samchain/econo-pairs-v1 huggingface dataset:
Put another way, few applied macroeconomic models allow inflation to drift seriously away from the target for a persistent period of time. Many models implicitly assume a minimised probability of tail risks and shocks, and an exaggerated level of central bank credibility. As a consequence they will tend to underestimate the reaction of interest rates necessary to stabilise inflation forecasts at the target. Frankly, it is too early to tell where the terminal rate could be, even if this time could come in the future. 2. Several useful milestones along the way  5  Page 6 sur 14  The preceding section has highlighted that unequivocal rules set once-and-for-all are of low practical use in the current context; they put us at risk of either overreacting (empiricist) or underreacting (academist). Yet we should not give up having any reference points. In my view, the right balance consists of explaining an intermediary step along our path. Beyond this intermediary step, I believe it would be useful for the euro zone to set out a few decision criteria, both on interest rates and on the size of our balance sheet. 2.1 The neutral rate as an intermediary step About the first part of the journey, the ECB will continue the process of normalisation until we reach at least the neutral interest rate. Of course, structural models of r* are notoriously imprecise and volatile but nevertheless help us understand the evolution of the natural rate over long periods of time.

At the same time, when looking at accumulated unit labour cost changes we observe that a number of economies which lost cost competitiveness also experienced a loss of market shares, less gains in job creation and/or deteriorating current account position. Despite the decline in the euro area average unemployment rate over the last few years, unemployment remains too high in several countries and regions of the euro area. In these countries and regions, wage increases should not fully exhaust productivity gains in order to provide incentives for firms to create additional jobs. In this respect, sufficient wage differentiation is also required to improve the employment opportunities for less skilled workers where there is high unemployment for this category of employees. The extent to which an increase in nominal wage growth leads to upward pressure on inflation depends crucially on trend labour productivity growth. Under normal circumstances, stronger labour productivity growth would justify an increase in nominal wage growth, thus allowing wage earners to participate in economic growth without adding to inflationary pressures. But for the same reason, without sustained improvements in labour productivity higher nominal wages would not lead to improvements in real purchasing power, but fuel inflationary pressures. Importantly, industries are characterised by different productivity developments. Therefore, wage setting should allow for sufficient wage differentiation and agreements in one industry or sector can not readily be transferred to others. BIS Review 52/2007  1  Those are the reasons whey the Governing Council calls for a high level of responsibility from social partners.
It is therefore not surprising that over there, as well as over here, there is criticism of the existing structure, and pressure for change. Our own system, with its monopolistic approach to the origination of legislation, does not generate competing draft bills. But the marketplace for ideas on regulatory reform is, I can assure you, just as well contested. Critics of the existing British system object on three counts: 1  that the failures of the last decade demonstrate its inability to cope with strains and crises;  2  that it is unnecessarily complex, with overlapping and sometimes even conflicting responsibilities; and  3  that it has failed to keep pace with changes in institutional and market structures; the distinctions on which it was based no longer effectively apply. It is not my aim today to give a comprehensive assessment of the validity of all these arguments. And, in any event, just as in the US, there is a heavy political dimension to this debate. But I would make a few observations on the arguments advanced for change. The UK system is complex, although it is no more complicated than the equivalent arrangements in some other countries with similarly sophisticated financial markets. (Indeed, were I not a guest here, I might say that the US system was rather more labyrinthine than ours.) Those who argue for simplification point to duplication of function and cost, especially between the SIB and the front-line financial services regulators.

