samchain/econo-pairs-v1 huggingface dataset:
As Fed Governor Gramlich has stated in a recent speech on oil shocks and monetary policy, the worst possible outcome for monetary policy makers would be “to let inflation come loose from its moorings”.4 Central banks will remain vigilant in their examination of longer-term inflation expectations. The Swiss National Bank, for one, would promptly react if there were any indications in its quarterly inflation forecast that second round effects were likely to undermine its long-term track record of maintaining price stability in support of maximum sustainable economic growth. Appendix Figure 1 Nominal and real oil prices on oil  Economic dependency in bbl/th GDP in PPP 1.2  [USD/bbl] 60  1.0  50 Brent crudenominal Brent crudereal 1971  40  0.8  0.6  30 0.4  20  0.2  10  0.0  0 1970  US Germany France Switzerland  1975  1980  1985  1990  1995  2000  1980  1985  1990  1995  2000  Source: BP, OECD, GS  4  Edward M Gramlich, “Oil Shocks and Monetary Policy”, Remarks at the Annual Economic Luncheon, FRB Kansas City, Missouri, 16 September 2004.

Regarding private placements, market-led initiatives have already allowed the effective development of European common standards. The French financial industry has been particularly active in this field, with the development of a Charter for Euro Private Placement for France in 2014. This Charter has been re-used by the International Capital Market Association (ICMA) to elaborate a market guide on common market standards and best  BIS central bankers’ speeches  1  practices. These initiatives could leverage on a common European definition and classification of SMEs to develop a Pan-European Private Placements market. (ii) Second, market-based financing should be seen as a complement to, not as a substitute for, bank-based financing. It is essential to foster the development of market-based financing as a complement to bankbased financing. Although this process has already started, the speed and extent of the shift differ across countries and sectors. Even though a rebalancing of the European economy financing mix is a desirable outcome as it diversifies the available sources of funding, banks will still have a major role to play. Some segments of the economy, namely SMEs and infrastructures, heavily rely on bankfinancing, due to the existence of high fixed costs and significant information asymmetries. Banks are indeed better equipped to assess the credit-worthiness of such counterparties or projects. Having said that, clear and transparent information on credit risk is a prerequisite to the recourse to any source of funding, be it intermediated or not.
There is also a risk that large imbalances in world trade and low employment in Europe will trigger protectionism, which could reduce growth capacity even further. A pronounced slowdown in growth in the entire OECD area is also likely to lead to markedly slower growth in China and emerging economies in Asia because exports are an important driving force behind growth in the region. This could lead to an appreciable fall in prices for oil and other commodities and weak developments in the shipping industry. Just as Norway has benefited strongly from the sharp international upswing in recent years, the Norwegian economy could be affected by such a downturn. The recent change in China’s exchange rate regime and the revaluation of the Chinese currency by 2 per cent will probably not cause substantial changes in the imbalances in world trade. At the same time, daily fluctuations of 0.3 percentage point between the yuan and the dollar are now possible. This allows for considerable variation and it cannot be ruled out that more pronounced changes in the same direction will gradually occur. So far, the Chinese authorities have maintained a stable course. It will probably be appropriate for both China and other Asian countries to shift more of their production towards domestic markets, which will reduce the large current account surpluses as well as curb the build-up of the official foreign exchange reserves. As part of this adjustment, the relative cost level will gradually increase.

