samchain/econo-pairs-v1 huggingface dataset:
Irma Rosenberg: The monetary policy decision-making process Speech by Ms Irma Rosenberg, First Deputy Governor of the Sveriges Riksbank, at Riksbanken, Stockholm, 13 June 2008. *  *  *  The Riksbank is considered to be one of the most open central banks in the world. 1 Openness has also been one of the basic principles in shaping our activities. If an independent central bank is to be perceived as credible it must be possible for outsiders to understand its decisions and to assess its activities. We have therefore tried to be as open and clear as possible about what we do and why we do it. This increases the credibility of our monetary policy and makes it easier to anchor inflation expectations around the target. Part of this openness entails clearly describing how our analyses are achieved and the processes for making interest rate decisions. I believe that most people are familiar with the way we conduct monetary policy in general. We look ahead and base our monetary policy on forecasts. We have held many speeches on this subject. But how do we go about producing a forecast that leads to a decision on the interest rate? This is probably not as well-known and I intend to talk about it today. In recent years we have changed our methods of working in a number of fields. For example, since the beginning of 2007 we report very clearly the future interest rate path we expect to see.

The Executive Board discusses the forecast at the second large meeting The Monetary Policy Department then presents its forecast for the main scenario to the Executive Board at the second large monetary policy group meeting. This takes place in week five, that is, approximately three weeks prior to the monetary policy meeting. The organisation of this meeting differs from the first one. The meeting is divided into two parts. The first part of the meeting is open to the majority of the employees of the Monetary Policy Department. The civil servants then report their outlook on the economy over the coming years. They present the results from any in-depth reports ordered by the Executive Board. There is now an opportunity for us Executive Board members to ask questions about and express opinions on the forecasts to the different sector experts. The second part of the meeting is held in a smaller circle consisting of the Executive Board, senior staff at the Monetary Policy Department, a couple of advisers and representatives of the Communications Secretariat. It is now that the Executive Board discusses and expresses opinions on the main scenario on the basis of its assessments. This may sometimes mean giving different weight to alternative macroeconomic scenarios, that is, the risks. The main scenario is then adjusted in accordance with the views of the Executive Board.
Following the intensification of the financial crisis in Autumn 2008 – and against the background of rapidly receding inflationary pressures – we have taken monetary policy measures that are unprecedented in terms of nature, scope and magnitude. These measures fall into two categories: first, standard measures in the form of interest rate changes (Since October 2008, our key policy rate has been cut from 4.25% to 1%); second, what is known as “non-standard” measures, encompassing a policy of fully accommodating banks’ liquidity needs, enlarging the list of eligible assets, lengthening maturities for refinancing operations, the provisioning of liquidity in foreign currencies but also the purchasing of covered bonds and, more recently, government bonds. 8. Let me add that we never ruled out to implement asset purchases, when it appeared necessary to repair dysfunctional markets to ensure a proper transmission of monetary policy impulses. Indeed, in 2009, the ECB embarked into a program of covered bonds purchases, which is now completed. Although modest in size (60 bn euros), this program has been fairly successful in reviving a market segment which in turn supported bank funding at a time where bond issuance were secure. 9. The recent decision to purchase Government securities should be seen in the same light. The objective of this program is to address the malfunctioning of securities markets to restore an appropriate monetary policy transmission mechanism. These interventions are sterilized as liquidity injected is exactly drained, thus fully neutralizing the effect on the banking system. 10.

