samchain/econo-pairs-v1 huggingface dataset:
The Basel Committee on Payment and Settlement Systems has published revised draft Principles for market infrastructures, including (Principle 24) that “A Trade Repository should provide timely and accurate data to relevant authorities and the public in line with their respective needs”. 19  See recommendations on bank provisioning in Chapter IV of FSB (2009), “Report of the FSB on Addressing Procyclicality in the Financial System”. Available at http://www.financialstabilityboard.org/publications/r_0904a.pdf  20  See Tucker P M W (2010), “Shadow Banking, Financing Markets and Financial Stability”, January 2010. BIS central bankers’ speeches  9  In a world in which regulatory arbitrage is endemic, it is a fact of life that the re-regulation of banks will set up incentives to build banking-like functions in other forms. The import of this for my remarks today is that securities market regulators (and insurance regulators) need either to be relaxed about the supervision of shadow banks being transferred to banking supervisors or, alternatively, vigilant about maintaining regimes that do not permit systemic risk to accumulate beyond the perimeter of the banking system. In the UK’s planned new regulatory framework, the Financial Policy Committee will be responsible for recommending to the Treasury when prudential supervision of a type of firm should shift from the securities regulator to the prudential regulator (and vice versa); and it will be able to advise the FCA on when it needs to revise its rulebook in the interests of stability.

Underlying inflation, which measures the rise in prices, excluding products with highly-variable prices (notably energy and fresh produce) and also public utility charges, after stripping out the impact of tax measures, rose at a slower twelve-month rate of 0.7%. France was thus the best performer of the euro area in this field, along with Germany, with twelve-month HICP growth of 1.7% in December 1999. Since the start of 1999, the Eurosystem - comprising the European Central Bank (ECB) and the eleven national central banks of the countries having adopted the euro as their currency - has been responsible for defining and implementing monetary policy. In accordance with the Maastricht Treaty, the primary objective of the single monetary policy is price stability. This is defined as a year-on-year increase in the HICP for the euro area of below 2%. The definition of this medium-term objective is the same as that adopted by the Monetary Policy Council for French monetary policy when the Banque de France was granted independent status a little more than six years ago. 1  BIS Review 55/2000  In order to achieve its main goal of price stability, the Governing Council of the ECB decided, as you know, to refer to two groups of indicators, or “pillars”, for European monetary policy: –  the first pillar is a prominent role for money, reflected by the choice of a quantitative reference value for growth in M3, the broad monetary aggregate for the euro area. This reference value has been set at 4.5%.
4  BIS Review 68/2002  Table 3 Real GDP growth in the UK Mean  St. dev  1956-1959  2.42  1.22  1960-1969  3.15  0.92  1970-1979  2.12  1.42  1980-1992  1.86  0.84  1993-2002  2.76  0.36  1956-2002  2.42  0.98  Note: Mean GDP growth is the total increase in real quarterly GDP over the period indicated, expressed as a four-quarter growth rate. Standard deviation is calculated on quarterly growth rates (not annualised) over the period indicated. Data up to 2002 Q2. Source: Bank of England calculations based on ONS data. It is, of course, difficult to identify the effect of changes in the monetary policy regime on the path of total output. One approach is to consider long runs of data which make it easier to identify structural breaks in the behaviour of output. Luca Benati of the Bank of England has been investigating the statistical properties of inflation over long periods for a number of countries. He finds that changes in the behaviour of inflation appear broadly to coincide with changes in the monetary policy regime. Some tentative evidence that this general conclusion applies to the UK can be found in the behaviour of ten-year forward interest rates on UK government bonds. At this horizon, high and variable interest rates are signs of high expected inflation and a large inflation risk premium.

