samchain/econo-pairs-v1 huggingface dataset:
The pre-requisites for such a switch of demand towards net exports seemed to have been put in place by the substantial depreciation in sterling that occurred during the financial crisis – sterling fell more than 25% between the middle of 2007 and the beginning of 2009 (Chart 6). Despite the slowdown in our main export markets, that should have been sufficient to give a kick to net exports. The performance of exports – particularly exports of services – has, however, to date been somewhat disappointing. It may be that this is just a matter of time – for instance, we are starting to hear stories of businesses bringing back activities that they had previously off-shored to emerging economies. But any further appreciation of sterling, which has risen almost 10% in trade-weighted terms since March, would not be particularly helpful in terms of facilitating a rebalancing towards net exports. Let me now turn to the role for monetary policy in supporting the recovery. When the MPC first provided explicit guidance over the future course of policy last August, the economy had shown early signs of recovery but we believed that there were still considerable underutilised resources in the economy that needed to be absorbed, otherwise we were likely to find inflation falling below our 2% target in the medium term. Our worry was that the mere sign of a return to decent growth rates could prompt premature expectations of rises in Bank Rate, dampening the recovery.

Reports of the demise of cash are vastly exaggerated. Notes and coins have been with us a long time, and have served a crucial role in the growth of the modern economy. I suspect they will be with us for quite some time more. BIS central bankers’ speeches  1  Three “C”s of a good payment instrument But be it physical cash or electronic payment, the medium of exchange for transactions must satisfy three requirements. I will refer to these as the three “C”s of a preferred payment system – confidence, convenience, and cost-effectiveness. First, confidence. Businesses and consumers must be assured of the security of payment instruments. The widespread circulation of counterfeit notes and coins can impair confidence in a country’s currency. As John Maynard Keynes put it nearly a century ago, quoting Lenin, “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency.” Keynes was, of course, talking about the deleterious effects of inflation. But it applies just as well to debasing the currency through counterfeiting. Ensuring the fidelity of notes and coins and the soundness of electronic payments is therefore a critical function. Central banks and currency issuing authorities must continually innovate and stay ahead of fraudsters. In electronic fund transfers, we have instituted more end-to-end security measures like two-factor authentication. Modern currency notes come with very advanced security features. I wanted to give some examples, but have been advised that it would be tantamount to giving away our secrets!
The central bank deposits held by the national treasury and the domestic financial institutions are then converted to the anchor currency, as are the financial institutions’ domestic assets and liabilities. Technically, this can easily be done, but what comes next? Many of the pros and cons of unilaterally adopting another currency are the same as those pertaining to the euro area: inflation is better anchored and exchange rate risk disappears in trade within the currency area, although independent monetary policy and exchange rate flexibility are relinquished as tools that can be applied in response to economic shocks. The fact that no formal agreements are needed and the process can be concluded swiftly could  BIS central bankers’ speeches  7  be viewed as an advantage over and above negotiated euro area membership. But the lack of a contractual framework embodies many of the disadvantages of this option in comparison with euro area membership or maintaining the domestic currency. The main problem is that the supply of the new currency in the country will fluctuate with capital in- and outflows, while counteractive measures are much more limited than with an independent currency or full euro area membership. For instance, capital outflows could quickly develop into a liquidity problem for the banking system and for treasury financing, which could ultimately lead to default and a financial crisis that the domestic authorities would be unable to stop.

