samchain/econo-pairs-v1 huggingface dataset:
Before the onset of the financial crisis, the 6  central bankers’ handbook prescribed that if the economy was overheating and prices and wages were under growing pressure, the central bank should raise nominal interest rates above inflation expectations, thus tightening real rates and cooling down the economy. And vice versa, in a downturn, with falling prices and rising unemployment, the central bank should cut nominal interest rates, thus reducing real rates and stimulating aggregate demand. Conceptually, central bankers tried to keep real interest rates at a level — known as the “natural rate of interest” — that held GDP at its potential level and inflation stable at around its target.2 The natural rate of interest cannot be observed directly and can only be estimated, with some uncertainty, econometrically.3  According to available estimates, in recent decades the natural rate of interest appears to have progressively declined in the advanced economies. This is attributed to demographic factors, such as population ageing, or technological factors, such as lower productivity growth, which have changed the balance between the supply of savings and investment demand. In the case of the euro area, estimates even place the natural rate of interest at negative levels.4 Consequently, to stabilise inflation, real interest rates must now be lower than two or three decades ago.

Since early 2010, due to anemic growth in external demand, current account balance has been deteriorating rapidly, whereas core inflation remains subdued and output gap persists. Recent surge in capital flows toward emerging markets, including Turkey, has the potential to exacerbate the divergence between the pace of recovery in the domestic and external demand. If this pattern of growth coexists with rapid credit expansion and deterioration in the current account balance, it may lead to financial stability concerns. These developments make it essential to effectively utilize policy instruments other than policy rates. Consequently, in today’s challenging financial environment, which is likely to persist in the foreseeable future, the Central Bank of Turkey underscored four basic principles upon which the monetary policies would be built to maintain financial stability. The first one is to discourage excessive leverage and keeping the debt ratios of banks and the corporate sector at modest levels. The second principle is extending the duration of borrowing for private and public sector, as well as household deposits. The third principle is strengthening the FX position of both the public and private sector, which is usually the Achilles’ heel for emerging economies with sizable current account deficit. The fourth principle is better management of foreign currency risk by the corporate sector through instruments like the Turkish Derivative Exchange. In November 2010, we have started quantitative tightening to deal with rapidly increasing macro imbalances driven by short term capital inflows and acceleration in credit growth.
Firms are the basic economic agent, since they take most of the economy’s production decisions and their management, strategy, adaptation to demand and use of resources ultimately determine the economy’s growth rate, productivity and competitiveness abroad. Given the weak national demand with which they are faced, firms will evidently give their utmost attention to managing their productive processes efficiently. In particular, the surge in oil prices will force them to review the energy consumed in production. Although oil prices have moderated in the last few weeks, the uncertainty surrounding this market makes it advisable to maximise efficiency in oil use. In this respect, progress has to be made in introducing competition in the energy market and, at the same time, taxation must be revised to stimulate energy saving, since this input represents a significant burden on Spain’s trade balance. Spanish firms are tackling this phase through three lines of action, which the authorities should support. First, firms are reviewing their growth strategy in Spain. They are analysing the markets in which they compete, but also others in which they still do not and to which demand may shift in the future. Firms will try to see beyond the next few years of low growth to identify opportunities and imagine what the forthcoming needs and demands of consumers will be, in order to position themselves advantageously in those business areas.

As a result, today, unlike a few months ago, nobody is defending the possibility of certain European economies decoupling from what is happening in the United States. As you can imagine, the Spanish economy has not been able to remain unaffected by these processes. In fact, our country, which had been building up certain imbalances, in the form of rapid growth of household and corporate debt and, consequently, of a large external deficit, had already embarked upon a smooth correction from mid-2006. However, global events have accelerated and intensified this adjustment, even though, from the viewpoint of the financial system, Spanish banks have had absolutely nothing to do with the causes of the financial crisis. They have not generated doubtful assets like US banks have, nor have they invested in these assets like many European Banks have. However, the financial crisis has not only affected the institutions that generated these toxic products or invested in them but, by inducing financial market breakdown, has spread to all institutions. For Spain, this means that the adjustment process must now take place in the presence of much more difficult conditions in the financial and international environment than we have enjoyed during the last decade. That said, the Banco de España has pointed out on a number of occasions that some of the adjustment we are experiencing is an inevitable part of economic developments, which will allow correction of the imbalances that had been accumulating during the upswing.
Now, inflation seems set to rise sharply in the near term. And our latest central projection is for output to grow at below trend rates over the next two years – even on the conventional assumption that Bank rate follows the market yield curve and falls to 4.5% during the course of this year. There is still relatively little in the headline macro data to support such a marked change in view. CPI inflation, at 2.2%, remains close to target. And, on the output side, growth weakened a touch in the fourth quarter last year, but was still around the post war average. Indicators for the first quarter are mixed, but do not suggest that growth has stalled. In other words, the change in our Inflation Report projections is a forecast. It is the judgments underlying that forecast – and the attendant risks and uncertainties – which will be the main focus of my remarks today. So why have we changed our view? Our latest forecasts reflect judgements about the possible future impact on the UK of two key developments. First, the continuing financial crisis in advanced financial markets which has been triggered by the slump in the US housing market; and second, the renewed build up in global inflationary pressures, associated with soaring energy and food prices.

