samchain/econo-pairs-v1 huggingface dataset:
If one claims this, one is also implying that central banks and governments do not have the possibility to choose the level of the inflation target, but that this is something determined by structural conditions in the economy. Ultimately, one thus also says that inflation is not a monetary phenomenon, which does not concur with what is widely accepted today. Important to maintain confidence in the target A slightly milder interpretation is that one did not literally mean that the inflation target should be lowered, but that the Riksbank, and all other participants in the Swedish economy should accept that inflation will continue to undershoot the target over a long time to come – despite the fact that it has already been below the target for several years. The main reason would be that the expansionary monetary policy required to bring inflation up to the target would also contribute to a further increase in house prices and household debt. I have some understanding for these thoughts, but I consider that they disregard a number of important circumstances as well. I believe that above all, one underestimates the importance of maintaining confidence in the inflation target and the problems that can arise if this confidence is lost. We have lived with an inflation target of 2 per cent for more than twenty years and few would claim anything other than that it has been a good system with good results for the Swedish economy.

The way forward Becoming a member of the euro area does not represent the end of a process, but rather the beginning of a new era in which the burden of adjustment will have to be carried entirely by the real economy and in which the harmful effects of inefficient institutions and practices on costs and final prices will become more visible. The policy challenge, therefore, is to maximize the benefits of participation in monetary union and so bridge the remaining income gap with the euro area. Malta’s per capita income level is still around 70% of the euro area average. Among other things, this means that further fiscal consolidation is necessary in order to achieve a balanced budget by the set date of 2010. There must also be more emphasis on expenditure-based adjustment, particularly in view of rising pressures caused by ageing-  BIS Review 14/2008  5  related factors such as pension and health care costs. It will be equally important, in both the private and public sectors, for wage growth to be compatible with productivity growth, labour market conditions and cost developments in competitor countries. The further strengthening of competition in both product and resource markets and the creation of more incentives to work are also necessary in order to raise the participation rate. These ambitious objectives clearly allow no room for complacency. In this regard, it is a positive sign that the Budget for 2008 promises policy continuity.
There is no doubt that the updated recommendations will enhance the level and methods of protection of the economic system against such type of crimes threatening it. In conclusion, I would like to express my thanks and gratitude for your respected group for its achievements accomplished during its short life, wishing you continued success. I thank the organizers for their efforts. I also welcome you again in the Kingdom of Saudi Arabia and I hope that your meetings in this session will be a success. 2  BIS central bankers’ speeches

Making this translation in the loss function, we see that the conservative central banker attempts to minimize the equally weighted sum of squared inflation and unemployment deviations: L = (π – π*)2 + 1 * (u – u*)2 where u and u* are the actual and natural rates of unemployment6 The bottom line is that a conservative and tough-minded central banker can still value deviations in unemployment from the natural rate equally with deviations in inflation from its target. Accordingly, an inflation rate of 5% against an inflation goal of 2% presents this  3  Taylor, John B. 1979. “Estimation and Control of a Macroeconomic Model with Rational Expectations,” Econometrica 47 (5) September, pp. 1267–1286. 4  For example, Woodford, Michael, 2005. “Central-Bank Communication and Policy Effectiveness,” Paper presented at Federal Reserve Bank of Kansas City Symposium on “The Greenspan Era: Lessons for the Future,” Jackson Hole, Wyoming, August 25–27, 2005. Available at: http://www.columbia.edu/~mw2230/JHole05.pdf  5  Rogoff, Kenneth S. 1985. “The Optimal Degree of Commitment to an Intermediate Monetary Target,” Quarterly Journal of Economics 100 November, pp. 1169–1189. 6  That is, Okuns’ Law says (y – y*) = 2*(u – u*), where u and u* are the actual and natural rates of unemployment. Making this translation in the loss function (so squaring and multiplying by ? = ¼ yields L = (? – ? *)2 + 1 * (u – u*)2.
Mention should be made that banks showed caution in managing CHF-denominated assets and liabilities. III. The current economic environment  The analysis of the current economic environment reveals two significant characteristics. First, Romania has maintained sustainable macroeconomic balances over the last years, also as a result of the counter-cyclical monetary and prudential policies implemented by the National Bank of Romania. Romania further enjoys robust economic growth and solid growth prospects, of 2.7% in 2015 and 2.9% in 2016. The annual inflation rate has remained on a  4  BIS central bankers’ speeches  downward path, while the general government balance and the current account balance stand at sustainable levels. These arguments show that the movements in the CHF/RON exchange rate should not be seen as a depreciation of the domestic currency (which is supported by strong economic fundamentals), but as CHF appreciation following the Swiss National Bank’s decision. Second, the downtrend in interest rates on leu-denominated loans, also as a result of the NBR’s decisions to gradually cut the monetary policy rate and to pursue adequate liquidity management, is supportive of the solution of converting foreign currency-denominated loans into the domestic currency in the case of currently unhedged borrowers.

