samchain/econo-pairs-v1 huggingface dataset:
18  Figure 11 Real MPR (*) (percent)  6  6  Brazil  4 Colombia  4  Mexico  South Africa  2 New Indonesia Zealand  2  Peru  0  Chile  B  M  CO  S  P  I  N  -2  C  A  -2 Australia (*) Calculated as the current MPR minus expected inflation one year ahead. Sources: the Central Bank of respective country. Figure 12 Total corporate debt (*) (percent of GDP)  140  140 Local  120  External  120  100  100  80  80  60  60  40  40  20  20  0  09  10  11  12  13  14  15  16  17  -  (*) Basado en información administrativa a nivel de empresas. Incluye entidades financieras no-bancarias. Source: Central Bank of Chile using Achef, SBIF and SVS information. 19  Figure 13 Activity and commercial portfolio credit risk (real annual change, percent share) 8  95  Normal portfolio (right axis)  6  4  94  93  GDP Commercial (*)  2  92  0  91  11 12 13 14 (*) Growth rate of commercial debt stock divided by two. Source: Central Bank of Chile using SBIF information.

Figure 8  BCS: causes behind changes in lending standards (1)  (index, moving four-quarter average)  Big enterprises' demand  30  Substitution of funding sources  15 0  Households' supply (2)  30  10  15  0  0  -10  10 Competition other entities  0 -10  Other  -15  Working capital  -15  -20  -30  Mergers/acquisitions  -30  -30  -45  -40  -40  -60  -50  -50  -75  -60  -45 -60  Fixed asset investment  -75 14  15  16  17  -20 Regulatory changes  -30  Risk (npl, default, other) 14  15  16  -60 17  (1) Index measures net relative importance attributed by banks to credit demand and supply determinants, respectively. For more detail, see Banking Banking Credit Survey. (2) Average between housing and consumer Source: Central Bank of Chile.
9  STRUCTURAL CHANGES AND NEW CHALLENGES  NORGES BANK  We have always know that activity on the Norwegian shelf would eventually decline. After a half-century of oil production, about half of estimated total reserves have been extracted.3 About half of what remains has not yet been discovered. In recent years, known oil resources have shown little increase (Chart 10). There is also the question of how much of what remains would be profitable to extract. ECONOMIC PERSPECTIVES 13 FEBRUARY 2020  Chart 10 Fewer large discoveries. Reserve growth. In millions of scm of oil equivalents 1800  1800  1600  1600  1400  1400  1200  1200  1000  1000  800  800  600  600  400  400  200  200 0  0 1967  1974  1981  1988  1995  2002  2009  2016  Source: Norwegian Petroleum Directorate  The offshore oil industry features investments that generate income for a long time ahead. For many fields, the exploratory, development and production phases span several decades. The Johan Sverdrup field, where production recently started, will according to plan remain in production for at least 40 years. Exploration and field development decisions have always been based on estimated futures prices for oil and gas. Uncertainty linked to future profitability has also been a key factor. Today, global climate challenges add to that uncertainty. More and more people are waking up to the gravity of climate change.

The new Basel package is an attempt to use simple measures to put bounds on the consequences of flaws in more complex measures, which were themselves designed to avoid the perverse incentives to hold only very risky assets created by the previous generation of simple measures. More will need to be done in the years ahead to simplify and underpin the Basel regime. Market discipline can help, but only if there is much more transparency around the drivers of risk weights – both why they change over time and why they differ, for similar exposures, across institutions. The market needs to be able to understand what is published. Microprudential supervision under the new UK Twin Peaks system But the new UK regime will not rely on getting the regulations exactly right. That would be a fool’s paradise. Effective supervision is absolutely vital. Whether we like it or not, firms will be able to find their way around any set of rules – complex or simple – if they are determined to do so. This is not good. But the UK’s new Twin Peaks structure will help. In the first place, the reforms will finally give London a dedicated securities regulator a quarter century after the Big Bang that made it so necessary. The Financial Conduct Authority’s approach to enforcement will need to preserve – and, where necessary, restore – honesty in a market community for which side-stepping rules and principles has become too close to being part and parcel of commercial life.
At the latest Economic Policy Symposium held in Jackson Hole a couple of weeks ago, in a very stimulating paper, Eric Leeper set out a long list of questions that he felt should be addressed by researchers in order to fill the large knowledge gap in the field of fiscal policy and guide it closer to scientific analysis and away from its current state of alchemy. 1 Tonight I would like to add a couple of issues to that list, which are partly related to the international dimension of fiscal policy (often ignored by US academics). I will try to inspire our academic colleagues to give more thought to some issues which are key to the functioning of the global financial system and about which policy-makers often do not have sufficient understanding to inform their actions. The legacy of the financial crisis One feature of the financial crisis that has become apparent only at a relatively late stage has been the dramatic and widespread increase in public debt, especially in advanced economies. I will focus on this legacy and its implications for both the global financial system and the global economy as a whole. First, regarding the global financial system, high levels of public debt in major advanced economies are likely to have a non-negligible impact on financial market conditions over the next few years. We have seen in some cases how financial markets react to delayed fiscal consolidation, at times in a rather non-linear fashion.