The scope is relatively moderate, but appears nonetheless to have reduced bottleneck tendencies in some industries where demand has increased sharply. Traditionally, many workers from our neighbouring countries have contributed when the labour market in this country has been tight. In 2001, close to 30, 000 persons resident in Sweden were employed in Norway for all or part of the year. Swedes who have registered as residents in Norway come in addition. An increased supply of labour from new EU member states to Norwegian enterprises may lead to a higher-than-normal increase in potential output for a period. Many of the foreign workers work for a shorter period in Norway without being employed in a Norwegian enterprise. Examples include foreign contractors and self-employed in the construction industry who carry out various building projects in Norway, as well as others who carry out other types of projects. Aker Kværner, for example, has contracted 300 consultants in India who are working from India on the Ormen Lange project in the western part of Norway. An increase in the use of these short-term contracts will appear as an increase in Norway’s service imports, which contributes to increasing the supply of goods and services without drawing on domestic resources. Protectionist measures may dampen the impact on the Norwegian economy of an increased supply of labour from the new EU member states. The transitional rules from 1 May last year stipulate that foreign workers shall have Norwegian wages and working conditions.
As I noted earlier, housing debt during the boom was rising at essentially the same pace as home values, leaving household leverage ratios more or less constant. If housing debt had risen apace with home prices since 2012—rather than staying flat as it has—then we would once again be seeing housing debt producing cash flows available for consumption of about $ billion a year. Instead, households continue to divert about $ billion annually to paying down their housing debt. That’s a difference of roughly $ billion per year, or about 3 percent of total consumption. Relative to historical patterns the household saving rate currently seems quite high, given the ratio of household net worth to disposable income. So, why has household behavior with respect to housing debt apparently changed so much? As always, the data reflect the result of the interaction between the demand and supply sides of the credit market. One obvious demand-side candidate is that consumers may have become more cautious about housing’s value as a financial investment, or its value as collateral for borrowing to finance consumption. That is, households may have come to view housing wealth as more similar to financial wealth in that changes can be transitory rather than permanent. Consequently, it may be viewed as prudent not to spend too much out of increases in these sources of wealth. Additionally, the deep job losses that occurred during the Great Recession may have also impressed on households the need for precautionary savings against adverse income shocks.

In the meantime, consumption growth will largely be determined by income growth, the trajectory of wages and the strength of the labor market. The U.S. expansion is now in its eighth year. By historical standards, it is long in the tooth. Despite this, I am optimistic that the economic expansion will continue over the next few years. First, it is important to note that economic expansions don’t simply die of old age. Usually, they end either because inflation climbs and the Federal Reserve responds by shifting to a much tighter stance for monetary policy, or because the economy gets hit with a large unanticipated shock that the Fed and the fiscal authorities cannot respond to quickly enough, or with sufficient force, to prevent an economic downturn. While economic shocks are, by their very nature, difficult to forecast, the risk that the Fed will snuff out the expansion anytime soon seems quite low because inflation is simply not a problem. Not only are underlying inflation trends very subdued—for example, the core personal consumption expenditures deflator has risen at only a 1. 7 percent annual rate over the past year—but the economy is not growing much above its sustainable long-term pace. Thus, while pressures on labor resources have been increasing, but quite slowly. Finally, the recent strengthening of the dollar will put downward pressure on import prices and limit the ability of domestic producers to raise their prices. Second, the household sector’s financial condition is in unusually good shape for this point in the economic cycle.
The ECB also announced additional easing at the end of 2015 and again at the beginning of 2016. Concurrently with the discontinuation of the minimum exchange rate, the SNB shifted the focus of its monetary policy. We moved the interest rate on sight deposits at the SNB deeper into negative territory. Money market interest rates have since settled at around −0.75%. We also underscored our willingness to intervene in the foreign exchange market as necessary. Both the negative interest rate and the willingness to intervene in the foreign exchange market were intended to cushion the effects of the discontinuation of the minimum exchange rate (cf. chart 5). Once the currency floor had been removed, the Swiss franc appreciated sharply in the initial period; the euro fell to parity against the Swiss franc and the US dollar depreciated by a similar amount. Both currencies have since regained ground, however. In recent weeks, the euro has been trading at around CHF 1.10; and for some time now, the US dollar has been trading above the level posted on average while the minimum exchange rate was in place. Overall, though, the Swiss franc remains significantly overvalued. At the last monetary policy assessment, which took place about six weeks ago, the SNB confirmed that the monetary policy it had been pursuing since January 2015 would remain unchanged.

