samchain/econo-pairs-v1 huggingface dataset:
It is therefore natural for fiscal policy frameworks to focus on maintaining long-term stable public finances and for monetary policy frameworks to keep inflation at 2 per cent.8 Although it is practical, and probably necessary, to have separate frameworks for fiscal and monetary policy, it is important to recognise that there is an interdependence between the two policies. Confidence in one depends on there simultaneously being confidence in the other. For example, if public finances are perceived as unsustainable, the expectation may easily arise that monetary policy will eventually allow inflation to rise in order to reduce the real value of public debt, that is, inflate it away. This may also cause the anchor of monetary policy to loosen. Similarly, if inflation rises because confidence in the inflation target has been eroded, it may lead to significantly higher interest rates, which, in turn, will  6 For a description of the Fed’s changes to its strategy and the background to these, see, for example, Powell  (2020). 7 See ECB (2021). 8 Of course, it is not self-evident that this number should be exactly 2. According to the previous reasoning, a higher target would give more room to lower the interest rate in bad times and I myself have raised the question of whether a target of 3 per cent should not be considered instead; see Jansson (2020). 5 [17]  lead to an increase in the government’s interest expenditure and will challenge the sustainability of public finances.

If public investments, which, sooner or later, may still need to be made, can be financed at a historically low cost, this would seem like a good opportunity to implement them. Ultimately, fiscal policy aims to increase the well-being of citizens. The development of deficits and public debt may be the means to achieve this, but it is not obvious from an economic point of view that it should be seen as an end in itself. A comparison with monetary policy can be made here: the target is formulated in terms of the outcome, that is, mainly how well the inflation target has been achieved, rather than the means, that is, the monetary policy tools. I think it would be useful if we were to start thinking more along these lines in fiscal policy as well.14 The conclusion of this reasoning is not that public borrowing is never problematic. For example, if the policy becomes too extensive or if it is not sufficiently explained and followed up, investors may nevertheless begin to fear that the government will not be able to manage its debt and may therefore demand a higher risk compensation for lending. This, in turn, may make the commitments even more difficult to meet – there is a risk that we will find ourselves in a bad equilibrium, expressed in economic terms.
But data through mid-September generally indicate that the rise in rates has cut into the upward momentum of the housing sector. Currently, improving economic fundamentals versus fiscal drag and somewhat tighter financial conditions are pulling the economy in opposite directions, roughly cancelling each other. The economy continues to grow and payrolls are rising, but there is little evidence of a pickup in the economy’s forward momentum. For example, real GDP growth is still stuck close to the 2.2 percent average annualized growth rate that has prevailed since the beginning of the expansion. But, as the degree of fiscal drag and other headwinds lessen, the tug-of-war should begin to shift in favor of higher growth. Absent additional fiscal restraint, a further tightening of financial conditions, or some adverse external shock, I expect the economy to grow a bit faster in 2014. So, how compelling is this narrative? In big picture terms, it certainly seems quite reasonable to me. However, no forecast is inevitable and there are some reasons to remain wary. In particular, although the fiscal drag will likely lessen in 2014, I expect it will still be significant, and the outcome of the current federal budget and debt ceiling debates may affect this assessment. Moreover, when one drills down and looks at the recent performance and outlook for the economy’s major sectors, additional caution seems warranted. Turning first to the outlook for fiscal policy, there are two points worth making. First, the CBO projects that significant fiscal drag will persist into 2014.