In other words, what happens when certain assets that are considered relatively safe, and in some cases are used as safe havens, are not considered as being that safe any more? The crisis has shown the importance of financial markets relying on liquid and safe assets to protect against systemic risk. Traditionally, the government bonds of advanced economies  4  BIS Review 126/2010  have played this role. What scenarios open up if advanced economies’ sovereign debt assets are no longer perceived as risk-free assets? How would this affect the functioning of financial markets? There is no doubt that there would be some direct spillover to all other assets. The riskiness of the global portfolio can be expected to rise more than proportionately. Indeed, if the public sector is itself over-leveraged, who can back up the public sector? 2 It can be expected that higher yields and lower asset prices would exert downward pressure on economic activity through increases in the costs of external finance, negative wealth effects and negative effects on confidence. 3 A world without default-free assets would have further implications for economic activity because these are the prototype of “information-insensitive” instruments, i.e. they serve as “money” and provide the basic functions of money when the opportunity cost of holding money becomes too high. 4 For instance, information-insensitive assets are an important source of collateral in financial markets. The disappearance of “good” collateral would reduce credit supply and thus impair economic activity.
BIS central bankers’ speeches  3  These discrepancies have reinforced the worries of some that weak potential supply growth will constrain the pace of recovery. Possible explanations for such weakness range from demographics to a slowing in the rate of technological progress. It seems unlikely that communicating in 140 characters – useful discipline though that is – represents the apex of human progress. Nor should central banks always and everywhere take supply as exogenous. Central banks can affect people’s decisions about how much to work and firms’ decisions about how much to invest. When the outlook is particularly uncertain, as it is in the wake of a major financial crisis, this influence could affect potential supply. Monetary policymakers must consider the extent to which their decisions affect, not just depend on, the path of output.3 In the US this question has been the subject of much debate. A recent Federal Reserve Board paper argues that potential supply growth is likely to respond to demand as the economy recovers, for example through capital deepening, as well as the behaviour of the labour market.4 The rise in unemployment here in the US has been tempered by a fall in the rate of labour force participation and a slowdown in productivity growth (Charts 4 and 5). It is quite possible that, with a recovery in demand, those discouraged from looking for work will return to the labour force. Given the risks of hysteresis, that is more likely to happen the more quickly demand recovers.

3 The forecasts of inflation and the real economy are then conditional on the central bank’s view of the transmission mechanism, an estimate of the current state of the economy and a forecast of important exogenous variables. The central bank uses all relevant information that has an impact on the forecast of inflation and the real economy. In this framework, the central bank takes financial conditions such as credit growth, asset prices, imbalances, potential asset price bubbles and so on into account only to the extent that they have an impact on the forecast of inflation and resource utilization. Inflation and resource utilization are target variables, that is, variables that the central bank tries to stabilize. Financial conditions are not target variables. Instead, they are only indicators, as they provide information to the central bank about the state of the economy, the transmission mechanism and exogenous shocks. Financial conditions then affect policy rates only to the extent that they have an impact on the forecast of inflation and resource utilization. 4 Now, is there any reason to modify this view of monetary policy given the experience of the financial crisis so far? Let me approach this question by first asking what the causes of the financial crisis were, whether monetary policy contributed to the crisis, and whether a different monetary policy was warranted and could have prevented or reduced the size of the crisis.
Even with only one goal and with only one instrument, in theory Central Bank actions can be organized in different ways. For a long time in the past, monetary policy was conducted through the control of monetary aggregates. This practice, however, proved to be increasingly inefficient as economic systems designed new substitutive mechanisms to create money that had not been supplied by the monetary authority. With advances in information technology and its effects on the productive processes of commercialization and of consumption, this element of endogenous money creation made control of money ineffective, which in turn led Central Bankers to abandon the use of targets for monetary aggregates. It is important to highlight that this does not mean that the evolution of the monetary aggregates will be watched or treated carelessly. They are still closely monitored, but they have ceased to be the policy variable. Another choice available to the Central Bank is to conduct monetary policy through the control of the exchange rate, which implies that the focus of the monetary authority is aimed at managing the exchange rate's trajectory. This option has been also abandoned due to its high costs and to its limited effectiveness when the economy goes through significant changes and shocks. The option that has proven to be most efficient to conduct monetary policy is the inflation targeting regime. This system has explicit targets for the monetary authority, which brings transparency to the targets being pursued and allows for reporting to society the absolute commitment to the control of inflation.

