samchain/econo-pairs-v1 huggingface dataset:
While intra-regional trade has been growing fast, a further reduction in trade barriers should help promote deeper regional trade integration and facilitate more efficient resources allocation. A wider use of local currencies in trade settlement and financing would also help diversify sources of trade financing and reduce currency risk and transaction costs. Lastly, regional economies need to deepen financial market reforms and promote greater financial integration within the region to better channel Asia’s surplus savings to meet its own investment needs; to support growing trade integration; and to enhance the absorptive capacity of our financial markets to capital flows. Further liberalisation of the financial sector and improving financial infrastructure such as establishing credit information sharing system and microfinance institutions should also help some regional economies to allocate credits more efficiently. Over the years, ADB has contributed to financial sector development in the region through its own programmes and through supporting regional initiatives such as the Asian Bond Markets Initiative under ASEAN+3, and we welcome the Bank’s continued commitment in this regard going forward. It is noted that a number of the above structural reform areas have been identified as strategic priorities in the Bank’s midterm review of Strategy 2020. With its expertise, we believe ADB has an important role to play in helping the region to tackle the challenges arising from the highly uncertain global environment, and embark on structural reforms to raise its long-term growth potential.

In this regard, the involvement of multilateral agencies such as ADB would be very useful in that not only will it foster investors’ confidence if the multilateral agencies put in their own financial resources, but it will also help build the governments’ capacity in structuring projects, strengthening the PPP framework and improving project governance to make their infrastructure projects commercially viable. Secondly, shortfall in educational inputs has been seen as one of the major constraints for some developing economies to enhance productivity and move up the value chain. It has also been a major reason for the remaining pockets of poverty in the region, including in countries where substantial economic progress has been made but a substantial proportion of the population is still living in poverty. We encourage ADB to further strengthen its support for the educational sector and developing human capital, which are essential to enhancing competitiveness, eliminating poverty and addressing the rising inequality in developing Asia. Thirdly, intra-regional trade has been an important source of growth after the global financial crisis as regional economies increased their domestic demand and reduced their reliance on exports to advanced economies. As the global economy continues to rebalance, the prospect of the region to sustain its growth would very much depend on its ability to hold up domestic demand through sustained productivity enhancement as mentioned above, and further trade integration within the region.
This never happened! Hence, during the 1980s, policymakers realised that economic reforms were needed as a lasting solution to Zambia’s economic woes. For instance, between 1985 and 1987, Zambia undertook an IMF/World Bank-sponsored adjustment programme. This led to a partial decontrol of interest rates and the introduction of a Dutch Foreign Exchange System as a way of allocating scarce foreign exchange through a quasi-market system. It also entailed the removal of some subsidies as a remedy to the persistent fiscal deficits. The reforms proved to be highly unpopular and culminated in public protests and abandonment of the IMF supported reform programme in May 1987. Instead, the Government pursued an indigenous programme called ‘New Economic Recovery Programme’ (NERP) whose theme was “Growth from Own Resources”. Although this programme was successful in some respects, it suffered major setbacks, such as the overvaluation of the Kwacha, soaring inflation, lack of external financing, among others, that made the programme unsustainable, thus prompting the Government to go back to the IMF and agreed on a new IMF supported programme in 1989.

Low level of domestic savings in the Turkish economy, significant share of advanced economies in our exports, sensitivity of our exports to global economic cycles and deterioration in expectations of the private sector have caused a sharp slowdown in economic activity. However this contraction did not last long and Turkey has become one of the countries that have rapidly recovered from global turmoil. In other words, unlike previous crises, the Turkish economy has resisted global turbulence well owing to its structural transformation and policy implementations that have been underway since 2001. The main reasons for this resistance are the resilience gained from the implementation of a floating exchange rate regime, the robust structure of our banking system, counter-cyclical monetary policy implemented before and during the crisis and the room for maneuver provided to public finance by the fiscal discipline observed in the pre-crisis period. These factors, coupled with the subduing effects of the crisis, have promoted an earlier and stronger recovery in the Turkish economy, compared to that of the global economy. Accordingly, since the height of the crisis, by mid-2009 Turkey’s GDP and industrial production have increased by 11 percent and 21 percent, respectively, while the unemployment rate has dropped by approximately 3 percentage points. Although the level of production is still below its pre-crisis level, we expect that it will exceed this level in 2010. Meanwhile, we envisage that it will take an extended period for the labor market to recover.
Confidence in monetary policy depends on whether we succeed in anchoring inflation expectations and thus provide the economy with a nominal anchor. A credible nominal anchor is important to ensure that economic agents are able to differentiate between changes in relative prices and changes in the nominal price level. Changes in relative prices for goods and services are an important bearer of information about the degree of resource shortages and provide signals to investors, producers and households. Without a nominal anchor, it is more difficult for households and enterprises to make consumption and investment decisions. There is greater uncertainty surrounding real returns on nominal investments. This may increase risk premiums in financial markets. The absence of a nominal anchor may therefore result in unsound decisions and considerable fluctuations in output and employment and inflation. The interest rate will then have to be used more aggressively to stabilise output and inflation. Monetary policy may become less effective. Very low inflation over a longer period increases the risk of the economy moving into a negative spiral with real economic costs. Even if low inflation initially reflects favourable supply-side conditions, it may lead to a demand-driven downturn if economic agents choose to delay investment and consumption on the basis of expectations of continued low or falling prices. Orienting monetary policy with a view to achieving the inflation target within a reasonable time horizon and thereby providing a nominal anchor will be a safeguard against such a development.

