samchain/econo-pairs-v1 huggingface dataset:
Commentators and others may form their own views about the likelihood of various economic shocks occurring, and in that respect it is more important for them that the Committee explains its policy reaction function than attempts to provide guidance on the likely future path of interest rates. And when the Bank of Canada tried to anticipate the likely future path of monetary conditions, it found that, despite its clear explanations of why the future could not be easily anticipated, markets took those anticipations as commitments, and were surprised when unforeseen events resulted in different policy outcomes. In contrast, the MPC does not attempt to anticipate its own decisions. In addition to explaining the Committee’s views on the economy, and the balance of risks to inflation, there is a second important role for communication. That is to explain the views of the nine individual members of the Committee so that they can be held accountable for their judgments. There is, therefore, an inherent tension between a system of nine individually accountable members, with their associated views, and a Committee from which a single decision emerges that requires a clear explanation each month. The former produces, as I have argued, better decisions; the latter is important for the predictability and thus the efficiency of monetary policy. The communication strategy of the MPC must provide a balance between these two objectives, a point acknowledged in the report by Don Kohn on the procedures of the MPC.

Such reflection served to promote discussion on the adequacy of financial markets’ regulation to withstand crises. Two important shortfalls in the regulatory framework were identified. First, the banking legislation established clear rules for the orderly entry of new participants in the market but did not define the mandatory requirements for an orderly exit for the troubled market participants. Now in the post-crisis period, almost everyone agrees that, in the absence of a resolution regime, in order for a smooth and orderly exit of problematic banks, governments were forced to use public funds. Second, as a result of the high level of financial integration internal shocks in a given country were transmitted across borders to other countries, transforming them into a global issue. The post-crisis analysis motivated the European Union to assess issues related to banks’ recovery and resolution, and consider strengthening the existing cross-border cooperation, to reflect better the actual integration of financial markets. Today, the banking union in Europe has introduced harmonized rules about resolution throughout the European Union, and a unified application for the euro area. More specifically, the legislation of the European Union has activated the European Bank Recovery and Resolution Directive (BRRD) for all member countries and has established the Single Resolution Mechanism (SRM) in the euro area, as well. The BRRD creates such instruments for a preventive recovery and early intervention in a bank, designed to avoid the failure of a bank, as well as facilitate an orderly resolution when banks are failing, to protect the public interest.
In the upper storeys of the Bank he placed pavilions which are derivatives of the ends of the Secretariat blocks in New Delhi. As Lord Keynes said in his speech at the closing plenary session of the Bretton Woods Conference on 22 July 1944, "it has been our task to find a common measure, a common standard, a common rule applicable to each and not irksome to any. We have been operating, moreover, in a field of great intellectual and technical difficulty. We have had to perform at one and the same time the tasks appropriate to the economist, to the financier, to the politician, to the journalist, to the propagandist, to the lawyer, to the statesman – even, I think to the prophet and soothsayer. … We have shown that a concourse of 44 nations are actually able to work together at a constructive task in amity and unbroken concord. If we can continue in a larger task as we have begun in this limited task, there is hope for the world." The IMF is still the only international body with the legitimacy, as well as staff and expertise, to build and defend a successful international financial system. It is important, therefore, that we not accept uncritically the way it has developed, and we must examine closely how far changes in international financial markets require us to understand the consequences of limits to IMF lending and the implications of those limits for borrowing countries and private creditors alike.

