samchain/econo-pairs-v1 huggingface dataset:
They confirm that they intend to adhere to the principles of the Code, and will expect the same of their regular FX counterparties, except where this would inhibit the discharge of their policy functions. Additionally, members of central bank sponsored foreign exchange committees will be expected to adhere to the Code.” Consistent with this support, and in light of our interest in the integrity and effective function of the 3/6  BIS central bankers' speeches  FX market, the New York Fed will be focusing on adherence to these best practices. We are currently assessing our own FX market activities relative to the Code and evaluating what steps, if any, we must take to be able to make our own Statement of Commitment. In addition, we have revisited our own counterparty policy in light of the Code. The Federal Reserve Bank of New York policy on counterparties for market operations had already noted that counterparties were expected to operate in accordance with best practices promulgated by the New York Fedsponsored Treasury Market Practices Group and the Foreign Exchange Committee. However, that policy was recently revised to emphasize adherence to the Code in light of its publication. Finally, adherence to the Code is also being integrated into the membership framework for our sponsored Foreign Exchange Committee. These steps illustrate our desire to transact and engage with entities that are behaving with integrity. Central banks have an important role to play in supporting best practices, such as the Global Code.

Very often such type of predatory lending results in perpetual debt since the interest rate is prohibitively high, and the borrower does not have recourse to legal aid or proper financial advice given that the transaction takes place in the informal financial sector. Increased financial literacy would avoid recourse to such financing and would facilitate greater reliance on the formal financial service providers. An important objective of enhanced financial literacy is to achieve greater personal accountability for post-retirement financial, medical and social needs. Unlike in the developed economies, the financial burden of those who have retired with respect to health and retirement costs are usually borne by the individual. This requires understanding of the various insurance products and other health care plans. The most sustainable approach to mitigating this type of risk is to have informed participation in health and retirement funding schemes. Greater understanding and knowledge of these financial risks through improved financial literacy is the first step towards actively managing these risks. Enhanced financial literacy can also contribute towards a more stable and sound banking system. A more discerning household sector can drive greater innovation, greater efficiency in terms of lower fees and charges and better quality of services. This combined with the monitoring by Central Banks to ensure that financial services are provided fairly and to ensure appropriate risk management and governance practices adopted by the industry increases the potential for enhanced stability and performance of the industry.
The extraordinarily poor economic outcomes we see today underscore the importance of building a financial system that is resilient in its ability to provide credit to households and business throughout the business cycle. It also underscores the importance of limiting the types of financial and real imbalances that develop during times of prosperity. When such balances unwind, they can cause significant damage to the financial system and the economy. A range of reforms are in train as the Dodd-Frank Act and other initiatives are implemented in the United States and abroad. Within the Federal Reserve System, we are building a more robust framework for financial stability. And, through the Financial Stability Oversight Council (FSOC), interagency coordination in identifying and mitigating risks to financial stability is being strengthened. As we move to implement financial reform, we should not be dissuaded by those who argue that the costs of reform are too high or that the job is simply too difficult. I grant that not everyone is, or will be, happy with all the reform measures. Reasonable people can disagree about the best way to achieve certain public policy objectives or the appropriate speed of the transition. But I think that the fundamental point that the financial system needs to be changed in profound ways should be broadly accepted at this point.   Policymakers and market participants must acknowledge that the financial system is inherently unstable – that it is prone to booms and busts, and that these episodes can destabilize the real economy.

In many areas, we have identified the necessary tasks only in general terms. Progress in figuring out the details and the implementation path and how to coordinate the efforts on a cross-border basis is more limited. I would particularly highlight the cross-border coordination problem – regulatory oversight is national, but many financial firms and infrastructures operate on a global basis. Effective reform requires mutually consistent global standards – and while international cooperation to date has been good on many fronts, progress is uneven, and the devil is in the details of implementation. We need all national authorities to resist the temptation to favor domestic financial interests over the interest of achieving a true level playing field globally. And we should resist the urge to favor locally controlled infrastructures where global solutions would better advance the collective financial stability interest. Instead we should work to ensure fair access to global infrastructures. Also, it is important that national regulators have access to data and a role in the regulatory oversight of such global infrastructures when that is relevant to their own national financial stability agendas. In the United States, I think we have made more progress in bolstering the resilience of our banking institutions than we have on the other tracks. There are two elements to this. The first element is the increase in capital that has already occurred. The major U.S. banking institutions are much better capitalized today than they were in the fall of 2008.
The path towards becoming more open and clear has not always been easy, it has at times caused some debate. Two issues in particular have been the subject of lively discussion over the past year. The first is that we now publish our own forecasts for the interest rate path. The second concerns how representatives of the Riksbank send signals regarding the interest rate in speeches and press releases. 2  BIS Review 106/2007  Interest rate path a natural step towards openness In February 2007 we presented for the first time our own forecast for the development of the repo rate. Prior to this only the central banks in Norway and New Zealand published their own interest rate paths. But this group has now grown, with the addition of the Riksbank and in March this year also the Icelandic central bank. At the beginning of this month we also decided to publish our forecast for the path of the policy rate – and a number of other important variables – in connection with each monetary policy meeting. This means that we will publish our interest rate forecast six times a year, instead of three as before. By publishing our own forecast for the interest rate we have become more open and clear with regard to our view of future monetary policy.

