before Finansinspektionen adopts them. This is not in line with the ESRB’s recommendation that the macroprudential authority should as a minimum be operationally independent from political bodies. 17 The importance of independence when adopting macroprudential policy measures is also underscored by Goodfriend and King. This is, if anything, a return to the arrangement that often prevailed prior to the deregulations of the 1980s. A third problem with the Swedish macroprudential policy framework is that it has not been established by law. Finansinspektionen’s mandate in the macroprudential policy area is only a government ordinance and the Stability Council is formally only a committee.

Indeed, financial globalisation and digitalisation are also challenging the perception that central banks have a monopoly on the issuing of means of payment. The Riksbank’s responsibility for cash management has changed By law, the Riksbank shall supply the country with banknotes and coins and has the exclusive right to issue them. The law also states that these banknotes and coins are legal tender. Giving central banks a monopoly on the issuing of banknotes and coins, along with a certain degree of autonomy, has been seen as an effective and credible way of managing the supply of means of payment. Payment trends have a long history. From bartering and the first silver coins in Sweden in 995, to the first standardised and collective means of payment in the form of transport bills, which were introduced during the 17th century. Besides cash being much more modern today than when the Riksbank was founded almost 350 years ago, we also have access to several different electronic payment options. The Riksbank’ responsibility for means of payment has been adapted over time as needs have changed. At one point, the Riksbank had over 20 offices around the country, basically one in every county, where banks often deposited and withdrew cash. For a period, the Riksbank also accepted daily takings directly from companies. The Riksbank counted, performed quality checks, invalidated and stored cash. Over time, the Riksbank has rationalised and adapted its cash provision. Today, it is banks and other private entities who are responsible for the distribution of cash.
They are no longer confined to cards, as we are seeing with the rise of mobile payments. A broader range of participants: I am thinking here about how the payments market has expanded to include competition from big techs and major retailers, which are following a wide range of strategies in this respect. The flipside of this trend is the increasingly global nature of the market, which is raising sovereignty and independence issues, including the question of control of data with respect to the American and Chinese tech giants. Payment is becoming less prominent: nowadays the actual act of paying is becoming less visible, as it is combined seamlessly within the overall transaction process to minimise the impact on the payer. We are seeing this shift in online payments, for example, which are designed to be increasingly fluid through solutions such as one-click buying. Availability of payment services: payment services are becoming more available, ignoring physical borders and time constraints to satisfy customer demand for instant, continuous and uniform payment services, as economic agents become ever more mobile. 2. The development of crypto-assets naturally forms part of these underlying trends affecting payment instruments, combining the search for anonymity, management of non-intermediated peer-to-peer payments and the use of entirely web-based technologies. But crypto-assets are also different because of their financial, monetary and technological features that I mentioned in my introduction.

The regulator's role is to ensure systemic stability, the integrity of the payments systems, and fair rules of competition, while promoting a conducive environment for the growth of the financial centre. The industry's role is to compete, innovate, and enhance the value of their business. But both seek a more integrated, efficient and sound international financial system. I hope your deliberations at this conference will contribute to this goal. BIS Review 45/2001  5
Two challenges more specific to France  I would now like to discuss with you the two medium-term challenges that are more specific to our country. I am referring to our insufficient potential growth related to our inadequate labour supply, and excess public debt. 1) Potential growth and labour supply Let's start with two clarifications. First, I am aware that the word "growth" has become ambivalent, as for some people it may carry more environmental risks than economic promises. GDP growth is not sufficient: it must - and can - be greener and fairer. But it  Page 8 sur 15 remains essential for financing the European social and environmental model in which I strongly believe; degrowth would kill it. Second, it can be difficult to measure potential growth – the economy’s "cruising speed" outside of cyclical variations – because it is not a directly observable variable. At the Banque de France, we currently estimate annual potential growth at around 1.1% to 1.2% only, a figure that has remained fairly stable for the past ten years, after being halved over the past thirty years. Other estimates creep up to 1.35%,viii but they all hit a ceiling of between 1 and 1.5%, which is clearly insufficient. Our growth potential is strongly linked to the way in which our production factors are used. In France, we do not lack capital overall - both public and private investment is rather high - but we do lack labour, the supply of available labour to employers.

It plots the latest HICP inflation forecasts from the Euro Zone Barometer – a publication that produces macroeconomic and financial forecasts every month from a number of major economic forecasters in Europe. In this month’s edition, forecasters expect the spell of negative inflation in 2009 to last on average for a few months. Looking at the range of individual responses (which is shown as a shaded area), there is some disagreement between the highest and lowest forecast. But even in the lowest forecast, the period with negative inflation rate is expected to last no more than two quarters. Furthermore, according to the same survey, inflation projections for 2010 have been gradually revised downwards since January 2009 as economic conditions have deteriorated. This phenomenon is illustrated in slide 8, as a month-to-month shift to the left of the inflation forecasts. Nevertheless, the median projection still remains above 1%. So, if there is no evidence of a generalised and persistent fall in the price level in the latest inflation outturns, what is underpinning current deflationary fears? As I see it, when people think about deflation, they have in mind two possible scenarios. The first is that the accumulation of economic slack due to the recession may exacerbate downside risks to price developments, which in turn may lead to outright deflation as monetary policy loses traction in stabilising output. The second scenario is that a spell of negative headline inflation rates – perhaps due to the temporary impact of energy and food prices – might dislodge inflation expectations.