samchain/econo-pairs-v1 huggingface dataset:
The suggestion made in some quarters that the MPC has slavishly followed the inflation target in recent years – that it has been fixated with inflation at the expense of growth and employment – is simply at odds with the facts. Based on the MPC’s central projection for inflation published last month, over the decade to the end of 2015, CPI inflation will average close to 3%. It will have been above its 2% target for 90% of that time, and above 3% for 40% of the time. Yes: some of this might be the result of poor forecasting. But much more important was the recognition that a lower profile for inflation was possible only by tightening monetary policy at the cost of an even deeper recession and an even larger rise in unemployment. Monetary policy has been on the frontline in supporting our economy through the financial crisis and it continues to be so. Indeed, it is striking that while some criticise the MPC for focussing too narrowly on inflation, others argue that we’ve worried too much about the real economy and taken our eye off the inflationary ball. “Is the MPC’s job to hit the inflation target or not”, they ask? Has the inflation target become a sham? The remit given to the Monetary Policy Committee makes clear that our job is to hit the 2% inflation target.

They should gradually acquire the necessary knowledge, abilities, position and behaviour to take sound financial decisions and be able to deal with emergency situations, like the current one we are experiencing. Concluding, I would like to thank all participants and collaborators of the Bank of Albania in all its educational initiatives and programmes, and particularly for the Global Money Week. Absolutely, such themes as planning personal finance may not be quite attractive to new age groups, nevertheless being aware of their importance and impact on the life of everyone, it is crucial that our institutions never stop their efforts to bring them to the attention of the young people. This is what we have tried to achieve through the activities and competitions that will take place during GMW 2021, and which I kindly invite you to attend. I sincerely thank you for your contribution and I wish a successful performance to all participants! 2/2  BIS central bankers' speeches
However, the difficulties in pricing the structured products linked to sub-prime mortgages and, above all, the patent lack of transparency in the process of pooling, segmentation and redistribution of credit risk carried out through these products are causing problems of confidence between institutions. All these problems have practically paralysed the interbank markets for term loans, in which transaction volumes are very low, and led to interest rates above those expected under  2  BIS Review 134/2007  normal circumstances. European stock market prices, particularly for financial and construction firms, have also been adversely affected, while some investors have shifted to lower-risk assets such as government debt, resulting in declines in yields on these securities. The uncertainties deriving from all these movements pose evident added complexity in monetary policy decision-making. Fortunately, the financial turbulence described reaches Europe at a time of high economic buoyancy and, therefore, notable resilience in the euro area. The GDP of the euro area grew somewhat less than expected in the second quarter of the year, but 2007 to date represents, overall, a continuation of the economic boom initiated in the area in mid-2005. The sound financial position of firms, the expected profit rates and the favourable response of employment to the step-up in activity suggest that this stage of output expansion will persist over the coming quarters at a rate that, although it may well be slightly lower than anticipated some months ago, continues to be around potential growth.

Other episodes, by contrast, such as the “new economy” crisis had a more far-reaching impact, albeit of varying intensity and duration in the different geographical areas. Unfortunately, these experiences are no precedent for diagnosing the potential scope of the current episode, which exhibits many new features, including the fact that it is especially concentrated in the Western heartland of the industrialised countries. The recent past has seen turbulence in Asia, Latin America and eastern Europe. Now, in contrast, the shocks are mainly affecting the United States and the more developed European countries. Let me thus take an eminently European perspective as I examine more closely some of the main features at play here. This approach will also help me to look at its implications for euro monetary policy, which I believe is the most logical way to address the possible impact on the Spanish economy. I wish to begin by emphasising the non-existence in the euro area of the sub-prime mortgages that are accepted practice in the United States. Therefore, in the first analysis, the rise in doubtful assets in the United States should affect only the European financial intermediaries that acquired securities linked to sub-prime mortgage loans originated in that economy. However, the propagation of contagion is not confined to the influence of this channel alone, but rather is transmitted through a wider range of shocks.
Alternatively, an issuer could sell a bond with a negative coupon rate by providing that, in the absence of timely payment of interest, the omitted interest payment will be deducted from the principal due at maturity. In this case the bond would be redeemed for less than par, depending on the number of unpaid coupons and the magnitude of the (negative) coupon rate. These alternatives have different tax implications, as discussed in a recent report by the Danish mortgage bankers. 6 As one can imagine, these alternatives require a great deal of coordination and legal work to implement. One legal issue is whether, in the case in which bonds are to be redeemed for less than par, the bonds qualify to be used as collateral in various central bank or private arrangements that require collateral; another is whether the decrease in the par value of the bond might trigger a default that would require a writer of credit default swap protection to make payment to the holder of the swap. These and similar operational problems (including the difficulty of modifying security depositories and clearing and settlement systems to manage the calculations and transfers associated with negative rates) can presumably be solved in time. However, they represent expensive transition costs for those people and institutions that must deal with them as rates move from positive to negative. 3. Economic frictions  There are many zero interest rate conventions in society: negative nominal rates, but not negative real rates, reverse the incentives to exploit these conventions.

