samchain/econo-pairs-v1 huggingface dataset:
I also do not intend to comment on the principally international debate as to whether inflation targeting really is the best monetary policy framework, or whether a target for nominal GDP would be preferable, for example. As I have already mentioned, I think that flexible inflation targeting is the preferable framework, both now and for the foreseeable future. In general, however, it is important for us to follow the fairly intense international discussion about how monetary policy should best be conducted. We want to avoid ending up with rushed and home-cooked solutions that we eventually regret and find it difficult to change. However, the areas I will focus on here – the target variable and a potential interval – primarily refer to the Swedish debate and are things that we ought to be able to change, should we wish to, without a risk of major negative consequences. The target variable Let me therefore begin by discussing the target variable. Since the inflation target was introduced in January 1993, it has been formulated in terms of the consumer price index, CPI. The reason the CPI was chosen as the target variable was mainly due to the fact that it was, and still is, the most well-known measure of price developments in Sweden. The CPI also has the advantages that it includes a large part of household consumption, it is published regularly and has well-known statistical properties.

7  Simulations by Dorich, Labelle, Lepetyuk and Mendes (2015) using a model for the Canadian economy indicate that a target of 2 per cent leads to a result that is almost as good as if the target were raised to 3 or 4 per cent, given that the policy rate can be complemented by quantitative easing as well as active and credible supporting communication. BIS central bankers’ speeches  3  Major direct impact of interest rate changes makes Swedish CPI unique This direct impact of interest rate changes on inflation is quite unique to Sweden. The reason for the effect is that we include household mortgage costs in the CPI in a slightly different way than most other countries with inflation targets. More specifically, we attempt to measure households’ costs for living in an owner-occupied property, where interest expenditure is an important component.8 The CPI is calculated according to roughly the same principles in Canada, for example, but in practice the interest rate changes have a much smaller impact on the CPI there than here in Sweden.9 In Australia and New Zealand, interest rate changes also previously had a major direct impact on the CPI, but the method for calculating CPI changed in both countries at the end of the 1990s in a way that eliminated such effects.10 They now apply a method which is principally based on following price developments of new housing, a so-called net acquisition approach.
This involves government bond purchases and marks the launch of quantitative easing. 2  BIS central bankers’ speeches  Adding government securities and paper issued by supranational European institutions to the asset purchase programme was a very important step in the monetary easing and economic stimulus policy: the programme will run to September 2016 at least, with a monthly target of € billion for the three programmes as a whole, although government bonds will be the main component of the purchases and of the increase in the Eurosystem balance sheet. The programme is expected to give a significant monetary boost to the economy, keeping inflation in the medium term below, but close to, 2%. The monetary stimulus transmission mechanisms include both the easing of financing conditions for households and firms and, indirectly, the depreciation of the euro. Purchases of public securities will be allocated as follows: 88% to euro area sovereign and national government agency securities, and 12% to supranational institutions and international agencies resident in the euro area. Of the 88% of national government securities, 8 pp will be acquired by the ECB and the remaining 80% by national central banks, according to their capital key in the ECB, with some special rules for national central banks whose government debt markets are so small that these targets cannot be met.

We are ensuring that the next generation of RTGS service creates a world-leading payments landscape for the UK. We can also be a catalyst and a convener for broader developments. We have been working with the FinTech sector, a sector we previously had little to no interaction with. As the Bank’s Executive Director for Banking, Payments and Financial Resilience, Andrew Hauser, highlighted here in Cambridge late last year, our engagement in the FinTech sector has improved our familiarity with FinTech products, concepts and firms, and also given FinTech firms insights into the emerging questions and needs central banks might 8  have, as policymakers, regulators and operators. In recognition, the Bank won ‘Initiative of the Year’ last month from Central Banking, for the work we did with firms working on new and emerging financial technology. 9  Interacting with these innovative disrupters has reminded me that there are reasons to be optimistic about productivity growth in the longer-term, stretching beyond the horizon relevant for monetary policy. We are here in Cambridge, home to Silicon Fen. The city is home to around 1700 science and technology 10  companies, including over 200 biotech companies and a large array of science infrastructure. A survey by our Agents across the UK last year suggested that the biggest positive driver of investment intentions was the desire to achieve future efficiency gains. One feature of the drive for efficiency gains has been investment in automation, AI and robotics.
It would not be acceptable for the search for an alternative source of income in the short term to become once again a potential source of future losses. In this respect, price-setting policies at product or service level are fundamental to ensure an appropriate risk-adjusted profitability. These policies must be consistent, comprehensive and rigorous to ensure that the price charged for a product or service covers at least its total cost, including the risk premium inherent in each type of transaction. From the viewpoint of appropriate risk management, controlling the risks incurred, assessing how they develop over time and applying conservative conditions when negotiating the rollover of loans are basic elements of credit standards that banks must observe and keep up to date in their policies. Moreover, from the viewpoint of customer protection, the appropriate assessment of their solvency and capacity to repay is also protection against future vulnerabilities (see Chart 5). 5/11  Reputation and conduct One of the largest challenges facing banks today is precisely that of managing one of their main assets: their reputation, which is fundamental to generate the appropriate framework of trust within which to develop customer relations. The reputation of banks was eroded during the last crisis, not only as a result of management failures in part of the system, but also as a result of inappropriate marketing to customers, which undermined their trust. In fact, the number of complaints by customers to banks’ customer complaints services increased almost six-fold between 2014 and 2017.

