samchain/econo-pairs-v1 huggingface dataset:
Still, I do not believe the crisis has shattered the consensus on what central banks should be pursuing – central banking has always been about the preservation of, to quote Charles Goodhart, “the three aspects of stability”, namely price stability, (external) currency stability and financial stability. Nor has the crisis brought about the sudden realisation that these aspects of stability do in fact condition each other – central bankers, maybe even more so emerging-market central bankers, have long been keenly aware that failure to ensure one kind of stability is bound to jeopardise the achievement of the others. What the crisis has indeed challenged is the widespread conviction that meeting one particular stability criterion,  BIS central bankers’ speeches  1  while necessary in order to achieve the others, is also a sufficient condition to do so – after all, maintaining price stability, while valuable in itself, has proved insufficient to ward off major financial or macroeconomic instability. As a matter of fact, Andrew Crockett claimed ever since 2003 that the “peace dividend” yielded by the successful war against inflation had not lived up to expectations and therefore the battlefront against financial instability should not be overlooked. Nevertheless, it is widely accepted that price stability should remain the overriding objective of a central bank and I do not see this approach changing in the future, at least in Europe.

Particularly concerning is the low degree of export to import coverage, signalling structural problems of this deficit due to still-low competitiveness in our economy. In this direction, a special attention should be paid to checking costs and productivity growth in the economy, by raising investments in education, and by attracting most advanced technologies in production. Also, in the medium run, the macroeconomic policies should be  2  BIS Review 94/2009  prudent in terms of public and private savings level, in order to control the need for using foreign financing resources. The fiscal policy during the first half of 2009 had an expansionary stance, being featured by a rapid growth of expenditures and budget deficit. Budget revenues have recorded a more moderate growth, partially reflecting even the economic slowdown effects. Though remaining within the projected level for 2009, the budget deficit by about ALL 30 billion constitutes a much higher amount than in the same period of the previous year. Under these conditions, the Bank of Albania would appreciate the taking of measures for keeping budget deficit levels and public borrowing in check, helping the maintaining of the internal and external balances in the economy. Preserving the projected budget parameters will impact positively on macroeconomic stability, by controlling the fiscal stimulus on aggregate demand and dampening the pressures on monetary markets. The demand for monetary assets increased during the last months.
As it happens, market economists have tended to think that interest rate changes were more likely in Inflation Report months. Since 1998, Reuters have asked a group of economists (initially around 2030, now 40 or more) to attach probabilities to a range of different outcomes for interest rates, so we can calculate a mean and a mode expected interest rate change across individuals. Panel B in Chart 3 split the months in which the mode is for a (25bp) change into Inflation Report and non-Inflation Report months. According to this measure, markets have consistently thought that changes were more likely in Inflation Report months. The data on interest rate changes provide mixed evidence. Over the period since 1997 as a whole, the Committee has displayed a preference for changing rates in Inflation Report months. But it showed no such tendency in its early years. The picture since 2001 is very different, with almost two thirds of rates changes taking place in Inflation Report months, compared with the one third that would be expected if rate changes were evenly spread over the year. And no fewer than six of the last eight rate changes have coincided with the publication of an Inflation Report. (See Chart 3 and Table 2 for details). BIS Review 17/2005  5  Chart 3. months.