James McAndrews: Negative nominal central bank policy rates – where is the lower bound? Remarks by Mr James McAndrews, Executive Vice President and Director of Research of the Federal Reserve Bank of New York, at the University of Wisconsin, Madison, 8 May 2015. *  *  *  The views expressed in this speech are those of the author and do not necessarily reflect the views of the Federal Reserve Bank of New York or of the Federal Reserve System. The Swiss National Bank (SNB), the European Central Bank (ECB), Danmarks Nationalbank (DNB), and the Swedish Riksbank recently have pushed short-term interest rates to levels below the “zero lower bound.” The current extent and depth of negative policy rates is unprecedented; previously only Denmark had a modestly negative policy rate in 2012 through 2014. The actions of the four central banks have led a number of commentators to ask, Is the concept of a zero lower bound on interest rates valid? If not, what might be the lower bound, if any, on nominal interest rates? Indeed, some economists have suggested that with changes to the monetary system, we could in fact eliminate the lower bound to interest rates altogether. I’ll first review the reasons given by the central banks for setting negative policy rates – in all cases, the negative rates were seen as a means of advancing the banks’ macroeconomic objectives in the current environment.
Foreign banks also went on a lending binge in Asia in the years leading up to the crisis in 1997, and just as surely accounted for the bulk of the sudden withdrawal of capital in the two years that followed. Had Asia relied more on bond and equity financing, it would have had alternative sources of financial intermediation, and the subsequent credit crunch in the banking system would have had a smaller impact on the real economy. Bonds and equities offer significant advantages over bank borrowing. They are a means of long-term financing and investment to corporates, unlike short-term credit lines which mean funds being pulled out of a company at the first sign of trouble. They facilitate asset-liability management. They mobilise savings and widen the range of investment alternatives for both institutional and retail investors. They create transparent market-determined assessments of creditworthiness. Singapore believes there is good potential for developing domestic bond markets, and an Asian bond market. We have actively promoted the growth of the bond market in Singapore, as one of the centres for the Asian bond market. Previously, MAS did not allow foreign entities to borrow in Singapore dollars, whether from banks or through bond issues, except to finance economic activities related to Singapore. This was to deter the internationalisation of the $ But last year we reviewed this policy, and issued new guidelines, a Notice (MAS 757) that made it easier for foreign entities to list $ shares and issue $ bonds, subject to safeguards.

In addition, the rise in incomes, the presence of abundant foreign capital, the expansion of the banking sector and sometimes negative real interest rates all contributed to rapid credit growth in transition countries. Again, the rates of growth were almost unprecedented before, and in 2007 they reached around 60% year on year in Bulgaria, Romania and around 40.6% in Lithuania. 11 After a previously suppressed consumption, the process of credit growth was understandable and desirable for economic growth. However, the rates of growth are only adding to demand pressures in these countries, and in combination with the other factors, adding to the rise of inflation, rise of imports and further worsening of the current account position. Dear guests, At the current time, these developments pose two particular challenges for the policy makers in transition countries, one a short-term and the other a longer term. The short term challenge is how to lower the risk of high current account deficits, which can cause wider financial crisis, combined with a currency crisis in countries with pegs and currency boards. Both the economic theory and the economic history are clear that current circumstances are not the most favorable for these countries. Worsening current account deficits are not sustainable and can not continue forever. The more they widen, the bigger the pressure becomes for real exchange rate depreciation as a way of restoring competitiveness.
The substantial trade deficit indicates that comprehensive strategies, which focus on promotion of high-value exports, expanding the export base, and diversifying markets by strategically planned trade in growing economies, particularly in Asia, are essential for its reduction. We clearly need to protect, consolidate and if possible increase our traditional markets in the US and Europe. But the real exponential increase that we are looking for has to come from Asia - from India, Page 10 of 17  from China, etc. and as we know incomes and growing markets are expanding in these countries - we need to get part of that action. Restoring external sector stability in a challenging environment requires the building up of external buffers with policies to reduce spill-over effects from adverse developments in other areas. In this connection, priority has to be attached to fiscal sustainability and prudent monetary policies to ensure that excess demand is not pumped into the system. The generation of higher export revenue will, in turn, increase the capacity to service the large accumulated stock of foreign liabilities. It can also be utilized for the stabilization of the exchange rate, and the building up of a sustainable level of reserves which we serve to increase the country’s economic resilience. In addition, a renewed focus on exports can help divert investment to more efficient segments sectors of the economy, thus raising overall productivity. This is what I was saying – to shift people and financial resources to more productive sectors of the economy.

