samchain/econo-pairs-v1 huggingface dataset:
It will also involve conveying the message that the flexibility, in this case, is not due to the central bank taking account of the development of the real economy, for example, but to monetary policy not being as efficient as many, both in academia and in the central banks, had counted on ten years ago. The way I see it is that central banks will have to create credibility in this kind of flexibility. I feel optimistic about the possibilities, as this has been done before. One parallel that strikes me is with the regime changes in the central banking world in the 1980s and 1990s, when ideas about an independent authority with clear tasks and a mandate for monetary policy became a successful recipe for stabilising the development of inflation and boosting confidence in monetary policy in a large number of countries. To sum up my speech: my message today is that monetary policy has become more complicated than most researchers or central bank representatives had counted on before the financial crisis. The impact of monetary policy on economies may have changed and, if so, in a way that will mean that the exchange rate will have a greater effect than before. The lower global interest rates have squeezed monetary policy’s room for manoeuvre in both small and large economies. And, finally, we need to continue to examine conceivable measures if these global difficulties turn out to be persistent.

The Swedish debate has also been stormy. Something that I feel is often disregarded in this debate, or at least underestimated, is that the Swedish repo rate is not set in a vacuum. We must take account both of the fact that global real interest rates are very low and that monetary policy abroad is highly expansionary. Both of these factors put restrictions on which monetary policy it is possible to conduct. I shall return to this shortly. Of course, it should also be remembered that the introduction of negative interest rates means a fairly marginal increase of monetary policy scope – when all is said and done, it is hardly possible to cut the rate into negative territory by several percentage points. Many central banks have also attempted to increase scope for monetary policy by purchasing various securities. It seems highly likely that this has contributed towards preventing considerably weaker economic development. But it is still not easy to determine how efficient this kind of policy actually is. Above all, it is uncertain whether it can form an adequate alternative to adjustments of the policy rate if the global level of interest rates should remain very low for an extended period. I will return to the low global level of interest rates soon. Until then, allow me just to observe that this is an important reason for why monetary policy is more difficult to conduct today than it was a decade ago.
Chart 2: Capital and leverage ratios of major global banks(a) Chart 2a: Risk-based capital ratios, end-2006 Per cent  Chart 2b: Leverage ratios, end-2006(b) Per cent  16 Surviving banks Failed banks  14  16 Surviving banks  14  Failed banks  12  12  10  10  8  8  6  6  4  4  2  2  0  0  Sources: Capital IQ, SNL, published accounts, Laeven and Valencia (2010) and Bank calculations. (a) The classification of bank distress is based on Laeven & Valencia (2010), updated to reflect failure or government intervention since August 2009. (b) Total assets have been adjusted on a best-efforts basis to achieve comparability between institutions reporting under US GAAP and IFRS. BIS central bankers’ speeches  9  Chart 3: Output losses relative to trend after financial crises(a) Per cent 20 Interquartile range-past episodes Total range - past episodes  10  Mean 0  -10  -20  -30 0  1  2  3  4 5 Years from start of crisis  6  7  8  Sources: IMF and OECD. (a) The episodes examined are taken from IMF (2009).

The second reason why recovery is likely to be slow after a banking crisis, highlighted by those such as Richard Koo (2003), is that the excess debt and investments built up in the preceding period of over-optimism need to be worked off. And that process of balance sheet repair – by households, businesses and financial institutions – typically takes time and involves a period of subdued demand unless the spending of other, less indebted, agents rises to compensate. Unlike some other countries which saw substantial rises in house prices during the years preceding the crisis, the United Kingdom did not see a major boom in residential construction (Broadbent, 2012). As a result, the overhang of unsold properties needing to be worked off was much smaller here than in, say, the United States or Spain. Even so, households that had taken out relatively large mortgages might have been more inclined to cut back their spending when conditions deteriorated in 2008–9 as the financial crisis worsened. Some support for this hypothesis is provided in Chart 4, which exploits microeconomic data from the Living Costs and Food Survey to examine consumption patterns by income quartile, split by the indebtedness of households. It is striking that the sharpest falls in consumption were seen amongst high income, highly indebted households, though there may be other explanations for this too. The most important process of balance sheet repair is, though, taking place within the financial sector itself.
the competition situation both abroad and in the home market and developments in costs and profit margins for both producers and distributors. To better understand why inflation is so low, the next step is to analyse the various stages from the production or importing of goods until the goods are put up for sale to consumers in shops. Allow me to begin by looking at developments in the producer prices of domestic goods and in the prices of imported goods at customs, i.e. the prices paid by wholesalers in the distribution sector. I will then analyse how the path through the distribution sector can be thought to affect the final price of the goods that customers buy in shops, i.e. the price in the CPI. Producer prices of domestically produced goods The rate of increase for producer prices of domestically produced consumer goods has been very low since the beginning of 2003 but has risen weakly from 0.5 per cent to about 1 per cent in February this year (Chart 4). The main driver of a company’s production costs, and thereby the price of its products, is the costs of intermediate goods and labour costs. Intermediate goods costs in manufacturing dropped in 2002 and 2003, after which they increased by 2.3 per cent in 2004 according to the National Institute of Economic Research’s estimates (Chart 5). Product prices have by and large followed the cost developments for intermediate goods, even though changes in the costs of intermediate goods do not feed through fully to product prices.

