samchain/econo-pairs-v1 huggingface dataset:
In addition, we are concerned about a reference to the threshold allowing access to the Resolution Fund being introduced into the calibration of the internal MREL; this makes no sense when resolution is carried out at parent company level. As regards the measures still needed to finalise the Banking Union, completing the resolution framework is, in my opinion, the first priority, even more so than deposit insurance, the third pillar of the Banking Union. Mario Draghi was most insistent on this in his Florence speech of 11 May. i In most large jurisdictions – the United States, the United Kingdom and Japan – the intervention capabilities of resolution funds are not capped because they are backstopped by the fiscal authorities, without being a burden on public finances, since any public outlays are generally reimbursed by the private sector. During the last financial crisis, market and depositor confidence resulting from a credit line backstopped by the US Treasury enabled the Federal Deposit Insurance Corporation (FDIC) to resolve 500 banks without tapping into the resources of the safety net. ii Today, in the event of a severe crisis in the European Banking Union, the resources of the Single Resolution Fund (SRF) could be depleted. This is why a common backstop for the Single Resolution Fund is urgently needed. Let me emphasise that the aim of a common backstop is not to bail out banks or draw on government budgets.

These include sticky information models, in which new information is slow to diffuse through the population (Mankiw and Reis, 2002), perhaps because agents only probabilistically pay attention to experts or to news (Carroll, 2003). They also include noisy information models, in which agents form expectations based on noisy private signals (Woodford, 2001). Other explanations are based on the use of some form of adaptive learning (Evans and Honkapohja, 2001), switching between different prediction rules (Branch, 2004); or learning from lifetime inflation experiences (Malmendier and Nagel, 2013; Madeira and Zafar, 2012). In our information-based experiment that I discussed earlier, we found that cross-sectional disagreement (variance) in expectations falls after our information treatments, which is consistent with a sticky-information model and points to the importance of private information and information constraints. We also found evidence of gender differences in updating behavior, which in turn may reflect differences in gathering and evaluating new information. Numeracy, financial literacy, and education also appear to play a role in explaining dispersion across respondents, as seen in Chart 8. In our research, we have found extreme inflation expectations, especially high values, to be associated with lower financial literacy and numeracy skills, and with being relatively under-informed about past inflation or inflationrelated facts. Finally, there exists suggestive evidence of respondents forecasting under asymmetric loss, with respondents appearing to be averse to under-estimating inflation.
Three reasons for delay, and four reasons for hope So why have these two major European projects struggled to get off the ground fully six years after they were launched? After a strong initial impulse which quickly gave birth to an effective first pillar – supervision –, the Banking Union has been on hold for several years due to lengthy and not very productive discussions, in particular on the third pillar (deposit insurance scheme). When it comes to the CMU, its first action plan back in September 2015 had already identified a number of improvements that are still valid today; its main weakness was not in its content but in the lack of implementation. Let me start with three bad reasons for that. A first explanation would be that Europe only moves forward in times of crisis. This is partly true: the Banking Union and the CMU are two examples of 1/4  BIS central bankers' speeches  initiatives taken in the aftermath of the financial and sovereign debt crises. Yet we should not wait complacently until the next crisis to act; it is precisely because we are not in an acute crisis situation that we should move forward now. Second, both initiatives can be described as arid and technical. This is not an issue in itself; we are accustomed to complex topics. But here we may have created a maze of technical and interconnected sub-topics, and lost sight of their original political purpose.

