samchain/econo-pairs-v1 huggingface dataset:
This is leading workers to use their bargaining power to recoup lost income. For the seven countries covered by the ECB’s wage tracker,[4] collective bargaining during 2022 led to an aggregate wage rise of 4.7% for this year. This is already playing a stronger role in core inflation. While wage-sensitive items[5] contributed only around 0.5 percentage points to core inflation before the pandemic, that contribution has more than doubled in recent months. If both workers and firms accept fair burden sharing, and stronger wage growth represents merely a rebalancing between labour and capital, then both wage and price pressures should diminish as this process plays out. But if both parties attempt to unilaterally minimise their losses, we could see a feedback mechanism between higher profit margins, wages and prices. The risk of such a “tit-for-tat” dynamic is also heightened by the prospect that labour market tightness will linger. Unlike other jurisdictions, labour participation in the euro area has grown robustly since last year[6], helping to address part of the soaring labour demand driven by reopening. But the pandemic has also led to a sharp increase in public employment[7], reducing the pool of labour available to the private sector. And how much further labour supply can expand overall will depend, among other things, on complex policy questions such as countries’ attitudes to immigration and childcare.

The Riksbank do get suggestions that we should change to an inflation target similar to the one the ECB uses and aim for 0–2% in a medium-term perspective. In practice, this could very well lead to the same decisions concerning the repo rate as the model we have chosen and the difference should therefore not be exaggerated. That I personally prefer our approach has to do with at least four different aspects. Besides Goodhart’s argument that it helps us staying on track, doing what we should to keep inflation at 2%, there are three more arguments. 1. The more precise policy formulation has been beneficial for our thinking and the way it has developed, an aspect that does not usually get a mention in the literature. A clear framework kicks. Good and clear arguments that can be presented openly are needed for departing from adopted principles. 3  BIS Review 85/2000  2. Aspects of communication also favour our approach, with published forecasts and a simple policy rule. When explaining on television to the general public or to the audience at a labour conference in the north of Sweden, I can rely on exactly the same arguments as when I face Professor Lars Svensson at Stockholm University. 3. The clearer the policy, the easier it is to assess or evaluate. These assessments are an important part of the efforts to generate broader respect for what we do and healthy for our accountability.
While some progress has been made in working out what the problems that need to be addressed consist of, we are still a long way from seeing results, and with the absence of major speculative attacks in the last few months, we are in danger of being lulled into a false sense of security. Conclusion 23. To summarise, the problem to be tackled is essentially this: capital flows are moving through a financial system that is now to a large extent global and borderless. Market liberalisation and advances in information technology mean that the system will continue to develop in this direction. Yet the machinery that regulates this system is still largely operated by individual governments. There is much that governments can do, and are doing, on their own to help ensure that markets can channel the benefits that capital flows bring while minimising the risks. But managing these risks – which lie mainly in volatilities exacerbated by high volume and high velocity, and occasionally by deliberate viciousness – may ultimately be beyond the capacities of individual jurisdictions. Crisis management and rescue packages are expensive and disruptive methods of clearing away the damage and picking up the pieces. The only effective long-term solution lies in prevention through collective action to reform the international financial architecture and ensure that free markets continue to be able to function as they should.

