samchain/econo-pairs-v1 huggingface dataset:
The teething problems with the Stability and Growth Pact have been an example of these challenges. One of the key motivations of the Pact was an effort to avoid free riding by national governments in a multinational currency area. In other words, the desire to achieve a proper policy mix was present at the birth of this rule. In spite of that, the Pact is now criticised for being too rigid, not allowing for a proper policy response in times of distress, and thus ultimately leading to poor real economic performance. This naturally undermines its credibility and supports calls for various “escape clauses”, to use the inflation-targeting terminology. The Pact is thus fighting the same battle that the conservative central banker was some time ago. It should evolve towards a “constrained discretion” system that will fulfil its major goals - sustainability, credibility and co-ordination of stabilisation policies - yet at the same time be sufficiently flexible to allow for proper responses in adverse periods. It has yet to convince policy-makers and the public that it can deliver the lunch without them having to pay too high a price for it in terms of cyclical stabilisation. So far, the Pact has seemed to be losing the battle. This is somewhat unfair, as the adverse period came before most EU countries had achieved the target of balanced structural budgets, which reduced their manoeuvring space considerably. In a sense, the Pact is thus paying a price for being too lax in the previous period, i.e.

William C Dudley: The economic outlook and the Fed's balance sheet – the issue of "how" versus "when" Remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Association for a Better New York Breakfast Meeting, New York, 29 July 2009. *  *  *  It is a pleasure to have the opportunity to speak here at the Association for a Better New York. This group has obviously been very successful. New York today is a far different and vastly superior place from what I found when I first arrived as a freshman at Columbia University in 1970. Today, I’d like to accomplish two tasks. First, I’ll comment briefly on the economy and the economic outlook – where we have been and where we may be going. I’m going to suggest that the balance of risks is still tilted toward weakness in growth and employment and not toward higher inflation. I will also argue that it is premature to talk about “when” we are going to exit from this period of unusual policy accommodation. Second, I will talk about the impact of the Federal Reserve’s lending facilities and purchase programs on the size of the Fed’s balance sheet. I’ll explain why an expanded balance sheet does not constrain our ability to exit from the current degree of policy accommodation. In other words, contrary to what is sometimes argued, it is not the case that our expanded balance sheet will inevitably prove inflationary.
In addition, there is still room for improvement, particularly when it is noted that Spain continues to be the EU country with the highest density of branches per head of population. And this does not seem to be very compatible with the technological innovation I have been talking about, whose introduction permits a lesser physical presence. Banks must adapt to the new environment and continue the orderly correction of excess capacity carried out in recent years. The increases in efficiency required could lead to some further consolidation within the sector. 7/8  Finally, as I said at the start, I cannot finish without reminding you of the need to maintain the confidence of bank customers, the most important and also the most fragile asset of the business of deposit institutions. In my first public address as Deputy Governor I mentioned aspects that could be improved. The Banco de España is strengthening its supervisory activities in relation to the conduct of banks. The priority must be the customer, as this is the only way to maintain confidence in the sound functioning of the Spanish banking system. Thank you very much for your attention. 8/8

11  All speeches are available online at www.bankofengland.co.uk/speeches  11  One can make the point, albeit with an absurdly extreme example, by imagining that the only thing a sceptical outside observer can see is whether or not there has actually been such a problem. We’re interested in how long it would take, possessing only this information, to conclude that the likelihood of such an event had changed. The precise answer depends on what one means by “conclude” and how sure the observer is of her prior belief12. But imagine, for illustration, that after a relatively long period with several such episodes, our observer’s best guess is that the per-annum chances of a serious problem in the financial system are 8% – she expects it to happen only once every 12½ years, on average (I’m thinking of something less severe and less infrequent than the “once-in-a-century” financial crisis of 2008). What she doesn’t know is that, thanks to some beneficial piece of prudential legislation, the  Chart 9: Learning about rare events takes a long time  likelihood has actually fallen to 4% a year. Chart 9 shows how her estimate of the probability is likely to evolve over time. Because these events are rare this happens only very slowly.
Our definition of price stability is that, in the medium term, prices have to grow less than but close to 2%. Inflationary expectations seen by various panels tell us that, over the next five years, inflation is seen at around 1.9%. I believe it is essential that citizens, savers and investors can trust in the fact that we will take all decisions necessary to ensure that inflation remains at these levels in the medium term. For three reasons: because it is our primary mandate; it is what citizens are asking us to do, and because it is a major contribution to sustainable growth and job creation in Europe. Where do you see risks of price increases? Further increases in oil and commodity prices and in goods and services prices due to past oil price increases. Also additional unexpected increases in administrative prices and indirect taxes. Then, more fundamentally, there are the so-called second-round effects, that is the risk of increases in wages and salaries that would derive from a loss of credibility regarding our capability in countering price increases. It is essential to intervene before these effects materialise. Do your concerns include the increase in VAT to be implemented in Germany in January? The increase in VAT in Germany, which was decided upon some time ago by the government, had already been incorporated in our analysis. BIS Review 87/2006  1  You were in Cernobbio, Italy, in early September. What was the mood among Italian entrepreneurs, politicians and economists?