The main Swiss investors in Romania are present in significant economic sectors: building materials, energy, petrochemicals, pharmaceuticals, food industry, tobacco, agriculture and stockbreeding. Over the last years, trade flows with Switzerland exceeded the EUR 250 million threshold for exports and the EUR 400 million threshold for imports. 2  BIS central bankers’ speeches  The situation generated by the CHF appreciation should be approached rationally, rather than emotionally. First and foremost, before coming up with a solution, we should make sure that the situation has stabilised. Frequently, FX markets tend to overreact at the incipient stage of such events. From this standpoint, mention should be made that about 40% of the rise in the CHF/RON exchange rate was already corrected: it started off at 1 CHF = 3.74 RON on 14 January 2015, peaked at 4.58 on 23 January and stood at 4.21 on 9 February 2015. Moreover, given the considerable financial impact, time is necessary for solutions to be formulated so that the additional burden generated by the stronger CHF might be rationally and realistically shared among the parties involved. To sum up, we believe that, before adopting any measures, the following should be analysed: the actual situation of CHF-denominated loans in Romania, the current economic environment, the approach to the effects generated by the stronger CHF in other countries in the region, as well as the viability of the solutions recommended. II.
Perhaps the main concern was the strong domestic inflation trend with price and wage spirals that collided with attempts to maintain a fixed exchange rate, and therefore led to recurring cost crises and devaluations. Another concern, which was partly connected to this, was that fiscal policy was often too expansionary, with rapidly rising public spending and tendencies toward structural deficits as a result. In addition, there was a deregulation of the credit market in the mid1980s, which would lead to far greater problems than were anticipated when the reform was implemented.21 In the early 1990s, these and other ingredients contributed to another domestic cost crisis, which also coincided with a financial crisis largely caused by excessive lending to households and companies. Unemployment rose sharply and public finances deteriorated dramatically. The krona was put under strong pressure by investors who expected Sweden to devalue again soon and, in November 1992, the Riksbank was forced to give up its defence of the fixed exchange rate. It had become clear that the type of policy Sweden had pursued for a number of decades had reached the end of the road, and needed to be fundamentally reshaped. Instead of defending a fixed exchange rate, the task of monetary policy from now on would be to keep inflation low and stable around 2 per cent. For its part, fiscal policy would focus considerably more than previously on keeping public finances in good condition so as to maintain market confidence. Looking back now, around thirty years later, the restructuring was successful.

Capital adequacy and liquidity regulation are thus two sides of the same coin. Just as it would be impossible or uneconomic to require banks to operate without risk to provide total certainty of solvency, so liquidity regulation is needed as a form of insurance. The issue is discussed in an article in the December edition of the Bank's Financial Stability Review. The Basel Supervisors' Committee has done valuable work in examining issues and techniques in liquidity management and this work deserves to be carried forward further. For those of you who have already digested the 500 pages of the new Basel Accord we are discussing today and are looking for some more recreational reading, over the Easter holiday, I thoroughly recommend a re-read of the update the Basel Committee published last year of its sound practices for managing liquidity risk. In the meantime, thank you for allowing me to address you this morning. BIS Review 29/2001  5
The problem that loomed around this time a year ago is a thing of the past and terms in the secondary market are more favourable again. The Central Bank underlines that global market conditions can take a sudden turn for the worse and it is important to be on the alert and prepared for such a contingency. The current episode of ample liquidity and lower interest rates which has been ideal for risk-seeking investors may change unexpectedly. Short-term interest rates have been rising in most markets recently and capital costs are no longer so favourable. The Icelandic banks are better equipped for such a reversal than a year ago, because experience has taught them to extend and disperse their borrowing, and build up substantial liquid reserves in foreign currency. In 2006 the spotlight was on the banks’ liquidity risk. Now that this risk has ebbed, the focus has shifted to credit risk and the potential impact of higher interest rates and a depreciation of the króna. Amidst the turbulence of 2006, the banks slowed down their credit growth and expansion of their balance sheets. No major foreign financial companies were acquired and equity exposures were reduced. Nonetheless, it is natural to consider their credit risk and vulnerability towards a fall in asset prices. Icelandic households’ debts with credit institutions have soared in recent years, especially averageincome and young households.

