samchain/econo-pairs-v1 huggingface dataset:
In other words, under this definition, the CCyB should allow for the accumulation of shock absorption capacity that banks could use in the downward phase of the cycle to continue providing households and firms with the necessary credit flow. In many macroeconomic and financial contexts, the activation of the CCyB will be justified on the basis of the three objectives mentioned by the BCBS simultaneously. This would certainly have been the case in the boom period of the Spanish economy before the last financial crisis. However, there might be cases where, based on available data, only one or two of these objectives can warrant the activation of the CCyB. In particular, there have been numerous examples of economic recessions not preceded by excessive credit growth. This promptly begs the question: should these buffers be exclusively built when the credit cycle is in a boom phase, or also when the economy is buoyant, i.e. when the business cycle is expanding? In my view, sound arguments may justify the use of the countercyclical capital buffer to accumulate loss-aborbing capacity in good times to be used in bad times, even when there is no evidence of the emergence of excessive credit growth. The main argument, in my view, stems from the evidence that, even in those situations, when the recession comes, borrowers’ default rates rise, 5/11  negatively affecting the profit and loss account and the capital position of banks.

Jean-Pierre Roth: The population is ageing - we cannot wait any longer! Summary of a speech by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank, at the Association suisse des actuaires, Basel, 17 June 2005. The complete speech can be found in French on the Swiss National Bank’s website (www.snb.ch). *  *  *  Like other developed countries, Switzerland has been hard hit by the phenomenon of demographic ageing. It is putting our old age pension scheme to a severe test. The ageing of the population is also impacting on our ability to innovate, our potential to achieve productivity gains and our competitive dynamism in a globalised and demographically diversified world. This is why measures need to be put in place quickly. At the heart of this demographic challenge lies the need to enhance the productivity of our economy as well as our productive capacity. It is all the more important to secure favourable growth conditions because the ageing of the population in itself could impact negatively upon our capacity for growth – which is under strain already now. Increasing the productivity of our economy and the pace of growth is essential if we wish to maintain our system of social security. At the macroeconomic level, the financing of old age pensions works according to a simple principle.
Christian Noyer: Challenges of financial innovation for the conduct of monetary policy Speech by Mr Christian Noyer, Governor of the Bank of France, at the International Monetary Fund-Bank of France-Bank of England Conference, Paris, 29 January 2008. *  *  *  The current financial turmoil is here to remind us that financial innovation, like technical innovation, is not a smooth process. The flip side of the recent years of exuberant financial innovation, what might be seen in retrospect as the golden age of structured finance, comes now to the fore. However, after two or more decades in which major, multi-faceted financial innovation has brought about far-reaching changes in the global economic environment, it would be unfair to forget the benefits economic agents have collectively reaped from tools that are fundamentally aimed at allowing an easier and broader access to funding and a more efficient risk allocation. I am delighted to co-introduce this conference which will tackle some major issues. Rather than giving an exhaustive overview of the nature and magnitude of financial innovation, I think it more useful here, as a central banker, to focus on how financial innovation affects monetary policy decision-making. I know this seminar will dig further into some of these issues but I selected two main issues, whose scope goes beyond the current events: -  firstly, how the last wave of financial innovation has affected the monetary transmission process of monetary policy.

Risk measurement It will come as no surprise to you that, as a supervisor, I will begin by talking about the second of these elements, namely risks. The process of transition will entail two types of risks to the financial system:  4/9    On the one hand, the physical risks caused by the direct effects of climate change, for example as a result of the gradual increase in temperature, or more frequent or more severe climate events such as storms, flooding or natural disasters.   On the other, the transition risks. These refer to the potential effect on specific bank borrowers of the regulatory measures aimed at sustainably transforming the  economy, technological changes, and changes in customer behaviour and preferences driven by greater environmental awareness. The two types of risk are related: the more ambitious the regulations combating climate change, the greater the transition risk and the lower the physical risk, and vice versa. Environmental risk is a risk in its own right, although its impact materialises through “traditional” banking risks.
The policy responses mitigated the recession but could not stop it from becoming the deepest in Iceland’s post-war history and a severe one in international comparison, as can be seen from this slide. 4  BIS central bankers’ speeches  But Iceland was not the hardest hit, as can also be seen from the slide, and this would be still clearer if we were to look at the labour market. Iceland lost 12% of GDP from peak to trough, slightly more than Ireland. However, as was probably also the case in Ireland, that peak was unsustainable and was associated with a significant positive output gap. Iceland has regained 7½% since, which is significantly more than Ireland but less than Latvia, which suffered a much deeper recession. Finally, I would like to mention selected lessons that I think can be drawn from this experience. First, dealing with failing big banks in small countries: Guaranteeing the entire banking system in Iceland’s case would probably have resulted in sovereign default and the bankruptcy of the country. In general, taking such a step with big banks in small countries is risky, especially if a significant part of their balance sheets are in foreign currencies. The alternative is to save only key infrastructure elements, such as the domestic payment system. Second, dealing with volatile capital flows: Deal with the inflows if you want to avoid having to take drastic measures to deal with the outflows.