Bandid Nijathaworn: The role of Early Warning Systems in economic policy formulation Speech by Mr Bandid Nijathaworn, Deputy Governor of the Bank of Thailand, at the panel discussion on “The Role of Early Warning Systems in Economic Policy Formulation”, IMF High-level seminar “Early Warning Systems and Their Role in Surveillance”, Singapore, 9 February 2010. *  *  *  First, let me thank the IMF for the invitation. At first, when I was asked to speak on this panel, I was not sure why the Fund is organizing a high-level seminar in Asia on Early Warning Systems, as interest on the topic seems to have faded completely with the recovery of the Asian economies from the crisis in early 2000’s. Then, it becomes clear that the resurgence of interest on EWS, now called EWE or Early Warning Exercises, is very much the mandate of the G20 that requires the IMF and the FSB to lead the conduct of such exercises in response to the current crisis. Given the severity of the current crisis, I think this initiative is important and needs to be supported. For this afternoon, I want to make three observations on how the new Early Warning Exercises can be made most useful to help sustain global growth and maintain financial stability, especially in light of the lessons learned from the current and past crises.
The cumulated loss at the end of the third quarter (since 1 October 2008) was USD 4.4 billion. Equity capital reported thus remains negative, though this loss was entirely covered at the time by the secondary loss protection – the warrant for the purchase of 100 million UBS shares at nominal value. By the end of the StabFund’s first financial year it will have largely completed the build-up of its operating activities. In the last few months, following the asset transfer phase between December 2008 and April 2009, the asset management process was set up, risk monitoring and financial reporting expanded, and an internal control system and operational risk management introduced. These processes will be further improved next year, with asset management taking on a key role. While the intrinsic values of the assets represent a key element in managing the portfolio, the process must not be merely mechanistic. Now that it has been possible to sell off some of the more liquid assets over the last few months, attention will focus more closely on two tasks: minimising the larger concentration risks, and ensuring that – as the portfolio is disposed of – the best possible equilibrium is maintained in various respects, including the degree of liquidity of its holdings. Broadening participation in the Swiss franc repo market The unsecured money market collapsed when the financial crisis broke out in August 2007 and it has not properly recovered to this day.

CEMFI is the outcome of the ambition of the leadership of the Banco de España in the late 1980s, who saw the possibility of innovating in the organization of a graduate programme comparable to the best programmes in Europe. It was Luis Ángel Rojo, at that time the Banco de España's Director General of Research, who invited Rafael Repullo to lead this venture. Precisely as a token of appreciation for his decisive contributions in the early days of CEMFI, the prize for the best Master student bears his name. The Banco de España is very proud of its ongoing support and collaboration with such a special institution providing first-class graduate education and research, contributing a host of public goods to the Spanish economy and generating valuable ideas for public policymaking. An excellent example of this collaboration is the co-organisation of the biennial Financial Stability Conference that concluded this morning at the Banco de España. Demonstrating an outstanding academic level and policy relevance, it has enjoyed the presence of a large number of distinguished visitors, including the Federal Reserve Board Chairman, Jerome Powell. Building on this example, I am pleased to announce a new collaboration between the Banco de España, CEMFI, and the Universidad Internacional Menéndez Pelayo, an annual conference on the Spanish economy, the first edition of which is due to take place next week in Santander.
Operating cost of domestic banking institutions has declined from 41.2% in 2001 to 40.3% of total income in 2003. There have also been improvements in turnaround time in processing loans and in response time in resolving customer problems. •  There has also been a higher level of innovation and introduction of new products and services to meet the customer needs that are becoming increasingly complex and sophisticated. These services include wealth management, structured investment products, bancassurance and Islamic financial products. •  New delivery channels through innovative technology-based mechanisms such as internet and mobile banking have enhanced the delivery of products and services as well as widened access to banking services. •  Despite a more competitive environment, domestic banking institutions have been able to sustain their market share at 80%. The domestic banks commanded a 83% share of the outstanding loans to the small and medium enterprises, while their market share in the credit card business has increased from 46% in 2000 to 54% of total credit cards issued in 2003. •  With the increased investment in risk management systems, the risk management capability in the banking sector has been further strengthened on all fronts through increased availability of risk management tools. This has been reinforced by enhanced prudential policies. Banking institutions are now better positioned to withstand challenges arising from unfavourable developments. •  The resumption of credit growth has now gathered momentum to meet the growing financial demands of the economy, while keeping risks at acceptable levels.

