samchain/econo-pairs-v1 huggingface dataset:
Just as we did a year ago, when we discussed the exchange rate conjuncture at the Honorable Chamber of Representatives, I want to state that we act with the conviction that we are making the best decisions to provide stability to our economy and widen its growth opportunities. We permanently and carefully monitor the situation and we incorporate it consistently in our monetary policy decisions. To finish, I thank again the Economic, Promotion and Development Commission of the Honorable Chamber of Representatives and its President, representative Mr. Antonio Leal for letting me present our visions here. The serious management of monetary policy and its formulation on a solid technical basis is essential to ensure economic stability in such volatile  4  4  Matus et al. (2009). BIS Review 35/2009  and blurred global conditions as we are now going through. I appreciate this opportunity to come and expose our vision of the relationship between market interest rates and the conduct of our monetary policy. Thank you. References Becerra, S., L. Ceballos, F. Córdova, and M. Pedersen (2009), “Evolución Reciente de las Tasas de Interés de Colocación,” manuscript, Research Division, Central Bank of Chile, March. Berstein, S. and R. Fuentes (2003), “De la Tasa de Política a la Tasa de Colocación Bancaria: La Industria Bancaria Chilena,” Economía Chilena, Vol.6, N°1, April. Central Bank of Chile (2009), Monetary Policy Report, January. Matus, J., D. Oda, and N. Silva (2009), “Caracterización de las Colocaciones Bancarias en Chile.” Studies in Economic Statistics N°73, Central Bank of Chile, March.

However, a full normalization of credit demand and supply will depend on the appeasing of the global financial environment, on more clarity about the definitive structure of the global financial system, and on economic growth prospects settling down in the larger economies of the world. Overall, it is important to note that this analysis has focused on the cost of credit for operations already materialized. The other central dimension of the financial system operation is clients’ access to credit. Lately loans have slowed down. It is difficult to figure out how much of this to blame on lower demand and how much on the financial institutions’ reluctance to lend. In any case, we believe it is important that financial institutions, provided good risk management, continue to lend to firms and households. We agree with the Superintendent of Banks and share the principle that through tough times the banks must stand by their clients and cooperate in the solution of their financial problems. I would like to inform you that, as part of our process of increasing transparency, particularly regarding public dissemination of information about interest rates charged on credit operations, we have decided to extend the available data on credit conditions by maturity, indexation, and type of loan. Thus, starting today our website has increased the level of detail of interest rate information made available to the public. 4 Part of said information was used in producing the results reported in this presentation.
It is the impact of falling asset prices on an over-levered and liquidity-stretched financial system that imperils the provision of essential financial services. A necessary condition for a pervasive financial system problem is weakness amongst financial firms. The late-90s tech bubble is arguably instructive in this respect. The collapse of dot.com shares obviously caused a lot of volatility, but it was the wave of defaults on telecom debt that threatened banking stability. 9 Why not then cast the objective solely in terms of credit growth? Essentially for three reasons. First, a macroprudential instrument will alter the terms on which credit is supplied by the banking sector, but the resulting growth of credit will depend on demand conditions, which lie beyond the direct reach of the macroprudential instruments I shall go on to discuss. pursue their own domestic monetary objectives. But in a world in which capital flows freely, local attempts to control the pace of credit creation, particularly within the financial system, may not work. All of that will need to be thought through. But first we need to concentrate on the immediate challenges”. The four questions are sketched out in more detail on pages 7-9 of my remarks at the Turner Review Conference. 8  Chairman Martin’s testimony before the US Senate Committee on Banking and Currency, 84th Congress, 1955, discussed by Paul H Kupiec of the FRB, April 1997, “Margin Requirements, Volatility, and Market Integrity”, quoting from Moore, Thomas (1966) “Stock Market Margin Requirements”, Journal of Political Economy, vol 74, No 2, pp 158-167.