M R Pridiyathorn Devakula: Challenges and opportunities facing the Thai futures market Remarks by Mr M R Pridiyathorn Devakula, Governor of the Bank of Thailand, at the gala dinner hosted by The Agricultural Futures Exchange of Thailand, Bangkok, 23 February 2006. *  *  *  Distinguished Guests, Ladies and Gentlemen, It is a privilege for me to be here today amongst distinguished personalities from the banking and finance industry. First of all, I would like to thank the Agricultural Futures Exchange of Thailand for inviting me to address this distinguished audience. I have been asked to share some thoughts with you on the challenges and opportunities that I see facing Thai futures market going forward. Thailand has been one of the world’s leading producers of agricultural products. Thailand has always been top-ranked in rice, tapioca starch, sugar and natural rubber production. In fact, Thailand has been the world’s largest rice exporter for more than a decade. Our rice export accounts for no less than one quarter of total world’s rice exports. Likewise, we supply more than one-third of the world’s total natural rubber production. With roughly half of our labour force being employed in the agricultural industry and with rice alone earning almost 2 billion U.S. dollars last year, the importance of the sector towards Thai economy cannot be overstressed. However, unique characteristics of agricultural products are that of long supply adjustment lags and inelastic demand. Prices therefore tend to exhibit inherently high volatility.
Some countries are in a relatively favourable position because their past management was wise and prudent, while others are already very close to losing credibility. Spain – where fiscal consolidation had progressed more than elsewhere – will have to make sure that it keeps its fiscal credibility in the years to come in strictly meeting the requirements of the Stability and Growth Pact. A clear plan for a medium-term fiscal correction becomes even more pressing for rapidly ageing societies like ours, as an increasing numbers of pensioners will mean mounting claims on public transfers. IV. Conclusion  More than one year after the dramatic deepening of the financial crisis in September 2008, we can spot a number of signs of economic stabilisation in the euro area. We have halted the freefall in economic activity that we witnessed over a period lasting more than six months after the intensification of the crisis in mid-September 2008. But the crisis has debilitated the real economy. As I said, the crisis has proved so deep because it has deprived our citizens of confidence. Every business activity is by its very nature an act of trust, an expression of confidence. As regards bankers, by granting loans more actively to entrepreneurs they can contribute to transmitting and inspiring confidence to the economy at large. Being part of the euro area and the European Union will help in this process.

Draghi, M. (2017), “Accompanying the economic recovery”, speech at the ECB Forum on Central Banking, Sintra, 27 June. Engel, C. and K. West (2010), “Global Interest Rates, Currency Returns, and the Real Value of the Dollar", American Economic Review, 100(2), 562–67. European Central Bank (2016), “Exchange rate pass-through into euro area inflation”, Economic Bulletin, July. Forbes, K., I. Hjortsoe and T. Nenova (2015), “The shocks matter: improving our estimates of exchange rate pass-through”, Bank of England Discussion Paper, No 43. Fuhrer, J. and G. Moore (1995), “Monetary Policy Trade-Offs and the Correlation Between Nominal Interest Rates and Real Output”, American Economic Review, 85, 219–239. Fuhrer, J. and G. Rudebusch (2004), “Estimating the Euler equation for Output”, Journal of Monetary Economics, 21, 1133–1153. Georgiadis, G., J. Graeb and M. Khalil (2017), “Global Value Chain Participation and Exchange Rate Pass-through”, mimeo. 12 / 14  BIS central bankers' speeches  Goodhart, C. and B. Hofmann (2005), “The IS Curve and the Transmission of Monetary Policy: Is there a Puzzle?”, Applied Economics, 37, 29–36. Gopinath, G., O. Itskhoki and R. Rigobon (2010), “Currency Choice and Exchange Rate PassThrough”, American Economic Review, Vol. 100, No 1, 304–336. Gust, C., S. Leduc and R. Vigfusson (2010), “Trade integration, competition, and the decline in exchange-rate pass-through”, Journal of Monetary Economics, Vol. 57, Issue 3, 309–324. Hahn, E. (2007), “The impact of exchange rate shocks on sectoral activity and prices in the euro area”, ECB Working Paper No 796.
The full reopening of the economies in the wake of the pandemic has unleashed strong demand for recreation, hospitality and tourism. Thus, euro area GDP rose by 0.8% in Q2, compared with 0.7% in Q1, outstripping the 0.2% projected in the Eurosystem’s June forecasts. The growth in GDP in Q2 was higher than anticipated in many euro area countries, and especially in Spain and Italy, which both saw an unexpected surge in private consumption. In Spain, GDP rose in Q2 by 1.5% quarter-on-quarter, mainly on the back of private consumption, in turn driven by the services activity returning to normal and by positive developments in the labour market. Tourism exports have also increased significantly. Overnight hotel stays in August were only 1.6% below their 2019 level, with those of residents nearly reaching their pre-pandemic level (-0.2%), while those of foreign tourism stood 2.5% below the peak recorded in the same month of 2019.12 Overall, overcoming the health crisis is prompting a sectoral shift towards services, while industry has fared worse owing to supply difficulties, among other factors. Growth in activity has been accompanied by the continuing strength of job creation, particularly in terms of the number of hours worked, which has risen by more than 3% in H1. In any event, the recovery in Spain remains incomplete, in contrast to the euro area. Thus, a negative output gap compared with pre-pandemic levels persists in Spain (specifically, of -2.2 pp), while this gap is already positive (1.8 pp) in the euro area as a whole.