•  There is now a recommended template to help regional governments structure meaningful public-private-partnership agreements for infrastructure projects. The latest innovation is an infrastructure debt takeout facility. •  By providing a guaranteed takeout arrangement, the facility will enhance banks’ ability to originate, arrange and provide infrastructure project finance loans. •  At the same time, it will make it easier for institutional investors to invest in long-term infrastructure debt instruments as an asset class. Second, we need to deepen our markets. Take the asset management industry, where Singapore plays the role of a regional hub with $ trillion of assets under management. To deepen our market, we are embarking on several initiatives: •  To add diversity and resilience to the industry, we are seeking to anchor sovereign wealth funds and pension funds. 4  BIS central bankers’ speeches  •  To fund managers who use Singapore as their hub for Asian growth, build their investment capabilities and strengthen their local talent pool, MAS is giving out more investment mandates. •  To facilitate the domiciliation of funds in Singapore, MAS together with the Ministry of Finance is putting in place a more efficient corporate fund administration structure for asset managers. •  To meet the growing demand for family offices, we are providing greater clarity on the regulatory treatment of single family offices. The third way in which we build dynamism in the financial sector is by enhancing connectivity.
The performance of the non-bank financial institutions has todate been fair as the Bank of Zambia continues to implement measures aimed at maintaining and enhancing the soundness of the financial system. Chairperson; when we met last year at Fringilla in Chisamba, I informed the participants to the 12th Media Seminar that further expansion in the banking sector was eminent, as some commercial banks had plans to re-open or indeed open more branches across the country, this has come to reality as most of you have seen the establishment of new branches by  2  BIS Review 113/2007  several banks. These developments are undoubtably a manifestation of the improving investment environment arising from consistent macroeconomic reforms reflected in enhanced macroeconomic stability. We have also continued to received inquiries from foreign banks that want to establish operations in our country. Under the Financial Sector Development Plan, implementation of activities has continued key among them being: a)  Sovereign rating for Zambia  The process of obtaining a sovereign rating for Zambia, being spearheaded by Government has made appreciable progress, with the completion of the Terms of Reference for the provision of advisory services and subsequent submission of Cabinet Memorandum for approval. The Sovereign rating is expected to compliment other government initiatives to promote foreign investment in the Zambian private sector and stimulate the development of domestic capital markets and investment by Zambians.

Monetary  4  BIS central bankers’ speeches  An unemployment rate of 7% is not our intended destination. Nor even is it necessarily the first turning on the way to our final destination. Rather, it is a conveniently located layby at which we can pull over, study our economic map in detail, and work out whether we are anywhere close to our first turning. Why unemployment? There are two other challenges facing the UK economy and the MPC which the Committee’s guidance also helps to address: the uncertainty as to why productivity has been so weak and the extent it will rebound as demand increases; and the need to clarify how monetary policy is likely to respond as the economy recovers. Defining our guidance in terms of a threshold for unemployment is helpful in both cases. Giving supply a chance When considering the appropriate trade-off between bringing inflation back to target quickly and supporting the recovery, by far and away the biggest judgement facing the Committee is the extent to which productivity is likely to recover as demand increases. If you speak to some economists they are quite optimistic and suggest that productivity growth is likely to rebound relatively robustly as growth picks up. They note that productivity is strongly pro-cyclical. They also point to evidence that some companies have retained employees in anticipation of the recovery, while others have had to use resources more intensely to generate the same level of orders given the weakness of demand.3 But other economists are less upbeat.
Given  4  BIS Review 96/2006  the analysis and forecasting tools we use today, it is difficult to say whether a sudden correction in house prices will occur, or whether we can count on a calmer and more prolonged adjustment. At the same time, the Riksbank must take into account the risks when conducting its monetary policy. If house prices and household indebtedness increase rapidly over a long period of time, there is a risk of imbalances building up. These imbalances may force an adjustment further ahead and in the worst case may have severe consequences for the real economy and inflation. If house prices rebound, this could lead to subdued demand further ahead through both a decline in household consumption and reduced investment in construction. This type of development could in the longer term lead to both inflation being below target and to weaker growth in the economy. It is difficult to manage this type of risk. One possibility is to make changes in the interest rate slightly sooner or later than would otherwise be justified on the sole basis of the forecasts for inflation and the real economy. It is hoped that such a policy will contribute to a smoother adjustment process and help to avoid a more abrupt correction. A two-year horizon is a good decision rule, but it cannot always work in all situations. There are now signs of some slowdown in the housing market.

