samchain/econo-pairs-v1 huggingface dataset:
Inflation Forecast June 2003 with Libor at 0,25%  2003 2004 2005  Annual average inflation in %  0.6  4  0.4  1.2  BIS Review 27/2003

Although circumstances differ, our experience may also be of value to others. Forward guidance in general Up until the 1990s, the code of conduct among central bankers was one of secrecy. Today, however, central banks strive to be transparent. This development reflects a general trend towards greater transparency in modern societies. For some central banks, including Norges Bank, a change from fixed exchange rates to an inflation targeting regime also highlighted the importance of greater transparency. Transparency is necessary for accountability. With accountability the central bank can build credibility and trust, both by showing that the objectives are actually attained in the longer run, and by explaining deviations from targets. Forward guidance, understood as information about future policy intentions, may be viewed as a natural extension of this accountability framework. Economic agents are forward-looking, and hence the future stance of monetary policy matters to them. As Michael Woodford has stated, “For not only do expectations about policy matter, but, at least under current conditions, very little else matters.” 1 In macroeconomic theory, the importance of expectations has been appreciated since the rational expectations revolution of the 1970s. In the early 1990s, theorists started to model monetary policy as setting the interest rate. 2 Central bankers have since had a theoretical  1  Woodford, M. (2005): “Central Bank Communication and Policy Effectiveness,” NBER Working Paper 11898. 2  See Taylor, J.
Stefan Ingves: Communication – what demands are made of an independent central bank? Speech by Mr Stefan Ingves, Governor of the Sveriges Riksbank, at the Swedish Economics Association, Stockholm, 24 April 2007. *  *  *  Introduction I shall begin by thanking you for the invitation to the Swedish Economics Association. It has become a recurring and pleasant task for the Governor of the Riksbank to discuss the Riksbank’s activities with this knowledgeable assembly. Since I was last here, a year ago, quite a lot has happened in the monetary policy field. We at the Riksbank have, for instance, implemented a number of changes to make our communication clearer. We have replaced the earlier Inflation Report with a Monetary Policy Report. We intend that this change of name should signal that the report now contains a description of the considerations we have made when we have taken our interest rate decisions. Another new element is that we have now begun to present the forecast for the repo rate that we consider will provide well-balanced monetary policy ahead. There is nothing strange about our methods of working changing over time. We are constantly trying to improve and develop our methods. After all, monetary policy is also to a large extent a learning process. In part, this is a case of gradually discovering shortcomings in our methods of working and trying to remedy them.

The ongoing consolidation, the lifting of foreign shareholding restrictions, the separation of banking and non-banking activities and the process of generational change will result in a reduction in the relative shareholding of the major shareholders. Succession planning is critical. The transition from the present framework to the new landscape will need to be carefully managed. The banks have already started taking steps to enhance corporate governance and professional management. MAS has also implemented measures to ensure that the Boards and key committees of the banks have sufficient representation of independent directors, and to encourage the Boards to appoint qualified professionals to run the banks. MAS will continue, by moral suasion and prescription, to encourage the banks to strengthen and institutionalise their managements, especially those merged banks which emerge from the consolidation. Safety and soundness While bigger banks are likely to be stronger and more diversified, they pose a larger risk to systemic stability if they run into difficulties. MAS will intensify its supervision of the merged banks, placing stronger emphasis on evaluating the banks' internal risk management processes and control structures. In the US, the Federal Reserve Board installs examiners almost continuously in the large and complex institutions under their purview, in order to monitor and supervise the banks more closely. MAS does not expect to have to do the same, but more frequent inspections and closer supervision of the banks will be necessary.
(October 2022). 17 Mertens and Williams (2021). 18 The equivalence of the uncertainty test about interest rates and inflation test breaks down if the natural rate of interest rate is subject to permanent shocks. By continuing to use our site, you agree to our Terms of Use and Privacy Statement. You can learn more about how we use cookies by reviewing our Privacy Statement.