The likelihood of this could be reduced through preventive mitigating measures, such as running the central government at a significant surplus and requiring that domestic banks either maintain sizeable foreign exchange reserves of their own or have credit lines with foreign banks. But all such measures come at a significant cost, the foreign exchange reserves are always limited, and experience shows that credit lines with private banks are not secure, particularly when they are most needed. Measures of this type can therefore never fully replace the central bank’s ability to provide liquidity support in its own currency, which is virtually unlimited so long as the banks are solvent and can provide eligible collateral. Unilateral adoption of another currency can therefore entail substantial risk to the stability of the financial system. In this connection, some argue, however, that providing central bank liquidity facilities to the banking system is harmful and that this is therefore not a disadvantage. But the problem is that even though a banking system based on a maturity transformation has contributed significantly to output growth and economic welfare, it is extremely risky without the back-up of a central bank, as previous experience has shown. The banking system could therefore fail “unnecessarily”, at enormous cost in the form of economic contraction and elevated unemployment.
•  There will be a greater rebalancing between the role of the public and private sectors in the economy, with the public sector activity focussed on providing the enabling environment to strengthen the role of the private sector in the economy. •  While large domestic corporations and multinational corporations will continue to be important in the economy, the role of the small and medium-scale enterprises will gain significance. •  Greater focus will be given to secure competitiveness on a more comprehensive basis in terms of other dimensions such as productivity and efficiency, labour quality, logistics, research and development, the delivery system and the supply chain. BIS Review 44/2004  1  Malaysia will also continue to leverage on our low country risks in terms of the political stability, industrial maturity and the supply of a skilled workforce. To promote endogenous sources of growth, greater focus has been directed at promoting greater private investment, including by the small and medium enterprises (SMEs). The financial infrastructure and incentive structure will continue to be enhanced to promote investment in new sub-sectors in particular, the services, agriculture and manufacturing sectors. On the external front, while there has been a synchronisation of growth among the major economies, there has also been some rebalancing of the relative strength of the growth among the economies. The increase in the expansion of world trade and the strengthening of labour market conditions in most of these economies suggest continued and self-sustaining growth.

On balance, my outlook is that growth in the rest of the world will be roughly the same in 2014 as it is this year, so that the contribution of trade to growth will likely remain quite small. Putting all these factors together, I still conclude that there is a basis for a pickup in growth as fiscal restraint lessens, but the impulse is not likely to be a particularly powerful one without some unanticipated impetus to growth that solves the chicken-egg problems, especially in the near term. On the inflation side of the ledger, inflation remains below the Federal Reserve’s 2 percent longer-run objective for the personal consumption expenditure (PCE) deflator. The year-overyear change in the total PCE deflator was 1.4 percent in July. This has created some concern that inflation is “too low,” raising real interest rates and making monetary policy less accommodative. I acknowledge this concern, but I believe it will abate as inflation moves gradually back up towards a 2 percent annualized rate over the next few years. A number of considerations inform my view. First, a decomposition of core inflation reveals that the most recent slowing in inflation has been largely confined to core goods, whereas the rate of increase of core services has been relatively steady. Such was not the case in 2010 – the previous instance of a significant slowing of inflation. This suggests that the fall in inflation partly reflects idiosyncratic factors that are not likely to be sustained.
William C Dudley: “Remarks at the New York Fed’s Economic Press Briefing on the Regional Economy” Opening remarks by Mr William C Dudley, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Economic Press Briefing on the Regional Economy, Federal Reserve Bank of New York, New York City, 18 August 2016. *  *  *  Jaison Abel, Jason Bram, Hunter Clark, Giacomo De Giorgi, Richard Deitz, Jack Gutt, Andrew Haughwout and Joseph Tracy assisted in preparing these remarks. Good morning and welcome to the New York Fed’s Economic Press Briefing. I am pleased to have this opportunity to speak with the journalists covering our region. You are an important communication channel to the people in our District. This morning I want to focus on economic conditions in our region, giving particular attention to job growth. I also want to discuss our ongoing work on Puerto Rico. As always, what I have to say reflects my own views and not necessarily those of the Federal Open Market Committee or the Federal Reserve System. The New York Fed is deeply committed to serving our region. This commitment manifests itself in several ways. We produce business surveys and local economic indexes to help our constituents track regional economic conditions. My staff writes papers and blog posts on economic issues important to our region. We meet with a number of advisory boards comprised of community and business leaders.

