samchain/econo-pairs-v1 huggingface dataset:
This emergency compromise has shifted the focus away from structural reforms, which guarantee rebalancing through the increase of income. Often, the perspective of economic policies does not extend beyond some quarters ahead, while a much longer time vision should be considered. The anchoring of the future should start from the present. The actual philosophy of stabilising policies is based on past experiences with the hope that the current crisis is similar to previous ones. This reasoning has urged the authorities to insist on recycling stabilising measures. The time, however, shows that the global economy has undergone radical changes. The current crisis is happening as the global economic map is being redesigned in terms of economic size, geographic distribution of savings, debt, and trade and current balances. Advanced economies have traded positions with the emerging ones across all these dimensions. Consequently, old recipes do not provide an exit given that axioms on which they are based have changed. The solution of current and future challenges requires a new philosophy of thinking based on the new global reality. 2  BIS central bankers’ speeches  This reality, globalisation, is no longer a choice, but a fact that should be taken into account when formulating long-term development strategies. Turning to a regional setting, I think that this philosophy should be embraced and supported without hesitation. In order to make it more productive, we should be more opened to each other and take regional cooperation to new and higher levels.

Ardian Fullani: Monetary policy, from the past to the present Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the 10th international conference on “Monetary policy, from the past to the present”, Tirana, 26 October 2012. *  *  *  H.E. Prime Minister, Your Excellencies Ambassadors, Honourable Minister of Finance, Honourable Governors, Distinguished Guests and Participants, I am very honoured and privileged to open the proceedings of the Tenth Conference of the Bank of Albania. This conference is particularly important this year as it is organised in the framework of activities for the 100th anniversary of the Declaration of Albania’s Independence and the 20th anniversary of the Bank of Albania. While retaining the scientific approach, the conference pays tribute to the endeavours made over the years in the monetary and finance aspects. In Bank of Albania’s view, the past is an essential element for the analysis and decisionmaking, and a requisite for theoretic or empirical research. At present, this is a necessity, a challenge that the economics world is facing. To scan, diagnose and cure the situation of the economy, a successful scholar would have to be able to read the human thought. Unfortunately, such a doctor does not exist. Therefore, in our days, the economic science is turning its attention to individual characteristics such as: history, ethnography and other national traits, considering them as substantial determinants for the stochastic process that leads the behaviour of economic agents.
Oil prices have increased reflecting fears of supply disruption and heightened risk premium, but some non-oil commodity prices have fallen in response to concerns about weakening demand. 9  This group covers the BRIC economies plus 22 other emerging and newly industrialised economies. 4  BIS central bankers’ speeches  economies is playing an increasing role. These economies account for a little under 20% of the UK’s imports. So if inflation remains elevated in these countries this could have a material impact on domestic inflation. Under some circumstances, we may expect the impact of high inflation in overseas’ economies to be offset by a corresponding depreciation in their exchange rates. But where economies operate pegged exchange rate regimes it is far from clear that this can be relied upon, at least in the near term. A third external factor which could add to domestic inflation is if there is further pass-through from the past depreciation of sterling. Our central view is that there has been close to 100% pass through in terms of the direct impact of higher import prices on to consumer prices. But it is hard to be precise about the exact degree of pass-through, and the range of estimates included in the February Inflation Report suggest that pass through to date may be as low as two-thirds.

Yes, it is perfectly possible to explain why inflation has been so high for so long. And yes, there are good reasons why monetary policy did not try to keep inflation closer to target during this period. But just like the Judge looking down on me earlier, to some people, at some point, this may just start to sound like a series of excuses. This risk is heightened by the fact that the MPC has consistently under-predicted inflation during this period. It is much easier to be wise after the event. For many people, the one thing about inflation they know with certainty is by how much their cost of living has increased in recent years. And if they take any signal from that about the path of future inflation, this could have significant implications. Discussions of MPC credibility are often framed in terms of a set of binary arguments. Has the MPC lost its credibility or not? Are inflation expectations anchored or de-anchored? This approach encourages a focus on measures of medium-term inflation expectations. The rate of inflation expected over the next year or so may consistently move around since the MPC does not attempt to bring inflation back to target over very short time horizons. But this  10  In the extreme, the law of one price (LOOP) suggests that, in the absence of transport costs and trade barriers, the price of a given commodity will be the same all over the world.
A collapse of confidence in the coffee houses of Lombard Street was one thing; a collapse of confidence in the world economy is quite another. An examination of these parallels will, I hope, help to throw light on three questions. First, does the nature of financial risk explain the frequency of crises and what does it imply for the design of banking regulation? Second, what are the lessons from the crisis for central banks in their pursuit of both monetary and financial stability? And, third and most urgently, how do we find our way out of the present crisis? The nature of financial risk and its implications for the regulation of banks There is no shortage of proposals for reform of bank regulation from official groups, such as the Financial Stability Forum, and unofficial groups, such as the G 30, chaired by Paul Volcker and the Geneva Forum. Since the excessive risk-taking of recent years has now given way to an extraordinary degree of risk aversion, there is no hurry to choose among them. Whatever exuberance – rational or irrational – existed has been destroyed by the crisis. So we have time to reflect before we decide on the shape of a new regulatory system. Another reason for reflection is that recent years have seen a natural experiment. Some regulatory systems were light touch, others heavy touch, and yet others placed both ownership and regulation of banks in the public sector.