While the global economy is adjusting toward a new equilibrium, solid macro-prudential long run policies should replace current stimulating efforts. Therefore the challenge for our economies in the long run is to address current problems and the inherited ones based on a new model of growth, based on: (i) higher savings and investments, aiming toward a contained consumption matched by domestic production; (ii) persistent FDI inflows oriented toward tradable sectors; (iii) regional cooperation. BIS Review 164/2009  1  Let me briefly share with you some of my thoughts on the importance of this last remark, namely regional cooperation. Following arguments illustrate the benefits of cooperation, at several levels: •  From a development point of view, increased cooperation and integration on a regional level creates a greater scope for economies of scale. This would increase incentives for local and foreign investors to undertake big investment project that would not be profitable otherwise. A related advantage would be increased specialization of our economies, leading to a higher economic performance. •  On a policy level, coordinated macroeconomic policies, legal and prudential frameworks, would tend to improve the allocation of resources and to prevent beggar-thy-neighbor policies. This race to the bottom type of philosophy would not benefit the region as a whole. •  From a strategic point of view, our region is in competition with several emerging regions on a global scale.
Mojmír Hampl: Theory lagging behind practice Speaking points by Mr Mojmír Hampl, Vice Governor of the Czech National Bank, for the Central Bank of Malaysia (Bank Negara Malaysia) Conference “The Future Direction on Monetary Policy Frameworks and Strategies in Emerging Market Economies”, Kuala Lumpur, 21 May 2014. *  *  *  Ladies and gentlemen, Thank you for your kind invitation to this conference. It is an utmost pleasure to be here today and to speak in front of such a distinguished audience. The issues being discussed here are important and I will echo many of the points already raised. It seems to me that we all to some extent share a feeling that there are many good questions, but sometimes we don’t have that many good answers to them. And because I don’t either, I will use the standard escape tactic of those who find themselves intellectually in dire straits – if you don’t have a smart answer yourself, use a quote by someone really smart and you might look smarter. So I will begin with one of the famous quotes by Albert Einstein: “In theory, theory and practice are the same. In practice, they are not”. Yes, exactly. And it is true not only in physics, but also in the areas of monetary policy and financial stability. In theory we central bankers believe we can control inflation, or the sustained growth of the general price level.

1  2  Borio, C.: Monetary policy and financial stability: what role in prevention and recovery?, BIS Working paper No. 440, January 2014  BIS central bankers’ speeches
If the experience of the first half of this decade teaches us that monetary policy should have a medium-term orientation, should take into due consideration the developments in the financial markets and should avoid focusing on extreme events that are unlikely to take place, and should be put into effect by an independent central bank, with a clear mandate that favours price stability – in line with the analysis contained in Franco Bruni’s book – the assessments of the present frequently continue to be contingent on opposed preconceptions. In the current circumstances, the actions of the central bank, especially those of the ECB, continue to be assessed in terms of a comparison with the United States and in terms of quantity rather than results. There’s a tendency to look above all at the number of rate cuts and points cuts and the scale of the refinancing operations, rather than looking at the results in terms of the sustainability of a certain policy over time. As I have had an opportunity to explain, a policy that quickly brings rates down to zero but cannot generate expectations of stable rates at those levels, can end up being less effective than a policy which maintains rates slightly higher but has stable expectations, allowing a flatter yield curve to be maintained. 2 If you look today at the results obtained in terms of the yield curve and inflation expectations, you can appreciate the strategy followed by the ECB in the rate-cutting phase.

Lorenzo Bini Smaghi: Presentation of the book entitled “L’acqua e la spugna” by Franco Bruni Speech by Mr Lorenzo Bini Smaghi, Member of the Executive Board of the European Central Bank, at the Center for American Studies, Rome, 24 June 2009. *  *  *  Above all, I should like to thank the Center for American Studies for inviting me to present this book by Franco Bruni; a book which is a real pleasure to present because it actually shows to be untrue what many have claimed recently, namely that the economists did not foresee the crisis and that they did not send out the alarm signals. Some economists, such as Franco Bruni, had been pointing out the imbalances accumulating on the financial markets for a long time, and, whilst they may not have anticipated the full extent of the crisis, they did, for sure, signal the risks. Franco Bruni’s book is a book well worth reading, because it helps us understand how the science of economics, is, at the end of the day, linked to common sense, and also that the “new paradigms”, which are increasingly cited to justify events that cannot be easily explained, should be questioned. If you base your own judgements on sound analytical grounds, albeit unsophisticated – and the book has the great advantage of also being accessible to non-specialists in economics – you can get to grips with the general trends, at least in the medium term.
The Committee expects to cease or commence phasing out reinvestments after it begins increasing the target range for the fed funds rate; the timing will depend on how economic and financial conditions and the economic outlook evolve. The Committee currently does not anticipate selling agency mortgage-backed securities as part of the normalization process, although limited sales might be warranted in the longer run to reduce or eliminate residual holdings. In the longer run, the Committee intends to hold no more securities than it will need to implement monetary policy efficiently and effectively, and that the SOMA will consist primarily of Treasury securities. Given the $ trillion in large-scale asset purchases (LSAPs) conducted since September 2012, the level of reserve balances in the system will be significantly higher during normalization than was envisioned when the 2011 principles were adopted. In light of this, as I just outlined, the FOMC has judged it appropriate to operate with a framework for interest rate control that is based primarily on administered rates rather than reserve draining tools. Given the unprecedented nature of this framework, the Committee has made clear that it is prepared to adjust the details of its approach in light of economic and financial developments. The FOMC has consistently adapted its policies as needed in recent years and will no doubt continue to do so as necessary throughout the normalization process in order to foster conditions consistent with its dual mandate.

