samchain/econo-pairs-v1 huggingface dataset:
(Slide 5) The first and perhaps the most fundamental reason explaining why we believe that the reduction of inflation is so important is the following. According to public opinion polls, for about 70% of Russians the inflation not only remains the number one problem, but it is even becoming more acute. On these slides you see that the value of all other parameters and of all other problems that worry the Russians is going down, while the significance of inflation goes up. This is, perhaps, one of the most disturbing factors. High inflation erodes salaries and pensions, depreciates savings. In order to stop people being afraid of saving, to make them confident of their financial future and able of conducting organised savings (organised savings create conditions for long-term investments and, consequently, for economic growth), we believe that it is critically important to pursue a policy aimed at reducing the inflation. Now there are many concerns, and I would say these are justified concerns, about the problem of expensive loans in the Russian economy. It is true that interest rates on loans, especially for investment purposes, are high. But we should understand that, as a rule, it is the inflation that sets the lower limit for interest rates on deposits and loans. Why? Because neither households no businesses are inclined to bring their savings to banks, if the interest rate is not as high as the inflation.

In the aftermath of the crisis, the configuration of the world economy will be transformed as changes in the pattern of global demand take place, as demands for greater efficiency and lower costs occur, as actions are taken for a reduced role of government in the economy, as new regulatory regimes are being introduced, and as efforts are being undertaken to enhance our capacity to manage systemic financial crisis. Many of these changes will involve cross border arrangements and collaboration. We are all stakeholders with interest in what the post-recovery world will look like. Indeed, the issue of new economic models in the context of these developments is relevant not just to Asia but also for other parts of the world. We have seen how within the short period of less than a decade, the rapid escalation of debt-driven consumption in North America led to chronic financial and economic imbalances that has resulted in a significant economic dislocation on a global scale. Several lessons can be drawn from these developments. The Asian economic model for the future needs to be redefined if the economic progress is to be sustained, taking into account the global changes that are taking place. Asia's success which has been described as a “miracle” has been well documented. It has been acknowledged that “the miracle” is not the result of any one single factor but rather, a confluence of factors. Structural change and pro-growth policies were coalesced synergistically with hard work ethics.
BIS central bankers’ speeches  13  References Aiyar, S, Calomiris, C and Wieladek, T (2012) “Does macropru leak? Evidence from a UK policy experiment” Bank of England Working Paper No. 445. Bean, C (2003) “Asset prices, financial imbalances and monetary policy: are inflation targets enough?” in A Richards and T Robinson (eds.) Asset Prices and Monetary Policy, 48–76. Reserve Bank of Australia: Sydney. Bean, C (2010) “The Great Moderation, the Great Panic and the Great Contraction”, Journal of the European Economic Association, April–May. Bean, C, Paustian, M, Penalver, A and Taylor, T (2011) “Monetary Policy after the Fall”, in Macroeconomic Challenges: The Decade Ahead, Federal Reserve Bank of Kansas City. Broadbent, B (2012) “Deconstruction”, Speech given at Lancaster University Management School. Dixit, A and Pindyck, R (1994) Investment under Uncertainty, Princeton University Press. Eggertsson, G and Woodford, M (2003) “The Zero Bound on Interest Rates and Optimal Monetary Policy”, Brookings Papers on Economic Activity, 1. Gagnon, J, Raskin, M, Remache, J and Sack, B (2011) “The Financial Market Effects of the Federal Reserve’s Large-Scale Asset Purchases”, International Journal of Central Banking, 7(1). Greenspan, A (2002) “Opening Remarks” in Rethinking Stabilization Policy, Federal Reserve Bank of Kansas City. Haldane, A and Madouros, V (2012) “The dog and the frisbee”, Speech given at the Federal Reserve Bank of Kansas City’s 36th economic policy symposium. HM Treasury (2012) “The Financial Services Bill: the Financial Policy Committee’s macro-prudential tools”, available at www.hm-treasury.gov.uk/d/condoc_fpc_tools_ 180912.pdf. IMF (2009) World Economic Outlook April 2009.