In the case of borrowing, transaction costs include any payment which the borrower has to make other than the payment of interest to the lender. Such costs, therefore, comprise legal fees, application fees, loan processing fees, any bribes or commissions payable, stamp duties and other taxes and, finally the opportunity cost of the time spent for pushing the application through bureaucracy and the waiting time. This can be compared with a village money lender who is alleged to be charging an exorbitantly high interest rate. Yet, the transaction costs involved in borrowing from a money lender is practically zero. Hence, from an efficiency point of view, a village money lender is preferable to a microfinance institution with a high transaction costs. In Sri Lanka, in late 1980s, the Central Bank ran an agricultural credit scheme of which the interest rate payable by the farmer had been fixed at 9 percent when the market interest rates amounted to about 20 per cent. The subsidy was intended to reduce the farmers’ cost of production and promote agriculture. A study conducted by ADB revealed that the effective interest rate paid by farmers, after taking into account all the costs, amounted to 30 percent, much higher than even the free market rates. The difference between the actual cost incurred by the farmer and the rate paid by him to the lending bank was wastage of resources. It had not been the income of anyone. Hence, such costs are known as deadweight losses.
Should they carry contractual foreign rates or some typical ISK rate, such as the benchmark rate published by the Central Bank of Iceland? In the former case, the blow to the capital position of the banking system would have been very serious indeed, requiring massive recapitalisation and possibly jeopardising the overall stability of the system. Those responsible for financial stability gave a sigh of relief when the Supreme Court ruled in mid-September that loans with illegal exchange rate linkage clauses should carry reference ISK rates published by the Central Bank of Iceland. After this decision, it is clear that the blow to capital ratios should be well manageable and only a very limited recapitalisation will be called for, if any. The reconstruction of the domestic financial sector paves the way for badly needed debt restructuring among households and businesses. This issue has remained unresolved due to delays in recapitalising the banks and the uncertainty following the first Supreme Court ruling. But it has also lagged because the framework for such debt restructuring has been a highly contested political issue. We have seen that Iceland has made significant progress on three main policy fronts. But before investigating how this progress has stabilised the economy, let us turn back to the recession in the Icelandic economy. As I said earlier, Iceland was well on its way into recession in 2009 before the banks collapsed in the autumn of 2008, and actually before the currency crisis materialised earlier in 2008.

We need strong institutions with clear responsibilities and which offer a framework for dialogue and formal agreement. This is all the more important at the global level. The scope of international cooperation is broadening significantly as our economies become increasingly connected. This is reflected in current efforts to strengthen the mandates and governance structures of existing  BIS Review 97/2010  1  international institutions. At the same time, existing informal fora are being adjusted and new fora developed. Examples are manifold. The G-20 has emerged as the prime group for global economic governance. The Global Economy Meeting of central bankers acts as the main forum for central bank cooperation. And the Financial Stability Board now represents all systemically important emerging market economies, and its mandate has been enhanced to strengthen the international financial architecture. These are encouraging developments and we must continue to pursue this path. The second area at the core of our efforts concerns reforms of the financial sector. This is also an area where further progress is needed. The extent of the financial crisis leaves no doubt that tighter regulations and supervision are required to overhaul the financial system. We know that the crisis originated mainly in institutions that had moved away from traditional banking and which increasingly relied on non-interest sources of income and nondeposit-funding. Reforms should be designed in a way that internalises the social responsibility that financial institutions bear for savers and society as a whole. How can this be achieved?
Islamic financial institutions now play a major role in driving the sustainability agenda in Malaysia hence, it is encouraging to see players such as CIMB Islamic and Standard Chartered Saadiq keep the momentum with this landmark deal which furthers Islamic finance and ESG convergence. I’m confident the Islamic finance sector will continue to do more in advancing sustainability practices by leading ESG innovations aligned to the value-based intermediation agenda. The introduction of ESG Islamic Repurchase Agreement is thus timely and it will further encourage the development of Islamic Repurchase market. Islamic Repurchase market registered RM39.4 billion in volume in 2021, more than double the volume in 2020[3]. The huge potential lies ahead as the volume registered is thus far, only around 1% of the total Islamic money market volume during the year. I would like to thus congratulate CIMB Islamic and Standard Chartered Saadiq on today’s signing. I wish you a successful partnership in this and potentially pave the way for more within the industry. Thanks also to the organisers for inviting me today and wish everyone a good weekend. Thank you  [1] Source: S&P Global [2] Source: Moody’s Investors Service [3] Source: BNM

