samchain/econo-pairs-v1 huggingface dataset:
The Eurosytem will keep fulfilling its priority mandate of price stability while also contributing to the broader objective of financial stability. Governments are increasing their cooperation. So the eurozone has shown it is well equipped to live up to its responsibilities as a truly global player in the international monetary system of the 21st century. I thank you for this opportunity to present my views. BIS Review 122/2008  3

We will probably have to live with some of the repercussions of the crisis for some time to come, but we expect the financial markets to normalise. But it is necessary to achieve a balanced economic growth even beyond the monetary policy forecasting horizon. If we are to do so we must attend to any deficiencies regarding, for instance, regulation, supervision and the allocation of responsibility, deficiencies which have come to light rather clearly in recent years. It is important to establish a system that covers all aspects; a system that prevents unnecessary risks and imbalances from building up. Experiences of the financial crisis in the 1990s have in many ways contributed to changes that have given our economy better resilience during periods such as the past few years. Merely the fact that we entered this crisis with sound public finances, a surplus on our current account and a lower, more stable inflation rate has given us room to manoeuvre that we previously lacked and which many other countries lack now. Some changes have also been made with regard to financial supervision and analysis of the bank sector. The banks themselves have also learnt from the previous crisis and have acted, at least in Sweden, in a much more responsible manner with regard to credit granting, for instance. But to some extent I think our memories were too short in the 1990s, when the acute crisis was behind us and crisis management was no longer such a pressing issue.
As is known, our banks comfortably passed the test, confirming the favourable results of the restructuring and recapitalisation programme carried out in 2012 and 2013 with the agreement and assistance of our EU partners. The comprehensive assessment of significant euro area banks was twin-pronged, entailing an asset quality review and stress tests to determine banks’ resilience in hypothetical adverse scenarios. The results obtained by Spanish banks were favourable. First, I should highlight the fact that Spanish banks are those with fewest adjustments to make as a result of the asset quality review which, unlike the stress tests, is not based on hypotheses but on a detailed balance sheet review. As regards solvency, only one bank stood slightly below the thresholds set in one part of the exercise and, in any event, that same bank had already adopted capitalstrengthening measures in 2014 on a scale far exceeding that needed to cover the shortfall identified. In the course of 2014, both the ECB and the national authorities made a significant effort to address the challenge posed by adaptation to the new supervisory framework. In this respect, to make our joint work easier, the Banco de España has reorganised its Directorate General of Banking Supervision, creating a structure that mirrors that of the ECB’s SSM. In 2015, its first year of operation, the SSM has defined a list of priorities, bearing in mind the environment and the main risks to the banking sector. These include most notably profitability.

Improved confidence has also benefited from the changes in certain external conditioning factors, such as those linked to the ECB’s monetary policy and to the progress in economic and monetary union, which have prompted an easing in financing conditions. On top of these are other more transitory effects, such as those linked to the low level of oil prices or to the depreciation of the euro. I shall continue with the analysis contained in the Annual Report, briefly reviewing the key factors behind the recovery. Budgetary consolidation Firstly, regarding public finances, the general government deficit met the objective set by the European Council (5.8% of GDP) for the third year running. In 2014, fiscal policy had a less restrictive impact than in the preceding years and was a less prominent conditioning factor of macroeconomic developments. The reduction in the deficit in 2014 came about as a result of the greater adjustment made at the central and local government levels, since most of the regional governments exceeded the targets set. The budgetary improvement was also the consequence of a similar-sized contribution by revenue and public spending (once the impact of the financial assistance to the banking system is stripped out of spending). The tax take progressively picked up during the year, in step with the cyclical improvement and the change in the composition of GDP.
Australia has had an inflation target of between 2 and 3 per cent for CPI inflation over the cycle since 1993, and its average inflation rate in the period 1996–2011 was 2.7 per cent. 13  11  An older method of calculating the rate of inflation with an unchanged consumer basket was used in real-time data prior to 2005. Using the current method of calculating the inflation rate as the percentage change in the CPI, average inflation was 1.3 per cent during the period 1997–2011, but real-time data are more relevant when evaluating monetary policy. See Sveriges Riksbank (2004). 12  In the period 1992-1996 the target was expressed as 2.5 per cent or lower in terms of the RPIX. RPIX = Retail Price Index. In the United Kingdom the CPI corresponds to the HICP price index. Since 1993 the average HICP inflation rate has been 0.75 percentage points lower than average RPIX inflation. 13  New Zealand has had an inflation target since 1990, but its target has been adjusted upwards twice and thus one cannot say that it has had a fixed inflation target. 10  BIS central bankers’ speeches  How have things turned out for the large economies, the euro area and the United States? The euro area has had a target for inflation, although during a shorter period than the countries mentioned earlier. The target is that inflation should be below but close to 2 per cent.