The first tells that an efficient monetary policy requires financial stability. The second that financial stability cannot be achieved irrespective of fiscal conditions. The third, that financial stability is contingent on a sound regulatory framework agreed upon at the internationally level and robust supervisory management at the domestic level. I. An effective monetary policy requires well-functioning financial systems  4. All the decisions taken by the European Central Bank during these last three years had the primary goal to secure the transmission of monetary policy. Three channels could affect these mechanisms through:   the price channel: the increase in government bonds yields may spill-over to the cost of financing of the private sector. Under normally functioning bond markets, sovereign bonds provide a floor for the funding conditions of the private sector.   the liquidity channel: government bonds are the primary collateral used by banks. Interruptions in the sovereign debt market reduce the function of government securities as liquidity buffers. This in turn impedes banks’ capacity to issue loans and refinance the real economy.   the balance sheet channel: falling bond prices induce valuation losses on assets and balance sheets of financial and non financial actors. For banks, these losses reduce their capital base, decreasing, hence, their supply of loans to the economy. BIS Review 113/2010  1  For borrowers, the losses on assets held, diminish their creditworthiness, affecting, thus, their capacity to borrow. 5.
James McAndrews: Student debt and higher education financing – a public finance perspective Remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the National Association of College and University Business Officers, at the Waldorf Astoria, New York City, 5 February 2015. *  *  *  Accompanying slides can be found at the end of the speech. Good afternoon. I’m happy to be here and to have the opportunity to share with you some thoughts on the subject of financing higher education in the United States. The remarks I make reflect my own views, and not those of the Federal Reserve Bank of New York or of the Federal Reserve System. Some of you may be wondering why the research director of a central bank is particularly interested in the way we as a nation pay for college. The answer, of course, is that we are gaining an increasing understanding that how we finance post-secondary education has important effects on a variety of critical economic outcomes, including economic growth and inequality. It’s this realization, combined with the fact that the outstanding student debt balance has now surpassed $ trillion, which has brought increased attention and discussion to the question of education finance. First, I’d like to acknowledge the work and research of Meta Brown, Rajashri Chakrabarti, Andrew Haughwout, Donghoon Lee, Joelle Scally, and Wilbert Van der Klaauw in preparing these remarks.

The guarantee is limited to a maximum of NOK 2m per depositor per bank. This represents a tightening for savings banks in relation to earlier statutory rules. For commercial banks this provides clarification in relation to the practice that was chosen during the banking crisis when all  BIS Review 124/1999  2  deposits were covered even if they were not covered by a formal guarantee. In relation to rules in other countries, the deposit guarantee in Norway is very generous. During the banking crisis, subordinated loan capital was not written down in the crisis banks, although the banks’ guarantee funds and later the state had to provide support to ensure continued operations. Subordinated loan capital did not function as a buffer as intended. Under the new Bank Guarantee Act, this capital can, subject to certain criteria, be drawn on while the bank is still operating. This increases the real buffer capital. It also means that banks with insufficient capital, and banks that take excessive risk, have to pay more for subordinated loan capital. This boosts market discipline. The risk of problems in one institution or a market segment spreading to other institutions or markets through the payment system is substantially reduced. A large share of interbank transactions is settled continuously during the day through Norges Bank’s settlement system. The largest interbank payments are settled individually and continuously on a gross basis. This reduces the risk of crediting an account without the payment due being transferred.
The yield curves and their use are explained in “The new euro area yield curves” in the February 2008 issue of the ECB’s Monthly Bulletin. Previously, Eurostat compiled these curves. 5  See “Explaining changes in the net international investment position of the euro area” in the January 2007 issue of the ECB’s Monthly Bulletin. 2  BIS Review 50/2008  published. See  Finally, since the end of 2006 the ECB has published monthly harmonised competitiveness indicators for all euro area countries. 6 6. Payment statistics have also been enhanced, and new data on securities trading, clearing and settlement have been made available. 7  7. Last but not least, Slovenia was successfully integrated into the euro area statistics in 2007, with the same happening for Cyprus and Malta in 2008. When countries join the euro area, all time series need to be recalculated in order to reflect the new composition of the euro area. At this juncture, I would also like to compliment the statisticians in the various EU countries on the outstanding work that they carry out, in coordination with the ECB and Eurostat, to meet the ECB’s statistical requirements. For its policy-making, the ECB relies not only on its own statistics, but also on euro area data compiled by Eurostat and the NSIs. In particular, the ECB attaches considerable importance to the reliability and timeliness of the so-called Principal European Economic Indicators (PEEIs), which comprise the indicators for core consumer prices, national accounts, shortterm business, labour markets and external trade.