BIS Review 21/1997  -7-  HM Treasury  Insurance Supervisor  Insurance Companies  Consolidated Securities and Investments Supervisor(s)  Investment Firms, Markets and Exchanges  Bank of England  Banks  This last is not a trivial point, since the cost and disruption caused by reorganisation would be considerable, and higher in proportion to the degree of change. The process would inevitably generate uncertainty among firms and the public, and make the regulatory system more difficult to manage in the meantime. This argues for building on the present arrangements, if at all possible, rather than beginning again with an entirely new structure that could take years to settle down. Furthermore, what matters to the financial system, and to the public, is that regulators are effective. Effectiveness necessitates good communication, consolidated supervision and close co-operation to maintain protection across the piece. Whether structural change (including bringing functions together under one umbrella) would improve communication and co-operation and so increase effectiveness, is a key question, and the answer is far from clear. We have been making considerable efforts recently to enhance communication between different supervisors in the UK. That has involved, as you would expect, the usual paraphernalia of Memoranda of Understanding. But, in addition, we have sought to achieve cross-membership of some of our most important institutions. For example, Sir Andrew Large, the Chairman of the Securities and Investments Board, has become a member of the Bank of England’s Board of Banking Supervision and, reciprocally, I have joined the SIB.
An environment of low pricing for risk and low volatility might appear to suggest that global markets are not expecting large changes in asset prices. And yet, in a short period over the end of last year and start of this one we saw very sharp moves across asset markets in response to what seemed relatively modest amounts of news. Between mid-October and the end of the year spreads on investment grade bonds, for example, went up by around 50bps. 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  Since then, these moves have completely retraced – spreads at the start of May were the same as they were in mid-October last year. Bonds in other currencies and high yield bonds went on a similar round trip. At one point towards the end of 2018, the S&P was 15% lower than it had been just 3 weeks earlier – it is now at record highs.20  The fall in financial asset prices seems to have been due in no small part first to market concerns about future economic growth and the recovery to better news about the world economy and to the signal of greater support to economic growth from central banks than had hitherto been perceived. But the episode may also suggest that when it comes to expectations about the value of debt, the market itself is very sensitive to changes in sentiment and a correction might come very quickly, either because of weakening expectations of economic performance or signs of inflation.

More recently, however, in the face of slowing economic growth, they have adopted a range of measures to support domestic credit. A sharp slowdown in economic growth would make China’s elevated debt levels significantly less sustainable. China’s external debt is small and denominated in its currency. Although a number of international banks are active in its jurisdiction, its financial system is not highly integrated into the global system. A debt correction in China would first and most directly affect the Chinese economy. The impacts could be expected to spillover, however, to wider financial stability through a number of channels. The Chinese economy is now pivotal to regional growth and one of the main pillars of world growth and trade. As well as the economic effects and effects directly through banking exposures, it is likely that there would be a severe impact on financial market sentiment, this effect was seen in 2015 when a period of sharp correction in domestic Chinese financial markets sparked a correction in US financial assets. 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  Pricing of risk  Finally, I have tried today to trace a line from financial stability risks in the overall level and growth rate of global debt to those that may lie beneath the surface of the aggregate numbers.
Another important aspect is the identification and division of the population according to their demographic, geographic and cultural characteristics. For us, financial education is a public  BIS central bankers’ speeches  3  good intended for all. In compliance with the best international experiences, we identified financial education for young people as highly important, targeting not only students but also their educators. Its practical realisation has been a complex process requiring adequate human and financial resources. For that purpose, the slogan adopted by us is very meaningful: “Education may be costly, but it is priceless”. The implementation methodology is widely known: meeting face-to-face, interactive games that intrigue children’s imagination, a series of publication with a flexible level of difficulties, training of teachers of economy, and a tour in various schools of the country. In this regard, I would like to point out to the recent contribution of the Bank of Albania to high-school students for the book on: “Personal finance in your hands”, which is conceptualised as an elective subject for high schools. Honourable participants, Education is a never-ending process. Learning is lifelong. It is deep, immense, and comprehensive. Therefore, I have to say that in spite of what we have done so far, we still have a long way to go. The Bank of Albania deems as imperative the drafting and implementation of a national strategy on contemporary financial education. The Bank of Albania stands ready to join any initiative at national level, which aims at promoting literacy across the country. Thank you!

Reasons behind this behaviour are understandable and related to the fact that the majority of the society acquires information circumstantially, hoping that the actual failure becomes a lesson for the future. One way to eradicate circumstantial learning is the introduction of financial reading at an early stage of education. In this view, I would proudly say that, the Bank of Albania has provided an outstanding contribution. Allow me to briefly make an résumé of our work in this aspect. The first strategic station of financial education provided by the Bank of Albania was needs assessment and identification of training priorities. From this point of view, we assessed that it was indispensable to open the Bank “de facto” to the public. More frequent communications with the market and its important participants, as well as periodic explanations of monetary policy decision-making and risks balance related to inflation and financial stability, are some initiatives that we consider as a very effective education process. I am proud to say that now we have:   A public opinion that builds up expectation as regards our decision-making;    A media sector, which has admirably enhanced understanding, interpretation and expectations related to our decision-making;    A banking sector, which reads accurately and responds with high flexibility to the direction oriented by us;    A qualified public critique, where Bank of Albania finds a mirror of alternative opinions on its adopted decisions and practices.
Elvira Nabiullina: Review of Russia's economic and financial developments in 2016 Speech by Ms Elvira Nabiullina, Governor of the Bank of Russia, at the plenary session of the State Duma of the Russian Federation, Moscow, 9 June 2017. * * * Dear Vyacheslav Volodin, and deputies of the State Duma! The Central Bank is guided in its actions by strategic objectives. I want to note that across the country, every employee of the Bank of Russia knows what these are. They are the basis on which key performance indicators for employees are formulated. These objectives are: price stability; financial market sustainability; availability of financial products and services for households and businesses; development of the national payment system; development of technologies and support of innovations in the financial market. These objectives follow directly from the functions of the Central Bank, as defined by the Constitution and by the law. Yesterday, I took another look at the speech I gave to the Duma four years ago. Yes, of course, life has made adjustments. No one back in 2013 expected such negative external factors, the sanctions, and the drop in oil prices. So the task of ensuring financial stability has come to the forefront of our activities. But in dealing with this problem, we have tried not to lose sight of strategically important activities that we assigned ourselves four years ago, and we must continue to work towards the completion of these.

