samchain/econo-pairs-v1 huggingface dataset:
Petar Goshev: Macedonia’s prudent monetary and fiscal policy Speech by Mr Petar Goshev, Governor of the National Bank of the Republic of Macedonia, at the press conference, Skopje, 26 March 2009. *  *  *  I. For longer than one decade now, the National Bank of the Republic of Macedonia has been successfully implementing the strategy of retaining the stable foreign exchange rate of the denar, through a successful mix of prudent monetary and fiscal policy. The choice for this strategy is not incidental. Macedonia is a small, fully open economy and extremely import-export dependant and unfortunately highly euroized country. Historically, it had suffered high inflationary as well as hiperinflationary schocks, which are deeply curved in people’s memory. For such characteristics of the economy and with such negative experiences, the stable foreign exchange rate of the denar has a tremendous importance for the price stability and for the positive expectations of the economic agents related to macroeconomic environment. Since none of the stated characteristics of our economy has not been changed, we in the National Bank of the Republic of Macedonia deeply believe that following up with the existing monetary strategy – keeping the stable exchange rate of the denar, as the main anchor in the economy – should continue. This means, i.e. let me repeat once again, that we continue to defend the stability of the foreign exchange rate with all instruments and measures available as of the monetary institution. II. In accordance with this strategy, during the past period, i.e.

Are we going to see the decline in the dominance of one global currency and its replacement by a new one or the formation of an alliance between currencies? Will it be the dominance of technology companies in providing payment services to the general public? TRUST Whatever the case may be, there is one thing we are certain of: Nothing has changed in our central banking task of maintaining the trust of the public in money and the financial system. Or to quote my colleague banker from the Bank for International Settlements, Mr Augustin Carstens, "The soul of money is trust.". We are still here to pursue monetary policy goals, to preserve the value of money by providing trust in the value of money and to offer money as a payment instrument that is widely accepted, secure, cheap and convenient. Our institutional task is to maintain confidence in the financial system and to serve as an anchor – a digital exchange for all other sorts of money that private issuers offer. To mention at this point – please, don't forget, everything you have today in your digital wallet, mobile banking app or similar is some sort of a payment instrument issued by a private entity. Some of them we supervise, some of them we don't. Whether it's a bank, a payment service provider, a stablecoin issuer or a globally interconnected anonymous network of nodes like Bitcoin, it isn't us you are banking with. But ... this may change.
4  BIS Review 68/2010  Risk Premium Indicators 5-Year CDS Rate Changes*  EMBI+ 900  5.5  Turkey Brazil S.Africa Hungary S.Korea  4.5 3.5  EMBI+ Turkey 800 EMBI+  700 600 500 400  2.5  300  1.5  200  0210  1009  0609  0209  1008  0608  1007  0210  1209  1009  0809  0609  0409  0209  1208  1008  0808  *Rate changes with base August 2008 (equals 1 on August 29, 2008). Source: Bloomberg, CBRT. 0208  100  0.5  Source: Bloomberg. 13. However, an important point that needs to be highlighted is that risk indicators for the Turkish economy have exhibited a more favorable performance compared to that of other emerging market economies especially since the height of the crisis during the final quarter of 2008. This development not only implies the soundness of the Turkish financial structure, but also indicates that our economy has gained resilience and strength against global crises compared to previous periods. 14. Turkey’s CDS rating changed dramatically at the end of 2009. Medium to long-term forecasts for Turkey were revised positively, many investors increased the weight of Turkish assets in their portfolios, and more importantly, prominent credit-rating agencies upgraded Turkey’s credit rating. There may be some credit upgrades in the upcoming period, in case a fiscal discipline backed by structural reforms is achieved and maintained.