I know of no-one who has argued that the problem with the UK economy is that it has not had a sufficiently deep recession. Inflation rose to over 5% but has now come down to 2.7%, and the Committee believes that it is likely to come back to the target over the next two years. In effect the MPC has allowed a longer inflation overshoot than usual in order to avoid pushing up unemployment. Our current remit does not specify how the MPC should strike a balance between growth and inflation in the short run. The horizon over which inflation should come back to target is effectively delegated to the MPC. But should the MPC itself choose how quickly to bring inflation back to target, or should the government use its annual remit to set that horizon? Is there a gain from trying to quantify how the MPC should manage the trade-off between growth and inflation in the short run? The recent guidance by the Federal Reserve about the conditions under which it would continue to hold interest rates at close to zero is a way of quantifying the “flexibility” in flexible inflation targeting. It describes how the Federal Reserve will interpret its freedom to balance its twin objectives for employment and inflation.
However, with clarity of vision on the ultimate goals that the financial system aims to achieve, we can, by our actions and initiatives taken today, help realize our vision of the future. The Master Plan in essence provides a common vision, and template for countries in developing the Islamic financial services industry. The vision and desired objective will to a large extent depend on the desired aspirations for the economy, expected the role of the financial sector in the economy, the stage of development of the economy and the financial sector and the degree of international integration with the rest of the world. The Master Plan will also serve as a key reference document to guide countries in charting an orderly development of the Islamic financial system. The broad strategies and action plans, with the necessary milestones that need to be pursued over the medium to long term to develop an Islamic financial system can then be identified. Within the defined parameters, countries have distinct options in determining the best course of action to achieve the envisaged country vision. Experiences of other member countries can be compiled to serve as references. It needs to be recognized however, while the Plan provides the strategic direction, the implementation needs to be managed with flexibility.

13  Figure 3 Domestic demand and components (real annual change, percent)  8  20  6  15 Private consumption  4 2  Final demand (*)  10 5  0  0  -2  Machinery & -5 equipment (right axis)  -4  -10  Construction & other works  -6  -15  -8  -20 14  15  16  17  (*) Without inventory change. Source: Central Bank of Chile. Figure 4 Labor market (percent)  9  Total employment (annual change)  Unemployment rate  6  10  Self-employed (annual change) (right axis)  3  15  5  0  0  -3  Salaried (annual change)  -6  -5 -10  11  12  13  14  15  16  17  Source: National Statistics Institute (INE). 14  Figure 5 Consumer expectations: IPEC (1)  Interest rate by type of loan (2)  (original series)  (index, July 2017=100)  80 Country's economic Purchases of situation 12 mo.
In the area of monetary policy, central bank independence  5  Cf. Summers (2007). 6  Cf. IMF (2008). 7  Cf. Feld and Kirchgässner (2008) and Poterba (1994). 4  BIS central bankers’ speeches  plays an important role. It has been empirically demonstrated that a higher degree of independence goes hand in hand with lower inflation rates. 8 To retain its independence, the central bank must show good performance, and acquire credibility and respect. This is the only way to make politicians and the public acknowledge the value of independence. Tension during a crisis The financial and economic crisis provided an impressive demonstration of how important it is for fiscal and monetary policy to remain focused on their mandate and on sustainability. If public finances are already running a high level of indebtedness in good times, fiscal policy’s room for manoeuvre will be severely curtailed (or very quickly used up) in a crisis. In this situation, the central bank faces growing pressure from both politicians and the public to stimulate the economy with monetary policy measures. 9 If the central bank gives in to this pressure, it endangers its own independence and thereby its credibility. With an unsustainable fiscal policy, a stable monetary policy is no longer possible over the long term, even if the central bank is independent and not under pressure to stabilise the economy. A glance at economic history shows that high inflation rates have very often been accompanied by high levels of public debt.

This is essential in enabling it to react to new challenges, and to smooth the economy in the event of a crisis. Thus, budget soundness is not an end in itself, because it fosters employment and prosperity. Fiscal policy thus pursues a similar goal to monetary policy. By creating favourable conditions for lasting and balanced economic growth, they both foster a prosperous society. The economic policy goals of monetary and fiscal policy are closely intertwined – or even overlapping. In both of these economic policy areas, sustainability is key: Fiscal policy can only ensure the lasting achievement of its goals if public finances remain healthy over the long term. Monetary policy, for its part, should focus on the medium to long term, because any economic stimulus motivated by short-term considerations carries the risk of raising inflation expectations. To recap: The goals of fiscal and monetary policy overlap to a large extent, which means that in normal times there should be no tension between the two policies. Nevertheless, there is a strong complementarity between fiscal and monetary policy, as their operations have a reciprocal impact as regards both the financial markets and the real economy. Let’s look at the financial markets first (cf. chart 2). Monetary policy steers a reference interest rate on the money market, which is used as a basis for the valuation and trading of securities such as government bonds on the financial market. If monetary policy is credible and succeeds in ensuring price stability, inflation expectations are low and well anchored.
The withdrawal of pension savings will have a significant effect on consumption and trade-related activities next year. The fiscal stimulus will continue to be positive, in accordance with the approved budget. The Chilean economy will receive a slightly greater external boost than previously considered, with our trading partners growing by an average of 4.9% in the years 2021 and 2022, with an average copper price of USD 3.15 per pound in the same years. With this, we project that after falling between 6.25% and 5.75% this year, the Chilean economy will grow between 5.5% and 6.5% in 2021 and between 3% and 4% in 2022 (Table 1). With respect to monetary policy, our assessment of the macroeconomic scenario and its outlook leads us to anticipate that the monetary stimulus will remain high for an extended period of time, so as to ensure the consolidation of the economic recovery and the achievement of the Bank’s objectives. In particular, we foresee the Monetary Policy Rate (MPR) remaining at its minimum level for much of the 24-month monetary policy horizon. As for the unconventional measures, they will remain in place. This considers that the total stock of bank bonds acquired by the CBC under different programs—around USD 8 billion—will be maintained for the next six months, reinvesting the coupons as they mature. This excludes the purchases made under the Cash Purchase and Term Sale (CC-VP) program, which have a different objective. With respect to the FCIC, the Board has made no changes to the total amount of resources available.