It therefore stands to lose money if there is a realised loss that is not absorbed by more junior creditors. Any such loss is later recouped by the Deposit Insurer via a levy on the surviving insured banks. It is important to underline that for banks funded by insured deposits, some of the costs of failure will fall on their peers. Over time, I suspect that that will increase pressure for a funded deposit-guarantee scheme with risk-based levies. That avoids defaulting banks getting off scott free, and has banks contributing to the deposit insurance system when times are good rather than only when under pressure. I realise that I am telling this conference of deposit insurance agency experts things you already know! I am doing so because they are highly relevant to where I am going on the development of resolution strategies for coping with the failure of the world’s largest and most complex banks, and how Deposit Insurance might fit into that endeavour. Resolution regimes for systemically important firms The objective is, of course, to get to a position where public money is never used to provide solvency support for a failing bank, however large or complex. To be clear, this is emphatically not just about preserving payments and transactions-deposit services.
This can be done without making statements about the policy instrument in the future. Each month we provide the market with a comprehensive assessment of the risks to price stability over the medium term. This allows market participants to form expectations about the future course of monetary policy, conditional on our real-time assessment of the state of the economy. In this sense, the ECB is predictable, and this minimises the volatility of expectations in normal times. Our quantitative definition of price stability and our medium-term orientation significantly reduce the likelihood of either deflation scares or inflation scares. The firm anchoring of inflation expectations – throughout a time of crisis – meant that we could maintain the rate on our refinancing operations at positive levels without having any materialisation of a deflationary risk or inflationary expectations. The phasing-out process I mentioned that we chose to expand our credit to banks. When executing lending policy, a central bank functions much like a private financial intermediary. Private credit extension is accompanied by restrictions on the borrower to limit its ability to take risks and to protect the value of the loan. If a central bank provides credit support, the analogy suggests that it must follow up with a continuous re-evaluation of the credit conditions to safeguard its funds and make sure its commitment is not abused. It also has to make sure that it does not subsidise certain economic activities nor permanently suppress the private interbank market.

6 Do you know why the losses were so small? Because banks were well capitalised and bank equity cushioned depositors – and the economy more broadly – against losses in the event of a bank failure. According to a study, the average capital-asset ratio fell from a high of 60% in 1880 to a low of 20% at the turn of the century. Then, after the crash of 1929, it rose to about 30% in the 1930s and 1940s. 7 It is now much lower, as you know. Making sure that banks are well-capitalised is the foremost life jacket of our system. Lifesupport in the form of liquidity assistance cannot act as a surrogate for appropriate management practices inside the banking system. The European Systemic Risk Board (ESRB), which will be hosted by the ECB, will assume a novel role in crisis prevention at the level of the 27 economies of the European Union as a whole. The ESRB will have the aim of identifying emerging systemic risk, and, if necessary, publishing early warnings as well as making recommendations to the competent authorities. The ECB is also fully involved in G20 reform efforts. International cooperation is absolutely vital given the interconnectivity between financial markets. A return to pre-crisis business practices would be fatal. Financial market participants need to restore trust. But this alone will not be sufficient. We absolutely require intelligent regulation that will prevent self-destruction.
European Central Bank: Press conference – introductory statement Introductory statement by Mr Jean-Claude Trichet, President of the European Central Bank and Mr Lucas Papademos, Vice-President of the European Central Bank, Frankfurt am Main, 15 January 2009. *  *  *  Ladies and gentlemen, the Vice-President and I are very pleased to welcome you to our first press conference of 2009. Let me therefore wish you all a very Happy New Year. I would also like to take this opportunity to welcome Slovakia as the 16th country to adopt the euro as its currency. Accordingly, Mr Šramko, the Governor of Národná banka Slovenska, became a member of the Governing Council on 1 January 2009. Following the adoption of the euro by Slovakia there are now 329 million citizens using the euro as their currency. We will now report on the outcome of today’s meeting of the Governing Council, which was also attended by Commissioner Almunia. On the basis of its regular economic and monetary analyses, the Governing Council decided to reduce the interest rate on the main refinancing operations of the Eurosystem by a further 50 basis points, bringing the total reduction since 8 October 2008 to 225 basis points. Today’s decision takes into account that inflationary pressures have continued to diminish, owing in particular to the further weakening in the economic outlook.

