samchain/econo-pairs-v1 huggingface dataset:
Inflation has risen slightly in most countries, owing mainly to the increasing oil price. But excluding oil, inflation has not risen at the same rate. There are plenty of spare resources in several of the biggest economies, and in recent years competition has toughened in many industries. As a result, international inflation is forecast on the whole to be relatively moderate in the coming years. The economic situation in the US and the euro area In the US the economic situation is continuing to improve. In the fourth quarter last year GDP in the US rose by 0.8 per cent compared with the previous quarter, partly due to a sharp increase in investment. This reflects a benign investment climate in the US with historically high profits and optimism among firms. Indicators of growth prospects for the fourth quarter provide a positive picture of the activity level in the US economy. As resource utilisation has picked up the Federal Reserve has raised its key policy rate from 1 per cent to 2.5 per cent. Many factors suggest that we can expect the tightening to continue in the spring. Inflation is estimated to rise in the period ahead, partly because the weakening of the dollar in recent months has made US imports more expensive. In the main scenario of the Riksbank’s most recent Inflation Report the US economy is expected to continue to perform strongly in 2005 and 2006.

Interest rates are at an all-time low and the proposals in the Government’s Budget Bill imply a looser fiscal stance. Household consumption will continue to grow steadily in the period ahead, and business investment also appears to be picking up again following a number of years’ weakness. Taken together, this means that GDP growth in 2004 is forecast to be around 3.7 per cent, after which it will be dampened somewhat, standing at about 3 per cent in 2005 and 2006, which is a fairly high level in historical terms. Despite the firm growth Swedish inflation is very low – in January it stood at 0.4 per cent, measured as the annual change in UND1X. The weak inflation is primarily due to surprisingly low import prices. Other causes are the strong productivity growth; the krona’s appreciation in the past half year, above all against the dollar but also against the euro; and low electricity prices. There are many indications that we won't be seeing any significant inflationary pressures in the coming year either. That made it natural for us to decide not to raise interest rates at the end of January. My personal view is that it will probably be a while before a rate hike comes into question. The risk outlook Surrounding this rather bright picture are a large number of risks that our growth and inflation forecasts will not be met in the coming two years. The key risk factor is how the US deficits will be corrected.
Once a month, immediately after the meeting of the Governing Council, the President of the ECB holds a press conference- which starts with a precise exposition of the diagnosis of the Governing Council which is immediately made available in real time on the ECB website. This will be the case when we will meet next Wednesday in Frankfurt. It is extremely important to stress that the Eurosystem was the first in the world to introduce, on the 1st January 1999, the concept of regular, frequent, real-time transparency in the domain of monetary policy. This illustrates the extent to which some criticisms are profoundly unjust! It is especially noteworthy, in this regard, that soon after we had embarked upon this new concept of real-time transparency, other important central banks decided to go along the same path. Being accountable for an independent institution in a modern democracy or, as it is the case for the Eurosystem, in a subtle set of democracies like the European Union, means being accountable to public opinion at large. In this respect, the public speeches and testimonies of the President of the ECB for the benefit of both European institutions and public opinion, the public speeches and testimonies of the Governors of the National Central Banks to national institutions and public opinion, are crucial. Explaining tirelessly the reasons and the reasoning that underpin the decisions of the Governing Council is a key part of our  2  BIS Review 28/2001  collective duty.

