samchain/econo-pairs-v1 huggingface dataset:
The latter is driven by, among other things, shrinking numbers of labour migrants coming to Russia for seasonal work. What is our concern? First, the lower a person’s income, the greater the share of food in their consumer basket. That means inflation hits such consumers in the first place. If we tolerate high inflation now, the least protected groups will suffer. Second, inflation expectations are accelerated by rising prices for food products that people buy every day: I have mentioned their effect. More so, last year’s loose monetary policy drove a reduction in deposit rates, making savings unprofitable. This year, a tougher monetary policy has pushed up interest rates, and deposits have been gradually growing again. We have raised the key rate several times this year to 7.5%. We have been raising the key rate gradually as we needed to make sure that tightening policy does not hinder economic growth and that inflation growth was really not a short-term episode, but that unfortunately, inflationary pressure is increasingly persistent. On this subject, I would like to raise the question of who wins and who loses from high and low interest rates. In general, this is a key point to understand the nature of monetary policy and key rate changes. High interest rates and low inflation benefit depositors, bond holders and those whose core income is fixed wages, pensions and social benefits.

In each of the scenarios, we are capable of returning inflation to target over the forecast horizon. We create these scenarios so that our policy is predictable for entrepreneurs and the real economy even if things change. In that scenario planning, we have to look into many uncertainties and multiple factors. In conclusion, I would like to thank you for your constructive cooperation and the efforts to finalise the Monetary Policy Guidelines, both within the working group and the joint meeting of several committees. Importantly, this year’s Guidelines take into account the feedback we have received from deputies. For example, we have started to publish a forecast for the average annual key rate, which we believe further increases the predictability of our policy. In line with our discussions this year, it is recommended that future releases of the Monetary Policy Guidelines offer insights into such key areas as the infrastructural impact of public investment and the development of specific industries from the economic potential perspective, as well as an assessment of demographic trends and the climate agenda. We will try to cover all these points in future releases of the Guidelines. Thank you so much for your time. I am ready to answer your questions. 4/4  BIS central bankers' speeches
In addition, there was little competition and little incentive to develop new services. The Swedish banks had too many employees and lived in an environment that must with hindsight be regarded as sheltered. After enduring the crisis, the number of employees had been reduced by one third, but at the same time turnover had increased. However, during the 1980s the regulation structure was slowly eroded. The banks’ balance sheets were full of government bonds that they had been forced to buy at non-market prices, and the credit flows began to move increasingly towards the unregulated sector outside of the banks. Developments in the international financial markets made the currency regulation increasingly difficult – and pointless – to maintain. It was not so much that there was a wish for deregulation; more that developments made it necessary. No one realised that this would entail a rapid and well-needed improvement in the efficiency of the banking system. Nor that the method by which it occurred would lead to a major financial crisis. During this period a Swedish money market began to emerge. As the banks could not and did not want to buy more treasury papers the central government was forced to consider alternative methods of financing the central government debt. They began to issue first short-term and then longer term bonds through regular auctions and these were purchased by pension funds and insurance companies. The banks became mediators in the market – primary dealers – rather than final investors.

This was to enable the Government to finance ambitious housing construction programmes and budget deficits that arose as a result of investment and social welfare measures. The banks themselves could decide who received the other half of their lending. However, the rate at which the lending could increase was determined by the Riksbank through “credit ceilings”. The idea was to keep credit expansion in line with economic developments and thus prevent inflation from accelerating. Moreover, the banks were encouraged to give priority to corporate lending so that the investment rate would not be threatened. Most of the loans to the private sector were made to large, international Swedish corporations. However, it was not only the banks’ credit volumes that were regulated; the price of the credit was also regulated. The Riksbank determined both the deposit and lending rates. The charges for various bank services were also regulated. This was intended to prevent unhealthy competition and protect account-holders and borrowers. The banks had to obtain permission to open branches in other towns in Sweden. This was to avoid too many banks establishing in one area so that competition became too stiff and profitability poor. In addition to the domestic regulations, there were also a number of regulations regarding crossborder capital flows. These were more or less entirely regulated. Companies and individuals were only  BIS Review 24/2006  1  permitted to invest if they could prove the financial necessity of the investment.
I could make similar points about the exchange rate criterion where, once again, we believe it is important to focus on the substance rather than on the form. Has a country shown that its anti-inflation discipline, over a lengthy period, has allowed its currency to hold its own without generating significant current account imbalances? For some applicant countries, the answer is evidently yes; for others, no. Once again, that is an issue which we will have to consider carefully as we assess the position of the United Kingdom next year. I imagine that these points would be very widely accepted across the EU, certainly by my central banking colleagues. But our view of the optimal state of preparedness for EMU is rather broader than this. And, here - as I said earlier - we may be less obviously in the mainstream of European opinion. Because we have concerns about the sustainability of an Economic and Monetary Union in which there is too little flexibility in product and labour markets, particularly the latter. Is the monetary union being designed one which retains sufficient flexibility to cope with the kind of differential shocks which may affect different countries within it? This point is, I think, not the same as asking whether the EU is an optimal currency area. I suspect the answer to that question would be no. But one might well give the same answer in relation to the United States, or even to the United Kingdom itself.

