samchain/econo-pairs-v1 huggingface dataset:
An obvious reason for why inflation can be higher or lower is the kind of risk for different economic developments that I have just talked about. But one factor that has puzzled us is the surprisingly low wage growth in Sweden bearing in mind how the economy has strengthened in recent years. 17 Even though we have seen that wages are now rising more rapidly both abroad and in Sweden, uncertainty remains over the strength of inflationary pressures. This is also a reason why we are expected to proceed very cautiously with repo rate rises in the coming years. The Swedish krona may grow weaker or stronger than our forecast, but as we have tried hard to get inflation to rise towards the target, we are more concerned about the potential effects of a rapid and sharp appreciation of the krona. The fourth and final category of uncertainty factors concerns ongoing major structural changes, the effects of which are very difficult to assess “in real time”. I have mentioned two factors today: the trend of low global real interest rates and the increasing interest-rate sensitivity of households. But there are also other factors that I have not discussed today, but that are nevertheless very important to consider. The mega trend towards greater digitalisation is changing many parts of society, and at the Riksbank we are affected not only as regards monetary policy but also as regards our other operations, such as our responsibility for a safe and efficient payment system.

Specific signals from central banks concerning the likely path of the interest rate can result in lower market rates through lower key rate expectations. Risk premiums may also decrease. The Federal Reserve, and recently the Bank of England, have also developed central bank communication by linking any introduction of monetary policy tightening to specific unemployment thresholds. In August, the Bank of England clearly stated that it does not intend to raise the key rate until the unemployment rate falls below 7 percent. But the promise was not without conditions. Significant changes in the prospects for inflation or  10  The forms of forward guidance have been referred to as either «Delphic», after the oracle at Delphi, or «Odyssean», after Odysseus, who bound himself to his ship’s mast to avoid the seductive song of the Sirens. Delphic guidance means only stating what you believe about future interest rates. Odyssean guidance also includes a binding promise about future interest rate developments (see Campbell, J. et al. (2012): Macroeconomic Effects of Federal Reserve Forward Guidance. Brookings Papers on Economic Activity, Spring 2012). BIS central bankers’ speeches  7  financial stability may lead to monetary policy tightening before unemployment falls below 7 percent. 11 In theory, the announcement of such thresholds could be particularly effective when the central bank’s normal response pattern implies that monetary policy would have been tightened before the threshold had been reached.
I now live in Frankfurt and feel good. How many days a week do you spend there? It's difficult to say. To express it like a central banker: perhaps 3.25 out of 6.5 working days! The rest of the time I spend working elsewhere, in Europe and further afield. 2  BIS Review 18/2007  In 2011 the ECB will leave Frankfurt's city centre for a former industrial area on the edge of the city. Do you regret the fact that you will have to leave the city centre? On the contrary, I believe that the design of the renowned Viennese architects COOP HIMMELB(L)AU, with its two intertwined towers and incorporating the listed Grossmarkthalle building, will greatly enrich the city's skyline while creating a European icon. BIS Review 18/2007  3

Finally, I would like to welcome the members of the Forum and its observers, and thank them in advance for committing to and participating in this exciting and important project. 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4
It is plausible that we are capturing all that we need to via the incorporation of asset prices – and so, at one remove, credit conditions – in mainstream macreconomic models and analysis. But we cannot be sure, not least because banking intermediation does not feature in those models, and now do risk premia. As I have said before, 34 we must look at money, as it can be an “amber light”, but analysis of the monetary aggregates, which means the analysis of the banking sector balance sheet, often needs to be especially detailed. Sitting at the juncture of the real and financial economies, central banks should be especially well placed to undertake that analysis. To be clear, those are my individual views. Our governance structure provides constructive incentives for each of us to reveal our views on issues of this kind – to each other, and in public. Conclusion Much of the world economy has been enjoying a period of sustained macroeconomic stability. Reforms under a series of governments to enhance the flexibility of product and labour markets have helped our economies to absorb shocks. But few people doubt that stability requires credible monetary institutions. The practice and theory of monetary policy has travelled a long way over the past 15 years or so. As performance has improved, so more refined questions have emerged about the optimal conduct and communication of policy. Many of those issues will feature in this conference.