This may result in higher margins. A tighter labour market may lead to higher wage growth. In addition, the increase in energy and commodity prices is pushing up producer costs at home and abroad. Although the Bank in principle neither found it desirable nor anticipated that inflation was as low as it actually has been, we have deliberately accepted an inflation rate that is below target for a period. In a period of increased cross-border labour flows, substantial technological advances, changes in competitive conditions and new trading patterns, we may, with our very open economy, have to accept a somewhat greater variability in inflation and deviations from the target, as we have witnessed over the past two to three years. This leads me to how monetary policy should be assessed. Section 1 of the Regulation on Monetary Policy states: •  "Norges Bank’s operational conduct of monetary policy shall... be oriented towards low and stable inflation. The operational objective of monetary policy is annual consumer price inflation of approximately 2.5 per cent over time. •  In general, the direct effects on consumer prices resulting from changes in interest rates, taxes, excise duties and extraordinary temporary disturbances shall not be taken into account." A reasonable interpretation of the regulation is that when we look ahead, the interest rate should be set with a view to reaching the inflation target of 2.5 per cent within a reasonable, but flexible, time horizon.
When the crisis began, the Swedish inflation rate fell significantly, but up to 1995-96 it was still far above the target level. The problems were emphasised by developments in inflation expectations. It was not until 1997 that expectations stabilised around 2 per cent. (Figure 1). BIS Review 9/2004  1  1. Inflation expectations among money market agents and actual inflation Percentage 12-month change 5  5 Jan '95  4  4 M ar '03  Feb '96  3  3  Feb '97  2  2  CPI Feb '98  M ar '01 Nov '03  1  1  M ar '99  0  0  -1 1994  -1 1996  1998  2000  2002  2004  2006  2008  Sources: Prospera and Statistics Sweden  However, around the mid-1990s confidence in economic policy increased. By then, the economy had grown for a couple of years, stimulated primarily by the weak krona rate. When drastic measures were taken to improve public finances, interest rates fell. Monetary policy contributed to this development by consistently fending off all tendencies towards excessively high inflation. It was now possible to have more stable economic growth. During the period 1995-2001, economic growth was an average of 3 per cent, which can be compared with an average of 2.4 per cent during the two previous decades. (Figure 2). Developments in the labour market also indicate that the measures taken were successful.