Second, all investments abroad are subject to an exchange rate risk, whether they be government bonds, shares, real estate, commodities or investments in infrastructure, and irrespective of whether they appear on the SNB balance sheet or on that of a separate sovereign wealth fund. Consequently, outsourcing the foreign currency investments would not reduce Switzerland’s exchange rate risk. Third, outsourcing the foreign exchange to a sovereign wealth fund would call into question the independence of monetary policy and the SNB, as well as the freedom of action for monetary policy. The size and composition of the SNB’s balance sheet are a reflection of monetary policy. The SNB must also be in a position to dispose of the assets it has purchased and determine the composition of its balance sheet as required. Only in this way can it conduct an independent and target-oriented monetary policy. 4  BIS central bankers’ speeches
Thomas Jordan: International money market disruptions, central bank reactions and lessons learnt Introductory remarks by Mr Thomas Jordan, Member of the Governing Board of the Swiss National Bank, at the end-of-year media news conference, Zurich, 13 December 2007. *  *  *  As early as the first half of 2007, turbulence could be observed now and then on international financial markets. However, each event was isolated and short-lived. In the second half of 2007, there was a fundamental change in the situation. The sub-prime mortgage crisis in the US had a substantial impact on international financial markets, the extent of which had never been anticipated. I will cover three areas in my following remarks. First, I will discuss the upheaval on the international money markets. Then I will talk about the reaction of central banks, in particular that of the Swiss National Bank. Finally, I will outline some of the lessons learnt from this crisis to date. Serious disruptions on international money markets At the beginning of August, the US sub-prime mortgage crisis spread like a shock wave into the money markets of the most important currencies. In doing so, it hit the vital nerve of the international financial system. Well functioning money markets are essential in ensuring that financial market participants can adjust their liquidity positions. Ultimately, they are crucial for banks' solvency and long-term commercial viability.

With attention focused on money markets, the spotlight also fell upon central banks who implement their monetary policy in money markets by influencing the level of interest, via the supply of liquidity. Moreover, the central banks are the only market participants who are in a position to create the liquidity used in the interbank payment systems. The kind of upheaval observed in the international money markets over the past few months has never been witnessed in living history. Rumours and reports of substantial sub-prime positions at banks led to a sudden loss of confidence in international financial institutions. Moreover, these banks are, to some extent, uncertain about their own future liquidity situation. Consequently, banks subsequently began hoarding liquidity and became extremely cautious when granting credit to each another. The market for unsecured interbank loans over longer terms collapsed and at times the market for foreign exchange swaps dried up. Since then, banks have been unable to obtain unsecured funds for terms of more than a few days or weeks – or have been able to do so only by paying substantial interest premiums. There were three factors that exacerbated the money market disruptions. First, bank securities holdings that had supposedly been first class and liquid proved to be illiquid, thereby failing to serve as a source of supplementary liquidity. Second, other participants in the financial markets also faltered in their supply of liquidity to the banks. Their confidence in banks suffered because money market investments that had been considered safe suddenly turned out to be risky.
In Romania, as in most other Central and Eastern European countries, monetary policy interest rates are still above the zero bound and, as such, there has been no need to venture into the uncharted waters of quantitative easing and negative nominal interest rates. Therefore, I will not approach these two already classical unconventional instruments, since Romania’s experience is not illustrative from this perspective. Besides, I am sure that they will be extensively dealt with by other panellists. In this case, you are probably wondering why I am now in front of you. The answer is that, 10 years ago, the National Bank of Romania faced an economic and financial context which could also be labelled as exceptional. It called for the use of unconventional instruments and hence the departure from the prevailing economic precepts of the time and particularly from the rules that defined the modus operandi of an inflation targeter. Some of these tools would later be referred to as “macroprudential instruments”, but back then we referred to them as unorthodox monetary policy measures, the NBR responsibilities including not only monetary policy, but also financial stability, the supervision of credit institutions and the issuance of secondary legislation in the field of banking regulation. Consequently, I have come in front of you today with the hope that at least some of the lessons we learned at the time might prove relevant for this panel’s discussions. BIS central bankers’ speeches  1  My intervention today is structured along 4 lines, namely: 1.