We remain strongly determined to secure a firm anchoring of inflation expectations in the euro area in line with our aim of maintaining inflation rates below, but close to, 2% over the medium term. This is a prerequisite for monetary policy to make an ongoing contribution towards supporting growth and job creation in the euro area. The Governing Council today also decided to continue conducting its main refinancing operations (MROs) as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the ninth maintenance period of 2011 on 11 October 2011. This procedure will also remain in use for the Eurosystem’s special-term refinancing operations with a maturity of one maintenance period, which will continue to be conducted for as long as needed, and at least until the end of the third quarter of 2011. The fixed rate in these special-term refinancing operations will be the same as the MRO rate prevailing at the time. Furthermore, the Governing Council decided to conduct the three-month longer-term refinancing operations (LTROs) to be allotted on 27 July, 31 August and 28 September 2011 as fixed rate tender procedures with full allotment. The rates in these three-month operations will be fixed at the average rate of the MROs over the life of the respective LTRO.
When you take a closer look you’ll see the new ten has the same new features as the new five: a portrait of Europa – a figure from Greek mythology – in both the hologram and the watermark, as well as the emerald number, which changes colour from green to deep blue when you tilt the note. Introducing a new banknote, especially one used as much as the ten, is a major undertaking. It requires a lot of planning and preparation to gradually replace the two billion or so ten euro notes currently in circulation. I would like to thank all who were involved in this process within the Eurosystem. I would also like to thank the banks, retailers and other cash-handling professionals, who will, in the end, put those new notes in your hands. I know that banknote equipment manufacturers and suppliers are already working hard to ensure that the  BIS central bankers’ speeches  1  machines are adapted in good time so that the introduction goes smoothly, and I want to thank them as well for the vital part they play. We are announcing the date of issuance and are sharing the required technical information well in advance to give all parties enough time to get ready. The new Europa series ten euro banknote will start circulating on Tuesday 23 September this year. And now it’s time to see the new ten euro banknote. 2  BIS central bankers’ speeches

The requirements for diversification of assets would introduce stringent restrictions on the ability of the insurance companies to hold housing bonds. Representatives of the industry claimed that considerable volumes of housing bonds would be sold by the insurance companies for this reason and that this would affect the market and increase costs for borrowers sharply. The gilt-edged bonds could at least partly solve the problem since, according to the EC directive, they would not be affected so much by the rules for single-party commitment. Others were doubtful about introducing special rules for insurance companies to give them an incentive to have a larger proportion of housing bonds in their portfolios than they would normally choose. There are no good arguments for letting insurance policyholders subsidise either housing loan institutions or their customers. Now the new investment rules were introduced for the insurance companies without this leading to any of the terrible consequences that had been predicted. The housing loan institutions began to borrow abroad to an increasing extent, which was a good idea from many respects. Hopefully, then the desire to create space for a larger proportion of housing bonds in the Swedish insurance companies’ portfolios will then no longer serve as a motivation for the gilt-edged bonds. As long as the insurance companies had their undertakings in kronor, some concentration of investments was explicable.
In the light of high  BIS Review 15/2003  1  expectations of future growth, households financed their consumption, and companies their investment, by increasing their indebtedness in the belief that these debts would be easy to repay due to high future earnings and income. Moreover, a large proportion of the companies' financing was obtained via the stock market. Balance sheets became inflated, as did the actual growth in the economy. When earnings prospects later proved to be lower than expected, there was a fall in both share prices and the value of assets. Debt levels appeared high, particularly in the corporate sector. In order to lower their debts, companies had to increase their income and reduce their costs, which resulted in weaker demand in the economy. Furthermore, the declining share prices prompted households and the financial institutions that invest households' money to seek out investment alternatives that appeared safer. The downward adjustment of the future outlook itself also resulted in uncertainty. This in turn was compounded by the uncertainty caused by international terrorism and the attempts to deal with this by putting pressure on Iraq. This contributed to an increase in the spreads between corporate and treasury bonds as well as to greater volatility in the markets. To counteract the effects of balance sheet and income statement adjustments on the real economy, monetary policy was eased in several countries around the world. At the same time, fiscal policy became more expansionary.