Decisions on interest rates were taken out of the political arena in May 1997 and delegated by the Chancellor to the new Monetary Policy Committee. It is too soon to compare the nine-member Monetary Policy Committee with the Council of Nine that ruled Siena during the fourteenth century. Exactly 660 years before the Chancellor created the MPC, the Council of Nine commissioned Lorenzetti to paint the marvellous frescoes in the Palazzo Pubblico showing the virtues of Good Government and the vices of Bad Government. There are few more convincing representations of the case for stability than those frescoes. Since the MPC has not, at least yet, discovered a modern Lorenzetti, I shall present the case for price stability in a more orthodox, if less compelling, visual form. Chart 1 shows consumer price inflation in this country over the past fifty years. The decade of inflation targeting stands out as a period of low and stable inflation. Table 1 shows that not only has inflation been lower since inflation targeting was introduced, but that, as measured by its standard deviation, it  BIS Review 68/2002  1  has also been more stable than in recent decades. Moreover, inflation has been less persistent - in the sense that shocks to inflation die away more quickly - under inflation targeting than for most of the past 1 century. Now this fall in inflation has led to sharp reductions in nominal interest rates, at both short and long time horizons, as shown in Table 2.
While the years before the crisis were characterised by stability in the evolution of the market for goods and services, asset markets were anything but stable. In particular, there was a massive expansion in  4  BIS central bankers’ speeches  credit, particularly within the financial system in many of the advanced economies, accompanied by upward pressure on a range of asset prices, including real estate. There was a boom in asset markets, even if there was no corresponding boom in the real economy. To some people, the relatively low level of interest rates necessary to maintain price stability was instrumental in generating this boom in credit and asset prices by encouraging an aggressive search for yield. While there is some truth in this charge, I think it would be a mistake to conclude that monetary policy was the sole, or even the prime, cause of the crisis. Several factors coincided to form a potent cocktail. There were other factors that depressed the yield on safe assets, including high savings rates in China and a more general demand for US Treasuries as emerging economies accumulated larger stocks of foreign reserves in the wake of the Asia Crisis. Equally important, in my view, was the impact of the Great Moderation itself on risk-taking behaviour, as low volatility encouraged an underestimation of the likelihood and severity of adverse tail risks crystallising. Seen in this light, the Great Moderation sowed the seeds of its own destruction.

A collateral framework must never act in a pro-cyclical manner: Restricting banks’ access to liquidity in a crisis – for instance, by introducing more restrictive criteria for collateral – might pose a risk not to only to the most vulnerable banks, but to the whole financial system. Ultimately, this would increase the risk for the central bank’s balance sheet rather than protecting it. Hence, in order to enable that a wide range of the counterparties could continue participating in the refinancing operations, the Eurosystem temporarily relaxed some of the eligibility criteria for underlying assets. This was done on several occasions. For instance, from 2008 to 2011 and again as of 2012, we accepted foreign denominated marketable assets. In 2012 we created the Additional Credit Claims framework. Credit standards have been changed by accepting lower rated assets compared to those accepted at the beginning, notably for ABS that fulfill certain criteria. However, these accommodative measures were coupled with a stronger-scrutinised counterparty framework and with more stringent risk control measures. As a result, the total amount of eligible collateral increased. Thus, an enhanced participation of counterparties in the refinancing operations was enabled, while at the same time the risks for the Eurosystem expanded only moderately. BIS central bankers’ speeches  3  The Eurosystem collateral framework has been quite complex from the very beginning, not the least because of the variety of national frameworks preceding it.
Thomas Jordan: Challenging economic and financial conditions for the Swiss banking sector Introductory remarks by Mr Thomas Jordan, Chairman of the Governing Board of the Swiss National Bank, at the media news conference of the Swiss National Bank, Berne, 20 June 2013. *  *  *  The Swiss National Bank (SNB) is maintaining its minimum exchange rate of CHF 1.20 per euro. The Swiss franc is still high. An appreciation of the Swiss franc would compromise price stability and would have serious consequences for the Swiss economy. In the current environment, the minimum exchange rate remains important in order to avoid an undesirable tightening of monetary conditions for Switzerland in the event of sudden upward pressure on the Swiss franc. We stand ready to enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities, and to take further measures, as required. The target range for the three-month Libor will be left unchanged at 0.0–0.25%. Since March, the SNB’s conditional inflation forecast has remained almost unchanged, apart from inflation for the current year, which is slightly lower due to a reduction in the oil price. The forecast is again based on an unchanged three-month Libor of 0.0% over the next three years. For 2013, we now anticipate slightly lower inflation of –0.3%. For 2014, the inflation forecast is unchanged at 0.2% and for 2015 at 0.7%. Consequently, inflation in Switzerland will remain very low in the foreseeable future.