Money was believed to be more controllable than inflation so, during this period, objectives, targets/indicators and instruments tended to be considered together, a monetary target being expected to deliver all three. Ministers were, in consequence, drawn into highly technical debates, rather than focusing primarily on articulating high-level macroeconomic objectives. But both money targeting and, subsequently, exchange-rate targeting failed in the UK. That meant that attempts by politicians to deliver effective monetary policy by binding themselves to a policy rule based on an intermediate target had failed. So attention gradually turned to broader institutional solutions, leading ultimately to “operational independence” for the Bank. In terms of the political economy, there were perhaps two crucial developments during the first half of the 1990s. First, there was much greater transparency. An inflation target was announced by government, making the objective clear and performance in achieving it easy to monitor. The Bank’s analysis of the inflation outlook was published in the quarterly Inflation Report; and its advice to the Chancellor on the level of interest rates was published in the minutes of the “Ken and Eddie Show”. This revolution helped to establish the legitimacy of what the monetary authorities were trying to achieve; helped to demonstrate the Bank’s competence; and showed that differences of view about the level of interest rates could be disclosed without the ceiling coming down.
6  The latest macroeconomic projections point to robust growth in the coming quarters once the vaccination programme has gathered pace and restrictions on movement have been progressively lifted. However, significant uncertainties remain as to the course of the pandemic itself, private consumption, tourism flows, the economic impact of the NGEU funds and the damage to the productive system caused by the pandemic. Against this background, there is still the risk of credit quality impairment being more pronounced in the future than has been observed to date, especially in the sectors hardest hit by the pandemic, and particularly once the support measures are gradually withdrawn. In fact, some signs of credit quality impairment were already observed in 2020. Specifically, Stage 2 loans6 increased substantially in 2020 (24.3%), and their growth has quickened in 2021 to date (37.5% in March). Meanwhile, although forborne loans continued to fall year-on-year, these declines have been far more moderate since the onset of the pandemic (-2.3% in March 2021, compared with -19.6% in March 2020). Lastly, NPLs increased in the consumer portfolio in 2020, growing by 23% (but slowing to 15.9% in March 2021). Deeper analysis of the growth of NPLs and Stage 2 loans in the business lending segment reveals that the sharpest increases occurred in sectors severely affected by the pandemic.

In the case of LTCM, stress testing could have given banks at least some warning of the types of exposures they could have faced last fall. The critical importance of stress testing is noted very explicitly in our new supervisory guidance. Sound Practice Guidance The sound practices document accompanying the Basle report presents an important set of standards that will guide both banks and their supervisors. It appears that banks generally have tightened the credit risk management standards for their HLI exposures since the collapse of LTCM. However, it is important that supervisors try to ensure that progress continues. Memories tend to be short, and we want to make sure that as markets calm down, as they have in the past months, banks do not return to the old ways of doing business. The adoption and rigorous enforcement of enhanced risk management practices should contribute substantially to limiting excessive risk-taking and leverage at HLIs. This is the case because HLIs cannot trade without access to financing and liquidity from banks and securities  3  BIS Review 27/1999  firms. If each counterparty manages its risks appropriately, the chance of contagion to other institutions and the financial markets more broadly would be reduced substantially. It is this risk of contagion and financial market instability that is the principal concern of central banks and supervisors. Along with other federal banking supervisors, the Federal Reserve has moved quickly to implement the recommendations of the Basle Committee’ s report.
But when we look ahead, it is very probable that this will no longer apply; the rate of increase in the CPIX is expected to be lower than the rate of increase in the CPI for a fairly long period to come. Let me go into more detail as to why this is the case. When the CPIX is calculated, mortgage interest expenditure for home-owners is excluded. Mortgage interest expenditure for home-owners in the CPI is calculated as a product of two indices: an interest rate index and a capital stock index. The interest rate index consists of an average of interest rates on mortgages, from variable interest rates to interest rates with a fixed duration of eight years. The capital stock index, on the other hand, measures the acquisition value of the housing stock financed by the mortgages. But with the calculation method used by Statistics Sweden the rising house prices will only affect the capital stock index when the houses change owners. Even if house prices are increasing substantially, this will only have a limited impact on the capital stock index in the short term. After all, it is only a small percentage of houses that are bought and sold every year. On the other hand, an increase in house prices affects the index for a long period to come. If house prices increased, say, twenty years ago, this will still have some effect even on today's index.