Ardian Fullani: Albania on the road to EU integration Speech by Mr Ardian Fullani, Governor of the Bank of Albania, at the launching ceremony of the Needs Analysis for the Bank of Albania project, Tirana 17 April 2014. *  *  *  Dear Mr. Mersch, Dear Mr. Hamza, Dear Mr. Bajrami, Your Excellencies Ambassadors, Dear guests, The purpose of the programme we are launching today is to support the Bank of Albania in the process of approximation with the EU central banking rules, procedures and standards. This is another step forward in the increasingly closer cooperation between the Bank of Albania, the European Central Bank (ECB), and the Eurosystem. I am delighted we have here today the Governor of the Central Bank of Kosovo and Vice Governor of the National Bank of Macedonia, as co-beneficiaries under this project. The Project addresses 13 different fields of central banking, as identified by Bank of Albania and ECB experts, wherein the Bank of Albania needs to make progress to reach comparable benchmarks to an EU central bank. These fields relate to all the main functions of the Bank of Albania, such as monetary and financial stability, operations, financial infrastructure, transparency, accountability and human capital. For the first time, information technology is also incorporated in the project scope, hence reflecting the impact of technology’s evolution on central bank operational systems over the past decades.
Effectively implementing the enhanced governance framework, completing the banking union, and building a capital markets union to reduce risk and to allow for more private risk-sharing while establishing additional public risk- sharing mechanisms in parallel are some of the key near-term requirements in this regard. In the longer run, a more perfect EMU will form the basis for a stable, flourishing euro area economy that will not only enable the euro area to tackle challenges in other policy areas, but that will also be to the benefit of global economic and financial stability. BIS central bankers’ speeches  3

And we all presumably want these decisions to be good ones. But how can we ensure that a decision is good? This is a weighty and far-reaching question. If I am to make meaningful contribution, I will need to limit my focus. Norges Bank makes many decisions. The monetary policy decisions every six weeks are awaited with particular interest. Based on my experience from interest rate decision-making, I will focus on how the quality of a decision can be assessed. Even though I am speaking from my own perspective, I hope I am able to touch on more general issues that are of wider relevance. 2. Independence provides a sound framework for interest rate decisions  Most countries have now delegated the task of ensuring price stability to the central bank. This is also the case in Norway. The government has set an inflation target for monetary policy and delegated the operational conduct of monetary policy to Norges Bank. 3 This framework can be regarded as an institutional solution to the problem of avoiding major mistakes. An independent central bank is better able to give priority to long-term interests over short-term gains. 1  The lecture “On keeping promises”, commentaries by Endre Stavang and Henrik Syse and Francis Sejersted’s summary of the debate are published in Norges Bank Occasional Paper No.39 (2009). 2  Kim Gunnar Helsvig (2007): Elitisme på norsk. Det Norske Videnskaps-Akademi 1945–2007 [Elitism in Norway. The Norwegian Academy of Science and Letters 1945–2007], Novus forlag, Oslo, pp. 18–19.
We are accountable directly to Parliament through regular public testimony to the Treasury Committee of the House of Commons. Policymakers in few other countries are called before Parliament as often as we are. We have a duty to make ourselves accessible, and to explain ourselves, not just to Parliament but also to people up and down the country. Their trust in us to do the job we’ve been given will not arise from trying to sound clever or from obfuscating with acronyms. Their trust in us rests on having it proved that we’re doing what we’ve been asked to do in the way we’ve been asked to do it. That’s why there’s a web version of our 100-page financial stability report that’s just eighty three words and three pictures. The whole report is captured in six tweets. It’s why a phrase such as “The 2018 stress test shows the UK banking system is are resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the global financial crisis and that are combined with large falls in asset prices and a separate stress of misconduct costs” has become…  10  All speeches are available online at www.bankofengland.co.uk/speeches  10  … “banks can lend to households and businesses in bad times as well as good”. And it’s why those of us who make the decisions are hosting Citizens Panels around the country. These are groups of 20-30 citizens from all walks of life and a diverse range of backgrounds.