The second challenge is maintaining high standards of credit underwriting and risk management in the face of more intense competition. It may be tempting for service  2  BIS Review 64/2008  providers to lower underwriting standards in order to compete for market share in the face of greater competitive pressures. In view of the severe consequences of the current global market turmoil that originated from poor underwriting standards in the US subprime market; this temptation should be resisted at all costs. Let me assure you that the Bank of Thailand, as prudential supervisor of banks, will remain vigilant to ensure that similar problems will not happen here. The third challenge is managing security risks associated with the use of new technology. Advances in IT and communications technology have enabled banks to provide faster, cheaper, and safer electronic banking services to an increasingly larger group of customers. However, proliferation of internet banking, mobile banking, and e-payment also increases the risks of IT fraud, network security breach, and identity theft, etc. If these risks are not properly managed, they could have severe financial and reputational consequences for the banks. In this regard, I urge banks to pay close attention to the best-practice guidance on IT and e-banking security risk management that we issued some time ago.
The objective is  BIS central bankers’ speeches  5  clear, but the difficulties we face are in its implementation, with the caution demanded by the complex macroeconomic environment. Thank you. 6  BIS central bankers’ speeches

There is a school of thought that suggests the sole objective of central banks should be price stability. Accordingly many countries have adopted the inflation targeting approach in their conduct of monetary policy. Price Stability indeed is essential for sustained economic growth and there is no argument that it should be pursued. Moreover, the inflation targeting approach has the benefit of building up the credibility and commitment of a Central Bank. However, there is a risk that central banks may concentrate on achieving price stability as measured by a consumer price index, which may not necessarily guarantee economic and financial stability. With globalization and improvement in productivity, there has been a general tendency for inflation to remain relatively low. Though, price stability in terms of a consumer price index is achieved, there could be other imbalances arising from excessive demand pressure which may be reflected in assets price inflation and external payment imbalances. There could also be a danger of developing deflationary conditions which depresses growth. Therefore, it is important that central banks take into account other signs of economic imbalances in designing their policies, even though the sole objective may be defined as price stability. The Central bank of Sri Lanka has defined its key objective, not simply as price stability, but as economic and price stability. This is expected to prevent the Bank from trying to stabilize a price index rather than ensuring overall price stability in the economy.
At the end of April, the daily turnover of RMB foreign exchange transactions in Hong Kong had reached $ billion equivalent, more than eight times greater than five years ago. The average daily turnover of Hong Kong’s RMB Real Time Gross Settlement system also exceeded RMB1 trillion recently. Going forward, we should see more products denominated in RMB. This is an area where market participants can play their part and why we also think seminars like this are important in bringing together ideas and looking at solutions. Building market infrastructure The HKMA has played a major role in promoting market development, with our strategy focusing on strengthening market infrastructure to support offshore RMB business. Indeed, liquidity is the linchpin in growing this offshore business and the HKMA has in place a RMB400 billion currency swap agreement with the People’s Bank of China which can be activated when market conditions warrant. In addition, we have made available an RMB liquidity facility to banks which is currently offering intraday repos of up to RMB10 billion, as well as overnight funds on T+0 basis and one-day and one-week funds settled on T+1 basis. We have also appointed seven banks as Primary Liquidity Providers (PLPs) and provided each with a bilateral repo facility of up to RMB2 billion. These facilities have helped banks to better manage their RMB liquidity and played a significant role in offshore market development. These facilities will be reviewed from time to time with the aim of providing better liquidity support to the offshore RMB market.

The launch of the ABF Malaysian Bond Index Fund today marks another important milestone resulting from EMEAP Central Bank cooperation in the region. It represents the successful implementation of the Asian Bond Fund project to accelerate the development of the domestic bond market and to promote greater integration among the regional bond markets. The listing of the ABF Malaysian Bond Index Fund is thus another major step forward in the development of the Malaysian bond market, and to enhance further its potential to contribute to sustained and balanced growth of our economy. The bond Exchange Traded Fund is an investment instrument with a low entry cost. It is a highly efficient, transparent and convenient investment tool designed to appeal not only to institutional but also retail investors. With an affordable standard lot size, the bond Exchange Trade Fund provides an avenue for retail investors to have access to the bond market. It thus offers investors an additional investment alternative as well as an opportunity to diversify their investment into more asset classes. The ABF Malaysian Bond Index Fund comprises investments in Government and Quasi Government securities and tracks an index, which by design is replicable and transparent. The listing of the ABF Malaysian Bond Index Fund today will not only add to the diversity of listings on Bursa Malaysia but would also pave the way for the increased introduction of other more innovative products in the future.
Annex Chart 1 Equity indices during crises S&P 500 equity index  FTSE All-share equity index Cumulative decline from peak (per cent)  Cumulative decline from peak (per cent)  0 10  0 10  20  20  30  30  40  40  50  50  60  60  1929 crash  70  1973 oil crisis  80  Current crisis  1929 crash 1973 oil crisis Current crisis  70 80 90  90 0  6  12 18 24 Months from peak  30  36  Sources: Global Financial Data Inc. and Bank calculations. (a) Previous peaks taken as: 1929 crash = 7 September 1929; 1973 oil crisis = 11 January 1973 and current crisis = 9 October 2007. 20  0  6  12 18 24 Months from peak  30  36  Sources: Global Financial Data Inc. and Bank calculations. (a) Previous peaks taken as: 1929 crash = 30 September 1929; 1973 oil crisis = 12 December 1972 and current crisis = 10 October 2007. Kamstra, M and Shiller, R J (2009), “The Case for Trills: Giving People and their Pension Funds a Stake in the Wealth of a Nation”, Cowles Foundation Discussion Paper No.1717.