Following the implementation of inflation targeting, the report will be published quarterly; - a model calibrated by the Bank’s staff is currently being tested and will be used for forecasting purposes. Instead of going into the details related to the Inflation Targeting framework, I will let my fellow speakers tackle the most important issues. Shortly after this, Deputy Governor Ms. Rachel Lomax will present a compelling account of UK’s experience and, may I add, success as a benchmark inflation targeter. After the lunch break, Gill Hammond, Deputy Director of CCBS, will give you an excellent presentation dealing with specific issues and challenges faced by emerging market economies when adopting inflation targeting. Later on, we will have our guests from the Czech National Bank and the National Bank of Hungary giving you a purposeful insight of such challenges and of their countries’ experiences with the IT framework. Mr. Ludek Niedermayer, Deputy Governor of the Czech National Bank, will first explain to you “why and how” inflation targeting was adopted in the Czech Republic – the first country to embrace this regime in our region. Then, it will be for Ms Csermely Agnes, Director with the National Bank of Hungary, to share with us the “Lessons and Challenges” put forth by the Hungarian experience with inflation targeting.
But it may also be the case that relatively large changes in the exchange rate have minor or no effects on consumer prices, depending on what are known as composition effects. Firms can choose to import other products or to import from other countries.9  7  See, for example, Campa and Goldberg (2005) and Sveriges Riksbank (2001, 2004). In the long term, the pass-through will be higher – estimates vary between 80 and 100 per cent (Sveriges Riksbank, 2001, 2004). Full pass-through is a reasonable assumption over the very long term, when permanent exchange rate changes are considered. 8  See, for example, Ekholm (2010). 9  See Marazzi et al. (2005) for a more detailed discussion. 6  BIS central bankers’ speeches  The effects on the economy of the real exchange rate When the general public discusses exchange rates, this usually means the nominal exchange rate. However, economists are more focused on the real exchange rate, which shows the price of foreign goods expressed in Swedish kronor against the price of Swedish goods in kronor. In other words, the real exchange rate reflects Sweden’s purchasing power and competitiveness. The stronger the real exchange rate becomes, the greater purchasing power a Swedish krona will have abroad. At the same time, a stronger real exchange rate means that Swedish-produced goods will be more expensive compared with foreign goods, and competitiveness will thus decrease.

Figure 7 shows model simulations of the effects on the CPIF and unemployment, according to the main scenario’s repo rate path and according to the repo rate path I voted for, under the assumption that foreign interest rates will be lower  BIS central bankers’ speeches  9  than in the forecast, particularly towards the end of the forecast period.14 My preferred repo rate path, which goes up to 3.25 per cent at the end of the forecast period, gives a lower unemployment forecast than does the main scenario’s repo rate path. It may seem that the target fulfilment of the CPIF forecast is worse, as it lies above 2 per cent towards the end of the forecast period. However, my assessment is that this is an overestimate of inflation. Inflationary pressures are influenced by resource utilisation, and it can probably be expected that the level of resource utilisation that is consistent with unchanged inflationary pressures will actually rise during the forecast period. In deep recessions, it is usual for the functioning of the labour market to be impaired initially, as typically the jobs that have disappeared differ from those arising once the economy has recovered. However, eventually it does start to function normally. In that case, perhaps inflationary pressures will be significantly lower towards the end of the forecast period than is shown by these simulations.
Debt restructuring could be a beneficial option for both lenders and borrowers in the case of highly indebted firms with a viable business. To smooth this process, insolvency mechanisms should be improved to make them more efficient. In Spain, these procedures tend to be very lengthy, taking an average of three-and-a-half years7, destroying company value in the process, and in many cases lead ultimately to the piecemeal liquidation of the firm. To prevent the congestion of courts, out-of-court settlements could be incentivised. And in the medium to longer term, resources devoted to specialised courts could be strengthened with the aim of speeding through the resolution of these processes. In the case of firms with no viable business model, an orderly exit from the market should be provided for. A prompt resolution of this process will benefit the structural adjustment of the economy and the reallocation of resources towards more productive firms. Four, our goal should be to ensure that the present crisis neither gives rise to a widespread tightening of financial conditions nor causes serious damage to our financial system. In the context I have described of an uneven and uncertain recovery, we cannot rule out the possibility that the risks identified may materialise or that their impact and persistence may be greater than expected. In this sense, in the banking sphere, the response to the possible materialisation of these risks can only be at the European level, given the commitment to the Banking Union.