Third, traditional financial institutions in Asia have embarked on a digitalisation journey, enabled by core technologies such as cloud computing. Almost every major financial institution has an active innovation agenda to strengthen its business by harnessing technology. In just the last three years, more than 30 global financial institutions have set up innovation labs in Singapore, testing new technologies and collaborating with FinTech start-ups to develop solutions. Let me give some examples of collaboration from the Singapore FinTech ecosystem: 2/4  BIS central bankers' speeches  Hedge fund managers are using a solution deployed by SQREEM to provide them behavioural insights related to equities, foreign exchange markets or political events like Brexit. Relationship managers are using a solution by AIDA, to predict whether their clients are likely to increase their assets under management or make a withdrawal. FINQUEST is using big data analytics to connect small to mid-sized companies globally to growth capital and potential acquirers. APVERA is helping enterprises detect anomalies in the behaviour of their employees and flag data leakage risks. These three driving forces – FinTech start-ups, e-commerce platforms, and financial institutions harnessing technology in a big way – are creating the synergies that power Asia’s digital transformation. Initiatives to Foster the FinTech Ecosystem MAS has an active and wide-ranging FinTech agenda. In the interest of time, let me highlight three key initiatives we have taken in recent years to nurture the FinTech ecosystem in Singapore and integrate it across ASEAN. First, the ASEAN Financial Innovation Network, or AFIN for short.
Last winter we saw how short the path was from a local virus outbreak in Wuhan to a global health crisis. Covid-19 followed the same routes as tourists, labour and goods. The virus showed how closely interconnected and interdependent countries are. 2 See The Productivity J-Curve: How Intangibles Complement General Purpose Technologies Erik Brynjolfsson, Daniel Rock, and Chad Syverson NBER Working Paper No. 25148, https://www.nber.org/system/files/working_ papers/w25148/revisions/w25148.rev0.pdf  6  NORGES BANK  Chart 5 Growth in global trade has stalled Share of global GDP. Percent 30  30  Trade in goods Trade in services  25  25  20  20  15  15  10  10  5  5  0 1977  1983  1989  1995  2001  2007  2013  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  0 2019  Sources: Refinitiv Datastream, WTO and Norges Bank  A rising number of countries have been integrated into world trade over the past decades (Chart 5). The gains have been substantial. Poverty has been reduced. Crossborder cooperation has enabled technology to advance faster than it would have done otherwise. Since the financial crisis, growth in global trade has stalled. While service exports have continued to rise, trade in goods as a share of global GDP has been more or less flat in recent years because a number of sources of growth in goods trade are drying up. Large countries such as China and India are now fully integrated into the global economy.