Chart 5  Chart 6  Changes in international equity indices since trough(a)  European corporate bond spreads  Interest rates Expected earnings  Implied risk premium Total  Per cent 100  Basis points (log scale) Illiquidity premium (a) 10,000 Compensation for credit risk (b) Great Depression (c) Current (d)  80 60 40  1,000  20+ 0 20  100  EuroStoxx  S&P500  FTSE 100  40  Current  March  Current  March  Current  March  Current  March  Current  BIS Review 10/2010  March  Sources: Bloomberg, IBES, Thomson Datastream and Bank calculations. (a) Based on a three-stage dividend discount model. See Panigirtzoglou, N. and Scammell, R. (2002), 'Analysts' earnings forecasts and equity valuations', Bank of England Quarterly Bulletin (Spring), pages 59-66. (b) Taken as 9 March 2009. 10  Sources: Citigroup, Moody's Investors Service, UBS Delta and Bank calculations. (a) Spread of iBoxx € corporate bond index over iTraxx Europe credit default swap index. (b) iTraxx Europe five-year credit default swap index. (c) Credit risk premium for realised default rates on US corporate bonds issued in 1931. (d) Credit risk premium for Moody's current default probability forecast for European corporates.
We have free international trade and free capital movements. We do not have the instruments for fine-tuning the exchange rate. But when the implementation of monetary policy is oriented towards low and stable inflation, this will contribute to a stable krone exchange rate over time (see charts). Different real economic developments across countries may nevertheless affect real exchange rates. Sweden is an example of this. Economic developments in Norway’s neighbouring country have been fairly weak over the past 30 years. GDP has fallen by 20 per cent in relation to GDP in the euro area. At the same time, the real value of the Swedish krona has declined by about 40 per cent against European currencies. Sluggish price trends for Swedish export goods and the deterioration in the Swedish balance of payments have contributed to the decline. In Norway too, changes in productivity and terms of trade may have an impact on the real exchange rate in the years ahead. However, it is important to be aware that the real exchange rate functions as an automatic stabiliser in these cases. The Swedish economy recorded weaker economic growth - more sluggish productivity gains - than its trading partners, reducing the competitiveness of Swedish firms. This resulted in a depreciation of the krona, however, thereby dampening the impact on competitiveness. Nominal effective exchange rates A rising value denotes an appreciating currency. January 1990=100.

Svein Gjedrem: Perspectives on the role and effects of monetary policy Introduction by Mr Svein Gjedrem, Governor of Norges Bank (Central Bank of Norway), for the Holden Committee of Experts assessing the challenges facing the exposed sector, Oslo, 16 January 2003. *  *  *  Introduction The primary objective of monetary policy is to ensure nominal stability. There were wide fluctuations in the Norwegian economy in the 1970s and 1980s. Economic developments were marked by high and variable inflation. Inflation rose gradually and it took a long time before it fell. The absence of a nominal anchor was one of the main reasons behind these pronounced swings in the Norwegian economy. With a policy of low interest rates and devaluations, inflation took root. Nominal interest rates were kept at a low level even though inflation and the value of tax-deductible interest expenditure rose. Frequent devaluations from 1976 were not able to prevent a decline in the manufacturing sector. On the contrary, they proved to be self-reinforcing. The wide fluctuations culminated in a credit boom in the mid-1980s, followed by a deep recession and high unemployment towards the end of the 1980s. From the mid-1980s, during and after the credit bubble, it was recognised that a substantial revision in economic policy would be necessary and that the problems created by inflation had to be taken seriously. The exchange rate was chosen as the nominal anchor. A deterioration in competitiveness due to high wage growth would no longer be rectified by means of devaluations.
By the end of 2008, the problems of banking sectors – in the US, Europe and elsewhere – and the need for massive deleveraging had become apparent. At the same time, the interbank market was severely disrupted, and so was the transmission of monetary policy impulses to the real economy. The measures adopted by the Eurosystem were geared at restoring the functioning of its transmission mechanism, and at supporting the continued availability of credit to households and non-financial firms. As a result of increasing tensions in the sovereign debt markets since 2010, the situation of the euro area financial sector worsened. Doubts about the sustainability of sovereign debt levels in some countries of the euro area led to significantly increased levels of sovereign bond spreads. This, in turn, also led to higher interest rates in the private debt markets of the affected countries. It became apparent that the health of the national banking sector was often closely intertwined with the health of the local sovereign: funding problems in the banking sector and weak fiscal positions mutually reinforced each other. Significant heterogeneity emerges when looking at changes in the bank balance sheet items in different countries of the euro area, primarily concerning changes in deposits and in credit growth.