We effectively used all policy instruments to maintain financial stability during the height of the crisis. As the crisis began to deepen in October 2008, we, by establishing a strong line of communication with the public about the details and the robust structure of the liquidity management strategy, have announced liquidity facilities to be provided to the markets step-by-step, in a clear and transparent way. Subsequently, by gradually introducing the announced measures for both Turkish lira and foreign exchange markets, we considerably removed the disturbances and volatilities in the markets. In this regard, we continued to implement measures that were taken as of October 2008 – when the crisis started to deepen – for ensuring smooth operation of Turkish lira and foreign exchange markets and supporting the corporate sector, in 2009 as well. In this part of my speech, I would like to outline the measures that we have taken. 41. The monetary measures implemented for Turkish lira during the crisis can be classified into two main groups: The first pillar of monetary measures was the implementations to ease the uncertainties in money markets caused by the crisis. In this regard, as of October 2008, we started to inject liquidity excessively in order to reduce potential tension in money markets and to completely eliminate volatility in overnight interest rates. However, at this point, I would like to remind you that the excess liquidity generated as a result of the implementation which was continued throughout 2009, was sterilized by overnight operations at the end of the day.
27  It is possible that the ON RRP facility might, in certain circumstances, have beneficial effects on financial stability by providing confidence that there will be an elastic supply of risk-free assets available to nonbanks. 28  “Statement Regarding Planned Changes to the Calculation of the Federal Funds Effective Rate and the Publication of an Overnight Bank Funding Rate,” February 2, 2015. 29  “Statement Regarding the Calculation Methodology for the Effective Federal Funds Rate and Overnight Bank Funding Rate,” July 8, 2015. 30  “Technical Note Concerning the Methodology for Calculating the Effective Federal Funds Rate,” July 8, 2015. 31  Eurodollars are unsecured U.S. dollar deposits held at a bank or bank branch outside of the United States or domestically through an international banking facility (IBF), whereas federal funds are domestic borrowings by U.S. banks and U.S. branches and agencies of foreign banking organizations (FBOs). Although the Federal Reserve can impose reserve requirements on net Eurodollar deposits of U.S.-based banks, it has imposed a zero reserve requirement since 1990, making the treatment of Eurodollar deposits effectively the same as federal funds borrowings. 12  BIS central bankers’ speeches  32  Since revisions were implemented to the FR 2420 on October 20, 2015, both domestic banks and FBOs have been required to report Eurodollar transactions on the FR 2420.

This way, expectations for the FOMC’s future policy stance will be properly incorporated into the term structure of interest rates, and thereby appropriately affect broad financial conditions and the broader economy. It’s not necessary that the effective rate stay within the target range each and every day. Before the crisis, there was usually a bit of variability in the effective rate owing to limitations on the Desk’s ability to achieve completely precise daily forecasts for reserve demand. Now, as I said earlier, the FOMC sets the target as a range, not as a point value. The federal funds rate can vary within that range, and it could even move outside that range on occasion, without materially affecting the economy.25 We have instituted a data-driven, cross-market framework for evaluating interest rate control. In unsecured markets, we gather daily, transaction-level data through a new Federal Reserve statistical collection called the FR 2420. These rich data give us much greater insight than we had before the crisis about how these markets are structured, which is important to developing and maintaining an operating regime based on improving competition among borrowers in money markets, in the context of a large amount of reserves and substantial ongoing regulatory and business model changes. Monetary control does not stop at the effective federal funds rate: The Federal Reserve also wants to ensure that the stance of monetary policy is passed through into other money market rates.
Thus, many unemployed workers may be returning to work without needing to retrain or look far afield from the job they lost. However, an equal number may need to search outside the industry they know best and this may require retraining in some cases. Thus, the need for job search assistance and training opportunities is likely to be high in New Jersey and the nation in the near term.2 Now let’s look at the situation of New Jersey households. Here, too, there is room for improvement. While the median household income among New Jersey families is the second highest in the nation – at about $ in 2009 – about 9 percent of residents are in families with incomes below the poverty line. This rate compares favorably with the national rate of 13.6 percent, but varies by city across the state: here in Newark that share is 24 percent. Reducing poverty is a major challenge for policymakers. Local organizations like Newark Now are working hard to create greater economic independence for low- to moderate-income residents. More broadly, how are the state’s families doing in restoring their finances? During the recession, all across the nation, the number of debt delinquencies soared and many families had to reduce their debt to more sustainable levels.