This common transatlantic trend calls for a common vigilance from central banks, and a change from the very accommodative monetary policy rightly – and successfully – pursued in 2020 to face the Covid crisis. That said, let me stress some intercontinental differences. The US economy recovered faster and more strongly than that of the euro area, notably due to the very large fiscal stimulus after the Covid crisis. In December core inflation, excluding food and energy, was 5.5% in the United States and 2.6% in Europe, showing that the dramatic increase in energy prices in 2021 does not stand as the sole explanation for this recent surge in overall inflation. The labour market is also much tighter in the United States: the labour force participation remains lower than before the crisis, and there is a large decrease in unemployment, to 4.2% in November 2021 compared with 7.2% in the euro area. These differences explain why monetary policy accommodation is removed more quickly in the United States with the Fed seemingly contemplating three significant shifts in a row: tapering of purchases, lift off of interest rates, downsizing of the balance sheet. On the other side of the spectrum, Japan is little affected by rising inflation. Indeed, 2021 growth is lower than in Europe (1.8% vs 5.2%i), inflation returned to positive territory for the first time in a year in September but remains very low at 0.6% in November; and core inflation remains in negative territory at –0.6%.
What follows is not an assessment of whether Scotland will be overall better or worse off under independence – that is a multi-faceted judgement for the Scottish people. It does not pass judgement on the relative merits of the different currency options for an independent Scotland, but instead draws attention to the key issues. This is a technocratic assessment of what makes an effective currency union between independent nations. The costs and benefits of currency areas Let me begin by outlining the basic rationale for sharing a currency. BIS central bankers’ speeches  1  Economist Robert Mundell first wrote about what determined an “optimum currency area”1 Spurred by the breakdown of the Bretton Woods system and the move to floating exchange rates as well as by the formation of the European Monetary Union, others have elaborated and extended his work. We now have a fairly comprehensive sense of the costs and benefits of sharing a currency. For Mundell, the main benefit was that it eliminates the transactions costs associated with using, and switching between, different currencies. The European Commission estimated the size of these direct benefits for Europe to be almost 0.5% of GDP every year.2 Sharing a currency can promote investment by reducing uncertainty about currency movements and giving businesses access to deeper, more liquid financial markets.3 It can also reduce borrowing costs for countries with a history of high inflation and currency devaluation. By tying themselves to the mast of the monetary policy of others they can import credibility.

BIS central bankers’ speeches  5  middle of 2012 (chart 5). Bank lending to the real economy collapsed and credit conditions tightened massively (see charts 6–7).20, 21 Clearly something must be done. It is in the interests of all countries to sever the link between banks and sovereigns by ending too big to fail. Governments must put in place regimes that impose losses on bank management, shareholders and creditors rather than taxpayers. That is exactly what is established by the UK’s recent Banking Reform Act, and the recently agreed European Bank Resolution and Recovery Directive. The Bank of England is at the forefront of efforts to establish the common global requirement that is needed to finish the job. While ending too big to fail should mean that taxpayers no longer have to bail out banks, it will not fully break the bank-sovereign loop, for three reasons. First, banks hold substantial amounts of their national government’s debt in order to manage liquidity, meet collateral obligations and hedge exposures – European banks hold more than € of home country sovereign debt amounting to 5% of total assets. Second, confidence in deposit guarantee schemes relies on a national backstop.22 The European process illustrates the difficulty of building the institutional arrangements for a common insurance scheme across sovereign states. This is unsurprising since mutualised deposit guarantee schemes imply a pooling of risk and loss of sovereignty. All member states must be persuaded that they won’t simply be left with the bill for the mistakes of others.
to promote price stability, it was granted full independence to use its instruments, its financial independence was ensured and legal requirements were made for transparency and accountability, along with other points. I think it is fair to say that the new Central Bank Act generated interest internationally, not least for the speed at which the legal review was made and the broad consensus achieved on the reforms. The Central Bank Act authorises the declaration of a numerical target for inflation, subject to the Prime Minister’s approval. This provision incorporates into law the policy introduced on March 27 this year when the monetary framework was changed and the flexible fixed exchange rate was replaced with an inflation target and floating exchange rate. Despite very detailed discussion of the framework changes and the fundamental principles of the new policy, the Bank has often noticed widespread misunderstandings. I shall therefore outline the broad principles of monetary policy. Inflation is a monetary phenomenon The Central Bank was assigned a specific inflation target in the joint declaration which it issued, with the Government, on March 27. This stipulated that the Bank should aim for a rate of inflation as close as possible to 2½%. Tolerance limits were also set, 1½% higher than the inflation target and 1½% lower. The inflation target was defined as the twelve-month rise in the CPI. If inflation exceeded the tolerance limits, the Bank would be obliged to bring it back within them as quickly as possible.