Another factor of importance is the new capital adequacy rules that are planned for introduction in 2006. Put simply, capital adequacy rules are rules governing how much capital a bank is required to hold for various borrower groups for each krona lent. In the new rules, it is intended that the risk weighting will better reflect the actual credit risk. This means that the banks will be more careful in assessing the relationship between the risk of a loan and its return. It will therefore be possible to observe increased risk in the banks' interest rates. The new capital adequacy rules have both advantages and disadvantages. The proposed rules require the banks to hold more capital if the risks in their loans increases. If they do not have more capital than that prescribed by the rules, they must either acquire more capital or reduce the risk in their lending. In such a situation, a bank can decide against renewing loans, which of course would entail severe consequences for its borrowers. There is therefore a risk that the new rules will reinforce cyclical developments. Nevertheless, the new rules entail several advantages: a more all-round, individual risk assessment that better protects savers' funds and reduces the risk of tax payers via the Government having to step in, opportunities for cheaper loans to low-risk borrowers as well as increased interest expenditure for high-risk companies. Consequently, the pricing of loans will be fairer.
Furthermore, the Riksbank's aim to take risks into consideration to attain a long-run stable development of the economy is well in line with the international discussions now taking place regarding the choice of direction faced by central banks in the wake of the financial crisis. I would therefore also like to broaden the perspective and put the debate here in Sweden in a larger context. We need a nuanced discussion of the development of inflation Let me begin with the criticism that the Riksbank has been over-zealous in combating inflation. The actual starting point for this criticism is that CPI (consumer price index) inflation has undershot the inflation target of 2 per cent on average since the target was introduced. This has received considerable media attention and been debated in blogs – which is of course not a problem in itself. It is important and absolutely necessary that the target attainment of monetary policy is analysed and discussed to enable the Riksdag and ultimately the Swedish people, to ensure themselves that the Riksbank is doing the job it has  BIS central bankers’ speeches  1  been assigned to do. But for exactly this reason it is unfortunate that the reporting of the average inflation rate has often been rather superficial and in certain cases, intentionally or unintentionally, not entirely correct. In some extreme cases it has even been claimed that the inflation target has in practice ceased to apply. Headlines and comments of this type hardly contribute to a serious debate on monetary policy.

Private sector infrastructure financing in the region has traditionally relied on international bank lending, particularly from European banks. With the European banks facing deleveraging pressure and retreating from the region, some Asian banks have stepped in and increased their market share. However, there are questions as to whether Asian banks can fully fill the gap. Recent regulatory changes may also reduce banks’ appetite in long-term project financing. Given these circumstances, there are benefits to further develop the capital markets to complement bank financing and provide a channel to tap into other long-term institutional investors such as pension funds and insurers. Policymakers in the region have made steady efforts to develop the local currency bond markets. Along with the faster growth and improved fundamentals of the region, there has been a rapid growth of the regional bond markets in recent years. Notwithstanding this encouraging development, the capacity of the regional bond markets is still limited when compared with the huge financing needs of the region. Much work still needs to be done to develop a deep and liquid regional bond market, including but not limited to expanding the issuer and investor types, gradual liberalisation of barriers to entry of non-resident investors, promoting development of hedging tools, enhancing financial infrastructure linkages, improving corporate disclosure and transparency, and greater standardisation of legal and governance terms. Policymakers, as market regulator and market facilitator, should further their work on these fronts.
Figure 10 Growth forecasts (annual change, percent)  3.2  3.2  United States  2.9  2.9  2.6  2.6  2.3  2.3  2.0  2.0  1.7  1.7  1.4  2.6  1.4 15  16  6.8  17  18  2.6  Eurozone  2.3  2.3  2.0  2.0  1.7  1.7  1.4  19  1.4 15  16  17  18  19  6.8  4.2  6.6  6.6  4.0  4.0  6.4  6.4  3.8  3.8  6.2  6.2  3.6  3.6  6.0  6.0  3.4  3.4  5.8  3.2  3.2  China  5.8  15  16  17  18  19  15  Source: IMF. 13  4.2  World at PPP  16  17  18  19  Figure 11 Terms of trade (index, 2013=100)  110  110 Dec.18 Report  105  105  100  100 Mar.19 Report  95  95  90  90  85  85 13  14  15  16  17  18  19  20  21  Source: Central Bank of Chile.