Increase in consumption and private investments, owing to the improved financing terms, confidence and private sector balance sheets, was, and is expected to continue to be, the main driver of the economy’s performance. On the other hand, the public sector has been and remains committed in the path to fiscal consolidation, whereas the external environment continues to face problems and pose challenges to the increase of Albanian exports. In the short run, the increase in consumption and private investments is sufficient to generate initial triggers for economic growth, but the long-term growth of the Albanian economy should rely more on the improvement of its competitive profile and growth of exports. Therefore, we deem that the acceleration of structural reforms has a unique role in supporting economic growth. Inflation continued to stand below our target. Internal inflationary pressures have been upward, but the fall in prices in global markets decelerated the return of inflation to target at home. The monetary policy stance of the Bank of Albania has become strongly accommodative. This policy stance aims at reducing the financing costs of the private sector, in order to sustain the return of the economy to equilibrium and of inflation to target, in the medium-term horizon. In our view, the indicators of economic activity and inflation are performing in the right direction; however, the sustainable accomplishment of targets will need time and will imply keeping low interest rates for some quarters ahead. Overall, the main indicators in banking system activity improved.
Indeed, some recent suggestions seem to imply that the Eurosystem should react more or less automatically to exchange rate movements or other specific variables such as unit labour costs. The Eurosystem’s monetary policy stance is not one of benign neglect with respect to the exchange rate. The Eurosystem’s stability-oriented monetary policy strategy takes into account the external value of the euro as one, potentially important, determinant of the outlook for price stability. Obviously, if a strong and abrupt appreciation of the euro were to occur, this would lead, all other things being equal, to downward pressures on price developments. In such a situation, there would be a stronger reason for lowering the ECB’s interest rates, which might then, in turn, help to counteract part of the prior exchange rate movement. However, monetary policy reactions to the exchange rate, or to any other variable, can never be mechanistic or automatic. According to its stability-oriented strategy, the Eurosystem always has to analyse carefully a wide set of indicators, the nature of any disturbances and their implications for the overall outlook for price developments in the medium term. In any case, it must be borne in mind that the Treaty on European Union also requires the single exchange rate policy to respect the primary objective of price stability. Thus, the ECB cannot commit itself in advance to any specific reaction with respect to the exchange rate.

The Governing Council therefore decided that for the next two main refinancing operations the same conditions will apply as for the three main refinancing operations settled earlier this month. This means they will be fixed rate tenders conducted at an interest rate of 3.0% Furthermore, the Governing Council confirmed that it did not see a need for continuing the application of the narrow interest rate corridor beyond the date of 21 January 1999. It was thus decided to revert to the interest rates on the Eurosystem’s two standing facilities, which it had set for the start of Stage Three. It set the marginal lending rate at a level of 4.5% and the deposit rate at 2.0% with effect from 22 January 1999. This decision has to be seen against the background of the experience with the functioning of the euro area-wide money market since the beginning of the year. Difficulties of some market participants with the functioning of the area-wide money market have diminished substantially over time. As a consequence, overall, the integration of the euro area money market has therefore reached a satisfactory state only three weeks after its creation. The first regular longer-term refinancing operation, which was conducted using parallel tenders with three different maturities of one, two and three months, was also settled successfully on 14 January 1999. It was conducted as a standard variable rate tender, using the single rate allotment procedure.
The difference between the levels of inflation experienced by different groups in society was not that large when inflation was low, amounting to about one quarter of a percentage point as shown by the ECB's research1. The gap between the inflation rates for households on higher and lower incomes had widened in the euro area though to 1.9 percentage points by September 2022. Calculations for January 2023 by the Bruegel 2 think tank indicate that it had reached two or three percentage points in many European countries, and as much as five or even seven in countries where inflation was 20%. Such differences can aggravate inequality and have substantial distributional effects. It is low-income households that face higher rates of inflation, but they typically have smaller financial buffers and hold their savings on bank accounts with low interest rates, which are less protected against inflation. This makes it vital that governments target their support measures as accurately as possible. 3/8  BIS - Central bankers' speeches  The consequences of high inflation for public finances High inflation also affects the public finances, as the relationship works through numerous channels and in both directions3. Some of those channels are direct consequences of policy measures to alleviate the impact of high inflation, especially higher energy prices. Bruegel estimates4 that countries in the European Union allocated a total of 657 billion euros to cutting energy taxes and supporting households and firms between September 2021 and January 2023.