Based on statistics made available to the Bank, commission and agency remuneration have consistently accounted for approximately 40% of the total net premium income of life insurers since 1997. With the proposed flexibility, individual insurers will have the ability to determine the remuneration of its intermediaries but subject to appropriate safeguards being put in place such as a more robust disclosure framework for greater transparency. These operational flexibilities will be implemented in a gradual manner, with some measures being introduced by the end of this year. This is to minimize the risk of adverse impact on the efficient delivery of insurance products and services to consumers. With the fundamental changes taking place around us, it is timely for insurers including intermediaries, to assess how best to improve insurance penetration going forward. There are some fundamental questions that need to be asked. Would attracting a larger agency force be the most effective solution in this more liberalized environment? Or, should the focus perhaps be on expanding the diversity of the intermediaries in general, to ensure consumers have more alternatives to receive high-quality and suitable advice? Whatever the response to these questions, what is obvious is that investing in human capital is an important common denominator, not only to enhance the existing level of expertise of intermediaries but also to attract the right people to ensure a continuous supply of talents into the profession.
We should certainly not forget that as the new Member States differ greatly in terms of economic structure, exchange rate and monetary regimes, and in the degree of nominal and real convergence already achieved, they will need to be assessed on a case-by-case basis throughout the process leading to the eventual adoption of the euro. In this respect, no single path towards ERM II and the adoption of the euro can be identified. In other words, many strategies may be feasible, provided they are based on sound economic reasoning, conform to the existing institutional framework and contribute to the high level of sustainable convergence which is essential in maintaining the status that the euro has gained in the few years of its existence as a respected and credible currency. We should also consider that the eventual adoption of the euro by a new Member of the EU is the end-point of a structured convergence process in which peer surveillance is called upon to preserve the common interest of all participants. The multilateral nature of the framework means that, at least at the ultimate stage in which full integration into the euro area is debated, decisions concerning one country or one currency are collective decisions. And this simple fact argues for the fundamental principle of equal treatment. So, while each country would be considered according to its specific merits, comparable situations and cases will be assessed on the levelled playing field provided by objective criteria.

Estimates from our recent survey indicate a sharp drop in the use of cash over the last 15 years. Estimates of the exact level of cash use vary according to data sources and methodology. However, it is fair to say that cash is still an important means of payment. Notes and coins will also remain important as symbols of money. I believe that there have been two very important factors behind the rapid transition to electronic payment services in Norway. Banks have cooperated on standards and payments infrastructure while competing on the supply of services, and banks have charged for the use of payment services. Prices that reflect relative differences in production costs encourage users to choose the most cost-effective services. Research (by Humphrey, Kim and Vale) has shown that a  BIS Review 140/2008  1  relatively high price per transaction for paper-based payment services and a low price for electronic payment services have accelerated the trend towards an increasing share of electronic transactions. Without incentives for consumers or merchants to move to more efficient instruments, banks and other payment service providers will more likely be left trying to improve on old solutions. Payment systems are networks for the exchange of values between payers on the one hand and beneficiaries on the other. In two-sided markets like this, the benefit to existing users increases when new users join up.
The risk models that are in use are liable to accentuate this phenomenon, even though such models are actually intended to do the opposite, namely minimise risk and instability. A signal from a risk model can trigger sales by numerous investors, whereupon prices fall still further. In this way, a mechanical application of risk models is liable to exacerbate price fluctuations. Financial market globalisation also leads, as I mentioned initially, to increased capital flows. Low transaction costs and high liquidity enable individual investors to pledge assets in the market to a greater degree. This leads to closer links and more interaction between different markets; a player may take large positions not just in markets for different assets but also in markets in different locations. Price movements may be affected if market players lose confidence in a particular geographical market or incur losses that oblige them to dispose of other assets. Globalisation has naturally increased such contagious effects, as we clearly saw last autumn. Recurrent financial crises In many ways, global economic development in the past two to three decades has been outstanding. Annual growth since 1980 has averaged over 3 per cent. The rate in the industrialised countries has averaged just over 2.5 per cent as against almost 5 per cent in the developing countries. Many East Asian countries have achieved even higher growth and thereby a radical improvement in economic prosperity. But development has by no means been smooth.