In particular, the FPC is charged with ‘the identification of, monitoring of, and taking of action to remove or reduce, systemic risks with a view to protecting and enhancing the resilience of the UK financial system’, but this does not ‘require or authorise the Committee to exercise its functions in a way that would in its opinion be likely to have a significant adverse effect on the capacity of the financial sector to contribute to the growth of the UK economy in the medium or long term’. 7 This approach, of proposing and testing, is similar to the notion of ‘discursive governance’ proposed for independent regulatory agencies by Gehring (2004) and discussed in the financial stability context by Demekas (2019). 6  7  All speeches are available online at www.bankofengland.co.uk/speeches  7  Together, these three ingredients mean we have a clear mandate to follow but, at the same time, we have the flexibility that’s needed to manage financial stability efficiently and effectively. An example – resilience of major banks Our approach to how resilient major banks should be to economic shocks captures all of these ingredients. We started with Parliament’s preferences: resilience but not at the expense of growth over the medium to long term. Using all the evidence available, we’ve balanced the benefits and costs. On the benefit side of the ledger: the fact that the system will not magnify severe downturns.
Reforms to remove the defects in the social security system; to prevent unregistered economic activities; to provide the labor market with a more flexible structure via education; to restructure the taxing system; to continue with the reforms in the financial sector incessantly and to increase efficiency in the agricultural sector should be given priority in our country. On the other hand, considering that growth is a dynamic process, it is very important to strengthen the macro reforms with micro measures and being in a search for a strategic approach in accordance with the changing needs and newly emerging structures. The public and private sector should engage in cooperation in this field. 1  Global Competitiveness Report 2006-2007, World Economic Forum. 2  Global Competitiveness Report 2006-2007, World Economic Forum. 3  Indicators of good governance are prevention of corruption, the rule of law, efficiency of the legislation and regulations, quality of the state services, political stability and transparency and accountability. 4  Macedo, J.B. ve Martins, J.O. (2006). “Growth, Reform Indicators and Policy Complementaries”. 6  BIS Review 28/2007  The public sector should assume a supervisory and regulatory role within the scope of the principles of good governance and work towards creating an atmosphere in which the private sector can compete within the international markets under the market conditions and should absolutely prevent the unregistered economic activities.

The reason why I attach such a special importance to this subject and put emphasis on this with similar expressions in almost all my speeches is to draw attention to the possible risks that the economic units may confront under the floating rate regime and increase awareness. Otherwise, the deterioration brought about by the mis-management of risk affects the economy as a whole. Dear Guests, When the course of the value of Turkish currency versus foreign currency from 2002 up to now is taken into account, it is observed that as long as tight monetary and fiscal policies are maintained; structural reforms are implemented, political stability is maintained and the decisiveness for macroeconomic stability is sustained; the basic tendency will be in favor of the appreciation of the Turkish currency. This is a process in which the Turkish currency is increasingly preferred for investment as in every robust economy although it is subject to occasional interruptions. Therefore, the value of the Turkish currency emerges as a clear consequence. Determination of the foreign exchange rates under the market conditions as a requisite of the floating exchange rate regime does not imply that the Bank shall not undertake any transactions in the foreign exchange markets. As it was also explained in detail in our announcement called “Monetary and Exchange Rate Policy for 2007”, the Central Bank undertakes transactions in the foreign exchange markets for two objectives.
In the two years to June 2015, UK PNFCs increased their level of borrowing from capital markets by £ and reduced their borrowing from banks by £ Overall, UK PNFC’s net debt is still some 30% below its 2009 peak. The stock of lending to SMEs, which had been declining for over five years, now seems to have stabilised, though it is some way from growing in line with the economy. The commercial real estate (CRE) component of credit growth in the UK has often been a source of vulnerability. UK banks have suffered large losses on CRE portfolios in most of our severe recessions and the post crisis recession was no exception. On the face of it the UK CRE market is simmering. Transactions reached a record high of £ billion in the 12 months to June this year. Prices have risen by 10% over the same period. As prices rise, average yields are deteriorating and are now around 2005 levels. The credit element of the story, however, which is most relevant from a macroprudential perspective, has been much less pronounced than in past episodes, CRE activity has been financed more with equity than debt; the share of equity financing of CRE investment increased from about a third pre crisis to three quarters in the years following the crisis. And particularly in London, much has been financed by foreign flows which reached £ billion last year.