Mario Draghi: ECB press conference – introductory statement Introductory statement by Mr Mario Draghi, President of the European Central Bank, Frankfurt am Main, 4 December 2014. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to the first press conference in our new premises. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by the Commission Vice-President, Mr Dombrovskis. Based on our regular economic and monetary analyses, and in line with our forward guidance, we decided to keep the key ECB interest rates unchanged. As regards our nonstandard monetary policy measures, we have started purchasing covered bonds and asset-backed securities. These purchase programmes will last for at least two years. Next week, we will conduct the second targeted longer-term refinancing operation, to be followed by six further operations until June 2016. Taken together, our measures will have a sizeable impact on our balance sheet, which is intended to move towards the dimensions it had at the beginning of 2012. In the coming months, our measures will further ease the monetary policy stance more broadly, support our forward guidance on the key ECB interest rates and reinforce the fact that there are significant and increasing differences in the monetary policy cycle between major advanced economies. However, the latest euro area macroeconomic projections indicate lower inflation, accompanied by weaker real GDP growth and subdued monetary dynamics.
Norges Bank recommends that the maximum limit for the loan-to-value ratio be set at 85 percent as a regulatory requirement, but that banks are also permitted to extend a certain proportion of loans with a loan-to-value ratio higher than 85 percent. Such quotas for new loans that exceed the regulatory limit are commonly referred to as speed limits. Norges Bank recommends that the tightened requirements for principal repayments for loans with high loan-to-value ratios and for debt servicing be set out in the form of guidelines rather than in the form regulations. The prudent lending requirements strengthen the robustness of banks and households and should be regarded as a permanent structural measure. Let me conclude by turning back to the present situation and challenges for the Norwegian economy. Oil prices have nearly halved since last summer. So far, the effects on the mainland economy have been relatively small. Nevertheless, the Norwegian economy must now adapt to lower demand from the oil sector and lower oil revenues. BIS central bankers’ speeches  3  The shift to an oil-driven economy with a high wage capacity was a comfortable journey. The journey forward, where the oil service industry must downscale and other trade-exposed industries must grow, will be more challenging. The point of departure for coping with the period of restructuring we are now facing is favourable. We have economic policy leeway. Inflation expectations are firmly anchored and the krone exchange rate is functioning as a stabiliser.

If developments in the Norwegian economy are broadly in line with that projected in the period ahead, there are nevertheless prospects that the key policy rate will be reduced further in the course of the first half of this year. The analysis in the latest Monetary Policy Report suggests that capacity utilisation in the Norwegian economy will decline ahead. Moreover, there are prospects that unemployment may increase somewhat, but reduced labour immigration will likely limit the increase. The krone deprecation since autumn 2014 will contribute to underpinning inflation in the coming period, but inflation is projected to move down further ahead. In the conduct of monetary policy, we seek to mitigate the risk of a build-up of financial balances, but monetary policy cannot assume a primarily responsibility for financial stability. Should financial imbalances build up further, the required countercyclical capital buffer for banks may be increased. Rapid rises in house prices and debt may also require the implementation of other, more targeted measures in order to mitigate the risk associated with the high level of household debt. In March this year, the Ministry of Finance requested Finanstilsynet (Financial Supervisory Authority of Norway) to consider whether it would be appropriate to implement measures aimed at limiting growth in credit and house prices. Norges Bank submitted its comments today where we endorse Finanstilsynet’s proposal while underlining the importance that regulation should give the banks flexibility – and responsibility for conducting sound credit assessments.
And this approach has the full backing of the central bank. Ten years ago, supporting euro adoption in our country was a sign of “good social morals among the better classes”, whereas today only the brave confess to ardently supporting it. That’s how much the mood of the elite and the electorate has changed over the last decade. Why is that so? Here my seven personal comments come into play. The euro and political union A stateless monetary union is inherently unstable. A currency is usually a consequence, not a cause, of the establishment of a state. In Europe, however, we began to build the “currency house” from the roof down, and then in 2008 everyone was very surprised at how the tiles flew off when the first wind appeared. Is there a prospect of a political union – a single European state – in the pipeline? Even if there is, do we want to be part of it? If the question is no, which would seem to be the case, thoughts of introducing the euro in the Czech Republic should, for that reason alone, be left on the back burner. Autonomous monetary policy Autonomous monetary policy is a kind of “absorber” of economic shocks. It is meant to reduce their impact and smooth the economic cycle. It prevents an economic contraction being borne by the unemployed and those on low incomes more than is necessary.

