samchain/econo-pairs-v1 huggingface dataset:
One of the – perhaps the – most important economic and social problems facing Europe is the high level of unemployment: 16 million unemployed people throughout the European Union, a rate of over 10%, with young people under 25 accounting for almost a quarter of this total. That represents a major failure of economic policy. But is it a failure of monetary policy? To go one step further, should the objectives of monetary policy – whether enshrined in the Maastricht Treaty or in the Chancellor’s remit for the Monetary Policy Committee – be altered to include an explicit reference to unemployment? Many think so. For example, the new German Finance Minister, Oskar Lafontaine, has said that his aim was a “European monetary policy that supported growth and employment as well as price stability”. Nearer to home, the TUC has called for the MPC to be given a wider remit to include employment as well as inflation. And several newspaper editorials have argued for a broader remit for the MPC. The fact that the proposition appeared in a newspaper does not of course mean that it is necessarily compelling.

First, the Fund does not devote enough time and effort to overseeing the system as a whole, through assessing global economic prospects and analysing international economic linkages and policy spillovers (so-called multilateral surveillance). Instead, the great bulk of the Fund’s effort has been devoted to producing reports on individual member countries (so-called bilateral surveillance). Second, these individual country assessments have often lacked focus. The subjects covered have ranged widely, reflecting the preoccupations of the day, including much detail on so called ‘structural’ issues. Nor has bilateral surveillance been good at picking up multilateral issues - areas where a country’s policies might have wider effects, or where it might be particularly exposed to global risks. The Fund’s analysis needs to be better focussed on the big global issues, including financial issues and on the interactions between different regions and countries. This means devoting more effort to analysing multilateral issues and to integrating bilateral and multilateral surveillance; and it means being ruthlessly selective in dealing with structural issues, by testing their relevance to external stability. It also means putting more emphasis on the surveillance of those countries with the most potential to create waves in the international monetary system. Finally, the relatively puny effort devoted to multilateral surveillance is not having enough influence on members’ policies. According to the Independent Evaluation Office (IEO) report published earlier this year, there is ‘too much weight on providing information on economic developments and too little on analysing economic policy linkages and identifying scope for collective action’.
This will also include engagement with the market participants, payment service providers and industry players to collaborate in these important areas. Finally, for mobile payment products to succeed and achieve widespread acceptance, we need to strengthen consumer confidence in the safety, security and reliability of mobile networks as a means for consumers to access financial services. Indeed, mobile digital signature, which ensures the confidentiality, authenticity and integrity of payments initiated from mobile phones, is one of the ways forward towards building a secure mobile infrastructure that is conducive for the delivery of financial services. Conclusion We are now operating in an environment where we have to do more with less. The point I would like to stress this morning is that in the pursuit of this cause, we have to learn to work  4  BIS Review 69/2008  together. We need to come together to decide how this cooperation can be shaped. I believe this symposium will contribute towards achieving this objective. In this regard, I hope that the results of your deliberations in this symposium will provide valuable input for the formulation of strategies and modalities for both the industry and authorities. On that note, I would like to thank Malaysian Communications and Multimedia Commission for this opportunity to share my thoughts on electronic payments. I wish you a stimulating and productive discussion in this symposium. BIS Review 69/2008  5

It is estimated that the share of foreign trade of the Euro area will be only about 10% of GNP in comparison to about 30% for Germany today. And over the long term, the Euro should become almost as widely used as the US dollar is today. One conclusion to be inferred from this is the following: since Turkey has close trade, service and financial links with Europe, and as the only country connected to Europe in a Customs Union (CU), which I hope will evolve over time towards full membership, the EMU will create completely new conditions in Turkey’s international and European relations. Therefore what will happen in Europe will be decisive for Turkey in the years ahead. It will be a challenge for the Turkish authorities, as well as for bankers and businessmen. One of the most important prerequisites for a successful monetary union is a sufficient degree of economic convergence among the potential members. From that standpoint the degree of convergence among the EU countries is remarkable, particularly as regards the convergence criteria; stable prices, stable exchange rates, low long-term interest rates and healthy public finances. In addition to these criteria, the Maastricht Treaty requires that all member countries in the EU must grant independence to their central banks before the Monetary Union and the establishment of the European System of Central Banks (ESCB). The reason behind the requirement of independent national central banks is that fixing exchange rates and unifying currencies requires a common monetary policy.
But I want to flag some reasons for caution in how to interpret our published inflation forecasts as guides to the validity of the interest rate profiles on which they are conditioned. Interpreting scenarios The sensitivity of the MPC projections to the conditioning assumptions is currently very high. And the uncertainties surrounding those assumptions are significant. For example, the outlook for international commodity prices remains very uncertain. In recent forecasts, the MPC has attempted to illustrate the sensitivity of the forecast to the commodity price assumptions by publishing alternative scenarios based on the path of prices implied by futures curves. This practice was maintained in the May report. As the drivers of commodity prices shift from the epidemiological to the geopolitical, they are unlikely to prove easier to forecast. It is all too easy to envisage outturns – such as the introduction of an oil or gas embargo if the conflict in Ukraine were to persist or widen – that would imply commodity prices quite different from those embodied in the MPC forecast, with very different  Page 13  implications for the economy, for the inflation outlook and ultimately for monetary policy. As members of the MPC have emphasised many times in the past, the outlook for monetary policy therefore cannot be read simply from the MPC’s published forecast. Rather it is conditional on how events evolve. [12] That conditionality is ever present. But in current circumstances it is further complicated by the importance of the joint interaction among the assumptions underpinning the MPC forecast.