6  Jan in’t Veld, Fiscal consolidations and spillovers in the Euro area periphery and core, European Commission Economic Paper 506, October 2013. 7  Dawn Holland and Jonathan Portes, Self Defeating Austerity, National Institute Economic Review No. 222 October 2012. 4  BIS central bankers’ speeches  I could elaborate on the financial dimension of EMU. The Banking Union, when completed, has the potential to move up to the highest level of institutional integration. Similarly, the Juncker Plan is a useful integrated instrument, although too weak and slow at present. I have stressed elsewhere the need for and the benefits of moving ahead with a much stronger “Financing and Investment Union”, incorporating these steps forward and going well beyond the proposed Capital Markets Union. Yet, today I prefer to focus on the fiscal and structural policy dimensions of EMU. In practice, our fiscal framework has been implemented as a fairly weak monitoring framework. Likewise, on the structural front, the MIP (Macroeconomic Imbalance Procedure) is clearly lacking teeth. An institution is clearly missing to develop a mandatory and, hence, full coordination of national policies in the fiscal and structural areas, an idea I will elaborate upon in a few moments. The highly political nature of the debate should not hide the strong economic rationale for such a reform. 15 years ago Peter Kenen 8 argued that a fiscal integration could make currency areas thrive, even though they did not meet all the features of an optimal currency area.
In strict inflation targeting, all policy actions are aimed at hitting an inflation target. In flexible targeting, policymakers balance deviations from both the unemployment and inflation targets. Usually, the policy prescriptions from the two targets are not in conflict. Above target unemployment is typically associated with muted inflationary pressures, and accommodative policies are appropriate to reduce both gaps from their respective targets. At times, however, conflicts can occur. When they do, a flexible targeter does not accept a large miss in one target in order to hit the other perfectly, but instead accepts moderate misses in both in order to minimize the total loss. A corollary is that any flexible inflation targeter has to accept the idea that optimal policy may involve inflation running for a time above the long-run target if that is a consequence of policies designed to bring unemployment more in line with its target rate. 3  For example, the economy may have experienced some permanent loss of potential output during the recession partly because of reduced capital deepening with lower rates of investment and partly because of other factors. In addition, extended unemployment insurance benefits and difficulties in matching workers with jobs may be temporarily pushing up the natural rate of unemployment. 4  See Board of Governors of the Federal Reserve System (2011). 5  See Evans (2011).

