samchain/econo-pairs-v1 huggingface dataset:
In order to avoid more drastic changes in monetary policy at a later stage, we chose to adjust monetary policy in a somewhat less expansionary direction. The repo rate was raised in December from 4.10 to 4.35 per cent. (Diagram 6. Inflation Forecast December 1997)  BIS Review 14/1998  - 10 -  CPI an d Underlying In flation annual percen tage ch an ge 4.0  4.0  Underly ing infl ation  3.5  3.5  3.0  3.0  2.5  2.5  2.0  2.0  1.5  1.5  1.0  1.0  CPI  0.5  0.5  0.0  0.0  -0.5  -0.5  Jan-95  Jul-95  Jan-96  Jul-96  Jan-97  Jul-97  Jan-98  Sources: Statistics Sweden and the Riksbank  The current crisis in Asia was discussed chiefly in our risk scenarios. A small reduction in the growth of exports was made in the main forecast. But it was primarily a possible deepening of the crisis compared with the situation in December that, it was deemed, might have substantial effects on economic and price developments in Sweden. Thus the Asian crisis was taken into account in our risk assessment. Since then the crisis in Asia has worsened, both in terms of its effects on the financial markets and its likely consequences for real economic growth. For Sweden’s economy it means that the negative effects of the Asian crisis probably will be somewhat more extensive and prolonged than we expected in December.

Let me conclude the answer to this first question by emphasising that my reasoning is anything but new, even if some of the examples are, and there is new empirical research to rely on. The Swedish Trade Union economist Gösta Rehn argued in the 1950s and 1960s that full-employment policies must be combined with a tight demand policy. Wage formation could function well only if demand was restrained and the rules of the game were obvious. He also waged a battle for many decades against inflation for reasons of distribution under the slogan, “Hate inflation”. Substantial, arbitrary changes in income and wealth pose a threat to “the cement” in our society and thereby to the democratic system. Question 2: Why has inflation been allowed? Average inflation in Sweden has been low over a very long-term perspective. That changed after the Second World War, both in Sweden and in the majority of other industrial countries. During the 1960s, 1970s and 1980s, inflation was on a rising trend and at the same time fluctuated considerably. Not until the 1980s was the growth in prices stabilised in many parts of the western world. In Sweden, this stabilisation has come about in the 1990s. (Diagram 2.
All of that should mean that firms face a more balanced choice between incurring the costs of specialist climbing equipment to climb a particularly steep bit of the mountain and strolling up a somewhat gentler hill instead. The mountain guide The consultation we’ve launched today introduces a new Supervisory Statement to make it much clearer how our expectations change over time for banks as they grow from ‘new’ to ‘mature’. Whilst most of this reflects how we have supervised firms in practice over the past few years, we have brought it all together for the first time so that the mountain path ahead is clear to you all. I won’t set out the entire supervisory regime now. But I did want to draw your attention to three changes introduced by the CP, all relating to capital, and which are designed to deliver a clear path from being a new bank at base camp to being established and on the way to the summit.   First, we are proposing to update how we calculate the capital buffer requirement for new banks. To date this has been based on an unspecified wind down cost calculation. But interpretation by banks has (understandably) been inconsistent, so we are proposing to move to a clear and consistent policy of setting the buffer as six months of operating expenses. This should be enough to allow banks time to find alternative sources of capital or to change their business model if investor support is lost.