Housing starts and sales are now on a clear upward trend, and a widely followed national home price index is up around 12 percent over the twelve months ending in April.1 Indeed, anecdotal reports suggest that this higher-than-expected increase in home prices is due to a lack of homes for sale. Unfortunately, the improvements in consumer spending on durable goods and housing are not yet showing through in the overall GDP growth rate due to the significant headwinds that we continue to face. First, federal fiscal policy has recently become quite contractionary. Estimates from the Congressional Budget Office (CBO) indicate that this fiscal restraint is on the order of 1.75 percentage points of potential GDP this year. In the period since 1960, there have been only two previous episodes of fiscal contraction of this order of magnitude  2  BIS central bankers’ speeches  – 1969 and 1987 – both of which occurred when the economy was on a more solid footing than it is today. Second, the euro area is experiencing a protracted recession and growth in many of the largest emerging economies has slowed. This has resulted in a very sharp slowing of U.S. exports, with an associated slowing in production and employment growth in the U.S. manufacturing sector. Thus, I continue to see the economy as being in a tug-of-war between fiscal drag and underlying fundamental improvement, with a great deal of uncertainty over which force will prevail in the near-term. This tug-of-war is clearly seen in the monthly employment data.
But regulators cannot halt the advancement of technology just so that they are ready to regulate. In this situation, our challenge is to ensure that we keep pace with technology so that we are able to offer the required protection to all who access financial services using the new and unconventional payments systems. On our part, the Bank of Zambia shall focus its attention on the development of a robust regulatory framework that will address the key “hot button” issues of; 1. Prudential requirements; particularly those that relate to liquidity management and capital for infrastructure,  2. Consumer protection; with emphasis on disclosure of charges and confidentiality of customer information, and  3. Unfair trading practices particularly those related to monopolistic tendencies such as development of platform that are not compatible or not interoperable with platforms of other service providers. To strike a balance between a robust regulatory framework and the need for the framework not to hinder innovation and allow business to flourish, our efforts in establishing a robust  2  BIS central bankers’ speeches  framework will therefore be anchored on five key or internationally accepted best practice principles. These are: 1. The need to identify the types of mobile payment platforms to be permitted;  2. The need for an efficient mobile payments infrastructure such as settlements systems;  3. The need to design rules to regulate the information communication technology platform which is itself rapidly evolving;  4. Consumer protection; and finally  5. The need for compliance monitoring.

Alongside the current unusually high degree of labor market slack, we have a situation in which core inflation levels are low by historical standards. Continuing the comparison with the recession of 1981-82, it is worth noting that the core inflation rate today is almost 5 percentage points lower than it was toward the end of that episode. In addition, historical experience shows that the slack generated during a recession typically pushes core inflation lower in the early stages of recovery. So far, this cycle looks little different. As the degree of slack in the economy has climbed over the past year, measures of core inflation, particularly of core services inflation, have moderated. The tendency for service price movements to be persistent, coupled with the current unusually large amount of slack in the economy, suggests that the core inflation rate is more likely to fall than it is to rise over the next 12 to 18 months. BIS Review 122/2009  3  In summary, I believe the current balance of risks around the inflation outlook lie to the downside due to the very low level of resource utilization and the fact that long-run inflation expectations remain stable. This balance of risks is problematic because the current level of inflation is already so low – the core PCE (personal consumption expenditures) deflator has increased only 1.3 percent over the past 12 months. Thus, we would not need much of a decline in inflation to run the risk of an outright deflation.
Growth among trading partners seems on the whole to be approximately as expected in the June Inflation Report, but the risk of more sluggish developments has increased, according to the IMF and the OECD. High oil prices may result in somewhat higher inflation abroad than previously projected. The objectives of bringing inflation back to the target of 2.5 per cent and anchoring inflation expectations imply a continued low interest rate. On the other hand, there are expectations that high output growth will persist. The objective of stabilising developments in output may, in isolation, imply a higher interest rate. Inflation is gradually picking up. High capacity utilisation may generate a continued sharp rise in property prices and household borrowing. This could be a source of instability in demand and output in the somewhat longer run. The Executive Board’s assessment in the June Inflation Report was that the interest rate may gradually – in small, not too frequent steps – be brought up towards a more normal level if economic developments are approximately as projected in the Report. Such an interest rate path was considered to provide a reasonable balance between the objective of stabilising inflation at target and the objective of stabilising growth in output and employment. It was the Executive Board’s assessment that the sight deposit rate should lie in the interval 1¾ - 2¾ per cent in the period up to the publication of the next Inflation Report on 2 November.