See, for instance, Brunnermeier and Sannikov (2013). BIS central bankers’ speeches  3  I think that the division into these three main views provides a good reflection of the current debate. But there are of course no sharp dividing lines between them, rather the dividing lines are relatively fluid. And where one finds oneself on the scale ultimately depends on which argument or arguments one allocates the greatest significance. It will probably come as no surprise to those of you who follow the monetary policy debate in Sweden that I myself have great sympathy for the principle that monetary policy needs to support macroprudential policy. I would therefore place myself fairly close to the second view in Smets’ description. So what has led me to this view? Allow me to begin by giving my interpretation of what a monetary policy that leans against the wind entails. What does it mean that monetary policy leans against the wind? There are different ways of illustrating how and why financial imbalances and risks should be included in the monetary policy deliberations. Essentially it is a question of avoiding scenarios where the imbalances will lead to very negative effects on GDP, unemployment and inflation. So in principle it is a question, as usual in monetary policy, of stabilising inflation and the real economy.
This is so that risks from potential concentration of market power and financial instability are minimised. The final pillar aims to fill the gaps in institutional, including legal and information, infrastructure that are necessary for an efficient and modern financial system. We will be looking at the legal framework and other measures that would support a more effective functioning and supervision of financial institutions. These include sound credit culture (e.g., bankruptcy and foreclosure laws) and implementation of international best practices, such as new international accounting standards. On the information side, efforts will focus on the information infrastructure that would assist financial institutions in pricing and managing risks better. Areas for improvements are, for example, the operation of the Credit Bureau, rating agency, and more complete data on key economic sectors such as the real estate and housing market, etc. BIS Review 54/2008  5  On the whole, while the policy recommendations will largely cover BOT-supervised financial institutions, those related to other types of financial institutions and broader financial markets can also be addressed if they are deemed to be systemically important. Ladies and Gentlemen, In closing, allow me to emphasize once again that Thailand’s record of economic resiliency to adverse shocks and uncertainties in the past should clearly attest to the strength of our underlying fundamentals. The US and Thailand are long-time partners, and I need not mention how crucial it is to both our economies that we strengthen our trade and investment partnership in the years ahead.

Therefore, while formal schooling is an important source of skill and quality development, experience in the workplace is equally essential for human resource development. As members of the business communities, your role as investors and employers will help make Thailand’s real sector more competitive by investing in the best technology and capacity to use that technology efficiently. This will in turn increase the attractiveness of Thailand for international trade and investment, especially as Thai exporters have benefited from new market penetration and the growth of intra-regional trade. We recognize that the US is the largest single trade partner for Thai exports, though its market share has been declining. As for US direct investment in Thailand, the US ranks fourth in terms of the size of FDI, accounting for about 12 percent of total FDI inflows annually since 2000. Ladies and Gentlemen, I turn now to the last part of my talk which focuses on the roles and directions of the Bank of Thailand in fostering economic growth, investment, and financial stability. Let me touch on two topics here, namely 1) the three new financial legislations that will enhance the transparency and efficiency of central bank responsibilities in safeguarding monetary and financial system stability, and 2) the second-phased financial sector master plan. The three new financial legislations, which were passed at the end of 2007, are the new Bank of Thailand Act, the Financial Institution Business Act (FIBA), and the Deposit Protection Agency Act.
The driving force behind growth can be very strong, as earlier economic upswings have shown. The situation in Sweden – some positive signs What is the situation in Sweden? The weak growth abroad at the end of last year led to an unexpectedly severe slowdown in Swedish exports. This means that the fall in GDP growth in the fourth quarter of last year was larger than we had predicted. The weak year-end has an impact on GDP growth for 2012, which was revised down in April in relation to the forecast made in February. At first glance, the GDP figure may appear ominous. But unlike exports, domestic demand during the fourth quarter was in line with the Riksbank’s forecast. Developments in the retail trade sector and indicators of confidence in the corporate and household sectors pointed to demand beginning to increase again. In addition, exports of goods increased strongly in January and recovered a large part of the fall that took place in the fourth quarter of 2011. 9  The support facilities currently available consist of three parts. The largest, the EFSF (European Financial Stability Facility), was established in spring 2010 and has been built using guarantees from the euro area countries themselves. The second part is the EFSM (European Financial Stability Mechanism) which is based on a guarantee from the EU. The third part, which was also announced in spring 2010, was that the IMF could provide loans of up to EUR 250 billion.