Christian Noyer: The ECB is ready to fight deflation Opinion piece by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, in Wall Street Journal, 21 November 2013. *  *  *  There is a lot of talk nowadays about the risk of a “lost decade” in the euro zone, with a conjunction of no growth and deflation. Current forecasts point to very low inflation in the foreseeable future. For the euro area as a whole, inflation is projected to remain at around 1.5% in the coming year. However, low inflation is very different from deflation. Deflation is a cumulative process of decreasing prices, wages and output fueled by negative expectations. Deflation is a pernicious spiral. It increases the burden of debt and creates an incentive to defer consumption and investment. Deflation is especially dangerous because once the process becomes entrenched, it becomes very difficult to stop. At the moment there are no signs of general deflation in the euro area and most indicators point to a very low risk. Inflation expectations in particular remain firmly anchored in positive territory and, for the long term, stand at levels close to the European Central Bank’s definition of price stability. As usual, inflation rates vary in the different economies of the euro area. In some peripheral countries, inflation is particularly low.
I encourage the industry to promptly address the matters that require action on their part. In particular, I am worried about two current shortcomings: •  The reach of Title II’s one-day stay on the close-out of qualified financial contracts is incomplete and does not extend to contracts governed by non-U.S. law with nonU.S. counterparties. BIS central bankers’ speeches  1  •  The placement of the parent company into receivership may be treated by these counterparties as an event of default due to the presence of a parent guarantee or other cross-default provisions triggered by the parent-level insolvency. Unless market participants make the appropriate contractual changes that will ensure that the entry of the parent company into Title II will not trigger the close-out provisions of those over-the-counter derivatives and other qualified financial contracts that are outside the reach of Title II’s U.S. application, foreign counterparties to the systemically important firm will tend to exercise this right whenever it is in their individual economic interest to do so. This would create significant difficulties because such actions could greatly complicate the operations of the firm during a time when it is already under considerable stress and would propagate stress more broadly in financial markets. There are two main options for addressing this issue, and they are not mutually exclusive.

Our external debt to GDP ratio has hit an all-time low since 1980, recording 29.4 per cent last year. Our foreign reserves have doubled within three years, increasing from 50 billion US Dollars by the end of 2005 to more than 100 billion US Dollars at present day. The amount of foreign reserves is more than four times higher than short-term external debt. This gives us an ample room to safeguard against instability from volatile capital flow and exchange rate movements which are deemed out of line with the economic fundamentals if necessary. 4  BIS Review 98/2008  Second, the government’s fiscal position continues to improve as reflected by the falling trend of the public debt to GDP. Indeed, these improvements were the backbone of mediumterm economic stability and provide much cushion against various economic shocks in the short term. They give the government the financial flexibility to execute policies that temporarily alleviate the public’s inflation burden. It is no coincidence that over the past few years, credit rating companies have affirmed their ratings on Thailand, pointing at the strength of our fiscal and external position despite the economic downturn. Notwithstanding the difficult political climate in 2006, credit rating companies did not downgrade Thailand’s sovereign rating. Although a few agencies put Thailand on a negative watch list but those were removed a few months afterward. Third, the labor market shows no sign of rising unemployment rate, something that would be expected in a worsening business environment.
Even for the majority of market players, many of the decisions taken at the time were difficult to predict, read and adjust to. The chief conclusion from these two Czech-made episodes of turmoil is that predictable actions produce lower-cost outcomes than unpredictable ones. This time the CNB had no plan B, so after the fixed regime was abandoned, it took several months to prepare the first coherent monetary policy framework after the end of the fixed exchange regime. All of which brings me to the current parlous situation of the eurozone. Let me start with a few observations. The eurozone’s mechanisms have supported economic divergence rather than convergence. The rules are not only wrong, they are manifestly and idly ignored regardless of their quality. To see this, consider for example that the eurozone’s debt exceeds the Maastricht debt criterion by one-half, and its deficit exceeds the deficit criterion by a factor of almost two. Only three eurozone countries – Finland, Luxembourg and  2  BIS central bankers’ speeches  Estonia – fulfil the Maastricht criteria. The belief that eurozone membership has disciplining consequences after joining has been proved unsubstantiated. As in the case of the Czech crisis of the 1990s, political and economic policy authorities have made numerous U-turns at state and EU level during the crisis.