17.06.2019  The Spanish banking system: transformations and challenges Opening of the seminar “Sustainable finances and their importance in the future of the economy”, Universidad Internacional Menéndez Pelayo, organised by the Spanish Association of Economics Journalists Pablo Hernández de Cos Governor  Ladies and gentlemen, good morning: It is an honour and a pleasure to be able to participate in the opening of this seminar, organised by the Spanish Association of Economics Journalists (APIE) as part of the Universidad Internacional Menéndez Pelayo’s summer programme of seminars, being held, once again, on this Santander soil, of which I am so fond. I should like to begin by recalling, here in this historic Magdalena palace, that 2019 is particularly rich in anniversaries relating to the opening up and liberalisation of the Spanish economy. The process began with the Stabilisation Plan 60 years ago, while one of the most important milestones was passed 20 years ago, when Spain adopted the single European currency, the euro. And, exactly 25 years ago, in order to reach that stage, it was necessary for the Spanish parliament to approve the Law of Autonomy of the Banco de España, which confirmed the Spanish central bank’s autonomy and independence. By means of this law, moreover, Spain established an institutional framework in line with the requirements for adopting the single currency, and also put in place a fundamental pillar for a culture of stability in the conduct of economic policy.
Moreover, with the achievement of what constitutes for all practical purposes price stability across many economies, a number of central banks discovered that with it came a new challenge: policy could no longer be directed exclusively to push inflation lower but had to pay at least as much attention to avoid inflation that could conceivably fall too low and thereby undermine the goal of price stability by initiating deflationary tendencies. As has traditionally been the case, vigilance will therefore continue to be the “Leitmotiv” for the world’s central banks. 3. Global Competition and Disinflation  A number of factors have contributed to the striking disinflation since the 1970s.5 Good monetary policy has undoubtedly made an important contribution of which many of today’s leading central bankers have every reason to be proud of. In many cases, a precondition for good monetary policy was institutional independence. Politicians have therefore played an important role as well. They have empowered central banks and freed them from political interference. Fiscal policy probably also contributed somewhat to an improved global macroeconomic environment though the case is not entirely convincing.6 Finally - and this is the point I would like to emphasize today – the global disinflation of the last twenty years has been facilitated by dramatic structural changes in the global economy. These changes are best encapsulated by what is loosely referred to as globalization.

In light of Switzerland’s large current account surplus (50 billion CHF or 12% of GDP in 2002), you have been additionally challenged by a real exchange rate which, over the last ten years, has on average appreciated by 0.6%.8 For the most part, the Swiss export sector has risen to that challenge. By contrast, the domestically oriented sectors of the Swiss economy have to a large extent remained sheltered from the competitive forces of an increasingly open global economy by an intricate web of regulatory measures which have prevented the product market from functioning according to market principles. Examples are numerous: The electricity market remains regionally monopolized. As a result, Swiss enterprises must bear higher electricity costs than their international competitors. In the telecommunication market, the achieved results in the deregulated part of the sector have not been matched on the still monopolized last mile. In the pharmaceutical and in the automotive sectors, parallel imports are still impeded by patent law or tacit collusion rendered possible by weak international cartel laws. The detrimental effects of this economic bifurcation are clearly reflected in Switzerland’s economic statistics. As one would suspect, prices in the domestic sector are being kept artificially high, thus undermining competitiveness. An analysis of longer-term price series demonstrates the diverging path of prices between the export- and the domestic-oriented sectors of the economy. The export price deflator rose much less than did the GDP deflator. (see annex for graph 2) A similar picture emerges on the productivity side.