Instead it involves identifying ways to induce and encourage desired behaviors. I would also suggest that it means avoiding departures from normal market functioning whenever possible. Interventions should seek not to override or suspend market functioning, but rather to guide market processes. §  This is not to say that payment suspensions always can and should be avoided, or that ever-larger bailouts are desirable or feasible. I would note that we at the New York Fed in numerous instances, spanning several decades, have worked to help borrowers and creditors find mutually beneficial solutions that involved some degree of concerted or coordinated financing. §  But in such instances, when payment interruptions or resort to concerted financing truly are unavoidable, experience has shown that minimalist approaches - - where only certain payments are suspended or delayed, and only when absolutely necessary - - generally offer the best  BIS Review 61/2002  prospects for minimizing spillover effects and for restoring market access rapidly. G  •  The linchpin of a market-based, minimalist approach has to be a strong policy response on the part of the country in crisis. Markets may not always be reasonable, but they usually have reasons for reacting adversely. Those reasons most often relate to policy or institutional shortcomings.
We are fortunate in having been able to grab him for a couple of hours today while he is briefly passing through Hong Kong. It is my pleasure to welcome him and to join with you all in the launch of this seminar, which will, I hope, be the first of many organised by the MPC over the coming months and years. 8. Finally, let me record my gratitude and congratulations to all the Committee members of the MPC for the excellent work they have put into the reconstruction of the Committee, and my thanks to everyone here for supporting this event today. 2  BIS Review 3/2001

The banks’ ability to transmit monetary policy effectively may be jeopardised if they have problems. The central role of the banks in the payment system - as the channel for payments of every type - makes it important that the banks are financially healthy and operate efficiently and reliably. Otherwise the traffic in payments is liable to be disturbed. If the problems become so great as to constitute systemic risk, it is incumbent on the central bank to consider support for liquidity. Moreover, in that central banks provide settlement systems for large-value payments, they also have a direct, operative function in the payment system. All inter-bank payments are channelled through the settlement system, which is thus the hub of the entire payment system. In Sweden the Riksbank now regularly publishes a Financial Market Report, in which we present our appraisal of the financial system’s development and stability. The Report is thus a way of monitoring one of our primary functions - the promotion of a safe and efficient payment system. There are some parallels here with the Inflation Report, which we publish regularly as part of the work on our other primary function - safeguarding a stable value of money. The rapid pace of financial developments, particularly in the international payment system, also calls for extensive international cooperation. The issue of financial system stability will be up for detailed discussion in various fora in connection with the coming annual meetings of the World Bank and the International Monetary Fund.
The Government has already started negotiations on a number of free trade agreements that will open doors to greater market access in the growth economies within the region. These negotiations are currently now at various stages. We remain confident of achieving a positive outcome that will be balanced and mutually beneficial. Specific opportunities for expansion abroad by Islamic financial institutions, in particular, are also being further enhanced through various bilateral and multilateral arrangements. This includes the signing of a memorandum of understanding between Malaysia and the Islamic Development Bank in 2004 to enhance cooperation among member countries of the Organisation of Islamic Conference, or OIC, in the areas of trade, investment, islamic finance and ICT development. These initiatives will pave the way for Malaysian takaful operators to promote and expand takaful and retakaful business to key target markets abroad, in particular, within the OIC. The net benefits that will ultimately accrue to Malaysia will depend on the ability of Malaysian institutions to develop targeted globalisation strategies that will position them to gain from the firstmover advantages where they arise. This needs to be reinforced with research into the new growth markets, and exploring opportunities for strategic alliances or joint ventures in these markets. At the same time, the growth strategies must also accord an equal inward focus on reinforcing financial strength and resilience, human capital development, a strong business reputation and high standards of service and professionalism all of which are the critical success factors for effective strategies abroad.