Much of the following also applies to Latvia and Lithuania as the other two Baltic countries. To start with, the share of energy and food in the consumer basket is still somewhat higher in our countries than the average in the euro area. This meant that rapid rises in the prices of energy and food in particular consequently had a bigger impact on our inflation readings. Compounding this, price setting has traditionally been more flexible in the Baltic region than in other euro area countries, meaning that both rises and falls in commodity prices are translated more swiftly to consumer prices. Administered prices are also flexible and governments have allowed higher global energy prices to pass through quickly to regulated prices, while governments in some other euro area countries have been more cautious. High energy prices have also passed through to consumer prices in Estonia particularly fast because Estonian households have generally preferred to have flexible prices in their utility contracts. This had been a smart choice in most previous years, but it cost us dearly in 2022. It meant that any price increases in the wholesale markets for electricity in particular were immediately reflected in the prices paid by households. The increases in the prices of electricity that Estonian households experienced in the first half of last year were indeed dramatic.
This is an encouraging development because it indicates that, as we have moved up from the zero lower bound, money market rates are continuing to move together. We can look into that further by examining the overnight Treasury repo market. Rates on these transactions as reported by the tri-party clearing banks, shown in Figure 6, exhibited a similar shift upward, although they settled modestly lower in the target range than they had in the preliftoff period. In part, this shift likely reflects the fact that the ON RRP offered rate was 5 basis points before liftoff – that is, 5 basis points above the bottom of the target range – and it is now set to 25 basis points, or the bottom of the target range. It also looks as though the increase in the federal funds rate passed through effectively into term money market instruments. Figure 7 shows the recent progression of rates on threemonth Treasury bills and three-month commercial paper. Also shown for comparison is a threemonth overnight index swap quote for the effective federal funds rate. All of these rates rose going into the December FOMC meeting, which makes quite a bit of sense, given that most market participants expected the FOMC to tighten policy at that meeting.35 We also gather information about rates on term unsecured borrowing in our FR 2420 collection, and about term secured transactions from the clearing banks, and these data tell a similar story.

BIS central bankers’ speeches  3  Returns important for preservation of real value That brings me to the third criterion for our investment activity – return. I would like to stress that the SNB is not concerned with maximising return for its own sake. Rather, return is inextricably linked to the criterion of security. Our goal is to ensure that the purchasing power of the currency reserves at least is maintained over time. That, in turn, presupposes that the long-term return we earn on our investments is equal to or greater than the average rate of inflation. Bear in mind that we are aiming to preserve real value in Swiss francs, not in local investment currencies. This means that a certain amount of positive return in local currencies is needed, if only to balance out the currency losses incurred in periods when the Swiss franc is appreciating. To improve the long-term relationship between risk and return, government bonds in our portfolio are supplemented by the additional investment categories I have already mentioned. Generally, the potential returns on equities are greater than those on government bonds issued by the major advanced economies. They can therefore make a contribution to preserving the real value of the currency reserves. To be more precise, equities increase the probability of preserving the real value of the currency reserves. This applies, in particular, in view of the current low (or negative) real returns on government bonds in core markets.
Furthermore, securitisation in Spain has mainly been used as a financing tool, to raise resources on the wholesale financing markets in order to meet the demand for loans from households and businesses. Since the element of credit risk transfer was limited, Spanish banks have had little incentive to issue overly complex financial instruments. Furthermore, we have always required capital to be held against liquidity enhancements to securitizations, which we consider may have significant credit risk. Let me take this opportunity to make a brief observation on the securitisation sector, which some have described as being in “dire straits”. I am sure that this sector will ultimately recover. But to do so, it must distinguish between traditional products that are sound,  2  BIS Review 70/2008  transparent, standard and easy-to-value, and “multi-layer” securitisations and complex structured products which are difficult to understand and assess. The good news is that the market is starting to differentiate between products. An example of this is the recent placement of several Spanish banks’ issues of simple covered bonds. In short, our recent experience shows that to be successful supervisors we need to combine an open attitude to financial innovation whilst keeping at the same time some good old fashioned supervisory suspicion towards it, especially when it entails overwhelming complexity or elements of regulatory arbitrage. The Spanish banking system has faced the recent turmoil from a well-capitalized, profitable and efficient position. However, there is no room for complacency.

And the price of repo in sterling markets has increased approximately in line with its US counterpart, as measured by the increase in GC repo rates relative to 3-month OIS swaps that carry similar economic risks (Chart 3). Alongside this there has been a deterioration in perceptions of overall sterling secured market function over the past year or so, which participants note has coincided with pressure to reduce balance sheet size due to regulatory reporting requirements – in particular the leverage ratio (Chart 4). Some of this impact may be transitory: as dealers and others adjust to the new arrangements they may find ways to transact more efficiently while staying within the letter and spirit of the regulation. As the paper describes, opportunities for netting could be further increased were a greater proportion of repo transactions to be centrally cleared – around 10% of US Dollar repo transactions are currently cleared centrally, compared with 45% in Sterling, and 65% in Euro. 1 Dealers may improve the optimisation of their balance sheets across the whole group, better allocating leverage headroom in one part of the business to more leverageconstrained activity in other parts of the group. And over time new approaches to intermediation could emerge – some exchanges are exploring platforms to allow end users of the repo market (such as pension funds) to transact directly with one another. However, such innovations and adjustments will only ever provide a partial offset to the underlying changes.