BIS Review 103/2006  3
This is a much debated issue, but in the context of the current discussion I would like to add that above the problem of doing the change in target in an opportunistic way and the impact it may have on credibility, there is a more profound reason why focusing on core versus headline inflation is not an issue in the current environment, where commodity prices have already increased substantially. In the present scenario, second-round effects appear in all prices. For example, a rapid increase in wages, due to backward looking indexation or other type of inertia, will affect all prices through the cost channel, and hence, a pernicious dynamic of inflation will be noticeable in both headline and core inflation. Indeed, a reasonable adjustment should have foodstuff and energy price inflation falling sharply after the relative price adjustment has taken place, and core inflation adjusting from a higher level to the target. Once food and energy prices level out, the propagation of inflation could be a more serious problem for countries that focus its target on core inflation. BIS Review 74/2008  5  Challenges to monetary policy Current inflationary shocks pose a serious threat to monetary policy. The recent adjustment has been uneven across countries. Many have been trying to avoid the increase in prices via subsidies, taxes or plain price controls. However, it is by now clear that relative prices must adjust, given the persistency of the shock and the need for appropriate signals for efficient resource reallocation.

On the other hand, there are countries, such as Chile, where changes in costs are regularly passed on to consumer prices, because markets for foodstuff are globally integrated and competitive. Hence, a large part of the inflationary shock has been already absorbed. However, we have continuously witnessed a flow of bad news on commodity prices, and inflationary shocks keep hitting us, but the benefits that the flexible inflation targeting regime brings in terms of price stability and credibility must be maintained. There is no doubt from the developing countries’ perspective that this is an important conquest and cannot be abandoned, least of all in these difficult times. The world economy is in a very complex situation. It is far from the disastrous 1970s, but we are in the presence of a slowdown with high risks of inflation. We are at a moment in which monetary policy is put under a serious stress test that will be crucial in identifying future refinements in the policy frameworks. Particularly important in the US and industrial countries is the interaction between price and financial stability. From a policymaker’s point of view, we must ensure that all the benefits achieved during the great moderation phase are preserved. It would be irresponsible to return to times of instability while searching for short-lived gains. References Ahmed, S, A. Levin and B.Wilson (2002), “Recent U.S. Macroeconomic Stability: Good Policies, Good Practices, or Good Luck?”, Board of Governors of the Federal Reserve System, International Financial Discussion Paper 2002-730.
Assessment of Risks to the Outlook The forecast that I have just described is my best assessment of how the U.S. economy will evolve over 2016. But there is uncertainty and risk relative to this baseline forecast, which also needs to be taken into consideration in assessing the implications of the outlook for monetary policy. There are two key considerations to this risk assessment. First, are the perceived uncertainties about the forecast higher, lower or about average as compared to the past? Second, are the risks symmetric around the baseline forecast or skewed upward or downward? The level of uncertainty is important in that it relates to the expected magnitude of forecast errors. The balance of risks is important in that it relates to the expected sign of those forecast errors. At the New York Fed, we use surveys, internal models and judgment in forming our risk assessment. Some surveys, such as the U.S. Survey of Professional Forecasters (SPF), ask respondents for both point and density forecasts. The density forecasts take the form of respondents filling out a histogram of their probability assessments that the forecasted outcome will fall into given intervals. These histograms can be aggregated and the resulting aggregate distribution can be used to assess both the level of uncertainty as well as the balance of risks. Recent U.S. SPF surveys have not indicated any significant changes in the overall degree of uncertainty around growth or inflation. The balance of risks have been roughly symmetric for inflation and tilted to the downside for growth.

For example, the median of three-year expectations from the New York Fed’s Survey of Consumer Expectations has declined over the past year to its lowest reading in the survey’s short history, and the longer-running University of Michigan measure is at the bottom of its historical range. Further declines in either measure would be worrisome. To date, these declines have not been sufficiently large for me to conclude that inflation expectations have become unanchored. However, these developments merit close scrutiny, as past experience shows that it is difficult to push inflation back up to the central bank’s objective if inflation expectations fall meaningfully below that objective. Japan’s experience is cautionary in this regard. In sum, I still anticipate that the combination of decreasing resource slack and anchored longerterm inflation expectations will contribute to inflation rising to our 2 percent objective over the medium term. Even so, because of the more persistent effects of energy and commodity price declines and U.S. dollar appreciation, the return of inflation to that goal may be slower than I earlier anticipated. This does not deny the possibility of some upside surprise―such as a sharp upswing in wage growth triggered by low unemployment. But, on balance, I am somewhat less confident than I was before. Partly, this reflects my assessment that uncertainty to the outlook has increased and that downside risks have crept up, a topic to which I now turn.
In particular, despite the positive factors I have cited, the growth in manufacturing output has been only moderate, with the  BIS central bankers’ speeches  3  overall manufacturing capacity utilization rate still below its pre-recession level. Thus, outside of the energy intensive sectors, there still appears to be little near-term motivation for firms to invest in order to increase their productive capacity. Businesses seem to be waiting for stronger demand before they significantly increase their investment outlays. Thus, we have a second chicken-egg problem. On the trade side, the news is mixed. Although Japanese and European economic activity has picked up recently, the sustainability remains in question. Even as Europe emerges from its recession, growth is likely to be anemic at best over the next year, constrained by continued fiscal consolidation and tight credit conditions as their banks continue to deleverage. In Japan, the consumption tax is scheduled to increase significantly next year, which is likely to constrain domestic demand. Moreover, the recent improvement in Europe and Japan has been offset by slowing in some emerging market economies. In fact, some emerging market economies are under pressure because they are running large current account and trade deficits. Any forced correction among these countries on trade is likely to be a drag on global growth and on U.S. exports over the near term.