In the US, the recovery will be supported by the labour market and rising asset prices. In Japan, the very expansionary economic policy is having an invigorating effect. Due to the upturn in world trade and the improvement in financing conditions, the euro area is also likely to emerge gradually from recession. In addition, the burden imposed by budget consolidation will be lower next year. Overall, however, the outlook remains uncertain. The risk of a deterioration in the global economy continues to be high. As before, the biggest risk remains a renewed deterioration in the euro area financial and sovereign debt crisis. Even though our baseline scenario  BIS central bankers’ speeches  1  assumes a gradual solution of the crisis, it is possible that tensions could re-emerge on financial markets at any time. Swiss economic outlook In Switzerland, the economy experienced a temporary revival in the first quarter, as expected, and real GDP rose by 2.3%, in annualised terms. Thus, we experienced more favourable growth than our neighbouring countries. The difference is primarily attributable to domestic demand. Once again, growth was mainly driven by private consumption and investment in residential construction. These demand components benefited from the relatively robust labour market, a continued strong inflow of immigrants and the favourable financing conditions. In particular, the supply of credit in Switzerland is currently having a much stronger effect on the real economy than in most European countries. In the case of exports, however, there are no indications of a lasting revival.
In a period of increasing cross-border labour flows, major technological advances, changes in competitive conditions and substantial changes in trade patterns, inflation will probably, with our very open economy, show somewhat wider variations, as witnessed over the past two to three years. The operational objective of monetary policy is low and stable consumer price inflation. Over time, the consumer price index will provide a guide for assessing monetary policy. Monthly variations in consumer prices reflect temporary conditions which monetary policy cannot control. According to Norges Bank’s remit, the Bank shall not normally take account of direct effects on consumer prices of changes in interest rate, excise duties and extraordinary, temporary disturbances. Energy prices have traditionally shown wide variations. Hence, a price index that is adjusted for variations in such prices as well as for indirect taxes can be a measure of underlying inflation in the economy. However, such a price index does not take account of that fact that the trend rise in energy prices has been higher than for other prices and is therefore not a perfect measure of underlying inflation. In the past 10-20 years, energy prices and taxes have pushed up consumer prices annually by an average 0.35 percentage point. Even when taking into account trend increases in energy prices, inflation is still moderate. Experience indicates that inflation expectations remain stable even if inflation varies somewhat, as long as the interest rate is used actively to curb the effects.