But we still expect new banks to maintain capital resources to support their business for 12 months ahead (whilst remaining above the operating expenses buffer), the reason for which brings me to the second change;  Scanning the Horizon, 24/05/19 – https://www.bankofengland.co.uk/speech/2019/sam-woods-building-society-association-annualconference-london 8  6  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  6    Whilst we recognise that obtaining regular new capital is often necessary for new and growing businesses, we are calling an end to ‘just in time’ capital planning. Instead, we expect any new equity to be injected well before a firm hits its buffers and for there to be a path to the point at which the bank will be self-sufficient in capital generation. If we observe evidence of ineffective capital planning, we will increase our supervisory intensity and consider whether further action is required. It is unsustainable for a firm to remain near base camp making losses forever. And persistent problems mean we may need to shift our focus to considering other routes down the mountain (as I will explain later); and finally    Growing banks are expected to develop their stress-testing capabilities so that they are ready to transition to full stress-test based buffer requirements once they reach maturity (typically but not necessarily five years after authorisation without restrictions). This has the potential to result in a sizeable step-up in capital requirements, for which firms need to be prepared.
All the prominent scholars who are presenting papers today will analyse some of the aspects of how and why market risk premiums vary. Financial regulations and financial frictions are  BIS central bankers’ speeches  1  important to our understanding of why risk premiums change over time. A thorough understanding of financial regulations and financial frictions might also be important in identifying unique investor characteristics. Axel Weber will shed light on the implications of financial sector regulation on the functioning of markets and the pricing of assets. Lasse Pedersen has provided valuable research on the micro structure of funding markets and how liquidity risks create systemic problems. In particular, he will cover frictions in financial markets. It is quite clear that the Government Pension Fund differs from the average investor in important respects. In addition, we need to understand how variation in risk premiums can be consistent with highly competitive financial markets. Why don’t all investors buy “value” or rebalance? Ken Froot will talk about rare events and disaster risks, how these events are priced in markets. He will also give insights on individual investor characteristics which give comparative advantages in holding these priced risk premiums. Ken French will speak about two ways for an investor to generate excess returns: informational advantages and systematically harvesting risk premiums which the investor has a comparative advantage in holding. Both Froot and French will mainly talk about average portfolio weights in highly competitive markets.

In the last talk today, Stan Zin will cover how different investors will change asset weights over time. He will also discuss what kind of risks an investor is exposed to through rebalancing and why investors might look at the same risk-reward trade-off differently. All of these exciting papers we will discuss today offer interesting perspectives for academic researchers and practitioners alike. As I argued at the start of my talk here, the challenges facing the management of our fund overlap with the research frontier of financial economics. However, we should not expect final and absolute answers. CAPM, partly developed by our own Jan Mossin, represented a huge leap forward in 1966. Today it has been replaced by better tested theories, just as future research will make today’s research frontier look antiquated. Rounding off the day, the CEO of NBIM, Yngve Slyngstad, will present the Norwegian Finance Initiative. This is part of NBIM’s efforts to build capacity to ensure our strategies have a well-founded theoretical basis. 2  BIS central bankers’ speeches
-  On the labour market, reforms should aim at protecting the persons, rather than the jobs. Professional mobility can be accompanied without blocking changes, while further progress can be made at improving risk sharing among employers and employees and fostering education. The gains from taking such steps are only reaped in the long run, while the costs are paid in the short run. In addition the gains can be seen as small from an individual point of view because widespread across a large number of agents, while the costs are more visible, concentrated on fewer beneficiaries who lose their position. This means that the reforms have to be well explained and well designed. Besides, a healthy public finance situation is seen as one of the prerequisites for the success of structural reforms: the degrees of freedom are also limited in that respect. In this regard, modernising public administrations can be a key element to ensure control over expenditure and budgetary consolidation. Appropriate monetary policy has a limited, although essential, role, insofar as it can help create favourable conditions for reform by insuring a stable price environment and therefore reducing overall uncertainty. Taking into account the achievements and the prospects for further reform in the present Euro area, what are the challenges facing the New Member States in the process of convergence and what are the prospects for a successful Euro area integration? In contrast with some gloomy predictions made ten years ago, the Euro is a success story.

Sound macroeconomic policies, institutional improvements spurred by EU-accession, increased trade and financial integration with the EU contributed to a rapid catching-up. Indeed, the year 2006 was the year with the highest GDP growth for the region since the beginning of transition. Today, the New Member States face the challenge of maintaining stability and sustainability of the catching-up path. Stability requires macroeconomic policies avoiding the accumulation of imbalances. Sustainability implies that past rates of high economic growth could be maintained in the future. To some extent, economic performance in the past decade could partly be related to a cyclical recovery after an initial slump. The recent dynamics were also generated by the massive reorganisation and privatisation of the economy after the fall of  4  BIS Review 115/2007  communism. This process triggered large FDI inflows providing both financial means and technological transfer. Today privatisation is almost complete and one has to look for new engines pushing forward the catching-up process. Currently, I see three main risks that have to be addressed as priorities by policy-makers: (i) (ii) (iii)  increased financial vulnerabilities, in relation with fast credit growth and mounting external imbalances ; rising inflation pressures which hurt external competitiveness; and the challenge of ensuring high future potential growth. . This third challenge belongs to the long-run as future economic developments will need to feed productivity growth beyond the dynamics of catching-up, through technological and production process innovation.
But we were all then hit by new shocks to the world economy. Russian default, followed by the near collapse of a highly-geared US hedge fund, led to a flight of investment into only the most secure and highly liquid assets, threatening not only a new round of financial crises in the emerging markets of Asia, Latin America and elsewhere, but also, for the first time, a credit crunch in major industrial economies, most notably in the US. Meanwhile the Japanese economy remained independently mired in recession. BIS Review 56/1999  2  By the time of the annual IMF meetings in Washington last October the public atmosphere was close to panic and the media noise was of impending world recession. Business confidence slumped pretty well everywhere, and so too in this country did consumer confidence. We were faced in the Monetary Policy Committee with a situation in which the overall economic slowdown which we had been seeking to engineer, in order to prevent accelerating inflation, threatened to become an unnecessary economic downturn likely to produce an unwanted fall in the rate of inflation to significantly below the Government’s 2½% inflation target.