We must not again find ourselves in a position where the authorities in different countries are developing as they go along how capital support should be provided: what triggers it, its terms, and who pays. I have aired the possibility of eventual losses falling on the surviving banking system, as a way of avoiding burdening the general taxpayer and as an incentive for firms to recognise and act upon their interest in the health of the system as a whole. But the more important point is the need to have a plan. And of course the fiscal support comes after drawings in any private sector provision of contingent capital. Banking and the credit system: might there be macroprudential instruments? At this point, I should issue another caution: that however all those issues are resolved, the banking-structure debate is resolved, I doubt they could prove sufficient to rule out bouts of instability, even crises, in the future. That is because I am doubtful that the tendency to excess can be curbed solely by addressing the circumstances of individual firms. Booms are spurred by plausible illusions and collective-action problems. The current crisis has, in my view, been at root a crisis of liquidity – of an over abundance of liquidity in the upswing, succeeded by a drying up of liquidity during the crash. Usually, material rises in asset prices are initially triggered by reasonable perceptions of a favourable shift in fundamentals.
Of course, the duration of the period of high inflation was long, but it responded to a succession of different shocks and not to the persistent effect of a single one. 8  On the contrary, whenever we identify medium-term pressures on inflation, either upward or downward, we must react with vigor. The same episode which I have just referred to is illustrative in this regard. While in the short term inflation rose as a result of a shock on the exchange rate, with transitory effects, medium-term pressures diminished as a result of a deteriorating economy. Had our target been short-term inflation, we should have raised the MPR. As it is not, and what we aim at is medium-term inflation, our decision was to lower the MPR to prevent inflation two years out from falling below the 3% target. This response of monetary policy is very different from its not so distant past. In the 1990s, when our economy was not yet sufficiently prepared to deal with a currency shock, the Bank had to choose between an inflation target and an exchange rate target. The result of the exercise was complex for the Chilean economy. Not to mention what happened in the early 1980s, when the defense of a pegged exchange rate and changes in external financial conditions led us to a recession that cost us 15% of lost GDP and escalating unemployment.

Banks with CDO exposure have already made full provision and recognized losses in line with IAS 39, and presently all sub-prime related CDO positions have been unwound. More importantly, Thai banks also do not have investment in US GSE securities. This is another positive point that will help insulate the banks from any further spillovers. Reflecting this, the direct impact of the turmoil so far, on the Thai banking sector, has been limited. Second, on the issue of liquidity and financing, banks in Thailand are predominantly domestic-owned. Hence, they rely more on deposit funding rather than external funding. Domestic funding is a more stable source of funding and is not affected by the turmoil. This feature will help cushion Thai banks from the effects of the global credit crunch. BIS Review 111/2008  1  Third, fundamentals of the Thai banking system have improved and the key fundamentals are sound and resilient. As a sector, banks in Thailand have enjoyed good profits for the past seven years and are well capitalized with the BIS capital adequacy ratio at 15.2 percent at end of June this year. Over the years, better risk management, improved asset quality, greater provisioning coverage against losses, and the regulatory and supervisory frameworks that meet international standards, have significantly improved the overall risk profile of the sector. As for the most recent quarter, net profit of 57 billion baht was registered in the second quarter of this year.
2.1  Main public spending measures  The Draft Budget includes an increase in public-sector employee compensation of 2.25% in 2019, plus an additional 0.25% if GDP growth in 2018 is equal to or higher than 2.5%, and other additional funds for specific targets and bodies. The hiring policy of the past two years remains in place, with replacement rates being increased in some sectors and additional measures being taken on working hours and temporary contracts. As regards social benefits, the Draft Budget includes a rise of 1.6% in State pensions and growth of 3% in minimum and non-contributory pensions in 2019, and an increase of 4 pp in the regulatory base of widows’ pensions. Other spending measures are the reinstatement of unemployment benefits for persons over 52 years old, more funds for dependent persons and the extension of paternity leave to eight weeks. The Draft Budget exhaustively details the other spending measures and priorities, which I shall not repeat here for the sake of brevity. In all, in 2019 State expenditure will, in accordance with this Draft Budget and in budgetary accounting terms, grow by 6.7% with respect to the budget outturn projection provided for 2018 (see Chart 8).