The most devastating ones have laid fertile land barren, reduced the supply of labour and entailed a loss of knowledge. During the Spanish flu pandemic, more than 50 million lives were lost, many of working age. Once the Covid-19 pandemic is over, we will have been through a long period of restrictions on how we spend money, how we get from place to place and how we work. The Covid-19 pandemic will leave behind scars as well. 4  NORGES BANK  Chart 3 Economic growth has fallen Mainland GDP per capita. Contribution to average annual growth 4  4  Productivity Employment GDP per capita  3  3  2  2  1  1  0  0  1970-79  1980-89  1990-99  2000-09  ECONOMIC PERSPECTIVES 18 FEBRUARY 2021  2010-19  Sources: Statistics Norway and Norges Bank  Growth in output per capita has been moving down over several years (Chart 3), and labour input is now growing at a snail’s pace. At the same time, the primary source of growth – productivity – is making a steadily smaller contribution. This is a trend we share with other advanced economies. An underlying driving force – cross-border trade – is showing signs of flattening out. The pandemic could influence these trends. Previously, sharp declines in economic activity have been followed by a persistent rise in unemployment and a lower labour force participation rate.
The Central Bank has bought a smaller share of foreign exchange inflows in the recent past than it did earlier in the year, and the króna has appreciated more as a result. This is because the foreign exchange reserves are larger and somewhat above the recommended minimum for liberalisation of the capital controls. The nature of the inflows is important, as is the view that if the currency appreciates due to a rise in the equilibrium real exchange rate, this is part of the desirable countercyclical role of the exchange rate; furthermore, it is not desirable to disconnect the exchange rate channel of monetary policy transmission entirely. Nevertheless, the foreign currency purchases have been substantial, based on precautionary principles concerning the durability of the inflows and attempts to prevent excessive appreciation of the currency in advance of liberalisation-related outflows. In the wake of the Central Bank’s large foreign currency purchases this year, the question has arisen whether large foreign exchange reserves are a problem in and of themselves; i.e., whether they jeopardise the Bank’s finances to such a degree that they could undermine its ability to pursue appropriate monetary policy at any given time. We do not have time to explore this in depth here, but the short answer is: no, they are not. First of all, we must not focus only on the cost of financing the reserves; we must also consider the benefits associated with them.

When we consider the interest rates that are most important for households and businesses – i.e., longer-term real interest rates rather than the rates decided directly by the Bank – it is also important to realise to what extent monetary policy can affect those rates. The answer to this is that monetary policy only has a short-term impact on long-run real rates that are ultimately determined by underlying economic fundamentals, not least the interactions between the propensity to save and the impetus to invest. Let us now examine a few facts of importance in this context. First, it should be noted that international long-term real rates have been falling over the past three decades, as can be seen in Chart 1. 2  Chart 1: Real long-term Treasury rates on price indexed bonds 1985-2016 %  1985  1990 2015  1995  2000  2005  — International interest  2010  —Iceland  Rates on indexed long-term Treasury bonds (5-10 years). International interest rates are the simple average of rates for the US (from 1999), the UK, and Germany. The Icelandic data are compiled from data on initial offerings of Treasury savings bonds and yields on Housing Financing Fund bonds and indexed Treasury bonds. The figure from 2016 is the average through mid-November. Sources: Bank of England, US Federal Reserve Bank, Central Bank of Iceland. This development began long before the financial crisis.
That is the largest recorded quarterly fall in output since 1958. In the wake of the financial dislocation of Autumn 2008, there was a collapse of confidence and elevated uncertainty which had a profound effect on consumer demand and investment intentions. There was also an intensification of the “Credit Crunch” which had been in train since the start of the crisis in mid-2007. A range of policies had been introduced in the United Kingdom to prevent an economic meltdown. That included action to re-capitalise some of the banks; guarantee some of their funding; expand liquidity assistance and to set appropriately accommodative fiscal and monetary policies. Governments around the world took very similar steps. Asset purchases were one part of the policy response. At its peak, the Bank of England bought nearly £ of commercial paper and corporate bonds (Chart 2). This is sometimes compared with the eventual total of £ gilts purchased, prompting the question why the Bank didn’t buy more private sector assets? This question reflects a – perhaps natural – misunderstanding of the different purposes of these interventions. The gilt purchases were intended as a monetary policy operation to inject a substantial amount of money into the economy. The consequences of that policy have been addressed in Bank publications (Bank of England, Quarterly Bulletin, June 2009 for example), speeches and elsewhere. There has been much less discussion about the private sector asset purchases.