carry trade) and instead incentivize them to focus on their core activities. 4  BIS central bankers’ speeches
Other scratches also need early and effective treatment to avoid becoming scars. For example, insofar as investment is being affected by post-crisis legacies, such as the debt overhang in parts of the private and public sector – the famous Fisher-Minsky-Koo channel of debt deflation – history suggests that effective deleveraging nearly always involves a combination of growing out of debt and writing down debt – which is to say, structural policies are also key.15 And action also at the EU level is crucial. Efforts to complete the Single Market, for example, would incentivise more firms to invest and grow as they have a larger market to serve and exploit economies of scale. Progress with the Capital Markets Union (CMU) would likewise help to raise productivity by facilitating capital reallocation. Conclusion So, to conclude, the evidence suggests that hysteresis as it is often understood – meaning rising structural unemployment – has not yet materialised meaningfully in our economy. We see more scratches than we see scars. And unlike “classical” hysteresis, these scratches are currently reducing price pressures, warranting our currently very accommodative monetary policy stance. We can be confident that this stance will have the desired effect. The ongoing broadening of the recovery, together with the gradual disappearance of downside risks, increases the chances that those who want to work more will be able to do so. This, in turn, will create the necessary price and wage pressures for a return of inflation towards levels closer to 2%.

In particular, the use of resolution tools like the bail-in when financial markets are in distress could exacerbate those turbulences and reduce the ability of other banks to obtain external financial resources. Or, in the case of the sale of the business, it could create a problem of fire sales that may additionally reduce the prices of the assets, generating losses for the rest of the institutions. In these circumstances, there should be a powerful, usable and credible backstop that could be activated even preemptively. The stability of the financial system and the potential for systemic risks to alter the functioning of that system have long been important topics for central banks, and I would like to encourage some additional consideration to this broader approach. Some episodes, including the Spanish experience during the Great Financial Crisis, suggest that the propagation of shocks is especially relevant for mid-sized entities and that the swift and orderly resolution of the problems is the vaccine against contagion. So, allow me to finish my presentation where I started: the current crisis management framework has been crucial in advancing the Banking Union and it has proven most useful in resolving very relevant events. However, the experience allows us to draw lessons that should be incorporated into the framework to contribute more effectively to maintaining financial stability and to ensuring the functioning of the Banking Union.
Mr. McDonough examines recent developments and trends in the foreign exchange markets Remarks by the President of the Federal Reserve Bank of New York, Mr. William J. McDonough, before the 39th International Congress of the Association Cambiste International, The Financial Markets Association in Toronto on 30/5/97. I am delighted to be invited to address the 39th International Congress of the Association Cambiste Internationale (ACI) -- The Financial Markets Association. I must confess to a certain affinity for the foreign exchange community, stemming, no doubt, from my commercial banking experience and my time overseeing the foreign exchange desk at the Federal Reserve Bank of New York. I’ve long believed that, more so than in most other sectors of the finance industry, there is a real community among those engaged in foreign exchange -- a community that relies on close personal ties and contacts. It is this spirit of community that makes events such as these ACI meetings today and tomorrow so enjoyable and important, giving us the opportunity to renew old friendships and build new relationships that will enable us to do our respective jobs that much better. In my remarks to you this morning, I would like to highlight some recent developments in the foreign exchange market and share with you my view, as a central banker, of what has been driving some of the trends we’ve been observing.