Conference "The internationalisation of the euro and the creation of the EU Capital Markets Union" - Paris, 16 June 2023 The euro as a complementary asset in a more multilateral system  Speech by François Villeroy de Galhau, Governor of the Banque de France  Page 1 sur 6 Ladies and Gentlemen, It is a great pleasure for me to be with you today for this conference on the internationalisation of the euro and the creation of the EU Capital Markets Union. I would like to warmly thank the Robert Triffin International (RTI) association and the European League for Economic Cooperation, and more particularly Bernard Snoy, for their invitation. I will begin by discussing the monetary policy decisions taken yesterday by the Governing Council (I), before getting to the heart of the matter of today's conference. Powerful forces are pushing for greater diversification within the international monetary system (II). The euro must now play its full international role, in order to assert itself as a complementary anchor towards the "creative frontier" that a truly multilateral international monetary system (IMS) would one day represent (III). I. Monetary policy We decided yesterday a 25 basis point increase, in line with the slower pace adopted early May. And our future decisions will be data driven, meeting by meeting. Hence nobody should rush to a premature conclusion about our calendar nor about our terminal rate, and the latest market volatility seems somewhat excessive.
The turnaround in the labour market usually occurs somewhat later than the turnaround in general economic activity, emerging first in an increase in hours worked rather than in job creation. This is illustrated clearly in recent statistics. In recent months, however, there have been indications that this process has come to an end and job creation is on the rise. In August 2011, the Central Bank forecast that inflation would rise sharply in coming months, peaking at about 6.8% in the first quarter of this year. This forecast, together with the assessment that the economic recovery was strong enough in spite of international headwinds to withstand modest interest rate hikes, lay behind the Bank’s decision to raise interest rates last year. The consumer price index for March was published yesterday. It shows that inflation measured 6.4% in Q1, driven primarily by a wide range of increases: in  BIS central bankers’ speeches  1  public and private services, housing costs, petrol, and other imported goods. Core inflation is also high, at 6%. The past few months’ depreciation of the króna plays a role in the recent rise in inflation. In small, open economies like Iceland, the exchange rate is a key factor in the inflation process.

To that end, it is of key importance to move unstable offshore krónur out of the hands of those who cannot hold them and do not want them and into the hands of investors prepared to commit capital in Iceland for a long period of time. It is also important that the general conditions provided for in the liberalisation strategy be met as fully as possible, for this will reduce the risk of instability when the controls are lifted. These conditions include ample foreign exchange reserves, Treasury access to foreign credit markets, and a sound banking system that can fund its activities in an environment free of capital controls. Great strides have been made in this respect, as can be seen in the Treasury’s foreign bond issue last summer, the Bank’s sizeable foreign exchange reserves, the prepayment of loans from the IMF and our Nordic neighbours, improvements in Iceland’s sovereign credit rating, declines in Iceland’s CDS spread, and the banks’ sound capital position in spite of the court judgments handed down in cases involving exchange rate-linked loans. But it is also important that the Treasury’s net domestic borrowing need be as small as possible once liberalisation begins, as it is probable that financing costs will rise sharply at that point in time. In this context, it is interesting to note that the Treasury’s real domestic financing costs in 2011 were negative by roughly 0.7%. It is therefore vital to adhere closely to the plan to achieve an overall Treasury surplus in 2014.
Development of unit labour costs in trade and industry, and total agreed wage increase Per cent 8  8 Unit labour cost  7  Total wage increase  7  6  6  5  5  4  4  3  3  2  2  1  1  0 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03  0  Note. Forecast 2001-2003. Sources: National Institute of Economic Research, Statistics Sweden and the Riksbank  The main downside risks are connected, for example, with the possibility that the adjustment in the United States after the long upward phase could take longer than expected. After September 11, moreover, terrorist attacks and military action can clearly cause developments to take very different paths, with markedly divergent outcomes for the global economy. Another aspect is the highly expansionary direction that economic policy has now taken in many countries, not least Sweden. If confidence in the future is restored, the table is really laid for a quick upturn. But all in all, there is considered to be a strong probability of inflation being lower as a result of the slowdown abroad being deeper and more protracted. Such a development would be likely to lengthen the slowdown in Sweden as well. There are also risks of inflation being higher than in the main scenario. One has to do with the fact that inflation has risen more than expected. Our main scenario makes some allowance for the higher outcomes but the revision is rather small.

This difference in inflation outturns gives some sense of how monetary policy settings are believed to matter. And the close to one percentage point gap is significant, certainly when compared with the inflation target of 2%. But this difference between Bank Rate scenarios is dwarfed by the overall fall in headline inflation of almost nine percentage points from its peak. That fall is testament to the size of the external shock to which UK inflation has been subject. It gives some measure of the challenge the MPC has faced in the past year in addressing the surge of inflation – a challenge of unprecedented magnitude in the inflation targeting era. There is a long history of MPC forecasts being interpreted as offering an implicit policy view on the interest rate paths upon which they are conditioned. And, prima facie, the constant rate scenario contained in the MPC’s May report appears to justify the guidance that ‘some degree of further tightening in monetary policy may still be appropriate in the coming months’: maintaining Bank Rate at 1% would fail to achieve the 2% inflation target within the forecast period. In my short time as a member of the MPC, I have made it a rule not to comment on the appropriateness or otherwise of market-implied or variant interest rate paths. And I am not going to change that practice today.