The aim is not that this measure will hold a special position in the same way as the CPIX has done. The idea is that the monetary policy discussion will focus more directly on the CPI. But there will certainly be reason to give a little extra emphasis to a measure like this from time to time. During periods when the repo rate is changed substantially it is important to have some grasp of how large the direct impact is on CPI inflation. This is how things have worked during the period since 2006, for example, when the Riksbank raised the repo rate in several stages. The measure can then differ substantially in the short term. If one looks at the inflation figures for April, the CPI and the CPIX increased by 3.4 per cent and 2.4 per cent respectively. 0.8 per cent of the one percentage point difference between the measures was due to interest rate changes and 0.2 per cent was due to changes in the value of the housing stock and in taxes. But nor can a measure that keeps interest rates constant provide an entirely perfect picture of inflation adjusted for the direct effects of monetary policy. Interest rates are not only affected by the Riksbank changing the repo rate. This applies above all to the long-term interest rates, but also the short-term ones. However, long-term interest rates carry relatively little weight in the interest rate index and the repo rate normally covaries fairly well with shortterm interest rates.
While a stronger alignment with actual economic risk is necessary, it is also important that the new requirements do not imply excessive procyclicality. When I speak of “pro-cyclicality”, I am referring to the interactions between the financial and real sectors of the economy, which tend to be mutually reinforcing and to amplify business cycle fluctuations. Just as a period of economic growth will tend to be accompanied by excessive risk-taking on the part of financial institutions, strong credit growth, asset price bubbles and, ultimately, the building-up of systemic risks, a strong contraction in economic activity may lead to a marked slowdown in financial flows, including credit, which hinders the recovery. Pro-cyclicality implies that capital requirements are loose  6  BIS Review 129/2009  in a boom, allowing banks to lend more in relation to their capital, while they are tight in a downturn, which induces banks to cut back lending to the private sector even further than they would in the absence of these requirements. While these mechanisms are to some extent justified by the different degrees of risk prevailing in the different phases of the business cycle, it is important that they do not lead to the excessive effects I just described. The pro-cyclical impact of regulatory capital requirements is currently being analysed by the relevant authorities, including the ECB. These assessments could provide a basis for developing an appropriate counter-cyclical buffering mechanism, which is a precondition for enhancing financial stability over the medium to long term.

However, both large and smaller banks tightened their credit standards more on loans to large firms than on loans to SMEs. This was especially the case at the beginning of the financial turmoil, but the net tightening was still slightly stronger for large firms in the second quarter of 2009. This may be surprising, given that there is a general perception that access to finance has of late become more difficult in particular for SMEs. The pattern of a stronger net tightening for loans to large firms can also be observed in Italy. This indicates that both large banks and large firms, which rely more on market-based financing, were initially more strongly affected by the financial turmoil than smaller banks and SMEs. Since the second quarter of 2008, however, the differences in lending behaviour between large and smaller banks have diminished. This probably indicates that the economic downturn has played a major role in the general tightening of standards when evaluating the creditworthiness of firms. Let me now turn to the question of how banks have tightened their credit standards. Both large and smaller banks have done so predominantly by increasing loan margins. In Italy, the net tightening of margins on average loans was similar to that for the euro area as a whole. At the euro area level, large banks increased margins on loans to enterprises somewhat more than smaller banks, which is in line with the overall stronger net tightening of credit standards.
Timothy F Geithner: Hedge funds and derivatives and their implications for the financial system Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Distinguished Lecture 2006, sponsored by the Hong Kong Monetary Authority and Hong Kong Association of Banks, Hong Kong, 14 September 2006. *  *  *  I want to thank Joseph Yam for inviting me to Hong Kong for this occasion. We are approaching the 10-year anniversary of the financial crises of 1997-99. Those crises were remarkable both in the scope of countries and markets they affected, and for their speed and severity. The circumstances leading up to the crises varied across countries and regions, as did the magnitude of the resulting damage to the real economy. But each of these events had one dynamic in common the confluence of a sharp increase in risk perception, and the subsequent actions taken by financial institutions and investors to limit their exposure to future losses. As asset prices declined and volatility increased in response to increased concern about risk, firms moved to call margin, to reduce positions and to hedge against further losses. These individual actions had the aggregate effect of inducing even larger price declines and further heightening perceptions of risk, ultimately propagating and amplifying the effects of the initial shock. The dynamic I just described was not unique to the crises of the late 1990s, nor was the damage to overall economic activity they left in their wakes.