Looking over the policy-relevant, medium-term horizon, annual HICP inflation is expected to be in line with price stability. This assessment is supported by available indicators of inflation expectations for the medium term. Risks to price stability over the medium term are broadly balanced. Unexpected further declines in commodity prices or a stronger than expected slowdown in the economy could put downward pressure on inflation, while upside risks to price stability could materialise particularly if the recent fall in commodity prices were to reverse or if domestic price pressures turn out to be stronger than assumed. It is therefore crucial that price and wagesetters fully live up to their responsibilities. Turning to the monetary analysis, the latest evidence confirms a moderating rate of monetary expansion in the euro area. Monetary trends therefore support the view that inflationary pressures and risks are diminishing. In analysing monetary developments it should be recognised that the intensification of the financial market turmoil since mid-September has the potential to affect the evolution of monetary aggregates significantly. Recent money and credit data indicate that this has already had a substantial impact on the behaviour of market participants. Both the broad aggregate M3 and, in particular, the components of M3 that are most closely related to the ongoing financial tensions – such as holdings of money market funds – have shown high month-to-month volatility of late.
The same applies to banks, rating agencies, specialist players such as bond insurers, hedge funds, and regulators. Mistakes brought down even highly sophisticated market makers and specialist players such as Lehman, Bear Sterns, and AIG. The CDOs and structured products were very complex, and their valuation and risk management required sophisticated quantitative skill. When mark-to-market failed, mark-tomodel becomes complicated by absence of in-house capacity. And, the option of turning to external expert valuer such as arrangers is very expensive, due to the lack of liquidity and captive nature of such market. Thus, the knowledge required to properly manage these risks goes well beyond the quantitative skill and the usual front-office ability to value, price, and trade in normal market period. During abnormal periods, the Board must understand the context of each market, especially its market structure, to be in a better position to gauge erratic market behaviour and liquidity. Board members need to have a clear view, for example, whether the market would likely become a captive one, and the degree of counterparty risk in such OTC derivatives market. In the crisis environment, the strength of capacity of mid-and back-office becomes critical for minimizing losses, such as by reducing counterparty risk, and dealing with settlement risks. 2  BIS Review 135/2008  As this crisis develops, financial markets have witnessed, in an unprecedented manner, the unwinding of many contracts, even those backed by standard agreements like ISDA.

The Thai banking system remains resilient and profitable, due to strengthened risk management of banks as well as the continued stable macroeconomic conditions at home, and credit growth remains supportive of the economy. BIS capital ratio stood at 15.7 percent at end-September. NPL has continued to decline in third quarter by another 15.7 billion, gross ratio to total loans down to 6 percent, and Net NPL ratio down to 3.3 percent. NPL is fully provisioned for in according to IAS 39 since the end of last year. We will continue to encourage banks to focus on bringing this down further to strengthen the sector outlook. Liquidity conditions in the banking system remains normal as Thai banks rely on local funding in the form of deposit with some small portion of bill of exchange, or B/E, for 86 percent of the total liability. Thus, the Thai baking system is quite unaffected by direct impact from global credit crunch. Overall, the liquidity indicator, the ratio of loan to deposit plus B/E, is stable at around 90 percent throughout the third quarter, with slight tightening at the end of second quarter as loan growth accelerated, reaching 13.2 percent in September. The direct impact of the turmoil so far on the Thai banking sector has been limited. This is because the Thai banking sector has low direct exposure to CDOs and other problem assets. Thai banks’ exposure to CDOs including sub-prime CDOs is now less than 0.1 percent of total asset.