Mr Duisenberg discusses the ongoing dialogue on monetary policy, the overall economic situation and other activities of the Eurosystem  Introductory statement by Dr Willem F Duisenberg, President of the European Central Bank, at the Hearing before the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, on 20 March 2000. *  *  *  It is my pleasure to continue today our ongoing dialogue on monetary policy, the overall economic situation and other activities of the Eurosystem. Since our previous hearing in November, the European economic outlook has brightened further, while, at the same time, the balance of risks to price stability has shifted upwards owing, in particular, to external factors. Against this background, the decisions of the Governing Council of the ECB to raise interest rates in early February and last week, as well as the reasoning behind these steps, are at the centre of my presentation today. Moreover, I should like to touch upon the overall European economic environment. Finally, I shall briefly turn to some other activities of the Eurosystem which might be of particular interest to you. 1. Current economic developments and prospects  As you are aware, the Governing Council of the ECB decided on 3 February and 16 March 2000 to increase the three main ECB interest rates. These two decisions followed the interest rate decision taken on 4 November 1999.
They helped to check the signs of panicky behaviour in the market and then to restore a more optimistic assessment of the future. At the same time, the process displayed some ability to heal itself. All this has contributed to a rapid recovery in the global economy as well as in Sweden. The current picture of many economies is thus very different from the uneasy situation that prevailed during 1998 and the early part of 1999. Global growth prospects are appreciably better and the risks connected with inflation have changed. That is also why instrumental rates were adjusted upwards by many central banks last autumn and early this year. In principle it can be said that inflationary pressure follows a cyclical pattern. When economic activity is strong, demand growth tends to exceed the expansion of capacity and this normally leads in time to an accelerating rate of price and wage increases. Conversely, weak demand may lead to the prospect of inflation being below the target one to two years ahead. As a rule, the repo rate should be raised in the former case and lowered in the latter. In this way, the repo rate varies with the business cycle so that the rate of inflation remains more or less continuously in line with the target. So, as rising economic activity successively reduces the degree of unutilised resources in the economy, the repo rate has to be increased. That is the process the Riksbank has initiated with the increases since last autumn.

These products should offer, over time, the higher returns provided by equity, and they can be less liquid, while also featuring a form of capital protection. However it remains crucial that product innovation continues to be carried out carefully, without undermining the protection of policyholders. In this respect, specific attention should be paid to the pan-European personal pension product (PEPP). The PEPP is an avenue to develop pan-European products and responds to the need for insurers to break away from the dual capital-liquidity guarantee. Yet it also raises several concerns: information on the risks incurred under the different types of guarantee may not be clear enough to consumers; in addition, the guarantee may ultimately depend on the financial company that is offering the PEPP, as there is a difference for instance between insurance companies abiding by Solvency II and asset managers, which have lower capital requirements. This brings me to the issue of regulation. Here too, insurers have to play their part, by actively contributing to the review of the Solvency II Directive’s new regulatory framework. In many respects, Solvency II represents a very significant step forward for the insurance sector. But this does not mean that it’s perfect: we must analyse its impacts closely, particularly its effects on investment behaviour and the financing of the economy, in order to propose the adjustments that prove necessary.
In view of this delicate situation and since the problem is a pressing one, the Banco de España, with the Government’s agreement, decided it was necessary to provide additional financing to CCM to preserve its stability. To this end, the Government granted backing to the loan, for a maximum amount of € billion, extended by the Banco de España. I would like to underscore this point. As reiterated by the Second Deputy Prime Minister at the press conference following the meeting of the Council of Ministers last Sunday, I should stress that we forecast that approximately € billion of this amount will be used. Nevertheless, our room for manoeuvre will make managing the payments more flexible, without any constraints in respect of the amounts involved. Developments in CCM’s liquidity in the three days it has been under the control of the Banco de España nominees have proven more positive than expected. Given the response by all the government authorities involved, management cooperation, the reaction of the trade unions and understanding on the part of the general public, there have been no queues or panic at branches and there have clearly been fewer withdrawals of deposits than foreseen. Having briefly outlined CCM’s current position, let me move on to the ultimate aim of the Banco de España’s supervisory decisions. While seemingly obvious, the Supervisor’s aims are to protect depositors’ savings and creditors, to avoid market turmoil and to preserve the stability of the financial system as a whole.