It also provides us with additional information on areas not covered by official statistical sources, and we learn which issues are of particular interest to enterprises. Information received from the regional network supported the picture presented in the June Inflation Report: enterprises are reducing costs while households’ financial position is strong. We are waiting to see if the results of the current round of talks will point to increased optimism in the business sector and in public entities or if the prospects for the future continue to be regarded as somewhat negative. Inflation is low in Norway. The rise in consumer prices adjusted for taxes and excluding energy products (CPI-ATE) has slowed primarily due to developments in prices for imported consumer goods. Low inflation is due to the appreciation of the krone throughout last year and low inflation abroad. The rise in prices for domestically produced goods and services has also slowed. This is particularly the case for domestically produced goods influenced by world market prices. Domestic price inflation has nevertheless remained close to 3 per cent, due to high wage growth over several years. In July, the year-on-year rise in the CPI-ATE was 0.7 per cent, which is lower than projected in the June Inflation Report and substantially lower than the inflation target. There are also prospects that inflation will be low for some time ahead.
Many emerging economies have successfully applied the lessons learned in past financial crises, capitalizing them as increased financial resilience and a reduced impact on growth than developed countries. One feature of world financial markets’ behavior of the past few months has been the increase in long-term interest rates on public instruments. These movements can be linked to an environment of reduced risks and expected increases in fiscal debt certificates, and to the fact that, for the first time in several months, there is incipient debate about the convenience of a not-so-expansionary monetary policy, given the medium-term inflationary risks. In the local financial markets, the interest rates on long-term Central Bank notes have also risen— albeit with swings—above the levels that prevailed at the time of our May Report. The steepening of the yield curve coincides with what has occurred in international markets, and may be signaling an increase in the markets’ appetite for risk. It may also be that they respond to more idiosyncratic factors, especially because of the big momentum showed by the local bonds market this year to date. The pass-through of MPR cuts to lending rates in recent months has been evident. While the latest data suggest that it may have moderated, transmission should continue, particularly as macroeconomic uncertainties phase out. The annual growth rate of credit volume has slowed, in a context where lending standards are still tight and there is less demand for credit due to a more cautious attitude among economic agents.

The much more flexible monetary and fiscal policies of today have also avoided the intrusion of protectionist distorting measures that so prolonged the crisis of the 1930s, amplifying its costs and deeply hurting the later economic development in several regions of the world, including our country. Still, it is likely that returning to domestic demand levels like the ones we had before the crisis takes a while, especially in the United States. Active fiscal policy actions have taken up the room left by the shrinkage of private spending. However, it cannot be sustained for long. The natural, sustainable solution will come via net exports from the US and, to a lesser extent, from Europe. How it will happen is an open question, because it is also yet to be seen which economies will, as counterparts, have to reduce their own net exports to create the  2  BIS Review 93/2009  necessary space for such an adjustment. Furthermore, this may call for major parity adjustments in the main economic areas. Beyond this last point, currently floating foreign exchange regimes have played a stabilizing role, providing every degree of freedom needed by monetary policy and by liquidity provision measures to tackle the cycle and the financial stability objective. This element was nowhere to be seen in the 1930s, when the main central banks struggled hard, but ineffectively, to defend the gold standard, severely magnifying tensions in the banking systems.
Reflecting the achievements of this university, our models have a well-defined steady state equilibrium for the real economy; well-defined steady state nominal properties, typically an inflation rate; and forward-looking rational expectations, that is to say modelconsistent expectations. The second of these characteristics means that a nominal target is always achieved in the medium-to-long run. And the third means that the model’s agents know that; ie they know now and behave – set wages and prices – accordingly, so that in these mainstream models the target is achieved over cyclical frequencies too. Typically, nominal things enter via inflation expectations, and they are pinned down in the stylised, model economy by a policy rule of the kind I sketched earlier, expressed in terms of an official interest rate (the price of base money). But just in case it were thought that the “problem” of models promising the policymaker success stems from the crime of ignoring money quantities, I should make it clear that that is not so. It would not make a fundamental difference in policymakers’ modern-macro models if nominal stuff entered via a money quantity, with the policy rule being specified as a money-supply growth rate. So-called velocity shocks to the demand for money would cause deviations from an inflation target in the short run, but everything would ultimately settle down nicely – because that assumption would be built in to the model’s long-run properties (in this instance via a demand-formoney equation that was imposed as stable over the long run). I’m exaggerating a bit.