Besides entailing rising inflation, this causes firms and households to start accustoming themselves to a high level of inflation. Monetary policy may then be forced to adopt a contractive stance in order to bring inflation back to the target rate. So if the central bank waits too long, the interest rate increases may be all the larger. In the meantime, moreover, economic imbalances and tensions may become so great that they lead to economic setbacks. We are familiar with such a course of events from the 1970s and 1980s, and perhaps not least from the early 1990s. Against this background, in situations when capacity is coming under pressure, it is clearly better for a central bank to act at an early stage. Future inflation The assessment in the inflation report, published just over a month ago, is that growth in the Swedish economy will be about 2 per cent in 1997 and around 3 per cent in 1998. In 1999, the rate is expected to go on accelerating to just over 3 per cent. This assessment envisages that, in an expanding world market, export growth remains relatively high. This is accompanied by an accelerating increase in private consumption, while public consumption at least stops falling. Economic growth in Sweden in 1998 and 1999 would then most probably exceed the potential rate, which is estimated to be just over 2 per cent in annual terms. The broad rise in all the major demand components will therefore gradually exert pressure on the available resources.
From a policymaking perspective, data collection, processing and statistical methods are a way to produce evidence for better decision making. A central bank that operates in a forward-looking environment, dealing with a large number of unobservable concepts, has an ultimate responsibility to use all the relevant information at hand. Monetary policy making is not a bureaucratic procedure, but an intense exercise of judgment. Of course, we must be able to share such information and judgment with the public to make our decisions easier to understand. As for judgment, a major challenge for central banks is to connect incoming information with medium-term prospects. While central bank boards generally meet at regular intervals, they need to assess when accumulated information is sufficient to indicate a change in the medium-term scenario, possibly demanding a change in the trajectory of monetary policy. In the case of emerging countries, FX pass-through poses a major challenge, as currency parities may exert substantial pressure on inflation in the short run, gaining a lot of public attention, but they may not prevail in longer spells. The source of currency volatility and the exposure of economic agents to FX risk are key factors that, in our experience, may help assess the medium-term impact of exchange rate movements and condition the need for a monetary policy response. A similar challenge to the exercise of judgment by central banks is to distinguish between “normal” times and stressed scenarios.

In Sweden, the Riksbank has regularly highlighted many of the risks in the financial system. We did so most recently in our Financial Stability Report. There we pointed out, for instance, that the financial turbulence might worsen and that the banks' access to funding could deteriorate. At the same time, we have all along made the assessment that financial stability in Sweden has been satisfactory. We make the same assessment now, and the Swedish banks are financially strong. 2  BIS Review 115/2008  As we have seen, a lot has happened on the financial markets recently. We are following developments closely, constantly updating our analyses and we are prepared to take action if necessary. We have regular contacts with banks, market participants and other government agencies, as well as our central bank colleagues in other countries. There is a generally high level of uncertainty in the world economy at present and this will probably persist for a good while to come. I would therefore like to return now to what I mentioned at the beginning – the inflation target and the stability it offers to the economy, particularly when storms are raging all around us. Monetary policy – focus on the inflation target The objective of monetary policy is to maintain price stability and this has been established by law since 1999. To be more precise, inflation measured in terms of the consumer price index, CPI, is to be held at 2 per cent, with a tolerance interval of +/- 1 percentage point.
Now let’s turn to what monetary policy should/can do  I would like to mention four challenges: First challenge: if the factors at play are global, what can domestic policies do? CBs have domestic mandates whereas the prevalence of lowflation and low rates suggests that some common or external factors may be at play. This is especially problematic for smaller open economies. And the existence of a “global financial cycle” à la Rey highlights the limits of flexible exchange rates in insulating those economies. Ultra-accommodative policies in AEs have definitely had spillover effects on EMEs, including the often-forgotten –albeit welcome- reduction of spreads in the latter, as shown by IMF research. Nevertheless, the formulation and stance of policies in one country can take account of feedback effects from others. And it goes without saying that the world at large would have been even worse off if AEs had fallen into deflation. Aside from building and using forex reserves, domestic policies should therefore contribute towards making the domestic real economy and its financial system more resilient to external shocks. In this regard, prudential policy aimed at building buffers or protecting financial institutions may complement monetary policy, provided these measures do not conceal a form of protectionism or an attempt at deglobalization. Second challenge: what should the inflation target and its horizon be?