Current account and public finances Per cent of GDP 12  12 Government net lending Current account  8  8  4  4  0  0  -4  -4  -8  -8  -12  -12 90  92  94  96  98  00  Note. Broken lines represent the Riksbank’ s forecasts. 02  04  06  08  10  12  Sources: Statistics Sweden and the Riksbank  22. Low repo rate over long period of time Per cent, quarterly average 7  7  6  6  90% 75% 50% Repo rate  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 04  05  06  07  08  09  10  11  Note. The uncertainty interval is calculated using historical forecasting errors. 18  12  Source: The Riksbank  BIS Review 98/2009  23.
Persistent inflation is the result of lax monetary stance There are good reasons for assigning central banks a single main objective, namely to promote price stability. Inflation is primarily a monetary phenomenon. Short-lived inflation can have many causes, but persistent inflation is the consequence of a lax monetary stance. In the long run, monetary policy therefore primarily has an effect on prices. Under normal conditions it only has a temporary impact on economic growth and employment. Since central banks broadly speaking have only one instrument, i.e. interest rates, and can therefore only achieve a single long-term macroeconomic goal, it is natural to set price stability as the ultimate monetary goal. This is not to say that price stability is a more important goal than, say, full employment, but simply that monetary policy instruments are inherently better suited to impacting prices. It is pointless to set objectives for monetary policy which it cannot achieve. Through price stability, a forward-orientated monetary policy can contribute towards creating a stable economic environment on which the long-term growth potential of the economy, namely growth and prosperity, is based. The reason that central banks can have a widespread effect on interest rate formation in the markets through their interest rate decisions is that they have the exclusive right to issue money in the economy, i.e. base money. By controlling the price of base money, i.e.

The policy rate is the rate of interest applying to the Central Bank’s repo transactions with credit institutions, i.e. interest on liquid funds that they borrow from the Bank. Monetary policy has been the subject of lively debate in recent weeks and months and the Bank has been under steady pressure to cut interest rates. As the Central Bank has repeatedly underlined, its viewpoint has been that lowering interest rates entails a greater risk than waiting for a while for tangible signs that the assumptions behind the August inflation forecast will hold good. It is crucial to bring inflation down swiftly, since it goes without saying that inflation is the worst enemy of both households and businesses. A tight monetary stance inevitably has consequences which are sometimes painful for households and businesses. There is nothing to be done about that. Households and businesses alike must accept the consequences of their actions and it is obvious that many of them have simply gone to excesses in their consumption, investments and borrowing in recent years. They will need to reduce their spending, cut costs and put their finances in order. That cannot be avoided. BIS Review 95/2001  3  I also point out that the current account deficit is very large. Even though it has shrunk rapidly this year and will foreseeably continue to decrease substantially next year, it is still very large both in a historical and an international context. In order to achieve acceptable macroeconomic balance, a contraction in national income is unavoidable.
3  The relationship estimated is: Change in unemploymentt = a + b0*(GDP growth)t + b1*(GDP growth)t-1 + b2*(GDP growth)t-2+ q*(Change in unemployment)t-1. εt . 4  IMF World Economic Outlook, April 2010. 2  BIS Review 58/2010  Studies have shown that unemployment may suffer long-lasting effects from a deep recession. This is partly because a person who has been unemployed for a long time loses part of his or her human capital and therefore becomes less attractive in the labour market, and partly because some people, after job-seeking for a long time, quite simply give up and leave the labour force. What is usually referred to as structural or “natural” unemployment may thus increase during periods of high and protracted unemployment. Labour market policy can counteract these effects to some extent, by for instance, offering further education and retraining to the unemployed. The situation today is in contrast to what we saw during the crisis in the 1990s. Then, GDP fell for three years and the fall in employment was greater than the fall in GDP. That crisis was domestically-generated and it was generally known that tough times lay ahead, as public finances were to be consolidated. This time, the crisis has come from outside and there has been scope for forceful fiscal policy and monetary policy measures. It is always difficult to make forecasts. Moreover, I believe it is more difficult than normal in the current situation.