Statistics Norway’s business tendency survey indicates continued favourable prospects for Norwegian manufacturing. Activity is expected to increase in service industries and the construction sector in the near term. Capacity utilisation in the Norwegian economy now appears to be close to a normal level. In manufacturing, capacity utilisation is close to its historical average. According to Norges Bank’s regional network, about 40 per cent of companies will have some or considerable difficulty in increasing production. Even though growth in the Norwegian economy has been high for a long period, substantial pressures have not yet emerged in the labour market. The rise in the number of employed in the first half of the year was fairly modest in relation to output growth. This may be due to lagged effects of the sharp fall in sickness absence through 2004. In many companies, the large increase in available person-hours was probably not fully utilised immediately. A considerable share of output growth may be the result of improved utilisation of company workforces. According to the quarterly national accounts, employment rose by 0.5 per cent from the first half of last year to the same period this year. Measured by the  1/7  Labour Force Survey (LFS), the number of employed rose by 12 000 from May to June and by a further 2 000 from June to July. The use of foreign labour has increased in the year that has passed since the enlargement of the EU.
When we set the interest rate, we give weight to both the current situation and the outlook two to three years ahead. The statistical models help us understand the current situation, while the equilibrium properties frame the analysis. NEMO describes how the interest rate can be set to bring the economy from its current starting-point back to the long-term equilibrium path. As a support tool in making monetary policy decisions, such a model apparatus is thus particularly relevant. I will come back to the main features of NEMO later. As I mentioned earlier, Norges Bank operates under a formal monetary policy mandate. The Bank’s objective is to stabilise inflation and provide the economy with a nominal anchor. As a minimum, an economic model to be used as support for interest rate decisions should be based on the assumption that monetary policy can steer inflation. Economic agents can be expected to look ahead when making consumption and investment decisions. It is not only current economic policy that is likely to matter to them, but also what they expect it will be in the future. Expectations must therefore be incorporated and play a role in a monetary policy model. 4  BIS central bankers’ speeches  Many economists previously held the view that unemployment could be reduced by accepting slightly higher inflation over time. Monetary policy was oriented accordingly and inflation accelerated in many countries, without a sustained decline in unemployment. It turned out that bringing rising inflation under control involved substantial real economic costs.