Indeed, those latter countries have in addition embarked on programmes of asset purchase which might have intensified downward pressures on euro and yen assets. This decoupling of the relative demand and monetary policy positions of the UK and US on the one hand, and the euro-area and Japan on the other, might have on-going implications for exchange rate movements. If these trends continued, they could result in some further appreciation of sterling and the dollar relative to the euro and yen, which would tend to increase disinflationary pressures in the UK and US. Chart 23: IMF output gap estimates and world export prices Percent Percent 6 4 5 3 4 2 3 1 2 1 0 0 -1 -1 -2 -2 -3 -3 -4 -4 2000 2003 2006 2009 2012 2015 2018 Global output gap - UK wtd (rhs) Global output gap - PPP wtd (rhs) World export prices - UK wtd (lhs) Sources: IMF, CEIC, Eurostat, Thomson Reuters Datastream and Bank calculations. Notes: The world export price series shows domestic currency non-oil export prices of goods and services of 49 countries weighted according to their shares in UK imports.
Today, I would like to give my views on the challenges that lie ahead this year. I believe that the four main challenges are to: •  Adapt to an environment that is still changing rapidly;  •  Resolutely pursue efforts to strengthen the resilience of the financial system by preparing for and implementing new regulations;  •  Further improve the competitiveness of the Paris financial centre;  •  Continue to support the economy by ensuring the best possible financing conditions. 1. A rapidly changing legislative and regulatory environment  First, your working environment will continue to evolve rapidly, in terms of both international financial regulation and France’s legislative framework. 1.1  A few words on the draft banking reform law in France  The financial crisis highlighted some major shortcomings of international banking and financial sector regulation as well as the inadequacy of the tools at the supervisory authorities’ disposal to reduce and address risks. The draft banking reform law reflects the commitment of the President of the French Republic to separate activities that are useful for the financing of the economy from speculative activities, which will either be ring-fenced or banned. This law sets out to enhance the protection of deposits and the security of market activities while – and I believe that this is also particularly important – striving to ensure that you are still able to offer a broad range of financial services that allow economic agents to hedge risk, borrow or invest.

However, a positive signal was sent thanks to the agreement reached between the EU Council, the European Parliament and the European Commission at the end of December on the terms of reference of the impact study on long-term guarantees. This study will give impetus to the discussions and I count on the contribution of the institutions chosen by the ACP. Insurance companies must take advantage of the extra time before Solvency II comes into force: in coordination with EIOPA at the European level, we consider that it is already possible and necessary to make use of certain definitive elements in the Solvency II directive, in particular concerning governance and the ORSA (Pillar 2), and reporting to the supervisory authority (Pillar 3). 2  BIS central bankers’ speeches  2.2  In the banking sector, credit institutions must continue strengthening their solvency – a process that is already well underway – and they must intensify their initiatives to adapt to future regulations concerning liquidity. The Prudential Supervisory Authority has organised a series of meetings designed to familiarise the French financial sector with the changes resulting from the implementation of the Basel 3 reforms. In terms of liquidity, the coverage ratio (LCR) is now stabilised. In my New Year address of January 2011, I said that the work on liquidity ratios was unsatisfactory and that it clearly needed to be reviewed. This has now been done.