ANNUAL GROWTH AND CONTRIBUTIONS  4.0  CHART 1  Projections  %  4.0  2.0  2.0  0.0  0.0  -2.0  -2.0  Projections  %  -4.0  -4.0 2011  2012  2013  2014  2015  NET EXTERNAL DEMAND  2016  2017  2018  2011  2019  2012  2013  2014  2015  2016  2017  2018  2019  IMPORTS OF GOODS AND SERVICES EXPORTS OF GOODS AND SERVICES NET EXTERNAL DEMAND  NATIONAL DEMAND  GROSS DOMESTIC PRODUCT  SOURCES: INE and Banco de España. FORECASTS FOR THE SPANISH ECONOMY: EMPLOYMENT AND UNEMPLOYMENT GDP GROWTH(%) Contributions of employment and labour productivity (pp) Projections  4  CHART 2  UNEMPLOYMENT RATE (% of the labour force) Projections  28 25  2 22 0  19 16  -2 13 -4  10 2013  2014  2015  2016  LABOUR PRODUCTIVITY  2017  2018  EMPLOYMENT  GDP  2019  2013  2014  2015  2016  2017  2018  2019  SOURCES: INE and Banco de España. particularly marked in the euro area; the progressive normalisation of monetary and financial conditions; and the very limits on the growth of domestic demand, such as, for example, those derived from the current, historically low levels of the household saving rate. On Banco de España estimates, the Spanish economy’s already positive output gap will widen during 2019 (see Chart 3).
Figure 12 Growth in loans (annual change, percent)  Chile (1)  Emerging economies (3)  90  90  60  75  75  50  50  60  60  40  40  45  45  30  30  30  30  20  20  15  15  10  10  0  0  0  0  -15 -10  -15 90 93 96 99 02 05 08 11 Housing  Consumer  Corporate (2)  60  -10 06 Brazil  07  08  09  Colombia  10 China  11 Chile  (1) Preliminary figures for May 2011. (2) Sum of commercial loans and foreign trade loans. (3) For Brazil, figures cover up to February 2011. For China and Colombia, up to March 2011. Sources: Central Bank of Chile, International Monetary Fund and Superintendence of Banks and Financial Institutions. BIS central bankers’ speeches  13  Figure 13 Indebtedness and financial burden (percentage of disposable income) 80  20  60  15  40  10  20  5  0  0  02.IV  04.IV  06.IV  Total debt (RDI)  08.IV  10.IV  Long-term financial burden (RCI)  Sources: Central Bank of Chile based on information from SBIF, SuSeSo and SVS.

I am sure that its long experience, accumulated knowledge and proficient staff make the Central Bank of the Republic of Turkey an institution that can fulfil these expectations. I am proud of this institution. I owe a great debt of gratitude to my colleagues, who have greatly contributed to our accomplishments and to our policy implementation. BIS Review 47/1997
Undoubtedly, the monetary policy of the European Central Bank, which has successfully achieved its objective of keeping euro area inflation and price expectations under control, has had a sharply expansionary effect on the Spanish economy. Indeed, lower interest rates have facilitated the growth of corporate and household debt and boosted spending and activity. But this cannot be identified as the sole cause behind our growth, and nor does it suffice to explain our better performance, since other southern European countries have also seen their financial costs substantially cut and yet have not recorded comparable growth. Nor can there be many doubts about the favourable influence that the fiscal policies pursued since 1994 have had on economic agents' confidence. With the help of European funds, these policies have enabled the budget deficit to be reduced to the extent that, in the past two years, we have run a surplus. The beneficial effects of fiscal consolidation have been reinforced by the fact that the gradual elimination of the budget deficit has occurred without hardly increasing public spending relative to GDP. Among the causes of the boom, we should also acknowledge the currency devaluations in the early 90s. These took place as a result of the turbulence then prevailing and led to a peseta-euro conversion rate that placed us in a very favourable starting position for the competitiveness of the Spanish economy.

I would add here that the Government has implemented several measures in this respect, such as electricity and natural gas price capping schemes, the compensation of the price of motor fuel/liter and caps on the firewood price. Also, we are aware that the war in Ukraine and the related sanctions will continue to generate considerable uncertainties and risks to the outlook for economic activity, through possibly stronger effects on consumer purchasing power and confidence, as well as on firms' activity, profits and investment plans, with an unfavorable impact on financing costs. In this current juncture, the balanced macroeconomic policy mix and the implementation of structural reforms, including the use of EU funds to foster the growth potential over the long term, are essential in preserving a stable macroeconomic framework and strengthening the capacity of the Romanian economy to withstand adverse developments. With respect to the National Bank of Romania's responsibilities, we aim to anchor inflation expectations over the medium term, to bring the annual inflation rate back towards the target, in a manner conducive to achieving sustainable economic growth. The annual CPI inflation rate is projected to follow a gradual downward path, but to remain slightly above the variation band of the target also next year. The prudential and financial position of the Romanian banking sector - the main source of finance to the economy - is adequate. However, the risks are rising both locally and internationally.