The State Budget for 2013, which will begin to be drafted in the coming weeks, must uphold this commitment and give expression in specific  4  BIS central bankers’ speeches  measures to some of the announcements made in the context of the latest Stability Programme. It is no overstatement to say that much of Spain’s future is at stake in complying with these fiscal targets, and that failure in this process of consolidation would set back considerably the possibility of an economic recovery in our country. BIS central bankers’ speeches  5
The rationale in textbooks is that, by either through choice or regulatory fiat (a minimum “reserve requirement”), banks will always back some minimum proportion of their deposit liabilities (call it ρ) with reserves at the central bank: R ≥ ρD. Because, unlike the bank’s other assets, reserves don’t pay interest (this is how the story goes), this constraint generally binds: reserves are held at this minimum and the relationship holds with equality (R = ρD). Inverting it, deposits are therefore just a multiple 1/ρ of the level of reserves. 9. There’s a very clear description of this process in McLeay, Radia and Thomas (2014). 10. Many investment firms don’t have reserves accounts at the Bank of England; asset purchases allowed them to swap gilts for more liquid bank deposits. 11. More generally – and just as importantly – policy is “endogenous”: it reacts to things that would otherwise disturb inflation. This is not something to which I’ve paid much attention in this talk – I refer to it only briefly in the conclusion – but it’s a very important issue if you’re trying to interpret correlations in the data between instruments and objectives. In general these are unreliable guides to what policy does because the causation can run both ways. For example, interest rates are “procyclical” – they tend to rise in expansions and fall in economic contractions. But this doesn’t mean that higher interest rates cause strong growth – it’s really the other way around. 12. Bailey et al (2020), Broadbent (2018).

That might have been for any number of reasons. One contributory factor may have been that the additional deposits were held disproportionately by people less likely to be “liquidity constrained” – older and better-off households – and therefore less likely to spend them. (The very existence of money probably reflects financial frictions of this sort. It wouldn’t therefore be surprising if the distribution of a monetary “windfall”, across a diverse population, had some bearing on its effects.) Whatever the reason, this makes it difficult to see these additional deposits as the principal cause of the inflation that’s followed. It is precisely those subsequent (and very large) jumps in import prices, and their second-round effects, that seem the more likely cause. This explanation would also accord much better with the very large changes we’ve seen in relative prices. Finally, let me end with a more open question, one that’s more about the future than the past. I’ve not addressed this directly today but it’s certainly relevant. As Chart 3 illustrates, household deposits (and aggregate M4) have actually been declining for some time since mid-2021, relative to household income. The levels of these aggregates, on the other hand, are still higher than in the pre-pandemic period. Which of these matters more – a still-high level but a negative growth rate – depends a bit on your view of how households behave and how their demand for money is determined.
In 1999 the GDP growth rate is expected to be rather more than 3 per cent. This implies that in 1998 and 1999 growth will be stronger than the increase in potential output, for which the annual trend is estimated to be just over 2 per cent. That means that today’s surplus capacity will be activated by degrees. It is difficult to tell how quickly this will happen. The Riksbank considers that the output gap -- a way of attempting to gauge unutilised capacity in the economy as a whole -- is currently about 2 per cent of GDP. With the growth rates envisaged above, the gap would then close some time in 1999. Other information with a bearing on when inflation might be likely to accelerate was also included in the inflation report. Estimates of structural unemployment and thereby, indirectly, of the level of unemployment that can be combined with stable, low inflation, suggest that risks of inflation also exist less than two years ahead. The rate at which capacity utilisation rises may likewise play a part. A rapid reduction of unutilised resources might generate inflationary impulses even though there is still a capacity surplus at total level. Risks in the wage negotiations Wage formation is particularly relevant at present because the settlements that are due in the coming six months will cover a large part of the labour market. Labour shortages are not yet being reported from more than a few sectors, but experience shows that the domino effects can be substantial.