In particular, I’d like to emphasise from the outset my preference for a ‘steady-handed’ approach to  Page 5  monetary policy – one which focuses on the slower moving and more persistent trends in the data rather than responding to each individual data release. As I have discussed in a number of previous talks,[7] I am sceptical that we know enough: (1) about the state of the economy; (2) about key features of the economy’s structure and behaviour; (3) about the intrinsic properties of inflation dynamics; or (4) about the monetary policy transmission mechanism, to be able to use monetary policy to ‘fine tune’ economic and price developments. And I worry that attempts to implement any such fine tuning will introduce more volatility into inflation and the broader economic system, rather than support the stabilisation at target that we seek. Of course, there are occasions – especially in the face of financial disturbances and market dysfunction – when central banks may need to step in to offer support quickly and sizeably to support financial stability and monetary policy transmission. We have seen examples of this of late, not least during the ‘dash-for-cash’ episode at the outset of the Covid pandemic in March 2020. And large macroeconomic shocks may require large monetary policy responses. Again, recent experience offers some examples. But, in my view, as a general rule monetary policy responses to macroeconomic developments need to be measured and persistent if they are to be effective.
In the current cycle there are more households with an access to credit, also from the lower income deciles, indicating the spread of the effects of the potential slowdown to a wider part of the economy. The second risk factor I would like to point out is the price level of real estate. Real estate prices have recently surged globally, and also in the Baltic countries. The possible factors behind this increase include rapid and relatively widespread income growth, favorable borrowing conditions, and international demand. However, despite these surges, absolute levels of real estate prices remain still about two times lower in Tallinn than in Helsinki, in line with the difference of overall price levels. There are signs that prices are now stabilized in nominal terms and may have slightly decreased in real terms. Nevertheless, relative prices of real estate have increased dramatically. Whereas the ratio of price of a square meter to monthly wages is about one in Helsinki, it exceeds two in Tallinn. The expectations of real estate price convergence fuel credit demand in Baltic countries but imply ever-increasing risks to  BIS Review 81/2006  3  both borrowers and lenders. (It is fair to say, though, that the majority of real estate loans are used for buying homes, not for speculation.) The third factor I wanted to mention - currency mismatch - has caught some attention from international observers. The issue is more nuanced than the classical approach.