Certainly, the more flexible is your economy (in terms of public finances, the labour market, and so on), the easier it is to cope with shocks and the less monetary policy is needed. However, the case of the Eurozone shows how tricky it is when the absorber in the form of monetary policy is switched off and nothing replaces it. The shocks are bigger and hurt more. Listeners themselves can answer the question of whether the labour market and labour law are likely be made more or less flexible (and dismissals made easier) in the future. In doing so, they will answer the question of whether there will be a need in the future for more or less domestic monetary policy in the Czech Republic, a country whose conservative population is so averse to upswings and downswings. 1/3  BIS central bankers' speeches  The “convergence trilemma” The standard “monetary trilemma”, which you know very well (a country cannot simultaneously have a fixed exchange rate, an open capital account and autonomous monetary policy), is accompanied in a converging economy of our kind with something I call the “convergence trilemma”. No country can simultaneously have high convergence growth, a fixed exchange rate, and low macroeconomic imbalances, be they internal or external. In our case, catching up with our wealthier, low-inflation Western peers means a long-term tendency for our currency to appreciate. This is hardly consistent with a permanently fixed exchange rate.
Consequently, we will continue to implement the strategy of monetary normalisation pursued since June 2004. We will be doing so in the conviction that a preventive approach is much less painful for our economy than belated corrective measures. While the resumption of growth is heartening, we should not rest on our laurels since the expected figures are still lower than those needed to cope with the increasing financial requirements of our aging population. Much still needs to be done to raise potential growth in our economy. The proposals on liberalisation of the domestic market that have been put to the Federal Parliament by the Federal Council are a step in the right direction. Additional reforms should be planned, with the objective of stimulating internal competition and reducing the level of market regulation. It is certainly worrying to see our country's frequent low ranking in terms of the indicators that measure market liberalisation. The vitality of countries that have created more room for private initiative should serve as an inspiration to us. Given the healthy state of our economy, the timing is excellent for pursuing a programme of economic reform. We would be making a grave mistake if we declared ourselves content with the results we have already achieved. By ensuring price stability, the SNB, for its part, creates an environment that favours both general economic expansion and structural adjustment. Stable financial markets 2005 was a year of great uncertainties, with the surge in oil prices, disruptions to refining capacity in the United States, and geopolitical tensions.

The reserves policy adopted by the Bank Council bears the hallmark of common sense, aiming for a gradual rise in the level of monetary reserves so that the relationship of reserves to GDP does not deteriorate over time. This approach is consistent with the fact that, at present, we only have a moderate level of reserves. Those who believe that the SNB has surplus monetary reserves overlook the fact that Switzerland's central bank constitutes a form of insurance with respect to the monetary stability of the country. Like all kinds of insurance, the National Bank – faced as it is with expanding markets and increasing risks – must be able to rely on its reserves growing in tandem with the economy. If they did not do so, its ability to operate on the markets would be weakened. In this respect, it is the country's long-term interests that must not be lost sight of. The debate on the Cosa initiative (under which SNB profits would be used for the AHV/AVS, the Swiss old age and survivors' insurance scheme) is another example of a political move that could lead to a weakening in our monetary credibility. This initiative would hinder us in fulfilling our mandate, and last year I had the opportunity of explaining to you in detail why this is so. Allow me to briefly reiterate these reasons.