As I just mentioned, the impulse we will be getting from abroad in the next two years will be milder than the one of the last two. And as we have said in a number of Reports, we believe that the external risk balance is biased downward. However, we must also be clear that this external scenario finds the Chilean economy on the right foot. Our growth rates have substantially outperformed those of previous years, investment is the most dynamic component of expenditure and our country has been absorbing a significant increase in the workforce without a corresponding increase in unemployment, while wages continue to grow. Today’s lower level of inflation and its implications for the two-year convergence, not only allows adjusting the pace of monetary policy normalization, but also provides room to monitor and analyze the evolution of external conditions without the pressure of an imminent adjustment to the policy rate. Plus, there the traditional cushioning effect of the exchange rate float and a deep local capital market. Summing up, monetary policy is now in an expansionary position, with the policy rate that has remained low for quite a while. Although in our baseline scenario we believe that it will still be necessary to raise it in the next two years, we have also been clear about the convenience of taking a break in the coming months.
This autumn the krone appreciated during the period of market turbulence, but has weakened somewhat in the past two weeks, reflecting shifting themes in foreign exchange markets. However, it appears the krone will be a good 3 per cent stronger on average in the second half of this year compared with the first half, and about 1.5 per cent stronger this year than last year. Exchange rate developments have a dampening impact on inflation. Given our inflation-targeting regime, we will be mindful of the effects of higher interest rates on the krone exchange rate when inflation is low. High oil prices have resulted in substantial growth in the petroleum fund’s capital, and there are prospects of further growth ahead. The Government uses the central government budget to influence economic developments. Government petroleum revenues are transferred in full to the Government Pension Fund – Global and invested in securities abroad. However, as part of the budget resolution, the Storting decides on an annual transfer from the Fund to cover the deficit in the government budget when petroleum revenues and capital income earned by the Fund are excluded. This annual transfer – direct petroleum revenue spending – has been sharply reduced in recent years, but is expected to increase somewhat next year. Developments reflect a marked increase in the government’s general tax revenues as a result of the current period of strong expansion.

To prevent interbank lending rates from rising too much, a number of central banks have increased their short-term lending to banks. In addition, the Federal Reserve has lowered its key rate by 0.75 percentage point in recent months. A further cut in the key rate in the US is now expected, and the interest rate is also expected to fall in the UK. In the euro area, market participants expect a more stable key rate ahead. But developments are not the same everywhere. The central banks in Sweden, Switzerland, Canada, New Zealand and China have raised their key rates. In Sweden, which has a lower interest rate level than our main trading partners, further interest rate hikes are expected. BIS Review 139/2007  5  The interest rate differential between Norway and other countries can have an impact on the krone exchange rate. In the short term, however, the factors that influence the krone exchange rate vary. High oil prices and krone appreciation appear at times to be related, but there have also been periods when the krone has appreciated while oil prices declined. The krone appreciated when the interest rate differential against other countries was high in 2002, but as interest rates in Norway moved down to the level among our trading partners, the value of the krone fell back. In the past, we have observed that market turbulence has occurred in tandem with a weaker krone.
In fact, I would even argue that there is an urgent need to accelerate our efforts to complete the EMU architecture with a fiscal capacity. Although we should acknowledge that this will take time, and that getting it right will require effort and precision, we should act without delay and speed up our work. Thank you for your attention  4  BIS central bankers’ speeches

The focus has gradually shifted from strengthening intermediaries in the domestic Islamic financial industry to fortifying the regulatory, supervisory, Shariah and liquidity framework necessary for such a robust financial system. This has involved greater international cooperation and collaboration in this new environment. A further development has been the evolution of the domestic Islamic financial markets into international markets. This has manifested itself in the form of foreign participation in raising funds and in investment activities in these markets, thus generating increased cross border financial flows. This has drawn participation from both emerging and the developed world in Islamic and non-Islamic countries. Going forward, the Islamic financial system is envisaged to have an increasing important role in connecting the world economies – through the strengthening of financial linkages, it will in turn facilitate increased international trade and investment activities. This internationalisation of Islamic finance will require the intensification of international collective efforts to establish the international Islamic financial architecture, and the development of mechanisms for more effective cross-border liquidity management. Central to achieving this next thrust of development is to develop a high caliber and competent talent base to cultivate financial innovation. Therein lies the investment needed in human capital development to support the industry. While Malaysia’s own experience and aspirations is to evolve into an international Islamic financial centre, we also continue to promote a more inclusive financial system to support a more balanced growth. On the international front, the aim is to enhance our international connectivity and thus establish greater economic linkages with other economies.