Mr George offers an overview of the UK economy Speech by the Governor of the Bank of England, Mr E A J George, at a dinner hosted by Birmingham City 2000 in Birmingham, England, on 18 May 1999. Thank you, Mr Chairman. I am delighted to have been invited to speak at this Birmingham City 2000 Dinner on the evening before the first ever meeting of the Court of Directors of the Bank of England at one of our Regional Agencies. We have decided to hold Court meetings periodically outside London for two reasons. First, we want to emphasise that we are the central bank for the whole of the United Kingdom and that we are very sensitive to that responsibility. Secondly, we want to draw attention to the existence of our twelve existing regional agencies (and, as we announced on Monday, we will shortly be opening a further agency in Northern Ireland) and to the important role which they play in informing the monetary policy process in particular of real-world conditions on the ground in industry and commerce in every part of the United Kingdom. Our Agent here in the West Midlands, John Beverly, is well known to many of you. He will be moving on, to the South West, in the autumn to be replaced by another John! John Bartlett who is at present a Deputy Chief Cashier.
Although drafting recovery plans is the task of individual banks, the Bank of Albania, in its capacity as the Supervisory Authority, plays an essential role in assessing the quality and reliability of these plans. During 2018, banks have prepared recovery plans based on a new bylaw adopted by the Bank of Albania that sets out their detailed content. The opening panel of this Conference will present concretely our assessment of these plans. In brief, we may say that our challenges remain the same as those faced by other supervisory authorities, whether in European or regional countries. In sound financial situations, such recovery planning allows the Bank of Albania to deeply understand the structure and activity of the bank, thus supporting our supervisory process to identify areas for improvement, as well as bank’s self-diagnosis in these areas. In stressed financial situations, the recovery plan is the main document the bank has to correct its difficulties and, as such, it must be efficient, applicable and comprehensive. The second step of the new crisis management framework is related with the early intervention in the bank. This step is activated if, after the implementation of the recovery plans, the bank’s actions fail to improve the situation. The Bank of Albania, in the capacity of the Supervisory Authority, undertakes several concrete early intervention measures in the bank, before the bank shows signs of insolvency. Currently, we are in the process of drafting bylaws for the early intervention implementation in accordance with the new legal requirements.