Bwalya K E Ng’andu: Improving access to finance by the SMEs in Zambia Remarks by Dr Bwalya K E Ng’andu, Deputy Governor (Operations) of the Bank of Zambia, at the Signing Ceremony for a credit line of $ 5 million between NORFUND and BancABC Zambia, Lusaka, 1 December 2011. *  *  *  YOUR EXECELLENCY, THE NORWEGIAN AMBASSADOR, MR ARVE OFSTAD; MEMBERS OF THE DIPLOMATIC CORPS PRESENT; THE CHAIRMAN OF BANCABC ZAMBIA LIMITED, MR. CHANDA CHILESHE; THE MANAGING DIRECTOR OF BANCABC, MR. DANA BOTHA; HEAD OF THE NORFUND SOUTHERN AFRICAN OFFICE, Mr. DEEPAK MALIK; DISTINGUSIHED INVITED GUESTS; MEMBERS OF THE PRESS; LADIES AND GENTLEMEN. Let me begin by thanking BancABC for inviting me to be the guest of honour at this very important event, where we will witness the signing of a credit line worth US $ million between BancABC and the Norwegian Investment Fund for Developing Countries (NORFUND). It is pleasing to know that the credit line to be signed this morning is specifically tailored to provide financial support to Small and Medium scale enterprises (SMEs). The development of the SME sector and its potential to contribute to aggregate productivity growth, economic growth and development have been stifled by the generally limited access to finance. The credit line to be signed today is an important milestone in improving access to finance by the SMEs in the country. Equally as important as access to finance is the price of financing that is placed at the disposal of SMEs.
At this point, it is important to underline once more the damage caused by high inflation in order to remind us why should do everything in our power to stick to the price stability objective. This is especially important in an environment where the benefits of overcoming inflation are not yet fully understood. The consequences of failure to maintain price stability, in other words, the damage caused by inflation, can be clearly seen in our country both in society and in the economy, as is the case in all countries that have experienced high and chronic inflation. High inflation, one of the main reasons for poverty, depravation, unfair distribution of income, and the economic instability environment it creates has been one of the most influential impacts of inflation on society. The legacy of inflation on poverty, depravation and the unfair distribution of income have been clearly felt by society. Another effect of high inflation, which manifested itself in the short-term in society, is that of immoral behavior. High inflation led to moral corruption in our country. While Turkey ranked low in fields such as infrastructure, education, health and the fair distribution of income in international development indicators, it ranked high in indices of corruption. Another factor worth mentioning in this context is the relationship between high inflation and political instability. Shortsighted policies by political instability and the resulting inflation as a result have  BIS Review 36/2005  1  featured several times in economic literature.

Secondly, due to the development of the derivatives markets, the foreign trade level in a floating exchange rate regime will be the same as the level in a fixed exchange rate regime. Hence, exchange rate risk will not affect the level of foreign trade3. Turkish derivatives exchange (Turkdex) In this framework, the effective operation of derivatives markets is for enabling economic agents to hedge their balance sheets from exchange rate risks under the floating exchange rate regime. Macroeconomic stability and the structural transformation process have provided our economy with a  3  Baron D. (1976). Flexible Exchange Rates, Forward Markets and the Level of Trade. The American Economic Review. Vol. 66. No. 3. BIS Review 36/2005  19  sound environment for risk management. And, the establishment of the Turkish Derivatives Exchange has been an important step taken on the way. It would be useful to reiterate the potential favorable effects of derivatives markets on our economy. First of all, derivatives markets offer economic agents the facility of risk management and make their future revenue flows predictable. Moreover, expectations can be measured and reflected on prices through these markets. This, in turn, increases the predictability and efficiency of spot markets. In this way, market prices provide economic agents with accurate information and excessive volatility decreases. Analyzed in terms of their impact on the real economy, the use of derivatives markets increases resistance to shocks in the economy as a whole as it reduces weaknesses resulting from the imbalance on firms’ balance sheets.