Birgir Ísleifur Gunnarsson: Monetary issues in the European Union and Iceland Speech by Mr Birgir Ísleifur Gunnarsson, Chairman of the Board of Governors of the Central Bank of Iceland, at a seminar organised by the Iceland Trade Council, Euro Info office in Iceland and the EU Commission on the theme: Does the Euro affect Iceland?, Reykjavik, 31 October 2001. *  *  *  Ladies and Gentlemen: The evolution of European integration during the second half of the last century is remarkable in many ways. This process began soon after the end of World War II and represented an effort to forge stronger bonds between European nations and thereby, among other things, reduce the likelihood of further conflict on the continent. Although I shall not go into its history here, many notable milestones can be cited along the course that has been taken. One of the most notable was the formal establishment of the Economic and Monetary Union in the beginning of 1999. Now the abolition of the individual member nations’ separate currencies is in sight. As of next year they will be replaced by Euro notes and coin. Not only will prices of goods and services be calculated and stated in a single currency in the twelve EMU countries, but the same notes and coin will be used for business in them all.
For example, we are investigating a waterfall functionality which would allow users to receive payments in digital euro above the holding limit by linking a digital euro account to a commercial bank account. The waterfall approach is a way of managing end users’ retail CBDC holdings via the automated conversion of retail CBDC in excess of a holding threshold into a bank deposit held in a linked commercial bank account chosen by the end user. See the digital euro glossary. Holding limits could also be differentiated by type of user, to account for the payment needs of citizens typically on the payer side and businesses that will mainly be on the receiving end of digital euro payments. 20. Panetta, F. (2022), “More than an intellectual game: exploring the monetary policy and financial  stability implications of central bank digital currencies”, speech at the IESE Business School Banking Initiative Conference on Technology and Finance, Frankfurt am Main, 8 April. 21. Broad engagement with market stakeholders will ensure that a digital euro meets users’ needs. A relevant set of initiatives have been put in place, including market contact groups, surveys and calls for expression of interest on the technical design features of a digital euro. ECB experts are also exchanging views on a digital euro with representatives from European civil society organisations and academia. See the ECB’s statement on stakeholder engagement.

At the monetary policy meeting on 5 July, the risk of the inflation target being exceeded in the Riksbank’s normal time horizon of one to two years still existed. The situation was the same as when the interventions began except that the krona’s dramatic weakening had been checked. Resource utilisation was judged to be high, notwithstanding the ongoing slowdown, and there were no grounds for being more optimistic about the krona’s future path in a longer perspective. Moreover, although the substantial price increases in recent months were considered to be mainly transitory, there was a risk of them influencing inflation expectations. There were signs of slackening growth in the euro area and Japan but it was judged that towards the end of the year, developments in the United States would result in a gradual recovery that would spread to other countries. An overall assessment of these factors led to the Riksbank’s decision to raise the repo rate from 4 to 4.25 per cent. Inflation expectations, which according to some indicators had tended to move up in the spring, returned during the summer to a level in line with the inflation target. The exchange rate stabilised. At the monetary policy meeting on 23 August the Riksbank’s forecast was that the rate of inflation two years ahead would be approximately 2 per cent. Against this background the repo rate was left unchanged. It was considered that demand had continued to weaken, both in Sweden and internationally, which should reduce the risks associated with the weak exchange rate.
Figure 1 gives you a sense of the scale – the global stock of bonds were worth about $ trillion in 2013 – bigger than world GDP. So-called “over the counter” derivatives in FICC markets had a market value of around $ trillion, with foreign exchange contracts being the largest (Figure 2). And the turnover in foreign exchange markets is over $ trillion on a typical day. That means that the value of trades in a month, in this single market, is roughly equal to the value of all output produced by every worker in the global economy in a year. These numbers are so big they may make these markets seem somewhat otherworldly to the average person. But in reality they permeate almost all of our economic transactions. Fixed income (or bond) markets matter for our savings and pensions. They matter for the public finances and how much tax we have to pay. They affect the interest we pay on our debts. Currency and commodity markets affect the prices we pay when we go shopping, and the cost of changing money when we go on holiday. FICC markets also affect the ease with which employers can raise finance, which in turn affects their very viability, the level of their investment, and potentially the structure of our economy. Far from being otherworldly, these markets really matter to us all.