The more this can be realised the more the new financial system will support the new creative jobs people will need – and enjoy – in the coming Machine Age. 20  While only private sector ingenuity will make these gains possible, authorities have essential, supporting roles in reinforcing them and managing the associated risks to financial stability. To help realise FinTech’s promise, we should refresh our supervisory approaches in a few ways. First, regulatory sandboxes can allow businesses to test innovative products, services, business models and delivery mechanisms in a live environment and with proportionate regulatory requirements. This supports innovation and learning by developers and regulators. The FCA was an early mover launching Project Innovate in 2014. 21  The G20 might consider the extent to which such approaches should be adopted  more widely. Second, existing authorisation processes can also be adapted to ensure they do not unnecessarily block new business models and approaches. This is why in the UK, the PRA and FCA now work closely with all 22  firms seeking new authorisation as banks. Third, the Bank of England is expanding access to central bank money to non-bank payments service providers (“PSPs”). Allowing access to the Bank’s Real Time Gross Settlement System allows PSPs to compete directly with banks, and so supports innovation, competition and financial stability. 23  Fourth, a number of authorities, including the Bank of England with its FinTech accelerator, are developing Proofs of Concepts with new enabling technologies from machine learning to distributed ledgers.
BIS Review 36/2005  5  behave in practice. Various empirical studies of baseball and cricket players suggest that fielders follow simple heuristics. For example, they keep their eye on the ball, adjusting their running speed so that the angle of the gaze – the angle between the eye and the ball – remains roughly constant.12 The heuristic will guide the fielder to the point at which he can catch the ball, without a need to acquire information about variables such as wind speed and direction, spin or the other relevant factors, nor perform complex calculations on those data. But it means that the fielder will run in a slight arc (the dotted line FA) and be moving when the ball arrives. What is instructive about this example is the ability to distinguish empirically between a simple heuristic and fully optimising behaviour, and that the evidence favours the former. A useful heuristic has two characteristics. It should be fast to compute and frugal in its data requirements. New heuristics can be adopted when needed. We might think of a “toolbox” of heuristics from which an appropriate choice can be made according to the task that is to be performed. Experimental evidence in laboratory settings shows that some fast and frugal heuristics can be about as accurate as much more data-intensive, optimisation-based methods such as multiple regression. What are the implications of heuristics for monetary policy? There are two issues.

Woodford (2003) and others discuss the link between that fundamental analysis and the proposition that monetary policy should aim to stabilise inflation and output. 2  BIS Review 36/2005  That is why recent academic analysis portrays monetary policy as a “policy reaction function” which describes the reaction of the official short-term interest rate to any possible configuration of economic shocks that might arise in future. For a given model of frictions it is possible to derive the appropriate policy reaction function which most advances the objectives of the policy-makers. Such a reaction function is a state-contingent monetary policy rule. It describes policy in every situation. There are no exceptions and, by construction, the rule does not change over time. Monetary policy rules have become a major area of research.8 Perhaps the most famous is the so-called Taylor rule, named after John Taylor who has just returned to Stanford after serving as Under Secretary at the US Treasury. The Taylor rule implies that interest rates should rise if inflation is above its target and output is above its trend level, and fall when the converse is true. The path along which inflation should return to its desirable long-run level will therefore vary according to the state of the economy. A key motivation for the study of monetary policy rules was the insight that if economic agents base their decisions on expectations of the future then the way monetary policy is expected to be conducted in the future affects economic outcomes today.