Some economists have called for adjusting the inflation target, although in opposite directions: a few have argued for a higher target to avoid testing the Zero Lower Bound often (ZLB); others have called for a lower target, assuming lowflation is the New Normal. In both  2  BIS central bankers’ speeches  cases, hasty changes may only affect the CBs’ credibility and the expectation channel of monetary policy. We have more flexibility on the target horizon. This is the medium term and should not be confused with the 3-year horizon of the forecasts published by the ECB for instance, which may fall short of the target level; what matters is being on a path that is consistent with this medium-term mandate. Forward guidance and the announcement that rates will be “lower for longer” should provide reassurance over the CB’s determination to do “whatever it takes” to fulfill its mandate within this mandate. True, uncertainty about the causes of lowflation and low rates leads to uncertainty over the neutral rate and the need for accommodation; but the more uncertain our environment, the more important and useful it is that we be clear and predictable in order to reduce this uncertainty. According to simulations carried out within the Eurosystem and the BDF, clarifying that the future stance will remain accommodative for many years enhances the efficacy of Quantitative Easing (QE). Third challenge: how effective can non-conventional monetary measures be? The ZLB has proved not to be the effective lower bound.
In this case, the gradualness of the residential investment slowdown was made possible by the support provided by strong housing demand, against a backdrop of high demographic momentum in the Spanish economy in recent years. The lower contribution to growth of these two domestic expenditure components was offset, first, by the continued buoyancy of productive investment of firms, in a situation of high profitability and favourable business expectations due to the continued momentum of domestic demand and, above all, to the surge in the world economy. In particular, capital goods investment in 2006 grew by more than 10% and in recent quarters its rate of expansion has been around 13%. Furthermore, net external demand has helped to mitigate the impact of the slowdown in household spending on growth, thanks to the notable recovery of exports in 2006 and to the moderation in imports in the first half of this year. The most probable scenario for the coming months is the continued gradual moderation of domestic demand and of output growth. In fact, there were signs in 2007 Q2 that might suggest a gradual change to a more subdued growth path, although GDP growth was only 10 bp less than in the first quarter of the year. The information (still very partial and fragmentary) of certain economic indicators relating to 2007 Q3 also points in this direction.

Other episodes, by contrast, such as the “new economy” crisis had a more far-reaching impact, albeit of varying intensity and duration in the different geographical areas. Unfortunately, these experiences are no precedent for diagnosing the potential scope of the current episode, which exhibits many new features, including the fact that it is especially concentrated in the Western heartland of the industrialised countries. The recent past has seen turbulence in Asia, Latin America and eastern Europe. Now, in contrast, the shocks are mainly affecting the United States and the more developed European countries. Let me thus take an eminently European perspective as I examine more closely some of the main features at play here. This approach will also help me to look at its implications for euro monetary policy, which I believe is the most logical way to address the possible impact on the Spanish economy. I wish to begin by emphasising the non-existence in the euro area of the sub-prime mortgages that are accepted practice in the United States. Therefore, in the first analysis, the rise in doubtful assets in the United States should affect only the European financial intermediaries that acquired securities linked to sub-prime mortgage loans originated in that economy. However, the propagation of contagion is not confined to the influence of this channel alone, but rather is transmitted through a wider range of shocks.
The propensity for investments started to decline during the summer of 2000 and continued to do so at an accelerating rate later on. Keeping public expenditures under control and rising tax revenue due to supplementary tax adjustments led the primary surplus to pick up significantly. However, the growth in domestic demand, the price hikes in energy sector, especially in crude oil, and the real appreciation of Turkish lira were all the factors that caused the imports to grow rapidly and this, in turn, led to deterioration in current account balance. In addition, the depreciation of the euro against the US dollar by an average 13 percent in 2000 raised Turkey’s imports from the EU countries, while Turkey’s exports to the EU countries were negatively affected. As a result, the external current account deficit in 2000 grew by 4.8 percent of the GNP. While the current account deteriorated rapidly, delays in privatization and structural reform agenda in the second half of 2000 adversely affected the capital movements and interest rates starting from August, arousing concerns in domestic and international markets. The increase in the interest rates, on which the monetary policy similar to a currency board regime is ineffective, resulted in deterioration  BIS Review 35/2001  1  of the financial structure of the banks which held large amount of government securities in their portfolios. This further weakened the confidence in financial markets in the second half of November.