I saw further confirmation of the great potential of Italy and of the Italian corporate sector, but I also found unanimous agreement that one of the most important problems facing Italy is the insufficient labour productivity and consequently the rise of unit labour costs. It is a European problem, and not only an Italian problem, but in Italy it is particularly visible: we have to do all that we can to implement the Lisbon agenda aiming at accelerating productivity growth. But the Italian industrial structure is weak nowadays. What should be done? Research carried out in Italy and in Europe, more generally, has concluded that we are not benefiting sufficiently from productivity gains in sectors that use new technology (and not only in the sectors that produce the technology themselves) and this seems to be due to overly rigid labour, goods and services and financial markets. Structural reforms that would allow the economy to be made more flexible are the primary tools for achieving a leap in productivity. In the United States this was made possible in the mid-1990s. And, consequently? One should never underestimate the importance of investment in research and development, which are today insufficient both in Italy and in the euro area as a whole. You have mentioned structural reforms, which are currently at the heart of the Italian political debate on developments in the finance laws. Let us begin with the deficit-to–GDP ratio, which is well above the 3% limit. Is the situation in Italy a cause for concern for you?
Higher quality capital and larger capital buffers are critical to bank resilience – delivering a more stable system both through lower sensitivity of lending behaviour to shocks and reducing the probability of failure and with it the risk of dramatic shifts in lending behaviour. The capital adequacy framework has made much needed progress in recent years. The framework is now being designed to be fit for purpose both for the micro-prudential purpose of each firm’s safety and soundness, and for the macro-prudential purposes of addressing the risk certain major firms individually present to financial stability and the risk that imbalances building up in the sector as a whole, or part of it, may threaten financial stability. The key elements of the framework are: -  first, a common definition of capital resources focussed on genuine loss absorbency in a going concern – Common Equity Tier 1.

Christian Noyer: No moral hazard – the banks are doing their job Comment by Mr Christian Noyer, Governor of the Bank of France, in the Financial Times, 18 September 2007. *  *  *  In recent weeks, Central Banks in Europe and the US have acted repeatedly to provide liquidity to interbank money markets. These interventions have raised some questions. Concerns were expressed that monetary authorities were bailing out speculators, thus creating the same kind of moral hazard that may have led to excesses in the past. There were also concerns as to whether the integrity of monetary policy would be compromised. These are valid questions. On numerous occasions, in the past, we pointed out the potential dangers that mispricing of credit risk posed for financial stability. We may be now seeing some of the consequences. Excessive risks were taken, and losses will have to be accepted. It is important that monetary and financial authorities take no action that would prevent this process from running its course, let alone be seeing to be condoning past or future excesses. However, the logic behind recent interventions is different. Put very simply, financial turbulence and uncertainty have suddenly triggered an upward shift in the demand for Central Bank money. Faced with such a shift, whose direction is apparent but amplitude uncertain, the choice, for monetary authorities, is clear: either accommodate, and provide temporary liquidity; or not, in which case, interest rates would have to rise to restore balance in the interbank market.
When profit expectations ultimately fall back to more realistic levels, share prices drop. Corporate investment slackens as the economy’s aggregate capital stock is adjusted to match a more reasonable long-term return. This is accompanied by decreased household consumption, not least of capital goods, to match a more realistic assessment of the long-term development of income. The Austrian School also provides us with a fundamental insight into economic policy’s limitations. If a technological breakthrough leads to a period when the growth of investment and consumption exceeds what is sustainable in the longer run, there is bound to be a fall-off. After a supply shock of this type, measures of economic policy are simply not capable of preventing an adjustment to a more realistic appraisal of the future. The necessity of the adjustment means that the measures only postpone it and presumably tend to make it all the more painful when it does occur. History teaches us that after a period of what I would call “growing pains”, the optimism about what the new technology can achieve will be restored, albeit in a more orderly, realistic guise. In my opinion, neither the rapid fall-off in global activity nor the terrorist attacks on 11 September have upset the grounds for being optimistic about the new technology’s potential. Problems for many companies After the investment boom and the marked slowdown we are now experiencing, there is a risk of a good many companies having balance-sheet problems.