The second entails initial profit margins being sufficiently high to stimulate investment and enable continued rapid growth in the economy. The final assumption concerns the overall, average wage scope for the country as a whole. The definition of a long-term sustainable wage increase may differ between sectors and regions depending on the different conditions for production technology, productivity development and competition. If the economy is not balanced, there may be a short-term deviation in nominal wage developments from the long-term sustainable level. This could be due to a stronger exchange rate, for instance. The inflation target is expressed in terms of CPI, which consists of the prices of both imported and domestically-produced goods and services. If imported inflation, which comprises approximately onethird of CPI, develops weakly as a result of a stronger krona or lower international price pressure, domestic prices may rise more rapidly than 2 per cent over a period of time without causing a threat to the inflation target. There is then temporary scope for nominal wage increases above the level implied by productivity growth. Payroll expense has risen on average by approximately 3.9 per cent a year from the beginning of the 1990s up to 2001, which is slightly more than the "wage norm" implies. At the same time, inflation has been at an average of only 1.8 per cent. An important explanation as to why the increase in payroll expense could be so high without triggering an acceleration in domestic inflation is that productivity has developed strongly.
Kerstin af Jochnick: My thoughts on monetary policy and financial stability Speech by Ms Kerstin af Jochnick, First Deputy Governor of the Sveriges Riksbank, at a meeting at SEB, Stockholm, 4 May 2012. *  *  *  As this is my first public speech as a member of the Executive Board of the Riksbank I would like to take this opportunity – from the starting point of my previous background – to point out a number of factors that are important to my view of monetary policy and financial stability. First: Sweden has become increasingly dependent on what happens abroad. How the debt crisis in Europe is managed is the most important factor for economic activity and monetary policy in the period ahead. Second: There are links between monetary policy and financial stability. We must be aware that imbalances and risks to financial stability can arise if interest rates remain low for too long. Third: One of the most important lessons of the financial crisis is the need to adopt a broader perspective on financial stability – as in the new policy area macroprudential policy. The Riksbank should play a major role in the work with macroprudential policy. How my background has shaped my view of the Riksbank’s work As most of you know I am a new member of the Executive Board of the Riksbank, which I joined at the turn of the year.

It will, in other words, be more expensive for the banks to increase lending in good times at the same time as this will create some protection against losses when a downturn comes. As I mentioned earlier, the policy rate is an instrument that has an indiscriminate impact on the economy, while countercyclical buffers, for example, can be seen as an instrument that is more specifically aimed at the “credit cycle”. Instruments of this type could also reduce the need to use the policy rate to promote financial stability. The special characteristics of the Swedish banking market – what demands do they make? I would now like to draw your attention to the conditions on the Swedish banking market that indicate that substantial safety margins are justified. Sweden has a large banking sector in relation to the size of the economy and the banks have substantial operations abroad (see slide 7). At the same time, the market is dominated by a few large players. These banks also have low risk weightings for, among other things, mortgages. Another risk factor is that Swedish banks are highly dependent on market funding, particularly in foreign currencies (see slide 8). In addition there is the effect of the market players’ expectation that the government will ultimately act as a guarantor of the banks’ operations and will not let them fail, in other words there is an implicit state guarantee.
Separately, one of the two largest trade unions in Malta has been running an independent price monitoring exercise, to be followed soon by a name and shame campaign. This exercise involves the participation of mystery shoppers who monitor an extensive list of products and services. More recently, a special deposit scheme was launched to provide residents with a one-time opportunity to regularise their position in respect of cash and deposits not previously declared for income tax purposes. The objective is to mitigate the risk of inflationary pressures arising from the sudden conversion of these financial assets into real assets, which would reinforce the view that the euro creates inflation. If I had to draw any conclusions from Malta’s experience, I would first say that the prospect of euro adoption has served as an additional, and welcome, impetus to fiscal consolidation and to structural reform. As a result, the economy should not only be more prepared for take on the policy disciplines of EMU, but also be better equipped to deal with an increasingly challenging global economic environment. Second, while a successful integration in the euro area demands, apart from solid economic foundations, public acceptability of the single currency, opinion surveys in Malta seem to confirm that public perceptions do respond to a targeted information campaign. Such a campaign is in hand, but the adjustment process is slow and is occasionally fraught with perceptions that are seemingly in conflict with each other. Myths are not easily dispelled!