These are like salt rubbed into the wounds to public confidence in financial markets. This is in no one's interest. Many leaders in the financial industry and the majority of those who work in these markets are ashamed of this bad behaviour and want to find a way to put it comprehensively behind them. The fines alone have been sufficiently large to require substantial reshaping of firms’ businesses. I am confident we can find a way forward. I recall the story of when the Queen visited the LSE in November 2008 and asked the gathered assembly of eminent economists why had nobody noticed that a crisis was on its way? The reply came in the form of a letter from the British Academy7. Their bottom line was that the crisis was caused by “a failure of the collective imagination of many bright people, both in this country and internationally to understand the risks to the system as a whole.” This is a moment when we need collective imagination – to imagine financial markets that are fair and effective and work in the interests of all of us.
In fact, those that surrender most of their monetary autonomy or maintain restrictions on cross-border capital flows need not feel immediate pressure to appreciate. But those that have come further along the liberalization road have to face a different kind of challenge. In our case, the Bank of Thailand has sought a balanced approach to managing capital flows under flexible exchange rate. We also undertake concomitant reforms in the area of financial system and market development. These initiatives are closely related and progress in one requires progress in the others. In building a resilient economy, prudent fiscal and monetary policy does help. As an automatic stabilizer, flexible exchange rate also helps. BIS Review 104/2007  3  Ladies and Gentlemen, Hot money, or indeed large inflows in general, can fuel asset prices and encourage excessive risk-taking behavior. Central banks may wish to counter that excess in the interest of financial stability. If the central bank chooses to maintain a high interest rate stance, the pressure on the currency to appreciate will likely mount. Since these challenges require significant ability for the domestic economy to adjust flexibly, the solution package we seek must help reduce the distortions in our economies. Allowing the competitive pressure and incentive to operate is undoubtedly the best way to foster investment in physical and human capital, as well as innovation and risk-taking, all of which are crucial to long-term productivity growth. They are also crucial for a flexible and resilient economy. But policy and regulations still have a role to play.

Moreover, we will have to wait and see how the US economy responds to the latest rate cut by the Fed. In sum, the external risks facing the Thai economy have been tilted more towards financial volatility rather than growth at this point. Ladies and gentlemen, I have highlighted to you the risks that may likely emanate from the external front. But as recent developments in the Thai economy stemmed also from internal factors, this brings me to the second part of my talk, which is the recent key developments in Thailand and the outlook for 2008. This year, even though Thailand’s growth rate has underperformed those of our peers in the region, I still consider GDP growth of around 4-5 percent, which is expected for the whole of 2007, quite satisfactory. Notwithstanding the baht appreciation, Thai exports have expanded well and remained the main engine of growth this year. Our exporters have also successfully penetrated new markets to compensate the falling demand from the traditional market, namely the US. Much of the extent of growth underperformance in comparison to our regional peers has been accounted for by slower domestic demand. Over a year-long political uncertainty led to weak consumer confidence and an unfavourable investment climate. I am hopeful that once the general election date is scheduled and the cloud of political uncertainty has lifted, consumer confidence would rebound. In line with the consumption recovery, I also expect investment to pick up and play a stronger role as growth driver, to promote a more balanced economy.
In all eight jurisdictions, the coefficient on the lagged level (δ) is numerically quite large, and especially so in the case of the euro area. None, though, are statistically significant at conventional levels. The tests are, however, likely to be of low power on such short samples. In order to increase the power of the test, the final row of the Table therefore shows the result when of a pooled regression, with the coefficient δ constrained to be the same across countries (the other coefficients are allowed to differ); the euro area is omitted from this regression in order to create a balanced panel. Unsurprisingly, the coefficient δ is close to its average across the individual country regressions. But the appropriately adjusted test statistic (see Levin, Lin and Chu, 2002) on δ is now highly statistically significant, strongly suggesting that collectively the price-level series are trend-, rather than difference-, stationary. There are a number of possible explanations for this apparent trend stationarity of the price level during the inflation-targeting period. First, it may be just an artefact of the particularly  9  I am grateful to Lars Svensson for drawing my attention to this fact. 10  To cater for drift insofar as prices have not, on average, risen at the supposed target rate. BIS Review 111/2010  15  benign environment obtaining for much of the sample period. More data from less benign times may overturn this result, so it will be worth revisiting in the future.

Rather, because of the difficulty of making individual credit assessments and the probably relatively high transaction cost facing the small investor, he is more likely to have indirect exposure to the debt market through collective investment schemes, pensions, etc, or to keep money in a bank deposit while the bank invests in debt instruments - a growing feature of bank balance sheets nowadays as an alternative to conventional lending. Mandatory provident funds are one example of such collective arrangements, and their advent in Hong Kong may be expected to add to the demand for good quality debt instruments. The prospect of an additional channel of demand should to some extent stimulate interest in issuance from the supply side. In sum, there are many opportunities for innovation and development in our debt markets. I have mentioned rating agencies, credit enhancement, more varieties of asset-backed securities, potential for more channelling through collective investment vehicles, the important though perhaps modest role of the direct retail investor, opportunities relating to MPFs, and so on. These are, by and large, activities for players in the banking and finance industry to follow through themselves if they see the commercial justification. I am sure that at least some of you here today are already giving attention to at least some of these topics. I hasten to add that not every bright idea necessarily results in a viable business proposition.