While other factors were also at play, it is clear that something of this kind took place in the spate of local troubles that snowballed into what we now call the Asian crisis. Private capital inflows, attracted by high short-term returns, fuelled Asia’s economic boom. The Thai baht crisis of July 1997, which many initially dismissed as a local blip, snowballed into a regional crisis when a sudden reversal of these flows took place following a rapid and wholesale reassessment of emerging market risk. In one way or another, the crisis has affected nearly every emerging market and has slowed growth throughout the world. Stampedes of this kind take little account of the economic fundamentals behind the markets: there were ongoing problems in many Asian economies, but there was no macroeconomic reason why there should have been such a sudden and wholesale withdrawal of funds at this particular time. To quote the US Deputy Treasury Secretary, Lawrence Summers: ‘Financial crises have elements of a self-fulfilling prophecy, like bank runs. Everyone expects failure or everyone expects everyone else to expect failure, leading to a rush to be the first one out and thus causing failure.’ The Asian financial crisis, in which untold and unnecessary damage has been caused by such behaviour, is a classic illustration of this. 10. Widespread volatility resulting from financial panic and herd behaviour is one of the more worrying aspects of international capital flows because small fires can spark off major conflagrations.
The possibility of expectational inefficiencies has also become an important insight for policies. Contagion, self-fulfilling prophecies, coordination failures and multiple equilibria, are just some of the phenomena from which market inefficiencies arise, and there are many examples in the real world. However, one has to be careful when the failure of bad policies is attributed to phenomena outside the control of authorities. Many crises that some may want to classify as bad-expectational equilibria are simply the result of bad policies. Indeed, there is no crisis that has struck a country without an associated fundamental problem. What  BIS Review 84/2010  1  expectational inefficiencies do is that they amplify the probability of occurrence and the cost of crises. Other important development has been the understanding of policymaking, in particular monetary policy, as a rule rather than changes in policy variables without reason. Thus, rather than thinking of changes in the policy variables, it is more realistic to think of changes in the determinants of policies. Finally, we have learned that credibility is central for the effectiveness of policies. All these developments have also led to changes in the way monetary policy is conducted. However, an important caveat has to be made. There is a two-way relationship between theory and policy developments. It would be presumptuous to argue that theory has changed policies. Indeed, the development of inflation targeting came before it was seriously discussed in academic circles. New Zealand implemented its inflation targeting regime in the early 1990s, before the main analytical developments took place.

Eichengreen, B. and K.H. O’Rourke (2010), “A Tale of Two Depressions: What do the New Data Tell Us”, in http://www.voxeu.org. Rancière, R., A. Tornell and F. Westermann (2008), “Systemic Crises and Growth”, Quarterly Journal of Economics 123(1): 359–406. BIS Review 84/2010  5
They’re more likely to narrow (we may already be seeing some signs of that correction in the data). 19  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  19  Particular glitches aside – and some of those are also the result of the pandemic – supply in many of these markets is also reasonably responsive to higher prices. For this reason, periods of rapid inflation in most non-oil commodities, and in manufacturers’ input prices in general, tend to be followed not just by lower but by below-average rates of inflation. The retreat of pandemic-related shifts in demand would also help to correct any mismatch in the domestic economy. And in the past, the UK labour market has often proved sufficiently flexible to absorb shocks, and reallocate resources – for example after the financial crisis – without a significant and lasting effect on the NAIRU or on wage growth. However, these judgements get progressively more uncertain as one goes down the list. Even if the heat comes out of some of the final demand for goods, there’d probably be pressure on suppliers for a while afterwards, if inventories need to be restored. With vaccination rates in much of Asia lagging those in the rest of the developed world there are still risks to global supply chains from potential outbreaks of the virus. And, even if a reduction in domestic mismatch is more likely than the opposite, we can only be unsure about the time and expense required to address it.

What, in view of all this, is the appropriate policy response to the current inflation? Most of the overshoot relative to target in the latest CPI numbers – more than all of it, on some measures15 – reflects unusually strong inflation in goods prices. In all likelihood that will also be true of the larger overshoot we’re going to see towards the end of this year. And if this was only a story about global goods prices – and depending how confident you were in its transitory nature – I think the answer could well be “nothing”. There’s a clear parallel with changes in oil prices. In that case the most reasonable assumption is generally that the direct effect on inflation will be gone in a year or so, before monetary policy could do much about it. Subject to any “second-round” effects on wages, the orthodox view is therefore that policy should “look through” the immediate impact. (Note that this applies as much to falls as rises. In early 2015, for example, a big drop in the price of oil pushed headline UK inflation into negative territory, more than two percentage points below target. But, despite a lot of chatter at the time about “deflation”, the MPC did not ease policy because it thought the effect would probably be transitory.) The parallel isn’t exact. Oil only needs to go through a simple refining process before it appears in the local petrol station and the general pass-through to retail energy prices is therefore fairly immediate.
Ravi Menon: Financial inclusion and innovation - retaining the customer Opening remarks by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the BIS-World Bank Roundtable on Impact of Technology on Financial Inclusion and Financial Stability, at SFF x SWITCH 2019, Singapore, 13 November 2019. * * * Let me first thank Mr Agustín Carstens, General Manager of the Bank for International Settlements (BIS) and Mr Alfonso García Mora of the World Bank Group for hosting this Roundtable. And also Her Majesty Queen Máxima for her presence, inspiration and for tirelessly championing the cause of financial inclusion globally over the last ten years. I am delighted to welcome the BIS, the World Bank, the UN Secretary General’s Special Advocate for Inclusive Finance for Development (UNSGSA), and fellow central bankers and regulators to the Singapore FinTech Festival. • I hope you had time to soak in the FinTech Festival, feel its spirit and energy, spilling over 60,000 attendees, six halls, and 1,000 exhibitors. I want to focus my remarks on the important evolution taking place in financial inclusion: from Financial Inclusion 1.0 to Financial Inclusion 2.0. • Financial Inclusion 1.0 was about improving access to bank accounts. Financial Inclusion 2.0 focuses on usage of bank accounts. • Financial Inclusion 1.0 was about developing nimble innovative financial solutions for the unbanked. Financial Inclusion 2.0 is about facilitating collaboration among financial institutions and FinTechs, to promote integrated solutions.