Since price stability is the Bank’s main objective, monetary policy will not be applied to achieve other economic targets such as a balanced current account, high level of employment or specific exchange rate, except insofar as these are compatible with the Bank’s inflation target. Inflation rose in 2004 after being close to or marginally below the 2½% target since the end of 2002. The rate of inflation was 4% from the beginning to the end of the year. At the beginning of March this year, inflation measured 4.7%, having moved above the 4% tolerance limited defined in the joint declaration by the Government and the Central Bank from March 2001. When inflation moves beyond the tolerance limit, the Bank is obliged to submit a report to the Government explaining the reasons for the deviation, how the Bank intends to react and how long it will take to reach the inflation target again in the Bank’s assessment. The report shall be made public. Such a report was sent to the Government on February 18 and published the same day. There are a number of explanations for the recent rise in inflation. Large investments in aluminium smelters and power sectors have built up demand pressures in the economy. These investments will be stepped up this year, when they will peak instead of in 2006, as assumed under earlier plans. Investment cost this year is estimated at 85 b.kr., or almost 10% of GDP in 2004. New conditions in the credit market have also driven inflation.
As far as the effectiveness of the policy goes, the impact depends on what those who have sold the gilts do with the money we give them in return, and how banks, businesses and households respond to the resulting movements in asset prices and money holdings. It is quite possible that the impact of a given quantum of purchases will be different at different times and be sensitive to the prevailing economic conditions. But that is also the case with changes in Bank Rate, where the effects can be equally uncertain. BIS central bankers’ speeches  3  Tracking the impact of the new round of purchases is also harder than before. Market participants have increasingly come to anticipate our actions, so that asset prices tend to move ahead of our decisions. That makes it difficult to isolate the impact on asset prices of policy changes from the myriad of other things driving them. The fact that UK government bond yields have fallen about a quarter percentage point more than those in Germany and the United States since the late summer is, however, at least consistent with the effect we expected. In any case, so far we have seen little to suggest that the effect on nominal demand will be markedly at odds with that of our first round of purchases. But it is still rather early to draw firm conclusions one way or the other.

It also boosts the value of people’s wealth, which should encourage more spending. As I noted a moment ago, we aim to acquire the gilts from institutions other than banks. But as a by-product of the purchase, banks will find that they have both more customer deposits and an increase in their claims on us (what are known as bank reserves). That may encourage them to increase their lending, though in the particular circumstances prevailing during and after the financial crisis, we expected this effect to be quite weak. That is in line with the observed weakness in bank lending over the past three years. Our analysis of the first phase of quantitative easing suggests bond yields were around one percentage point lower than they would otherwise have been. And UK equity prices rose 50% during the programme, though only a small part of that is likely to be down to quantitative easing. That made it cheaper for companies to access finance through the capital markets and issuance was indeed strong during 2009. But the ultimate aim was to sustain demand. Though we cannot be sure what would have happened in the absence of our asset purchases, our internal work suggests that the first phase of quantitative easing boosted the level of activity by around 1½–2%. Having finished the first programme of purchases in early 2010, why then did we deem it necessary to restart the programme last October and extend it at our February meeting?
The second point I want to raise is that if mistakes cannot be avoided, at least we should learn from them. It is the sovereign prerogative of any state to deal with that issue within its own borders, and I shall not elaborate on that. The Fund, on the other hand, is an international public institution and is constantly confronted with the need to justify its actions. Though strictly speaking it remains accountable only to its members’ authorities, in reality, the legitimacy bar has been raised in recent years. A wider section of society is more and more eager to engage the Fund in the various aspects of its activity. I think this is a most welcome development: the Fund has become an institution much more ready to listen than before. A milestone in this respect has been the institutionalization of the process of evaluating Fund activity with the creation of an Independent Evaluation Office in 2001. This office is now fully operational. It has already produced very valuable analyses, and I am sure that its evaluations will greatly contribute to improving the future way of doing business of the Fund. The prerequisite for a constructive enlarged debate is of course transparency. And transparency has taken a “quantum leap” in the last decade, to use the words of the Managing Director Rodrigo de Rato. Switzerland has always pushed to help the IMF in opening up and overcoming its questionable reputation of being a secretive institution. We are happy with the results.

Widening adoption of automotive process could lead to work displacement; a large number of individuals, especially those in mid-career, will need to be re-trained and equipped with new skill sets. These changes in business and labor market conditions will have considerable impacts on central bank policies and how central banks operate, including those in macroeconomic analysis, payment systems, and financial supervision. Moreover, growing interconnectedness in trade, finance, and supply-chains have resulted in increased real and financial spillovers and globalized price-level, thus complicating central banks’ job of maintaining price and financial stability. 1/4  Many powerful developments are taking place today, from the growing influence of FinTechs and BigTechs to introduction of cryptocurrencies and electronic payment technologies. For many of us, central bankers, when dealing with new developments that can transform our financial system and how we conduct our policies, several key policy questions are often brought up: What are the risks and rewards of these developments? Should we regulate them? If so, how best to regulate them? How can we make use of these digital developments in our policy setting? And, what roles could central banks play in promoting new technologies and new digital platforms? To begin approaching these questions, we first have to admit that the boundary for new innovations or technologies is limitless and their potential impacts, at current juncture, may not be fully uncovered. There are things that we know and things that we don’t.