Any irregularities are detected and reported to concerned authorities to take actions for continually checking that they are corrected. 7. SAMA has established a permanent committee for regular monitoring of financial crimes in general and money laundering crimes in particular. The committee is made up of members from SAMA and banks to review the instructions and procedures taken in this regard so as to be applied as required. 8. SAMA has attached great importance to training in the field of combating money laundering. SAMA’s IOB held 47 training courses benefiting 800 trainees during 2009. Several government authorities, which are concerned with anti-money laundering issues, have also made great efforts to train their employees. A number of conferences and symposiums at the domestic and regional levels have been  2  BIS Review 54/2010  hosted to raise awareness of the issue of money laundering and strengthen human and technical capabilities to combat it. Your meeting today in this symposium is only part of SAMA’s efforts to raise the level of compliance and anti-money laundering. Dear audience, Despite considerable efforts made to promote the principle of compliance and anti-money laundering that have had a significant positive impact, money laundering criminal activities always seek new techniques to be able to continue. Hence, we always need to be alert and cautious, and we should enhance our capabilities and do our utmost to fulfill the tasks entrusted to us.
Residential construction of apartments in apartment blocks in relation to the population increase has been lowest in Stockholm county, followed by Skåne county and Västra Götaland county. One ray of hope is that the number of building permits granted for apartment blocks is continuing to increase, which indicated a continued increase in new production of apartment blocks. Factors such as regulated rents for rental properties, i.e. the utility value system, a lack of land with planning permission in growth regions, the construction of the municipal tax equalisation system, the imbalance between traffic situations and housing in growth regions and long planning processes probably all contribute to the relatively low level of residential construction, even in areas where demand is high. A further restriction is the lack of competition in the construction sector. This is demonstrated in the developments in prices and wages in the sector. Construction workers’ wages have increased more than those of industrial workers in recent years. Another example is that the costs of construction  2  BIS Review 2/2002  materials, which constitute approximately one-third of total construction costs, have shown price increases over and above other industrial products for some time now, with price rises even during periods of low demand. One important explanation for this is the fact that the construction trade is concentrated to a small number of large companies. In some markets, for instance, those for cement, reinforcement steel and plasterboard, one company accounts for more than 50 per cent of total sales.

With the anticipated bumper harvest of maize coming on the market as the marketing season opens this month, maize prices are expected to fall and assist in keeping food inflation in check and overall inflation at a single digit level. The challenge will be to anchor inflation at these single digit levels throughout this year and beyond. In order to do this, continued implementation of appropriate monetary and fiscal policies as well as maintaining relative stability of the exchange rate would be vital plus increased production of goods and services. Ladies and Gentlemen, recently, the exchange rate market has been characterized by a general appreciation of the Kwacha against major foreign currencies. This has been mainly due to increased supply of foreign exchange on the market relative to demand. The key factors underlying the increased foreign exchange supply include:  BIS Review 72/2006  1  ii. increased copper output and exports as well as record high prices. Copper exports volume has in recent year registered sustained growth, increasing from 353,000 metric tons in 2003 to 423,000 metric tons in 2005. The price of copper rose to US $ per tonne in December 2005 from US $ per tonne in December 2004. By May 19, 2006, the price of copper had increased to US $ per tonne,  iii. increased non-traditional export earnings, from US $ million in 2003 to US $ million in 2005,  iv.
In addition, the Riksbank shall promote a safe and efficient payment system.” The first objective has therefore been made concrete by the Riksbank itself as 2 per cent inflation with a tolerance of one per cent upwards or downwards. The second objective, stability in the payment system requires monitoring of the “infrastructure” in the payment system and of the major institutions that could be associated with a systemic risk for the banking system. The second objective is hardly known although important and it will also continue to be the Riksbank’s responsibility if Sweden joins the monetary union, the EMU. The Riksbank has opted to measure inflation by the consumer price index, CPI. This measure has certain disadvantages, although it has the great advantage of being known and spread among the general public. “Inflation” is understood by the general public as a slow rise in CPI. The disadvantages with CPI are that the measure itself is affected by the policy carried out by the Riksbank. If inflation is low and risks turning into deflation, the economy needs to be stimulated. The Riksbank then reduces the instrumental rate to increase activity and capacity utilisation in the economy. However, the first thing that happens is that inflation is further reduced or even becomes deflation as interest rates fall and housing costs become lower. These are namely included in CPI. Only after some delay is there an effect on the level of activity and inflation in the right direction. This can lead to misjudged policies.

Within this framework, the GPFG should be managed in a responsible way. The report to the Storting notes that there is broad political agreement that the GPFG should not be an instrument of foreign policy or climate policy, and it is important that this continue to be the case in the future. Restrictions or instructions that have a significant impact on the trade-off between return and risk will limit the potential to achieve solid performance over time. 2/2  BIS central bankers' speeches