The players in financial markets had found ways of getting round the regulations, which in some cases had thereby become virtually toothless. In Sweden, for example, the capital controls had gradually lost much of their bite; companies were able to take up exchange positions, for instance, by shifting trade credits over time. There was also a growing awareness that economic growth would benefit from fewer controls. The interventionist line of economic policy had not been particularly successful. The pace of deregulation varied from country to country and the process was rather protracted. Britain and  1  BIS Review 52/1999  the United States led the way. Sweden was one of the last countries to abolish controls on crosscountry flows of short-term capital. Since the 1970s, financial market turnover has risen markedly and is now very much larger than the flows generated by global cross-country trade in goods and other services. According to the latest BIS study, from 1995, global exchange market turnover, for instance, was 1200 billion dollars, which is approximately five times the value of Sweden’s annual GDP. The figure is roughly twice the level at the end of the 1980s. A new BIS study, for 1998, is due next week and can be expected to show a further increase in global exchange market turnover. Equity and bond market turnovers have also risen rapidly. To some extent, the nature of the flows as well as the players in international financial markets have changed.
Paul Tucker: Resolution – a progress report Speech by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at the Institute for Law and Finance Conference, Frankfurt, 3 May 2012. All speeches are available online at www.bankofengland.co.uk/publications/speeches. *  *  *  Thank you very much for inviting me to join this important conference. The EU have made a massive contribution to global planning for resolution regimes to address the fundamental problem of Too Big To Fail, inputting very significantly to the G20 Financial Stability Board’s Key Attributes for Resolution Regimes. It comes as no surprise, therefore, that the EU is committed to implementing that International Standard, via a Directive. As Chair of the FSB’s Resolution Steering Group, I thought the most useful thing I could do this morning is to give a brief progress report, and also to air some emerging thoughts on how to operationalise the FSB’s high policy. Preliminaries: what this is about For those who hesitate to grasp the nettle of implementing resolution regimes, I want to stress that the genie is out of the bottle. While myopia gripped the financial markets in the years leading up to the crisis, they are now seized of the risks on bank balance sheets. That will be reflected in the prices of the debt of those who bear that risk. If the risk in banking is not incorporated into the yields of bonds issued by banks themselves, then it will be reflected in higher sovereign borrowing costs.

Price stability, as everyone realizes, may be defined in many ways, with somewhat different consequences for the execution of monetary policy. When the index for measuring inflation is chosen, a number of different considerations have to be taken into account. The index has to be reasonably broad and give a picture of price developments in the economy as a whole. It is an advantage if it is also well established and regularly published with a short time lag. In addition, it is desirable that the index is seldom revised. All these factors bear out the suitability of the consumer price index (CPI) . Thus, the Riksbank’s inflation target has been expressed in terms of a change in the official consumer price index. BIS Review 56/1997  -8-  Figure 5  CPI an d U n d e r lyin g In flatio n Pe r ce n tage 12-m o n th ch an ge 6 .0  6 .0  CP I  5 .0  5 .0  Un derl y i n g do m es tic in fl ati o n  4 .0 3 .0  4 .0 3 .0  2 .0  2 .0  1 .0  1 .0 0 .0  0 .0 92  93  94  95  96  97 -1 .0  -1 .0  Sources: S tatistics S weden and the R iksbank One problem with the CPI is that it is affected by temporary influences on inflation.