I believe that there is a broad understanding among households, companies and market agents that we need to adapt monetary policy and reconsider how we should set  BIS Review 106/2007  3  the repo rate in future when new information changes the economic picture. We have been clear about the fact that a forecast is by definition uncertain and that it becomes more so the further ahead it stretches. And the interest rate path presented in the Monetary Policy Report is indeed a forecast. It is not a promise! The fact that we do not have perfect knowledge of the future is no reason to refrain from being as open and clear as possible with regard to what we believe will happen. We must form an opinion of how the policy rate should develop in the future regardless of whether we publish it or not. If it turns out that we have made an incorrect assessment in our forecast, it would not have been less incorrect just because we had refrained from telling anyone about it. It is hardly reasonable that we should try to gain greater credibility by hiding things or sending unclear signals about one of the most important variables in our analysis. I believe it is better that we are open about what our decisions are based on, now that the inflation target is so well-established that we are able to be open.
Economic growth in the United States had been higher than expected and the first signs of a recovery in Europe were now visible. Meanwhile, a distinct upturn in the Swedish economy was increasingly apparent. The forecasts were revised upwards and the Executive Board now agreed that further interest rate reductions were no longer on the agenda. By the middle of August, at the monetary policy meeting on the 12th, the picture of a stronger economic development in Sweden was even clearer. The Board therefore concurred on a high future growth rate that would call for a tighter monetary stance. But price increases were low and the available statistics, on capacity utilisation and the labour market, for example, did not point to a rapid future increase in inflation. The Board’s majority therefore considered that an immediate tightening was not needed. With inflation expectations firmly anchored around the 2% target, we judged there was scope for waiting with an interest rate increase. Calmer monetary policy discussion Some of the earlier autumn conferences were preceded by monetary policy discussions that were rather intensive. In that respect the past year has been relatively calm, even though the situation has changed so rapidly. Last autumn there was, of course, considerable anxiety but the Riksbank’s quick succession of interest rate cuts was well received. In Sweden, moreover, we were spared most of the European discussion about political pressure on monetary policy.

It is seldom possible to demonstrate clear effects of interventions and that could not be done on this occasion, though the depreciation was broken during the day in question. Later in the autumn the krona appreciated again. BIS Review 111/1999  2  It seems to me that two main factors lie behind the krona’s appreciation in the past twelve months. One is a normal rebound from last autumn’s excessive weakening. This happened during the winter and was particularly pronounced because the euro’s introduction at the beginning of the year had made some investors concerned about the krona. The other factor is the increasingly clear picture of a strong economy with a budget surplus, low inflation and high growth. Moreover, the higher growth in Sweden compared with the euro area has influenced appraisals of the respective levels of interest rates. Specific events and statements may have played a part in the timing of the appreciation but it seems to me that the crucial influence has come from more fundamental economic considerations. The discussion of monetary policy has also acquired a new dimension. The procedure with the new Executive Board from the beginning of this year enables Board members to differ from the current majority view of inflation prospects and monetary policy measures. Board members have in fact differed on a number of occasions, as is clear from the published minutes. On two occasions, divergent opinions have also been registered regarding the level of the repo rate.
The desk’s role in implementing monetary policy Before discussing overnight, fixed-rate reverse repos, I think it would be helpful to lay out some context for how we think about monetary policy implementation. As you well know, the Federal Reserve Act charges the FOMC with formulating monetary policy to achieve what we call the “dual mandate” – stable prices and maximum employment. In normal times, the Committee would do this principally by changing the level of its target for the overnight fed funds rate, in order to influence the pricing of money and credit. Movements in this rate are passed on to other short-term interest rates that influence borrowing costs for households and businesses and financial conditions more broadly. Since December 2008, of course, the FOMC has held its target fed funds rate in a narrow range just above zero. Since then, in order to support a stronger economic recovery and help ensure that inflation, over time, is at the rate most consistent with its mandate, the FOMC has provided additional monetary policy accommodation using a number of unconventional tools. These tools include alterations in the size and composition of the Federal Reserve’s balance sheet and forward guidance on the target federal funds rate. Any change in the size and composition of the System Open Market Account (SOMA) decided upon by the FOMC is implemented by the Desk. This distinction between monetary policy formulation and monetary policy implementation is important.