However, I would like to briefly address an aspect of macroeconomic and institutional framework, which has been an important determinant of the extent and magnitude of the national authorities’ response to the crises: the exchange rate regime. A quick glance at the current developments in the region and broader allows us to draw the conclusion that the countries adopting a fixed exchange rate regime have been affected by the global crisis proportionally higher. Moreover, they have been more constrained in terms of responding to the crisis. By contrast, countries adopting a free floating exchange rate regime have been affected by the crisis more mildly and smoothly, and they have preserved higher independence in their economic policies for the mitigation of crisis effects. Obviously, this is not occasional: the free floating exchange rate regime is an important political, economic and institutional investment of emerging countries. Their sacrifices in terms of building reliable monetary and fiscal policies, enhancing public confidence in the respective currencies and national financial institutions are rewarded with the flexibility this regime provides to macroeconomic policies in coping with the crises. Exchange rate volatility mechanism is precisely a mechanism that allows the economy to absorb various shocks. The free floating exchange rate regime, devotedly adopted by the Bank of Albania, allows the Albanian economy to withstand these shocks at minimum cost. Let us leave this mechanism operate smoothly, without excessive reactions from the market or its agents. Any smooth moves towards the exchange rate equilibrium will be in the Albanian economy’s own interest.
Figure 6 Contribution to annual growth in real wage mass (*) (percentage points)  9  9  Wages  Real wage mass  6  6  3  3  0  0 Employment  -3  -3 09  10  11  12  13  14  15  16  (*) Moving quarterly average. Sources: Central Bank of Chile and National Statistics Institute (INE). BIS central bankers’ speeches  11  Figure 7 Net capital flows (1)  Nominal exchange rate (2)  (billions of dollars, moving month)  30  (accumulated change since May 2013 trough, percent)  30  Asia  20  20  10  10  0 Europe  0 -10  -20  -20  Latin America 13  14  15  Latin America (3) (6)  Comparable currencies (4) (6)  80 60  40  40 Chile  20  -30  -40  100  80 60  -10  -30  100  -40  Commodity currencies (5) (6)  0  16  05.13 May.13  05.14 May.14  05.15 May.16 05.16 May.15  20 0  (1) Latin America: Brazil, Chile, Colombia, Mexico and Peru; Asia: Korean Rep., Indonesia, Malaysia and Thailand; Europe: Czech Rep., Hungary, Poland, Russia and Turkey. (2) Dotted vertical line shows March 2016 Monetary Policy Report 2016. (3) Includes Brazil, Colombia, Mexico and Peru. (4) Includes Brazil, Colombia, Czech Rep., Korean Rep., Israel, Mexico, Philippines, Poland and Turkey.

However, after more than nine months, I think it is already possible to draw first conclusions in three main areas: -  First, the close co-operation between central banks on the one hand and between the supervisory authorities and central banks on the other hand seems, in my opinion, to be a determining factor for efficient crisis management. This point was indeed underscored during the recent work carried out by the Financial Stability Forum. I must say in this respect that the French model of banking supervision, in which banking supervisors have close ties with the central bank, has once again proven its worth in the current context. The necessity of this proximity has also been  BIS Review 78/2008  3  increased by the new accounting and prudential standards which have proven to be pro-cyclical and in which liquidity and solvency are intertwined. In this context, when in a financial crisis, it is crucial to cross-check, at every moment, information on the evolution of banks balance sheet and data on money market functioning in order to assess the risks to financial stability. Such an assessment enables to adapt, as far as needed, the refinancing policy of the central bank, in order to alleviate tensions in the market; those tension being a threat both to financial stability and to the effectiveness of the transmission of monetary policy.
And changing the economic model would mean radically altering the social and political framework as well. This time, the national consensus for reform, and the will to change, has proved elusive. But given Japan's past ability to remake itself, it would be hasty to conclude that it will not do so again. China China offers an interesting contrast to Japan's experience of modernisation. In the 18th century, at the zenith of the Qing Dynasty, Emperor Qian Long promulgated a "closed door policy" to restrict foreign trade to the single port of Canton, cutting China off from Western technology and influence. In 1793, Britain sent Lord George Macartney on a diplomatic mission to request for broader trading opportunities and diplomatic representation in Beijing. The request was refused. The Emperor declared in his reply to King George III that China "possesses all things in prolific abundance and lacks no products within its own borders". The shiploads of manufactured products from the ongoing Industrial Revolution in Britain failed to alert China to the technological progress beyond its shore. Within 50 years, China's weakness and backwardness became painfully obvious. China was forced open by the western powers, and compelled to sign unequal treaties with them. Amidst internal unrest and foreign invasions, the Qing dynasty made repeated attempts to reform and modernise itself, but all these efforts failed. China was in political disarray, and the turmoil continued into the 20th century. Under the Communists, China established a centrally planned economy, rejected free markets and the profit motive, and emphasised egalitarianism.