A krone that is too strong can over time result in inflation that is too low and growth that is too weak. In that case, monetary policy measures will be taken. In Norway, the key policy rate is the relevant instrument. The Norwegian krone market is small by international standards. This means that the krone exchange rate can fluctuate considerably in times of international turbulence. This will also be the case the day foreign exchange market participants decide to shift out of their krone positions. The exit may prove narrow if too many investors decide to withdraw at the same time. I began my lecture with Schweigaard’s childhood experience of his family having to surrender gold and silver for the establishment of Norges Bank. This experience cannot have given him much confidence in public institutions. As an adult, both as a professor of economics and a national politician, Schweigaard became a trendsetter in the area of monetary policy conduct. Schweigaard’s fundamental view was based on “empirical methods” rather than the “empty speculation” of idealism.12 This still applies to monetary policy. Theoretically anchored models and improved methods for quantifying them empirically provide a better basis for conducting an effective economic policy, which we take on board when we apply and further develop models and the analytical apparatus in Norges Bank. Knowledge about relationships in the Norwegian economy, in conjunction with professional judgement, provides a good platform. Thank you for your attention and good luck with your studies!
A decade of inflation targeting The Norwegian economy emerged quickly and fairly painlessly from the recent global economic downturn. Since 2001, economic policy in Norway has been guided by a fiscal rule and a flexible inflation target. With solid government finances based partly on petroleum revenues and firmly anchored inflation expectations, there was room for manoeuvre both in monetary and fiscal policy when the financial crises hit. Inflation in Norway is currently low, but it has been close to target over the past decade. During this period, monetary policy has faced demanding trade-offs, and the application of judgment has been put to a test. We have gradually learned more about the functioning of our economy under an inflation targeting regime. Let me touch upon some of these insights. Fairly soon after we had adopted inflation targeting, we learned how demanding it may be to strike a balance between different monetary policy considerations in a small open economy. When the key policy rate is raised to restrain a pronounced rise in domestic inflation, it may strongly impact the exchange rate, as we experienced in the period 2002–2003. Both the real economy and inflation were affected. Midway through the decade, global inflation rapidly declined. China’s entry into the WTO, and increased imports from Asia to the west led to a persistent fall in import prices. The combination of very low inflation and strong economic growth posed new challenges for monetary policy. Interest rates – both in Norway and abroad – were set at low levels.

Øystein Olsen: Monetary policy and financial stability considerations Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the European Banking & Financial Forum, Prague, 27 March 2012. *  *  *  The text below may differ from the actual presentation. This speech does not contain assessments of the current economic situation or interest rate setting. Introduction The past few years have clearly shown the costs of financial instability. The near collapse of the financial system in autumn 2008 led to the most severe economic downturn of our time. There was a dramatic decline in international trade, and total world output fell from one year to the next for the first time in generations. When financial markets failed, the authorities had to intervene. Bailout packages for banks shifted debt from private to public hands. Governments increased spending in order to curb the fall in activity. Many countries are now trying to rein in large deficits and rising government debt under difficult conditions. Pension rules and tax systems are under review. The costs of such structural reforms would have been lower in good times. A financial crisis has to be met with appropriate measures, but the main objective in our work on financial stability must be to reduce the risk of crises emerging. History tells us that a financial crisis typically arises when debt has accumulated over a long period. An important task is therefore to contain the buildup of imbalances and secure a robust financial system.
Under the real-time gross settlement model payment instructions are exchanged and settled individually on a gross basis throughout the business day (unlike under a ‘deferred net settlement’ model where payments are exchanged by participants during a ‘clearing cycle’). Under the RTGS model ‘settlement risk’ does not occur and our financial stability objective is promoted as claims and liabilities between banks and other participants are settled in central bank money which is the ultimate secure and liquid asset. It is also the platform through which monetary policy decisions are implemented and provides liquidity to the financial system. Why are we renewing? Just metres from this conference venue is Pudding Lane where in 1666, after a long, hot summer it was an ember from a baker’s oven that set off the Great Fire of London. This triggered the rebuilding of St Paul’s Cathedral, the city’s gates and bridges and much more. I’m pleased to say that the Bank of England today finds itself in the far more fortunate position of renewing its critical infrastructure through choice rather than necessity. RTGS was launched in 1996, and the world, let alone the financial system, has changed dramatically in the intervening 22 years. RTGS has undergone various upgrades but now is time for a more fundamental renewal. Technology is changing, the payments landscape is changing and the demands of users and potential users are changing.

For example, by identifying the common characteristics and residual risks underlying various types of credit risk mitigation techniques - collateral, guarantees, netting, and credit derivatives - it is hoped that a more uniform and consistent treatment can be applied to these instruments in place of the various, somewhat ad hoc, treatments that have grown up to date. There is perhaps one caveat that should be attached to the aim of introducing greater risk sensitivity. This is that it often entails much greater reliance on the judgement and competence of the supervisors. This can be seen in the evolution of the Basel Accord to encompass banks’ internal market risk models, if approved by supervisors, and in the new proposals to allow some banks’ internal ratings to be used for credit risk capital. It is also evident in the emphasis on individual supervisory judgement in Pillar 2 of the consultative paper. We believe this is the right direction to follow in the case of G10 banks and supervisors. It is, however, more questionable whether such a system is easily exportable outside the G10, in particular to some emerging markets. Indeed, even amongst the G10, some supervisors (such as the US) are actively contemplating drawing a two or more tier distinction in the capital rules applied to banks, depending on the level of complexity of the organisation.