But even if we don't have enough experience or enough distance from the crisis to resolve these questions definitively, we know a lot more about these questions than we did a decade ago. I want to talk about two dimensions of this broad policy debate. How much progress has been made toward addressing the factors that made emerging market economies so vulnerable to crises in the past? What are the most important policy challenges ahead for those governments? These are my personal views. I should start by noting that your view on what constitutes progress is naturally shaped by your view of the factors that rendered emerging economies most vulnerable to crisis in the first place. While no broad characterization can do justice to the different conditions at play, I believe the available evidence supports the view that the crises were generally most acute where there was a large buildup in short-term external debt, encouraged by the presence a fixed exchange rate regime and perverse incentives in the capital account, tax, or supervisory regimes. In most cases, these balance sheet weaknesses left the economies concerned acutely vulnerable to adverse shifts in confidence and the inevitable break in exchange rate regimes, with little flexibility for macroeconomic policy to cushion the damage. As domestic and foreign investors rushed to reduce exposure to the country, the exchange rate fell further, increasing losses for the banks and corporations that had borrowed in dollars and magnifying fear of default.
But if – as I expect is a risk – we are set to need more nuanced monetary policy actions in the future as the macroeconomic situation normalises and decisions become more finally balanced, then re-establishing a reputation for measured and purposeful steps in policy is valuable. Restricting ourselves to a 25bp now – albeit with the prospect of more to come in the coming months – is an investment in containing market expectations of aggressive ‘activism’ that I saw as worth making. In the early years of the MPC, former Bank Governor (then Deputy Governor and now Lord) King argued that the establishment of the inflation target should mark the end of characterising policymakers as either ‘hawks’ or ‘doves’: “it made no sense to use these descriptions because each member of the Committee had the same objective”.27 An alternative distinction could emerge along the dimension of how ‘activist’ policymakers were in pursuit of their common target: whether they would use policy aggressively to return inflation to target quickly, or take a more measured approach reflecting the potential for difficult trade-offs between inflation and output volatility created by some shocks. Given the data and structural uncertainties facing monetary policy that I have discussed in this talk, a case can be made for a measured rather than activist approach to policy decisions, with a focus on more persistent developments in the data that have lasting implications for the outlook for price stability. That is what I would label a ‘steady handed’ approach to monetary policy.

When the interest rate falls, it is less profitable for households to save, and they will therefore make purchases now rather than wait until later. Borrowing also becomes less costly, and investment also rises. Higher demand in turn leads to a higher rise in prices and wages. Lower interest rates make it less attractive to invest in the Norwegian krone and for Norwegian enterprises and households to raise loans in foreign currency. Therefore, lower interest rates will normally lead to reduced capital inflows and a depreciation of the krone. This makes imported goods more expensive. In addition, a weaker krone increases activity, profitability and the capacity to pay in the internationally exposed sector. Activity in the economy moves in waves. For the Norwegian economy, the 1980s was a period of relatively wide fluctuations in activity, with periods of high inflation. The mid-1990s represents a period of stable and solid growth. In contrast to the situation in the previous decade, inflation was low and stable. At the beginning of the 1990s, the Norwegian economy was in a deep recession. Production was far below capacity. When growth in the economy picked up, capacity utilisation increased. The output gap shows the difference between actual GDP and the level indicated by trend growth - estimated at close to 2½ per cent in Norway. Around 1996, there was full capacity utilisation, and the output gap, as we normally measure it, closed.
The financial sector has become more broad based, competitive and efficient in providing entrepreneurs with alternative sources of investment capital, a diversified selection of new and innovative products, competitive rates, and more efficient services. This has been accompanied by increased ancilliary support services including business advisory services. These mutually complementary elements are in addition to access, choice of products, pricing and the quality of services to the SMEs. The more globalised environment however, requires new approaches and paradigm shifts are required for SME financing. First, there needs to be a recognition that SMEs are going to be increasingly specialized and diversified. Therefore, the traditional standard transactional and lending-based banking approach needs to shift towards more customized and differentiated financial products and services that are tailored to the size, profile and specific needs of the different SMEs. This in turn, requires a different approach in the way financial institutions manage their relationships with SMEs. As SMEs become more innovative and entrepreneurial, financial institutions will need to be able to form sound judgments about the business of the SMEs based on a broader range of credit information which go beyond the narrow traditional focus on collateral and historical financial information. Second, SMEs are likely to see a more pronounced shift towards more innovative and creative industries, such as green technology, medical sciences, information technology and computer animation. In such knowledge-based industries, the true value of companies is not  2  BIS Review 98/2010  measured in tangible assets, but in intellectual capital and specialist skills.