Dimitar Radev: Recent achievements in resolving Bulgaria's banking sector issues Address by Mr Dimitar Radev, Governor of the Bulgarian National Bank, at a forum of the Association of Banks in Bulgaria on the occasion of the 25th anniversary of its foundation, Sofia, 24 May 2017. * * * Dear colleagues, First of all, I would like to congratulate you on the occasion of the 25th anniversary of your Association. During this, sometimes turbulent, period the Association proved itself not only as a branch organization supporting its members in their banking business, but also as a reliable and reputable partner to public authorities and institutions, including BNB. We highly appreciate this role. It was also demonstrated in the best of ways in the implementation of the measures in the banking sector after the turmoil in 2014. In the short period after it we went together a long way. As a central bank, we focused on improving supervision and building a reliable institutional framework for resolving banking sector issues. Undoubtedly, however, our most important joint effort was the asset quality review and the stress test conducted last year. An exercise unprecedented in its scale that was a real challenge and a test not only for the central bank, but for our banking system as a whole. Only two days ago, our achievements in the banking sector were a subject of an objective and independent discussion.
Changes in the real exchange rate mainly affect the economy via net exports, in which a weakening of the real exchange rate tends to increase net exports. Slightly simplified, it could be said that higher net exports lead to increased resource utilisation, higher wage growth and thus to higher inflationary pressures. The exchange rate effects arising in inflation via net exports can thus be seen as being significantly less direct than those arising via import prices, which I discussed earlier. Changes in the real exchange rate may entail adjustments to the economy that monetary policy may need to consider. For example, during a real appreciation of the krona, exporting and import-competing firms may have to review their costs so as to restore competitiveness. Among other strategies, the firms can achieve this by implementing operational changes to increase productivity.10 Such adjustments can contribute towards lower inflationary pressures, as increased productivity lowers unit costs. Another possibility for some firms is to move operations overseas. For major firms with broad international operations, it may be relatively easy, in some cases, to reorganise operations so that costs arise in another currency than Swedish kronor. However, for smaller firms with all of their production in Sweden, relocating operations overseas is generally associated with high costs. Monetary policy decision-making in consideration of the exchange rate I would now like to say a few words about how everything I have said so far about the exchange rate affects my view of monetary policy analyses and decisions.

Conclusion In summary, I would like to say that, even if there are factors suggesting that the significance of the exchange rate should not be exaggerated, it is my opinion that it should be considered in monetary policy decisions. Recently, the development of the exchange rate has been an important reason for the reservations I have entered against monetary policy decisions. The Swedish economy grew very strongly during 2010, but this should be seen in the light of the very steep fall that started in 2008 and continued in 2009. My assessment is that there are still relatively many unutilised resources in the Swedish economy and that both resource utilisation and inflationary pressures will continue to be lower than normal over large parts of the Riksbank’s forecast period. Contributing to this is the fact that the krona has (nominally) strengthened by about 10 per cent over the last year, which is more than was previously expected. As a stronger krona dampens both inflationary pressures and resource utilisation, I believe that a lower repo rate path than that decided upon would lead to better target fulfilment. References Campa, J. M. and Goldberg, L. S. (2005), “Exchange Rate Pass-through into Import Prices”, Review of Economics and Statistics 87, 679–690. Chinn, M. D. and Meredith, G. (2004), “Monetary Policy and Long-Horizon Uncovered Interest Parity”, IMF Staff Papers 51, 409–430. Ekholm, K. (2010), “Monetary policy and the exchange rate”, speech at HQ Bank, Stockholm 12 January 2010.
François Villeroy de Galhau: Pushing back the limits of insurability Closing remarks by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the 10th international conference on insurance, Paris, 26 October 2018. * * * Ladies and Gentlemen, I am delighted to be with you today to give the closing remarks at this tenth international conference on insurance, organised under the aegis of President Bernard Spitz. We don’t say it often enough: the financial sector is one of the French economy’s key strengths. Another point that bears repeating is that, within this financial sector, insurers play a critical role in financing our economy. This will be the first point that I touch on. I will go on to look at regulatory developments, hailing the progress made in the last year and picking out some European challenges that we must face together. I will close by speaking about “the limits of insurability”: your theme today is as old as your profession, which dates back to the bottomry arrangements used to protect shipping ventures in ancient times and the first recorded insurance policy written in Genoa in 1347. But the question has taken on a renewed urgency today with the emergence of new risks, particularly those relating to climate change. **  I. Insurers play a critical role in financing the economy. The ACPR recently published its annual statistical report, which showed that the French insurance sector is in good shape.

The needs are huge, and the goal of increasing assets held in retirement savings products from EUR 200 billion to EUR 300 billion is well within our reach. I would also stress the need to ensure that policyholders are adequately informed about retirement savings products, especially – as with all unit-linked products – if they do not include a capital guarantee. Within Europe, the forthcoming Solvency 2 review must include a full and frank assessment of the framework that has now been in place for three years. Of course, insurers have significantly improved their risk and capital management under Solvency 2, and the insurance market is now more resilient and better equipped to cope with financial crises. But these positives must not be allowed to overshadow the questions that need to be asked after such a radical change, particularly about the impact on equity investment and the financing of the European economy, along with issues relating to volatility and complexity. The very fact that we’re calling it a “review” for 2020 means that, by definition, maintaining the status quo cannot be an option. As the preparatory work gets underway, I would like to see every topic, even the most awkward, raised and dealt with. I urge insurers to play an active role in the consultations and I can assure you that the ACPR will make its presence felt in the coming discussions.