Eligible firms also had to contribute materially to the UK economy and must not be banks (other policies, as noted, had been introduced to help banks). And individual counterparty limits were imposed. Although disentangling the precise impact of the scheme from the global improvement in financial markets is difficult, it does appears to have been successful. Purchases peaked at around £ in late April 2009, at that time amounting to around one third of the sterling CP market. But, as I have stressed, the objective of the scheme was not to purchase a large quantity for its own sake. It was much more important that market spreads for the average issuer started to fall soon after the scheme was launched. Market spreads for all A1 rated sterling paper fell below APF spreads in August 2009 (Chart 3). By February 2010 nearly all firms who had sold CP to the APF were able to re-issue at cheaper rates in the market and the Bank’s CP holdings have fallen back to under £ That decline in usage, together with greater ability to issue in the market, indicates the improvement in market conditions which the scheme was intended to help bring about. I should note that, at the current moment, the need for firms to issue CP is at something of a low point. Investment-grade firms do not seem to have a strong demand for short-term cash and are concentrating on issuing longer-term debt.
When the bust arrives, over-indebted households and businesses want to increase their saving and liquidity buffers, and financial intermediaries want to raise credit standards. Both responses restrain demand and make a cyclical rebound more difficult. In the U.S. case, because the bust was concentrated in housing, the scope for a strong cyclical recovery was particularly constrained because the interest-rate sensitive sector that would typically lead such a rebound could not recover until the overhang of unsold homes and the impairment of housing finances was corrected. The U.S. recovery has also been subpar because it has been taking place in the context of a weak global economy. Historically, after a country experienced a financial crisis, growing foreign demand and currency depreciation have often led to a sharp improvement in the trade account that has put a floor under economic activity. In such circumstances, rising exports substitute for domestic consumption in supporting aggregate demand. This demand, in turn, encourages businesses to hire and invest. In contrast, this time the shock generated by the U.S. housing bust had global consequences, exposing economic vulnerabilities outside of the United States, especially in Europe. Under these circumstances, the scope for trade as a support for U.S. growth, while positive, has been very limited. These two factors – the dynamics following financial crises and the weakness of foreign demand – help explain why U.S. growth has been weak, but I don’t think these factors explain why it has been consistently weaker than expected.

But I must stress the urgency here: we don’t have much time left, one or two years. Everybody is talking about a CBDC; but first, and much earlier, we need to regulate crypto-assets, and then implement EPI. The third and final action: be ready to launch a general purpose CBDC, which means for the public and for the financial sector, to reassert the anchoring role of central bank money in case of need. Let me insist on the dual purpose: public attention is naturally focused on a retail digital currency, for individuals and firms. But a “wholesale” or “interbank” form is also important, particularly as the use cases are already even more obvious, and because this interbank money will be vital for cross-border transactions. The next investigation phase and technological prototypes selected by the Eurosystem will, in my view, need to cover both these functions, separately or together. The results of the ECB’s public consultation, published mid-April, show that European citizens regard two aspects as particularly important: privacy and security. Therefore, the retail CBDC would be made available to citizens as an easy-to-use, secure and accessible payment instrument, that protects user privacy and can be used for all types of payment. How would it be distributed? We want to develop a model where CBDC is distributed by intermediaries, to allow private players, first and foremost the banking sector, to keep a key role. Let me be clear on this: it is not the Banque de France’s or any Central Bank’s role to open bank accounts!
During this period one could say that the central banks’ original task of guaranteeing the value of the means of payment was neglected as other tasks, primarily affecting demand in the economy, were perceived as more important and more interesting for monetary policy. The consequence was that the nominal anchor was relinquished and to establish it again proved to require considerable effort. Let me before I discuss the other important component of an efficient payment system – financial stability – say something about the most common approaches to attaining price stability. There are currently two predominant means of trying to ensure that inflation remains at a low and stable level. One is to tie one’s own currency to the currency of a country with a long tradition of low and stable inflation. The fixed exchange rate thus becomes an intermediate target through which one hopes to attain the ultimate target – price stability. The other means is to allow the exchange rate to float and to give the central bank the task of acting more directly to attain low, stable inflation – what is known as inflation targeting. The changeover in monetary policy made by Sweden at the beginning of the 1990s meant that we switched from the first method, fixing the exchange rate, to the second, targeting inflation. The reason was quite simply that the fixed exchange rate had not functioned very well as a means of keeping down inflation and establishing a nominal anchor in the economy.

4 One strategy for maintaining financial stability can briefly be described as consisting of three different parts: a clear regulatory framework, an efficient day-to-day prudential supervision and oversight and a preparedness to act strongly and quickly in a crisis. Exactly what role is played by the central bank in this strategy is also something that varies from country to country. Many central banks contribute in different ways to the formulation of the regulatory framework for the financial system, for instance, by giving their views on proposed bills and by participating in committees where domestic and international legislation is formulated. With regard to the day-to-day prudential supervision and oversight, one solution that is applied in Sweden and other countries is that the supervision of the financial sector is delegated to a special, independent authority with the power to apply sanctions. In other countries the supervision work is done by the central bank itself. In the cases where supervision is delegated to an independent authority, the central bank usually has an oversight role that entails regularly monitoring and analysing developments in the financial sector and presenting its views of the risks in the financial system. Ever since the bank crisis at the beginning of the 1990s, this has been perceived as a very important task in Sweden; in fact, it could be argued that the bank crisis was allowed to arise partly because no authority previously had the specific task of monitoring the overall financial stability.