To conclude, I have personally conveyed to the Government and to the main opposition party the need for certain regulatory changes that might notably improve finding solutions in keeping with the principles informing our actions to date, which as you are well aware, were backed by a recently approved parliamentary motion. The purpose of my testimony today is not to debate what must be done in future, since that is evidently the primary responsibility of the Government and the parliamentary groups, since  4  BIS Review 42/2009  any changes must ultimately be approved by this House. However, I do want to mention some changes which we would view very favourably. For example, providing savings banks with the wherewithal to increase their own funds, at least on a comparable footing with Banks. This is important because, as I have reiterated today, it is essential to consider all possible private solutions before asking taxpayers to contribute more public funds. Evidently we must comply with the requirements of Monetary Union membership. But in this connection, one desirable institutional change, along the lines of the deposit guarantee funds that have worked so well for us, would be to avoid, as has occurred in the case of CCM, calling a cabinet meeting every time taking control of an institution is called for. These and other changes should also strive to ensure the orderly restructuring of banking institutions and, while maintaining the necessary discretion specific procedures require, comply with all government and parliamentary reporting procedures deemed necessary.
But there may be scope to widen and deepen the set of financial instruments covered by prudential requirements, to give a richer array of internationally-oriented macro-prudential tools. These would then be better able to lean against global fluctuations in a wider set of asset markets. Conclusion This time was different: never before has the world suffered a genuinely global financial crisis, with every country on the planet falling off the same cliff-edge at the same time. This fall laid bare the inadequacy of our pre-crisis understanding of the complexities of the financial system and its interaction with the wider economy, locally but in particular globally. It demonstrated why the global macro-financial network is not just a complex adaptive system, but a complex system of systems. The crisis also revealed gaps and inadequacies in our existing policy frameworks. Many of those gaps have since been filled. Micro-prudential microscopes have had their lens refocused. Macro-prudential macroscopes have been (re)invented. And global telescopes  BIS central bankers’ speeches  15  have been strengthened and lengthened. Institutional arrangements have also been adapted, better enabling co-ordination between the micro, macro and global arms of policy. So far, so good. Clearly, however, this remains unfinished business. The data necessary to understand and model a macro-financial system of systems is still patchy. The models necessary to make behavioural sense of these complexities remain fledgling. And the policy frameworks necessary to defuse these evolving risks are still embryonic.

The priority was to create a secure arrangement that will provide both exporters and importers with a simplified way to settle their transactions with a degree of ease similar to that with which they effect payments within their own countries. From this point forward, there is no doubt that the private sector will take it upon itself to create new financial products and further deepen the real-peso market. Indeed, deepening of the real-peso market, reduction of trade obstacles and access on the part of small and medium exporters are the primary objectives of this initiative. Despite noncompulsory, the facilities and lower costs of the SML should attract exporters and importers. There will be no foreign exchange contracts, despite documentation currently required will remain mandatory. The essential alteration for Brazilian exporters will be the need to register the operation in real. With elimination of a third currency in direct transactions among companies, exporters will set their prices in the currency of their own countries. Thus, they will be better able to calculate their margins precisely, since they will no longer be exposed to exchange rate risk. At the start, it will be possible to carry out trade operations between the two countries with terms of up to 360 days. Payments of services related to trade (for example, freight and insurance) can also be made in own currencies.