In addition, there are a number of initiatives currently underway to exploit more fully the possibilities of cooperation and convergence provided by this approach, and I think the results will be positive. Now it may be that over the longer term, the current structure is judged to be insufficient to meet the needs of a more integrated market, and that a more fundamental re-think of the organisation of EU supervisory responsibilities is necessary. I personally think that this debate will intensify in the next decade. But we would certainly need to proceed with great caution in this debate. I am a firm supporter of the idea that changes should only be made if clear problems are identified. But whatever happens, I think the solutions we have to look for should be cooperative in nature, embracing the needs of all EU member states. This would, in my view, be preferable to an approach which would tend to concentrate responsibilities in the hands of a few Member States while the implications of their actions would extend far beyond their borders. Taking a more inclusive approach is the way that we have found solutions in the past to European challenges, and I think it is the best way forward. EU-wide financial stability is of interest to all of us.
There is also the effect of net exports, part of which we saw in the first quarter, resulting from both higher prices in dollars and the reallocation of internal resources derived from the real depreciation of the currency. Add that the developed world will perform better. Finally, there is the impulse coming from public spending, particularly investment, because of the low budget execution of 2013. In the opposite direction point the aforesaid deterioration in business confidence and the downward revisions to the investment project agenda made by the Chilean capital goods corporation for 2014. The 2014 current account deficit forecast is revised downwards mainly because of the foreseen deceleration in investment and a slight increase in savings because of lower private consumption. In the trade balance this is visible mainly in a downward revision to imports. Accordingly, the baseline scenario includes a current account deficit of 2.5 percent of GDP in 2014 (3.6 percent in March). The lower outlook for expenditure also implies that, at trend prices, the deficit will decline further, to 2.2 percent of GDP (3 percent in March) (table 2). The forecast path for inflation rests on several assumptions. For one, in that the passthrough from the peso depreciation to prices will be in line with its historical pattern. In addition, the Board uses as a methodological assumption that the real exchange rate (RER) will remain close to current values, as it is now within the range that is considered consistent  BIS central bankers’ speeches  3  with its long-term fundamentals.

Figure 4 Current account (*)  (percent of GDP)  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 05  06  07  08  09  10  11  12  13  14  (*) Accumulated in one moving year. Source: Central Bank of Chile. 8  BIS central bankers’ speeches  Figure 5 Interest rates on Central Bank of Chile bonds (*)  (percent)  8.5  8.5  7.5  7.5  6.5  6.5  5.5  5.5  4.5  4.5  3.5  3.5  2.5  2.5  1.5  1.5 03  04  05  5-year BCUs  06  07  08  09  10-year BCUs  10  11  10-year BCPs  12  13  14  5-year BCPs  (*) Monthly averages. Source: Central Bank of Chile. Figure 6 Domestic companies' funding cost (*)  (percent)  6  6  5  5  4  4  3  3  2  2  1  1  0  0  Jul.05  Abr.07  Feb.09 Base  Nov.10  Jul.12  May.14  Spread  (*) Considers UF-indexed private AA companies' bonds at about 5 year maturities. Dotted vertical line Source: Central Bank of Chile based on information from the Santiago Stock Exchange.
Mr Bäckström reviews some topical monetary policy issues in Sweden  Speech given by Mr Urban Bäckström, Governor of the Sveriges Riksbank and Chairman of the Board of Directors and President of the Bank for International Settlements, at the Swedish Bond Promotion, Stockholm, on 4 October 1999. *  *  *  This year’s economic growth in Sweden has been impressively strong. GDP growth in the first half-year, on the first half of 1998, was 3.4%. The number in employment has risen by approximately 100,000 persons. As many people are returning to the labour market now that more jobs are becoming available, the reduction of unemployment has not been as marked. But total as well as registered unemployment is falling from the previously high levels. This has been accompanied by price increases that are moderate. To date this year, inflation’s underlying rate – measured by UNDIX, which excludes interest expenditure, indirect taxes and subsidies – has fluctuated between 1.0 and 1.5%. The picture since the summer seems to point to a continuation of favourable growth and employment, with no immediate threats to price stability. But we have to be on our guard, particularly as the economy is now in an upward phase. Due to the time lag in monetary policy, the Riksbank’s interest rate decisions have to be based on the prospects fairly far ahead. The most relevant period for our deliberations is the outlook for inflation twelve to twenty-four months ahead.