Mr. Heikensten considers inflation and the interest rate in Sweden Speech given by the Deputy Governor of the Bank of Sweden, Mr. Lars Heikensten, at the Sweden Financial Forum, Örebro, on 15/10/97. What I have to say is based in the main on the Riksbank’s latest inflation report, which was published less than a month ago. In some respects, I shall be developing what we said there about the outlook for inflation, though our assessment of the situation is essentially unchanged. I shall begin, however, with some remarks about why monetary policy is constructed as it is, with the objective of safeguarding the value of money. 1. Monetary policy’s foundations Experience advocates a stable environment The reason why the Riksbank’s objective is to safeguard the value of money is basically simple: low, stable inflation contributes to a good environment for the growth of production and employment. Support for this view is readily found in the pattern of economic developments in different industrialised countries. In those countries where inflation has been allowed to accelerate, growth has normally been weaker and more erratic. We have seen this in Sweden. In the first two-to-three post-war decades Swedish economic policy was characterised by stable rules and inflation was low. Economic growth in those years was good and new jobs were created to a greater extent than in the past two decades, when inflation shot up and there was a series of devaluation cycles. There is really nothing odd about this.
Three different approaches exist: (i) That the policy rate is assumed to remain unchanged during the forecast period, (ii) that the policy rate is assumed to follow market expectations, or (iii) that the policy rate is assumed to follow a path that the central bank itself considers to reflect a reasonable future development. 3 Regardless of which of these three interest rate assumptions is used to produce the inflation forecast, the monetary policy decisions made by the central banks always refer only to the current level of the policy rate, that is, the level that is to apply until the next decision-making point. 4 However, the monetary policy discussion and communication differ slightly, depending on which interest rate assumption is used. 1  See the minutes of the Executive Board meeting on 16 January 2007. 2  See, for instance, Eijffinger, S. and P., Geerats, (2006), as well as van der Cruijsen, C. and M., Demertzis (2005). 3  See, for instance, Blinder, A., (2006), and Kontulainen, J., D., Mayes and J., Tarkka, (2004). 4  There are special exceptions to this normal procedure. For example, during the deflation crisis in Japan, the Japanese central bank undertook to maintain its policy rate at a low level during a certain period. For another exception, see the statement in a press release from the Federal Reserve, Board of Governors, 12 August 2003, in connection with fears that inflation would be too low.

I wish therefore, to commend BancABC for sponsoring the CASE Handbook, which I am sure will provide valuable information to active and potential players on the Stock Market in Zambia. With these remarks, I wish to declare the CASE handbook officially launched. I thank you for your attention. 2  BIS central bankers’ speeches
In recent decades, the sectors exposed to international competition have led the way and set the standard, as it were, for the rest of the labour market. I firmly believe that the outcome of this system has been positive. The Industrial Agreement has played an important role. In other words, the inflation target and the Industrial Agreement have worked well together. The inflation target contributes to smoothly-functioning price-setting and wage formation The role of the Riksbank is and always has been to be responsible for monetary policy. Monetary policy is conducted with the aim of ensuring that the annual rate of inflation is 2 per cent. It is important to have a benchmark for expectations in the economy and thereby lay the foundations for efficient price-setting and wage formation. Its purpose is to enable economic agents to plan long-term, for instance, with regard to wage negotiations. In other words, the inflation target makes it easier for households and companies to make good economic decisions. It creates the conditions for good economic development with long-term economic growth. The benchmark of an inflation target of 2 per cent was established in 1993. Prior to that, a fixed exchange rate acted as the anchor for wage formation and price-setting. At that time, inflation in Sweden was linked to that in competitor countries. However, increases in wages and prices in Sweden became too high, at the same time as real purchasing power hardly increased at all. These were the problems that a new inflation-targeting policy would remedy.

Dimitar Radev: Review of Bulgaria's economy and banking system Banker's Day' speech by Mr Dimitar Radev, Governor of the Bulgarian National Bank, to the Association of Banks in Bulgaria, Sofia, 5 December 2017. * * * Dear Colleagues, Dear Members of Parliament, Dear guests, First of all, I would like to thank you for the invitation – on my behalf and on behalf of my colleagues in the BNB Governing Council. We are delighted to be with you this evening. The passing year 2017 was good both for the economy and for the banking system in Bulgaria. Perhaps, this has been the first year for a long time, in which there is more optimism than pessimism. The economy is developing at better rates than we anticipated early this year. The fiscal position is solid. The banking sector is in a very good state. Capital adequacy and liquidity ratios are above the average levels for the European Union. For a second consecutive year this sector’s profits nearly reach the highest historical levels. Lending continues to increase. We see a long-term downward trend in non-performing loans. We also have positive results from the accomplishment of the BNB’s main priorities. Generally, the measures adopted after the asset quality review and the stress test last year are being implemented successfully. The efficiency of banking supervision is improving and all independent observers of the developments in our banking sector point up this progress.