And finally, a bank needs a process to ensure that the results of stress tests receive the high-level attention necessary for the bank to respond effectively to the results. In the near term, supervisors also must re-examine how they think about concentrations. One lesson from the recent turmoil is how correlations in market prices arise from previously unsuspected linkages: countries with similar government debt structures or similar exchange rate regimes, institutional investors with similar risk strategies, and instruments traded with widely different customers, but with a common element of market risk, such as a countryrelated risk. Stress testing also can be useful in identifying such concentrations, particularly when accompanied by thoughtful analysis from bank management. These issues will be addressed in the ongoing work of the Committee on credit and liquidity risk management. In two other areas, we have begun work, but the magnitude of the efforts will involve more time. The first area is capital. The added focus on stress testing by banks and by supervisors should also influence how supervisors evaluate capital adequacy at banks. As banks are developing risk management and stress testing approaches, some are beginning to look at how they determine whether their capital is adequate to absorb losses, including losses under reasonable stress scenarios. One lesson from the current environment is the enormous size of market movements that are possible in such a stress scenario—whether in currency or equity markets or in credit spreads, and how quickly losses from even small positions can mount.
29  All speeches are available online at www.bankofengland.co.uk/speeches  29  Chart 24: Distribution of pay packets  Percentage of employees 50  40  30  2018  20  2017 10  0 <0  0  >0 & <1  1  >1 to <=2  >2 to <= 3  >3 to <=4  >4 to <=5  >5  Settlement by bucket (per cent)  Sources: Bank of England, Incomes Data Research, XpertHR, Incomes Data Service, Labour Research Department and Bank calculations.

Finally, I would like to discuss the importance of Islamic finance as an important mode for financing economic transformation. Islamic finance requires financial transactions to be supported by an underlying productive economic activity that will generate legitimate income and wealth. This gives rise to a close link between financial transactions and productive flows. Therefore, the growth in Islamic financial assets is generally in line with the growth of underlying economic activities, thereby ensuring that the financial system is always grounded to the real economy. Other inherent features arising from risk sharing also contribute to the stability and integrity of Islamic finance. Thus, Islamic finance, embraced in its entirety, is supportive of sustainable economic growth. Islamic finance offers an extensive range of innovative financial products and services from consumer financing, asset and wealth management to Islamic insurance and capital markets. The sukuk market has become a highly competitive fundraising option for large scale projects and infrastructure development. With an annual growth rate of 40 percent, sukuk instruments are fast emerging as an attractive new asset class for investors, while evolving to become a preferred financing and capital raising option for issuers. In Malaysia, the sukuk market now accounts for more than fifty percent of our bond market, drawing the participation of not only our own corporates but also a wide range of international corporations and multilateral agencies. In Malaysia, a comprehensive Islamic financial system operates in parallel to the conventional financial system. This is now internationalized to enhance our interlinkages with other emerging economies and traditional markets.
Transparency and disclosure are very important but we believed it was not sufficient. We have thus been working closely with the Vice-President on strengthening our banks’ solvency. A result of this has been the recently approved Royal Decree-Law, which we believe is a definitive step and a crucial quantitative and qualitative leap forward in restoring market confidence in Spanish banks. The aims of the new Royal Decree-Law are very clear. The first is to reinforce the solvency of all our banks, requiring them a level of core capital of 8% and because the doubts of investors over a small group of unlisted banks with some need to resort to the wholesale market, we are demanding of such banks 10% of core capital. We publicly announced yesterday which banks need capital to reach the 8–10% level, and how much capital they need. We have given them fifteen days to submit a recapitalisation plan. Those intending to tap the markets will have until end-September to attain the new level of capital. But we have made it very clear that if a bank believes it will be impossible to reach these solvency levels, it can apply to the FROB for these funds. The capital shortfall is for a maximum of € million, whereby the impact on public debt if the FROB has to be used would be relatively limited.

One of the key pillars of Title II is that, unlike a bankruptcy proceeding, the FDIC will have access to liquidity from the U.S. Treasury to help ensure an effective resolution. While this access provides significant support for an effective resolution, it will still be important for the resolution authorities to provide clarity about the timing and the amount of liquidity resources that will be made available after a firm enters into resolution. This clarity will likely be necessary in order to calm creditors and markets at the time of resolution. Under the single point of entry framework, the intent is to create a highly capitalized bridge entity so that counterparties will be willing to stay engaged based upon the improved creditworthiness of the bridge parent and its recapitalized subsidiaries. If successful, this will reduce the need for the up-front provision of external liquidity resources. Nevertheless, to make the viability of the bridge entity fully credible, market participants must believe that the bridge company has access in a timely way to whatever additional liquidity resources might prove necessary. In addition, under the Dodd-Frank Act, Title II is not the baseline or preferred approach for dealing with the failure of a large complex firm. For a firm to go through Title II, a determination must first be made that the failure of the firm and its resolution would have serious adverse effects on U.S. financial stability under the insolvency law that would otherwise apply.