We presume that oil prices will tend to go down. Consequently, inflationary pressure will subside somewhat, particularly towards the end of 2005. With an unchanged monetary policy, we are likely to see an inflation rate of 0.9% in the first quarter of 2006. 2. Continued recovery  In order to assess inflation in the medium term, economic prospects are paramount. During a phase of economic recovery, as we are currently experiencing, how rapidly the capacity utilisation rate increases is important from a monetary policy perspective. Even though GDP growth in the fourth quarter of 2004 is likely to be lower than we projected in the September assessment, we expect the Swiss economy to expand by close to 2% this year. The upswing will continue next year. We anticipate a growth rate of 1.5% to 2% for the whole of 2005. The fact that the economy braved the oil price hike and the stronger franc is testimony to a robust recovery. There is less uncertainty now as to the inflation prospects for next year. Utilisation of economic resources, which is slowly increasing, will not lead to any additional pressure on prices in 2005. As can be gleaned from the new inflation forecast, improved capacity utilisation is likely to have an impact on price development only in the course of 2006. 1/3  The current inflation forecast for the medium term, ie for the coming two years, is characterised by a similar course to the one charted in September.
But then, when you analyse that credit to the private sector and its development, it is also very clear that those high rates of growth are particularly present in the smaller countries of Europe and not too much in the larger countries, although there is quite a difference between the various countries. So, in itself, that rate of growth of credit, which is already moderating somewhat, is not a cause of inflationary concern for us, and neither is the move today any inducement to the banks to be more forthcoming in giving credit. They are already quite forthcoming. Question (translation): Mr. Duisenberg, the situation in Europe at the moment, especially this latest interest rate move by the ECB, now reminds me somewhat of Japan. You reduce interest rates time and again, yet on the other hand, no progress is being made in the areas of politics and restructuring in BIS Review 39/1999  4  Europe. In December, although I cannot quote you directly, you stated, much in the same way as today, that following the cut in interest rates the situation with regard to interest rates in Europe would be settled. It is now the beginning of April and we see obviously a further cut in interest rates.

Question: In your meeting today, could you describe what the mood was of the meeting and whether there was much debate about your move and much debate about the level of the move and also, whether it was an unanimous vote in the end. Duisenberg: The mood was good. We had a very long and, I must say, very interesting discussion today. There were a few who were not very inclined to do something about the rate - but here I talk about a very few - and a very large majority was inclined to do something and supported the proposal as we put it before the Council. And so, we had a very good discussion. For the final decision, I am afraid I have to tell you that we did not take a vote. But we know all the different views and so, finally, I could conclude as follows: the Governing Council decides that the main refinancing rate will be lowered from 3% to 2.5%. Question: You said there were no monetary risks of inflation at the moment. Can we infer from today’s decision that there were monetary risks of deflation or is it purely a growth-oriented decision that you have taken today? Duisenberg: No, we also see no risks of deflation emerging. We see that inflation has now remained, on a euro area-wide basis, constant at a rate of 0.8% four months in a row up to now. We see some risks on the upside, i.e.
Mark Carney: Inflation in a globalised world Remarks by Mr Mark Carney, Governor of the Bank of England and Chairman of the Financial Stability Board, at the Federal Reserve Bank of Kansas City Economic Symposium, Jackson Hole, Wyoming, 29 August 2015. *  *  *  Accompanying charts can be found at the end of the speech or on the Bank of England’s website. I am grateful to Ambrogio Cesa-Bianchi, Bob Gilhooly, Gene Kindberg-Hanlon, Ben Nelson, Ivan Petrella, Greg Thwaites, and Iain de Weymarn for help in preparing these remarks. I. Introduction  In this era of hyperglobalisation, 1 are central banks still masters of their domestic monetary destinies? Or have they become slaves to global factors? To what extent does a global financial cycle dominate domestic transmission mechanisms and does that, as some might suggest, confer particular responsibilities on those central banks that most influence it? On the surface, there’s evidence of global inflationary cycles that correspond with an intensifying globalisation that propagates common shocks via commodity, trade and financial channels. Correlations of CPI are as elevated today as during the first oil shock and on the surface we appear to be in the midst of a highly synchronised global rates cycle. But as is often the case, appearances deceive. Correlations of headline CPI largely reflect price level shocks such as those to oil (Chart 1). Core inflation rates exhibit much less comovement but rather vary with increasingly divergent underlying economic conditions (Chart 2). The stance of monetary policy reflects these differences.

As we meet today we welcome the various measures taken by the Bretton Woods institutions to reduce the impact of the devastating effects of the turbulences in the international monetary and financial markets and look forward to future reforms to help ease the burden on our economies. Another issue I will like to mention is the aspect of voice and representation which is critical for us to be fully represented in these institutions and we are happy that these issues are being addressed. For the next two days we will discuss issues relating to Africa in the context of global financial and economic crisis, lessons learnt and the way forward at the Miatta Conference Hall. This Dinner gives the opportunity to set the scene and get familiar with each other as there are a host of Bank Governors and Finance Ministers here coming from all over the continent, some, if not most, of us are meeting for the first time. I am certain it will not be hard for us to get to know each other because we share a lot in common, in terms of language, culture and socio-economic conditions. It is my belief that it is this common history and economic experience that brings us together and gives us a unique advantage in understanding our collective situations to help us reach consensus on all of the issues on the table for discussion.