The model of global integration is the economic model that has been adopted by most of the transition countries, such as Albania. Under this guidance, the Albanian banking market has demonstrated clear willingness and objectives for a swift harmonization with the legal framework of the European Union’s banking system, as well as with its significant changes since 2008. Although there are no cases of bank failures in the history of the Albanian banking sector, we have identified in our banking legislation the same loopholes found in other European economies. The development of hypothetical scenarios for coping with a potential exposure of the Albanian economy to the Greek sovereign debt crisis evidenced that the Bank of Albania – as the supervisory authority of the banking sector – did not have all the necessary legal instruments to manage insolvency situations in systemically-important banks. This need for a new legal framework is addressed in both national and cross-border aspects, by the Bank Recovery and Resolution Directive. In fact, the initial efforts to prepare and present the first recovery plan to the Bank of Albania started in 2012. The relevant Regulation was approved by the Supervisory Council of the Bank of Albania in 2014. But, of course, these efforts were made within the supervisory legal authority and, as such, they were not sufficient. For this reason, during 2015, with the support of World Bank’s FinSAC project, the Bank of Albania started the difficult but necessary work of harmonizing the European Directive into a new Albanian law.
•  In a relatively better position to weather the shift are Malaysia and the Philippines, as they export a variety of agricultural produce and consumer goods to China. 4  BIS central bankers’ speeches  However, it would be misleading to attribute Asia’s weak export performance solely to China’s slowdown. •  While Emerging Asia’s nominal exports to China fell by 4% y-o-y last year, the decline in the region’s exports to advanced economies and other emerging markets has been even sharper. •  An MAS study shows that the ASEAN-4 economies’ value-added exposure to G3 final demand is still about 1.4 times its exposure to China’s final demand. Third, the inevitable transition pains of a restructuring China will trigger periodic bouts of volatility in financial markets across Asia. •  Shocks from China’s financial markets are transmitted through the banking and portfolio channels due to the substantial holdings of Chinese assets by foreign investors and lenders. •  Another avenue of transmission would be through the confidence channel, whereby events in China affect risk appetites in other markets. China in transition: medium-term implications In the medium term, China’s rebalancing could bring more positives to Asia in spurring trade, boosting investment, and expanding regional production networks. First, there are ample opportunities for countries which re-orientate the structure of their exports to tap on Chinese’s burgeoning demand for consumer goods and services.

•  Local governments are now allowed to raise funds in the bond market, reducing their reliance on land sales to fund expenditures. •  And earlier this week, on 1 May, China replaced all business turnover taxes with a more efficient value-added tax (VAT). But work remains in the areas of reducing off-budget spending, strengthening social spending, and refining environmental and property taxes. Domestic financial liberalisation is another area where the glass is half full and half empty. A lack of depth and sophistication in China’s domestic financial market has limited the returns on household savings, indirectly crimping their purchasing power. It has also restricted financing to promising businesses. •  China has taken the important step of liberalising interest rates. •  But it also needs to develop deeper and broader capital markets. This will help better price risk capital and ensure that financing flows to more productive economic activities. China has proceeded with capital account liberalisation in a careful and systematic way, “crossing the river by feeling the stones”. •  Since 2008, the use of RMB outside China has been permitted for all current account transactions. •  Capital account transactions in RMB were subject to various quotas and schemes, which have been progressively expanded. •  And late last year, China allowed foreign institutions to issue bonds in China’s onshore interbank bond market for the first time.
In addition, member countries participate in a variety of consultative fora on economic policy and financial stability, which should also promote improved policy in these areas. Another benefit of euro area membership is access to rescue funds and a common safety net intended to address shocks in individual countries and reduce contagion among them. But euro area membership also entails risks for Iceland. It would no longer be possible to apply independent monetary policy and a flexible exchange rate in response to shocks and to expedite adjustments to changes in national income. Under certain circumstances, this has been quite useful for the Icelandic economy. On the whole, however, domestic monetary policy has not proven particularly effective in achieving set goals, and more often than not a flexible exchange rate has proven a source of shocks rather than a shock absorber. Consequently, relinquishing domestic monetary policy may not prove to be a great sacrifice unless monetary policy can be improved and excess exchange rate volatility can be mitigated. This possibility is explored later in this chapter. Another risk is the crisis currently facing the euro area and the design failures that are a partial cause of it. Because of this, it would be risky for Iceland to join the euro area before it can be determined, based on further developments, whether the euro area would be a better or worse choice in the long run.

The central bank deposits held by the national treasury and the domestic financial institutions are then converted to the anchor currency, as are the financial institutions’ domestic assets and liabilities. Technically, this can easily be done, but what comes next? Many of the pros and cons of unilaterally adopting another currency are the same as those pertaining to the euro area: inflation is better anchored and exchange rate risk disappears in trade within the currency area, although independent monetary policy and exchange rate flexibility are relinquished as tools that can be applied in response to economic shocks. The fact that no formal agreements are needed and the process can be concluded swiftly could  BIS central bankers’ speeches  7  be viewed as an advantage over and above negotiated euro area membership. But the lack of a contractual framework embodies many of the disadvantages of this option in comparison with euro area membership or maintaining the domestic currency. The main problem is that the supply of the new currency in the country will fluctuate with capital in- and outflows, while counteractive measures are much more limited than with an independent currency or full euro area membership. For instance, capital outflows could quickly develop into a liquidity problem for the banking system and for treasury financing, which could ultimately lead to default and a financial crisis that the domestic authorities would be unable to stop.