This was considered a natural consequence of the Riksbank being an authority under the Riksdag (the Swedish parliament). It was therefore considered unnecessary to specify any further objective than price stability in the law text. It would moreover be difficult to combine such objectives with the EU regulations and also inappropriate given that monetary policy cannot govern long-term developments in production and employment. Monetary policy affects the economy with a certain time lag. This means that the Riksbank cannot control inflation in the very short term and that monetary policy decisions must be based on forecasts of future inflation. Monetary policy is normally aimed at achieving the inflation target within two years to avoid the deviations from target from being too large and too protracted. The two-year horizon can be regarded as a restriction the Riksbank has taken upon itself to give credibility to the inflation target. At the same time, it provides an opportunity to show consideration for the real economy. If, for instance, there is a shock that leads to inflation being pushed upwards despite weak demand, a very rapid return to the inflation target could lead to a more severe slowdown in the already weak demand, than would be the case if the recovery was allowed to occur at a slower pace. If inflation is instead held back despite good growth in demand, attempts to quickly return it to target through very expansionary monetary policy could lead to the economy overheating.
Second: In order to reap the benefits of new technology, enterprises must be able to make rapid changes in their workforces. 9 However, at a more fundamental level, growth and restructuring capacity is closely linked to the level of skills in a population. European surveys indicate that there is a high level of science and technology skills among the adult population. 10 Surveys among pupils and students do not provide an equally positive picture. A report from the Norwegian Mathematics Council shows that the level of mathematical skills among new university students has declined markedly in recent years. 11 Even the top performing students score considerably lower than earlier. This is illustrated here as the percentage of correct answers in arithmetic and percent calculation, but we find similar scores for other mathematical skills. Norway is taking an economic risk in allowing the skills level to decline. But – to take a brighter view of this: We have after all experienced that negative trends can be reversed in very important areas of society. Our most important resource is our labour force. The employment rate is high in Norway. This is because many wish to participate in working life, and the vast majority find a job. However, the Norwegian labour market also has its weak points. The annual number of person-years worked is lower in Norway than in the US and the rest of Europe.

We have limited scope for restraining structural changes that take place when households increase their debt over several years in order to invest in housing and other property and assets. An interest rate level that effectively restrains this restructuring process would also have had adverse effects on economic activity. However, households are more vulnerable when debt is high. Long periods of sharply rising asset prices and debt may be a source of subsequent instability in production and employment. We believe that expectations regarding interest rate developments have a greater impact on household and business borrowing and investment behaviour than actual interest rates. Norges Bank communicates its analysis of the outlook for the Norwegian economy and the interest rate. At this juncture, the outlook for output and inflation suggests that the interest rate should be gradually – in small, not too frequent steps – brought up to a more normal level. 7 The economic outlook is uncertain. We illustrate interest rate uncertainty ahead with a fan chart, which is meant to capture the outcome with a 70 per cent probability. The consequences of higher interest rates for two households are illustrated in this chart. Both households comprise two adults and two children. One household has a gross income of NOK 800 000 and NOK 2 million in debt. The other has an income of NOK 600 000 and NOK 1.5 million in debt. The chart shows the two households’ income after basic expenses and interest and principal payments have been paid.
2  BIS Review 49/2005  However, meeting this ambitious objective implies a significant evolution of the current retail infrastructures towards a pan European infrastructure, the so called PEACH, which will aim at reinforcing the global efficiency of payments in Europe. The main achievement with regards to infrastructures until now has been the launch of STEP2, since it is the first infrastructure compliant with the PEACH requirements, as defined by the EPC. But there is still a significant way to go since STEP2 handles low volumes, 170.000 payments in May 2005, and can still not offer the same level of service as national ACHs. In that context, it must be seen as a positive prospect that most national retail payment systems are now preparing themselves to the implementation of SEPA, through the spreading use of standardisation, which will allow the interoperability of infrastructures. In France for example, several banks have initiated the STET project in view of SEPA. However, one should note that the idea of consolidating the retail systems platforms is for the time being not really at the forefront of market initiatives, even though consolidation is a source of cost savings and efficiency. Why such a gap in the level of integration between large-value payment systems and retail payment systems? I see two main explanations. First, large value payment systems have benefited from the incentive of the adoption of the single monetary policy in the Euro area, which made the creation of TARGET mandatory.

In the area of large value payment infrastructures, the degree of integration has increased very quickly. We should bear in mind that EURO 1 and TARGET have been clearly set up to face the challenge of the EMU. It was of great importance for large value payments, in particular those linked to the money market, to rely on systems handling efficiently and safely cross border transactions. Moreover, TARGET was a prerequisite for the effective conduct of the single monetary policy, because it ensures the settlement of monetary policy operations. The timeframe was particularly tight to build up the TARGET system. Therefore, the design of TARGET 1 was based on the principle of minimum harmonisation and on a decentralised architecture, with an interlinking of the national RTGS (Real-Time Gross Settlement Systems). TARGET 2, which is due to go live in 2007, will further improve the degree of integration of wholesale payment infrastructures. It will provide fully harmonised settlement services across Europe in real-time in central bank money, supported by a single price structure for domestic and cross-border payments and a single processing platform. This single platform will be used by all central banks of the ESCB to provide services to their banking community. TARGET 2 will enhance cost-efficiency and meet stateof-the-art business continuity procedures.