Estimates from our recent survey indicate a sharp drop in the use of cash over the last 15 years. Estimates of the exact level of cash use vary according to data sources and methodology. However, it is fair to say that cash is still an important means of payment. Notes and coins will also remain important as symbols of money. I believe that there have been two very important factors behind the rapid transition to electronic payment services in Norway. Banks have cooperated on standards and payments infrastructure while competing on the supply of services, and banks have charged for the use of payment services. Prices that reflect relative differences in production costs encourage users to choose the most cost-effective services. Research (by Humphrey, Kim and Vale) has shown that a  BIS Review 140/2008  1  relatively high price per transaction for paper-based payment services and a low price for electronic payment services have accelerated the trend towards an increasing share of electronic transactions. Without incentives for consumers or merchants to move to more efficient instruments, banks and other payment service providers will more likely be left trying to improve on old solutions. Payment systems are networks for the exchange of values between payers on the one hand and beneficiaries on the other. In two-sided markets like this, the benefit to existing users increases when new users join up.
In the long term, increase in competitiveness of the Albanian economy, diversification of growth sources, and integration in the regional and global markets will be prerequisites for sustainable economic growth. The Bank of Albania, therefore, supports pressing ahead with priority structural reforms in the export and import-competing sectors. Fiscal behaviour in the first quarter was characterised by shrinking budget deficit and public spending. During this period, budget deficit decreased by about 57%, in annual terms, reflecting an increase of about 8.2% in budget revenues and a shrinking of about 2.4% in public spending. Albeit showing a higher intensity than our expectations, it is in line with the corrective fiscal policy to be pursued during 2014. Fiscal consolidation is expected to be more rapid on the revenue side, supported by a new fiscal package and a commitment for reducing fiscal evasion. Meanwhile, the clearance of arrears to businesses is expected to improve their financial situation and support economic activity in Albania. Consistent with our previous messages, we support the corrective direction of fiscal policy, and consider this correction as an indispensable step toward improving macroeconomic balances in Albania. The implementation of a corrective fiscal policy has provided more room and opportunities for implementing a stimulating monetary policy to sustain aggregate demand and maintain our inflation target. The Bank of Albania has confidently moved in this direction.

From the macroeconomic point of view, the simultaneous action of weak inflationary pressures by the domestic economy, downward imported inflation and anchored inflation expectations led to low inflation rates. The domestic economic and monetary environment has put downward pressures on prices. Owing to the fragile aggregate demand, the negative output gap persisted, despite the growth recovery in the fourth quarter of 2013. Pressures  BIS central bankers’ speeches  1  from the labour market were subdued because of the rise in unemployment rate during 2013 and the moderate rise in wages. These developments led to a low increase of production cost and controlled businesses’ profit margins. The weak domestic demand narrowed the room for businesses to pass the increase in excise duty on the final prices. Also, the imported inflation has been downward, reflecting the low inflation in our trading partners and the stability of the exchange rate. Economic and financial agents show anchored inflation expectations, with no considerable deviation from either the objective of the Bank of Albania or the average historical behaviour. Analysing the economic performance, INSTAT data show that the gross domestic product increased by 1.1% during the fourth quarter of 2013, after a decrease by 2.5% in the third quarter of 2013. This increase was broadly determined by positive performance of domestic private demand, while the contribution of the public sector and net exports was negative. From the sectorial point of view, economic growth was generated by the positive performance of production, whereas services declined.