The present report therefore does not discuss those options in as much detail. In Chapter 3, however, is an in-depth discussion of Icelanders’ experience with independent monetary policy and a floating exchange rate. The strategy formulated in coming months must take into account this material if all options are to be considered. It is also necessary to examine which prudential rules would be applied in order to reduce the risks related to domestic financial institutions’ foreign assets and liabilities and the risks related to unrestricted capital flows. These rules are discussed in a newly published Central Bank report entitled Prudential rules following capital controls. That report discusses the limitations on liquidity and foreign exchange risk and the restrictions on domestic financial firms’ international operations that must be in place if movement of capital  BIS central bankers’ speeches  1  is unrestricted in other respects, particularly if Iceland retains its own currency. The discussion below also takes account of these two publications. 1 1.2  Iceland’s experience with its own currency  Iceland has had its own currency since 1885, maintaining parity with the Danish krone until June 1922, when it was devalued by 23%, followed by a temporary float (see Chapter 12). It can be said that the króna came into existence as an independent currency at that time. The experience with it has been mixed, and efforts to preserve the value of the currency have been largely unsuccessful.
In the context of the ECB’s strategy, macroeconomic forecasts and projections therefore play an important - albeit limited - role. Two important points follow from the role of projections in the ECB’s strategy and the procedures used to produce projections within the Eurosystem. First, the projections are produced by staff experts and do not embody the policy judgement of the Governing Council. They therefore represent one input into the policy-making process and not the outcome of the Governing Council’s deliberations. The Governing Council must exercise a policy judgement in evaluating the projections it receives, alongside all other analyses, when drawing implications for policy decisions. Second, since policy decisions are based on a broad range of analyses conducted under the two pillars of the ECB’s monetary policy strategy - of which the Eurosystem’s projections constitute only a part one should not expect policy decisions to respond mechanically to developments in the published macroeconomic projections. In this respect, the projections published by the ECB and their role differ considerably from the forecasts published by some other central banks. One question which has been raised since the announcement is why the Governing Council does not assume full responsibility for the projections to be published by the ECB, whilst of course accepting full responsibility for the staff that produces them. Let me answer this question by recalling the Governing Council’s ultimate responsibility, namely to maintain price stability in the euro area.

Instead, it is important to analyze the loan growth in broader economic policy context where due consideration should be paid to the credibility of macroeconomic policies and the impact other policies may have on the incentive structure in the financial markets. As I stated earlier, the presence of Nordic banks in the Baltic market is, of course, a hugely important positive factor. Parent banks are sometimes considered to have an implicit responsibility for the stability of the banking systems in the Baltic countries. It is said that the Baltic banks are too small to fail. International experience lends support to this view, although the evidence is not always in one way. Hence, there are also potential risks. If parent banks are active in many countries of the region, a shock affecting exposure in one country may lead to a reduction in their exposure across the region. Build-up of exposures to common risk factors in a region may also increase the potential for contagion - a reduction in lending to countries not affected by a crisis. The potential for contagion is naturally higher in highly integrated economies. Another potential risk factor is the smallness of the banks in the Baltics combined with their high profitability. While the Nordic banks have high profitability in all of their markets, profitability in the Baltic market is especially high. As a result, the share of banking groups' assets in the Baltics is significantly lower than the share of profits banks make in this region.
Indeed, what have happened in advanced economies today are stark reminders of those lessons learnt in Asia. Just like Asia, investors took excessively high risks creating asset price bubbles in advanced economies. Lax prudential policy, along with fragility of the financial system, quickly brought on a crisis of confidence, starting with debt defaults. Credit underwriting behaviors of financial institutions and credit rating agencies are being questioned along with imprudent lending practices and the bloating real estate sector. Thus far, the effects on emerging market economies in Asia have been minimal. Nevertheless, we are still awaiting final moments of truth as there will be a number of aftershocks following the financial tsunami. Clearly, having a resilient economy and financial sector that is stable, which I have discussed previously, is only a necessary condition for avoiding crisis. But, it is not sufficient to ensure non-occurrence of crisis. This is because the key pressure points that can lead to difficulties for us can be externally-induced, especially through capital account developments. We all know that sudden changes in global financial conditions and risk-appetite of investors can create difficulties through spillovers. Mindful of this, ASEAN needs to come up with  2  BIS Review 134/2008  cooperation strategy that best fit ASEAN objectives. Here, I wish to raise two key areas on regional cooperation strategy for your further exploration. First, the new global crisis should hasten ASEAN to think more deeply about the effectiveness of regional surveillance that can detect weakness early on.

Coordination and cooperation among ASEAN countries must be further enhanced to ensure that prompt remedial actions can be put in place should a crisis occur. Ladies and Gentlemen, In closing, I would like to reiterate that it is important for ASEAN’s economic and financial stability that ASEAN central banks continue, individually and collectively, to increase the effectiveness of their policy instruments through domestic reforms of markets and financial systems as well as communication efforts with markets and one another. In this spirit, I am reminded of how ASEAN has risen over the years to common challenges. History has recorded ASEAN as an exciting region second to none. While rich in diversity, ASEAN has always been united in bringing about successful solution to tackle our common challenges. ASEAN, itself, was formed forty years ago against the backdrop of political and security threats to the region. In addition, ASEAN Free Trade Area, or better known as AFTA, was created sixteen years ago to ensure that ASEAN together reap benefits from greater trade liberalization under the WTO. Going forward, with sustainable growth and development of ASEAN at stake, I have no doubt that we will be able to jointly find ways to overcome the present difficult global environment and together continue to prosper. Thank you. BIS Review 134/2008  3