In the November Business Perceptions Report, companies reported difficulties in satisfying increased demand, in part because of lower inventories anticipated for this year, some logistical restrictions, and uncertainty in scheduling their purchase and import orders, and/or in anticipating the higher sales. There is no conclusive evidence of extensive inventory replenishment taking place. It is important to note that the price increases of recent months will hardly have an impact on medium-term inflation, given the wide activity gap opened by the pandemic. In fact, the reversal in November of several of these previous increases confirms the volatile and transitory nature of these surprises. In the coming quarters, annual inflation is expected to hover around 3%, consolidating its convergence to the target during 2022. This scenario assumes that inventories will eventually be replenished, thus normalizing the supply of goods, and that the gradual reopening of the economy will boost the supply of services. Our projection scenario for inflation and its implications for monetary policy remind us of the importance of correctly understanding the role of supply and demand forces behind price movements. This is a key part of the work that the CBC must do, as it is essential to assess the short- and medium-term outlook for inflation, and possible adjustments to monetary policy. This is an ongoing task within the CBC, one that faces new challenges as the economy changes continually.
These changes have also had an impact in other countries. Clothing price developments in Norway have nonetheless followed a different path compared with Sweden and other European countries, with the exception of the UK. Trade in clothing in Sweden and Norway has many features in common. We have many of the same shop chains, and trade in both countries is increasingly concentrated on chain stores. Even though Norway has gone somewhat further in removing trade barriers, and even though the price level in Norway was initially relatively high, the question may still be raised as to whether there is reason to expect such wide differences in clothing prices in the two countries year after year. It is difficult to measure changes in clothing price. Although a clothing article often has a high introductory price, the price falls after a relatively short period. Sales activity is high. The range of goods changes frequently. A large share of the assortment in a shop is typically replaced in the course of 3-4 months. Changes in quality are difficult to define and identify. In Norway, it is the shops themselves that report clothing prices and changes in quality, which are used as a basis for the clothing price index in the CPI. In Sweden and many other countries (Denmark, Ireland, the UK), price inspectors perform this task. In Sweden, statistical methods are also used to calculate changes in quality.

Yves Mersch: Strengthening the European financial industry amid disruptive global challenges Speech by Mr Yves Mersch, Member of the Executive Board of the European Central Bank, at the European Institute of Financial Regulation (EIFR), Paris, 3 September 2018. * * * Europe’s financial industry still faces a number of challenges. Its continued weak performance, with low price-to-book ratios and meagre profitability, is ample proof of that. Some of those challenges – such as high levels of legacy assets, the need for deleveraging and the burden of stricter regulation – are a result of the financial crisis. But even before the financial crisis, the industry was facing pressure on various fronts, and those challenges are still there. In particular, fundamental technological change continues to call established business models into question. Today, I will focus on disruptive challenges that are arising in a particular area of business: digital technology. Such technology is becoming ever more important in banking and is opening the door to competition from non-banks in core areas such as payments. Cascades of complementary innovations have already fundamentally altered the payment landscape, and European banks need to act now if they want to avoid losing out to bigger international players. The euro area has been very successful in providing a top-tier foundation for innovative payment services. However, this foundation has not yet been fully utilised by European players to provide true state of-the-art pan-European services.