This affected employment, and the resulting uncertain labour market situation had a dampening impact on private consumer spending which rose at a below-average rate. The real estate sector, by contrast, benefited from the continuation of favourable financing conditions. Oil prices rose again at the beginning of the year, continuing to act as a brake on the world economy, and the situation remained particularly gloomy in Europe. Given these developments, it is most unlikely that the 1.5% growth for 2005 forecast in the last monetary policy assessment will be attained. However, signs of an improvement in the Swiss economy became evident in the first quarter of the year, with exports picking up in April and May. We expect this trend to be confirmed in the months to come, and now forecast real GDP growth of about 1% for the year 2005 as a whole. This delay in the recovery of the economy will have a dampening effect on price developments in the year 2006. Now I would like to outline my assessment of monetary developments, which remain more or less unchanged with respect to the assessment presented in March. The three-month Libor rate has remained at a low level for a long time now: it has been below one percent for almost three years, since July 2002. Real rates of interest for three month maturities have been negative for two years. Given the unusually low level of interest rates, the willingness to invest in liquid assets remains high and, according to our estimates, the money overhang persists.
If the economy functions entirely without rigidities, that is to say with flexible wages and prices, a higher growth rate in productivity has no importance for inflation. If productivity increases, wages rise. This means that the companies’ costs do not change and consequently inflationary pressures do not change. But the economy does not function entirely without friction. If the growth rate of productivity changes, wages do not adjust immediately. This means that the adjustment, both upwards and downwards, comes after a time lag. This is exactly what we have seen in recent years. An unusually high increase in productivity has coincided with a relatively moderate wage development. This is the most important explanation as to why inflation has been low, which in turn has given us at the Riksbank the opportunity to keep the interest rate at a low level. If we look ahead, the situation is probably the reverse. Over the coming years, productivity will instead probably grow more slowly, while wages will increase more quickly than before. Altogether, this indicates higher inflationary pressures and thus a higher interest rate in the coming years. References Barrell, R., Liadze, I. and Pomerantz, O. (2007), “Import Growth, Globalisation and the Impact of Trade Liberalisation”, National Institute of Economic and Social Research Discussion Paper no. 294. Bernanke, B. (2005), “Productivity”, Speech at the C. Peter McColough Roundtable Series on International Economics, Council on Foreign Relations, January 19.

We expect to enter the next phase over the coming years when GDP growth will slow down. This indicates a lower rate of increase in productivity. Another factor that indicates a lower rate of increase for productivity is the composition of the labour force. The rapid increase in employment means that an unusually large number of new job-seekers are entering the labour market. It is reasonable to expect that those who now obtain jobs have a slightly lower productivity than those who already have jobs. In addition, employment is mainly increasing in the service sector, which also indicates a lower rate of increase in the future. Structural factors also indicate a slowdown It is more difficult to assess how globalisation, deregulation, IT investments and other structural changes will contribute to productivity growth in the future. Some structural changes are of a one-off nature while others are ongoing processes without any clear ending. And even if these changes are of a one-off nature, such as the fact that Sweden joined the EU, they may have significance for a long period of time. Globalisation is a factor that will probably continue to be a driving force behind productivity for a long time to come. Integration within the EU is deepening. The countries in eastern and central Europe who  6  4  Greenwood & Krusell (2007)  BIS Review 61/2007  have moved away from planned economies have many years of rapid development ahead of them before they reach levels corresponding to those in western Europe.