The rise in prices for domestically produced goods and services slowed somewhat towards the end of 2005 and into 2006. The 12-month rise in prices for these products was 1.6 per cent in April 1 . Several factors now point towards higher inflation. Capacity utilisation in the Norwegian economy is increasing. This may result in higher margins. Furthermore, tighter labour market conditions may lead to higher wage growth. In addition, the rise in energy and commodity prices is pushing up producer input costs. Buoyant growth in the global economy has contributed to very high prices for oil, gas and other commodities. Since last autumn, copper prices have more than doubled and aluminium prices have risen by close to 50 per cent. Commodity futures prices have also increased markedly. Prices for other Norwegian export goods, such as fresh salmon, have also exhibited a marked rise. As mentioned by way of introduction, falling prices for imported consumer goods, in conjunction with rising prices for Norway’s export goods, have contributed to substantial terms-of-trade gains for Norway. Over the past few years, Norwegian export prices have increased twofold relative to import prices. The impact of the rise in oil and gas prices is particularly strong, but the terms of trade for the mainland economy have also improved. The situation in Norway differs from that of its Nordic neighbours. Sales of Swedish and Finnish high-tech products are growing strongly in volume terms, but prices are falling. Denmark has a diversified business sector, which is overall moving on a steady path.
The fact that the coming pay negotiations are taking place in a situation where it is expected that there will be a high demand for labour increases the risk of the historical pattern being repeated. In some industries and regions there are indications that a shortage of labour is developing. However, it is at the same time important to bear in mind that we are a long way from the scarcity levels experienced at the end of the 1980s. Another challenge for wage formation is that the first pay negotiations taking place are for public sector employees. In this sector, there are large groups that have obviously fallen behind in their pay development, leading to shortages. Among these are certain categories of teachers and many health care employees. The Swedish labour market has not only had problems in dealing with pay balances between different occupations. It has also found it difficult to tackle regional imbalances in the same occupational category through adaptation of relative wages. Shortage of labour has, for instance, particularly affected big city areas, although it has hardly affected relative wages between areas where there is shortage and where there is unemployment, despite the cost of living and not least housing costs being lower outside the big cities. With a more flexible wage formation, the imbalances in the labour market would probably be reduced. Changes in a positive direction The starting situation for the pay negotiations is thus not unproblematic.

Demand for goods could be satisfied at the same time, without the balance of payments showing large structural deficits. In the mid-1970s, productivity growth declined and it has since then been considerably lower than during the good years earlier and from 1974 to 1994, the growth in labour productivity remained at an average of 1.4%. At the same time, the economy was characterised by high inflation. The low productivity growth was reflected by a drastic decline in the gross investment in relation to GDP in the mid-1970s. A smaller part of the national disposable income was invested to build up the capital stock (see diagram 1 and 2). Net investment measures the addition to the capital stock. It fell on average from an average of 16% of disposable national income during the 1950s and 1960s to just over 5% at the beginning of the 1980s. During this period, we also continually borrowed abroad to meet demand. Since 1995, productivity and the investment ratio in Sweden have increased again, although the improvement is modest and starts from a low level. In the USA, the picture of growth in labour productivity has in rough outline displayed the same pattern over time as the Swedish with one important difference. The improvement of labour productivity since 1995 has been larger in the USA than in Sweden in contrast to the earlier twenty-year period when labour productivity increased by about as much in both countries.
Interest on reserves represents the rate of return on a riskless overnight deposit at the Fed.7 Accordingly, the interest rate paid on reserves represents the sure return a bank can earn and therefore the opportunity cost for the bank to make an alternative investment, such as a loan or the purchase of a security. Theoretically, if all money market participants had access to deposits earning the IOER rate, the IOER rate should set a minimum rate – or floor, so to speak – on short-term interest rates, as there would be no incentive for institutions to make loans to any institution at a lower rate. Even in a market without universal access to IOER, depository institutions with access to it could borrow funds or take deposits from institutions that cannot earn it, then leave funds invested at the IOER rate until there’s no further economic advantage to borrower or lender. Competition among banks that can earn IOER would thus pull up other money market rates close to the IOER rate. Money market dynamics in recent years generally reflect these changes. In a world with significantly elevated reserve balances and a ¼ percent interest rate paid on those balances, IOER has kept the federal funds rate and other money market rates at positive levels within the FOMC’s zero to ¼ percent target range.

The maximum bid amount and rate have varied over the life of the exercise in order to ensure usage sufficient to generate useful observations about counterparty demand under various market conditions during the testing period; however, as authorized by the Committee, they cannot exceed $ billion per counterparty and 5 basis points, respectively.18 It bears emphasizing once again that, like the Federal Reserve’s other  16  The facility does, however, raise new collateral management issues for the Desk, which would have to ensure that SOMA securities are appropriately allocated to meet policy and operational needs across multiple operations. 17  The Desk has been conducting periodic, small-value term reverse repo exercises with its expanded counterparties through tri-party arrangements since October 2009. These exercises have been limited to $ billion in total amounts outstanding and have been conducted according to the traditional, fixed-quantity model of Desk operations. In August 2013, the exercises were arranged for same-day settlement and overnight maturity in anticipation of initiating overnight fixed-rate reverse repos. 18  All 139 counterparties are eligible to participate, but they are able to choose whether they do so. Each counterparty was initially limited to a maximum bid of $ million. This amount was raised to $ billion on September 26, after we ensured that the initial launch of the exercise did not operationally overwhelm the  8  BIS central bankers’ speeches  operational readiness exercises, this one is a matter of prudent advance planning.