The problems I have seen are based on a combination of inflation having clearly undershot the target, the Riksbank’s inflation forecasts having been more optimistic than those of other analysts, the Executive Board’s repo-rate paths having indicated a tighter monetary policy than the market and analysts have expected and the repo-rate paths having been revised down time after time. I have said that in such a situation it is better to cut the rate immediately rather than continuing to present a repo-rate path that is not perceived by outsiders as entirely credible. However, these problems have become a little less important in recent months as other analysts’ forecasts of inflation and the repo rate have been revised up. Thirdly, it is not self-evident that taking into account household debt means setting a higher repo rate than we would otherwise have done. The current repo rate, 1 per cent, is undeniably low. In the long run, the repo rate will be raised to much higher levels. But we cannot raise the repo rate until we see that inflation has clearly begun to move towards the target of 2 per cent. And when this happens will of course depend on monetary policy. If we cut the repo rate now, inflation will rise faster towards the target. If the repo rate is left unchanged it will take longer before inflation begins to rise, and this in turn means that it will take a long time before the repo rate can be raised.
On the other hand, several shocks have further undermined confidence, among which I would highlight September 11, geopolitical tensions - in particular the conflicts in Afghanistan and Iraq - and corporate scandals. All this has created an environment of uncertainty over world economic prospects and has led to heightened risk aversion. Finally, crises have continued to beset certain emerging market economies, such as Argentina and Turkey. Both the real sector and certain segments of the financial sector have been affected by this series of shocks. Equity markets have suffered a protracted depression worldwide. The fall in stock prices has fed back into aggregate demand, although in many countries this negative wealth effect has been offset, at least partially, by a buoyant home market. As usual, one can see the bottle as being half-empty or half-full: admittedly, the recovery is proving mild, but it is also true that this is partly a result of the mildness of the previous recession and that a deep recession has been avoided. Conditions for higher global growth in the second half of this year seem to be in place and prospects for 2003 point to world GDP growth of between 3% and 3.5%, slightly above that for 2002, and an additional improvement is expected in 2004 (around 4%). However, it is also true that this recovery is proving atypical in several respects, among which I would stress five: First, in geographical terms, the recovery has been rather uneven so far.

The integration of financial markets will promote both competition and transparency and will enhance liquidity. Investors will benefit not only from a reduction in transaction costs, but also from an increase in investment opportunities, allowing them to manage risk better. Companies, for their part, will find it easier to raise funds to develop their activities. To be sure, in recent years, we have seen impressive advances in the degree of integration of international capital markets. This has fostered a better allocation of saving and improvements in efficiency from which we have all benefited. At the same time, this process has also entailed a more rapid transmission of shocks, whether or not these are generated in financial markets. In the European Union, although the process has been given notable momentum thanks to the introduction of the euro and to a series of measures such as the Financial Services Action Plan (FSAP), we are still a long way from achieving fully integrated markets, so that an additional impulse is required. Second: Accounting harmonisation Among all the developments needed to bring about market integration, let me mention one that seems to me particularly important: accounting harmonization or convergence at the international level. Financial information is of crucial importance for the proper functioning of the financial system, since it is the basis on which agents make their decisions. Retaining their confidence in the reliability, relevance and timeliness of such information is vital.
We measure the costs associated with the overall deviation of actual outcomes from the ideal with the quadratic loss function L. Note that for each policy goal, this loss function equally weights same-sized misses above and below target. The coefficient λ determines the relative weight policymakers give to their misses on real output versus those on inflation. If λ is equal to 1, then a 1 percentage point deviation of inflation from its target gets the same weight in computing the overall costs of being away from the optimum as a 1 percentage point deviation of output from its potential. However, Ken Rogoff (1985) and others have argued that, in order to avoid inflationary biases that might creep into policy, a good, conservative central banker ought to conduct policy as if λ were less than one.5 It’s reasonably conservative to set λ equal to ¼. That means the costs of a 1 percentage point output gap are judged to be only one-quarter as high as the costs of a 1 percentage point deviation of inflation from its goal. So a λ of ¼ puts a good deal of weight on keeping inflation near its goal. Given that the Fed’s mandate is expressed in terms of employment, it is helpful to recall Okun’s Law, which says that a 1 percentage point gap between actual and potential output corresponds to a one half percentage point gap between unemployment and its natural rate.