Such access was formally adopted as a requirement for multilateral netting systems, and I am convinced that the G-10 central banks would apply a similar standard when evaluating the start-up of any major multi-currency settlement service. In sum, the evolution toward more transparent foreign exchange markets that we’ve observed in the past several years is largely a product of both technological progress in the private sector and conscious policy decisions in the public sector. None of the policy decisions, I should stress, were taken with any explicit or implicit intention of reducing market volatility. On the contrary, the policy community has viewed moves toward increased transparency as desirable ends in and of themselves for a number of reasons. For one, transparency promotes a more level playing field for all market participants. In other words, transparent markets tend not to be dominated by just a few players. Rather, they are open to new entrants, large and small. In such markets, no one group of institutions or type of institution can develop a monopoly on information or competitive pricing. As in most industries, competition in the area of financial services spurs innovation, better service for customers, and a more efficient allocation of resources. Second, transparency in these markets also promotes investment. If money and investment fund managers or corporate CFOs can better understand the risks entailed in various investment alternatives, they are more likely to make the investment decisions best suited to their needs.
Ajith Nivard Cabraal: Inequality, poverty and development Inaugural address by Mr Ajith Nivard Cabraal, Governor of the Central Bank of Sri Lanka, at Annual Sessions of the Sri Lanka Economic Association (SLEA), Colombo, 10 August 2007. *  *  *  Mr. Chairman, Distinguished Invitees, Ladies and Gentlemen, At the outset, I wish to congratulate the Sri Lanka Economic Association (SLEA) for their initiative at organizing this important and timely event, the Annual Session focusing on Inequality, Poverty and Development. This forum would give a wonderful opportunity to all the participants to share their valuable thoughts and eventually enable them to contribute to the prosperity of this country and the well-being of our people. I am also delighted to have been invited to deliver the inaugural address to this distinguished audience and I must say that I consider it a great honour and a privilege. The SLEA has been organizing events of this nature for many years and at most such events I have been an active participant. I have myself benefited immensely from these fora, and I know most of you academics, and professionals have also gained from these well balanced sessions and fruitful discussions. Further, the themes that have been selected by SLEA and the calibre of the resource persons they have invited during the past prove their willingness to make an important contribution to the development in this country.

As we are aware, the world’s focus and attention has been to usher in an economic order that ensures high economic growth and an advanced level of development. In this endeavour, the widely discussed topics include liberalization, globalization, IT revolution, poverty alleviation, trade co-operation, political inclusion, regionalization, and many other buzz topics. Amongst these topics, “inequality and poverty” has maintained an important position, and it has therefore been discussed for years. Let us then ask ourselves the question: What do we really mean by inequality and poverty? Inequality means the lack of or fair treatment in the sharing of wealth or opportunities between different groups in society; and Poverty is the condition of being extremely poor. What do those who are stricken by poverty and inequality feel? Simply, they suffer the lack of material well being and lack of opportunities to succeed. Such feelings are often the root causes of political, economic and social upheaval, tension and revolution. Mr. Chairman, poverty and inequality are very closely linked. There is also ample empirical evidence to suggest that inequality and poverty seriously affect development. Inequality often leads to poverty while poverty hinders development and prosperity. Addressing inequality issues would undoubtedly have a positive impact on poverty alleviation. We would also probably unanimously agree that alleviating poverty is vital, considering its many economic, social, cultural and even more importantly, the human costs.
I will not attempt to describe this chart; it would take too long and, even if I had the time, I doubt I would have the ability. These were the self-same constraints – time, complexity – which faced investors in these products. Due diligence was the casualty. End-investors in these instruments were no more likely to know the name of the companies in their portfolios than the name of the cow or pig in their exotic hot dog. To illustrate, consider an investor conducting due diligence on a set of financial claims: RMBS, ABS CDOs and CDO2. How many pages of documentation would a diligent investor need to read to understand these products? Table 2 provides the answer. For simpler products, this is just about feasible – for example, around 200 pages, on average, for an RMBS investor. But an investor in a CDO2 would need to read in excess of 1 billion pages to understand fully the ingredients. With a PhD in mathematics under one arm and a Diploma in speed-reading under the other, this task would have tried the patience of even the most diligent investor. With no time to read the small-print, the instruments were instead devoured whole. Food poisoning and a lengthy loss of appetite have been the predictable consequences. Though it had aimed to dampen institutional risk, innovation in financial instruments served to amplify further network fragility. Diversity and stability A final dimension to network robustness concerns the effects of diversity.

The Fund did encourage longer term investment into unit trusts and kick started the ETF market on the HKEx and elsewhere in Asia, where we now have a variety of ETFs covering a wide range of asset classes. The result has been the provision of more choice to investors, both retail and institutional, at lower cost than traditional unit trusts. As we enjoy our 10th anniversary celebration, I cannot help but wonder if the exit strategies currently on drawing boards around the world will be as successful as we were? Only time will tell. I wish you all a very pleasant day and once again many thanks to State Street for organizing this celebration. 2  BIS Review 142/2009