But they now appear to be even deeper and more persistent than we thought earlier in the year. Many households and business may still feel they have inadequate buffers of assets to cushion against unexpected shocks. This leads to cautious behavior that holds back spending. For example, I regularly hear from business contacts that they do not want to risk hiring new workers until they actually see an uptick in demand for their products. They do not appear to be paring back at the moment, but they would rather sit on cash than risk undertaking a potentially unprofitable expansion. In addition to these long-running problems, continued uncertainty about the European debt crisis and the difficulties dealing with the U.S. fiscal situation have held back growth. Against this backdrop, the outlook has weakened substantially. Last June, most private sector forecasters were expecting real GDP to increase 2-3/4% in 2011 and 3.1% in 2012. By early August, these forecasts had dropped to 1.6% and 2.7%, respectively. This 2012 growth rate is barely above most analysts’ views of potential growth – so it certainly won’t make much of a dent in the unemployment rate and other measures of resource slack. On the price front, with energy prices increasing markedly, headline inflation – as measured by the 12 month change in the total personal consumption expenditures price index – rose from about 1-1/4% last fall to 2-3/4% in July. Excluding food and energy, PCE inflation has moved up from about 1% to 1-1/2% over the same period.
Distinguishing between the various determinants of pension spending is also useful to illustrate the medium-and long-term challenges the system faces. The most significant challenge stems from the progressive increase in longevity and, consequently, from the gradual rise in the retirement-age population as a proportion of the total population, i.e. progressive population ageing. 3/6  By way of illustration, the life expectancy of a 65-year-old today is six years more than that for a person of the same age in 1975 and, on the latest INE demographic projections, that same person today will live around five years less than a 65-year-old in 2060. As a result, the dependency ratio may be estimated to more than double from 2016 to 2060. One initial means of checking or compensating for the effect of the rise in longevity on pension expenditure is to raise the employment rate. For example, if it is assumed that the Spanish economy can increase its employment rate from the current rate of 56% to 80% by 2060, up to 60% of the pressure on spending derived from population ageing might be offset. A second means of compensating for demographic pressure is by reducing the replacement rate. Changes in macroeconomic variables – in productivity in particular – and the definition of the various parameters used to calculate the system’s benefits may both contribute to achieving this reduction.

In this regard, any measures that discourage early retirement and allow people to extend their working lives beyond the age of 67 would have a positive bearing on the financial sustainability of the system. Some countries have opted to build in an automatic link between life expectancy and the permitted retirement age in their sustainability mechanisms. Others have undertaken a broader change, adopting a notional definedcontribution accounts system, which has some advantages in terms of increasing the transparency of the system. Moreover, against the background of a significant rise in the dependency ratio and future reductions in pension replacement rates, it might make sense to extend the role of retirement saving to complement the resources of the public contributory system with the accumulation of financial assets supplementing future public pensions. In any event, implementing a funded system is complex and requires detailed prior analysis of issues such as the length of time needed to implement it, whether it is voluntary or compulsory, the returns it can offer in a scenario of demographic stagnation and sluggish productivity growth, and how the costs associated with implementing this change are to be shared out intergenerationally. 2) As regards new sources of funding, the alternative is to raise social contributions or other taxes, or permutations along these lines. Increasing social contributions may have adverse consequences for employment, since their weight in overall taxation is already higher in Spain than in other comparable countries.
Here in Hong Kong we are well on our way to implementing the latest international standards in this respect, i.e. the Basel II standards. As the bank supervisor, the Hong Kong Monetary Authority has been working with banks and legislators to ensure that we are able to implement the new standards by 1 January, 2007. We have also been working with other regulators in the region through the EMEAP Working Group on Banking Supervision to share our experiences on the implementation process. 23. Ladies and Gentlemen, I have given you a brief personal perspective on financial integration and regulation in our region. I do not know whether I have convinced you of the importance of these topics for our continued economic prosperity and financial stability. But I certainly hope to have persuaded you that they are topics that deserve our attention whether we are policy makers, regulators of the financial system, or members of the private-sector financial community. I am sure that more will be  BIS Review 14/2006  3  said about these topics throughout the conference, and I look forward to hearing from our European colleagues about the experience in Europe concerning financial integration and regulation in the Euro area. 4  BIS Review 14/2006

Thomas Jordan: Current monetary policy and its significance for the real economy Summary of a speech by Mr Thomas Jordan, Vice-Chairman of the Governing Board of the Swiss National Bank, at the General Meeting of the Aargauische Industrie- und Handelskammer, Wettingen, 20 May 2010. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch). *  *  *  In the current situation, the challenges for the SNB’s monetary policy remain formidable. On the one hand, against the backdrop of the economic recovery we have witnessed since mid2009, there is a danger of inflationary tendencies and the renewed formation of a bubble. This is because the current monetary policy is too expansionary in the long term. On the other hand, downside risks are still present or are again reappearing, and should not be underestimated. They relate, in particular, to the further development of the debt crisis in Europe. A deterioration of this situation entails the danger for Switzerland of renewed deflation and recession as well as the risk of another destabilisation of the global financial system. Between these opposing risks the SNB must walk a fine line, moving in terrain that is constantly and rapidly changing, depending on which risk gains the upper hand. With a monetary policy strategy aimed at maintaining price stability, the SNB is well equipped to face these challenges. What are the short and medium-term consequences for the real economy of addressing these challenges?