Third, that the system does not do business and exist on the basis of an implicit commitment that the State will have to use public money, the public’s money, to bail out firms that get into trouble. And fourth, that the public can place trust in firms and markets based on their reputations and the transparency of their dealings. Regulation is important and it can help to foster that trust, but it cannot substitute for the trust that the public needs to have, in firms and markets. The State is not there to support the industry, and regulators are not there to substitute for trust in and the reputation of firms and markets. Some important principles follow from the identification of the public interest in financial stability. First, a competitive financial system can only exist if it is rooted in stability: competition and stability cannot be traded off in a binary sense. Second, the public should not define financial stability as preventing all financial firms from failing. In other sectors of the economy firms fail without putting at risk the funds of the public or taxpayers’ money. We will not truly have solved the too big or important to fail problem and thus the public money problem until we have tools at our disposal which enable us to resolve large institutions if they get into trouble. This will create the right incentives for risk management. And third, regulators must use their judgement to mount a robust challenge to stop dangerous business models and investment practices.
Øystein Olsen: The role of central banks – a Norwegian perspective Speech by Mr Øystein Olsen, Governor of Norges Bank (Central Bank of Norway), at the Official Monetary and Financial Institutions Forum (OMFIF), London, 1 November 2016. * * * The charts can be found at the Central Bank of Norway’s website. INTRODUCTION Let me begin by thanking the OMFIF for the opportunity to speak to you today about the monetary policy regime in Norway. Like other central banks, the central bank of Norway is facing new challenges in a post-crisis environment of persistently low interest rates and uncertainty. Today I want to focus on how Norges Bank is responding to those challenges. Inflation targeting was formally introduced as a framework for monetary policy in Norway 15 years ago. As in other inflation-targeting countries, our inflation targeting regime has become more flexible over time. The operational target of monetary policy in Norway is annual consumer price inflation of close to 2.5% over time. However, according to the mandate, interest rate setting should seek to achieve a reasonable balance between inflation and capacity utilisation. Monetary policy should also be robust, taking uncertainty into account and seeking to avoid adverse outcomes. I will reurn to this topic in the following. The reasoning behind the policy rate decision taken by Norges Bank’s Executive Board is published in our Monetary Policy Report. The evolution of inflation targeting in Norway reflects the practical experience we have gained since it was introduced. The trade-offs have been challenging at times.

1  For an overview of what inflation-targeting central banks say about stabilising output, see Kuttner, K.N. (2004), “A Snapshot of Inflation Targeting in its Adolescence” in Kent, C. and S. Guttman, The Future of Inflation Targeting, Conference Volume, Reserve Bank of Australia. 2  BIS Review 45/2005  To some extent, the problems we have experienced probably reflect the fact that most people always prefer lower interest rates to higher ones. But it could also be the case, of course, that the way in which we have dealt with and communicated the flexibility problem has simply not been clear enough, despite our best efforts. One could perhaps see it as a sign that we have been too successful in “anchoring” the simple rule that we introduced at an early stage in an attempt to clearly explain our decisions and to create confidence in the new regime. Discrepancy between word and deed Of course, Sweden is not the only country in which the communication of flexible inflation targeting has caused problems. For instance, at the international level there is more general criticism claiming that the central banks in inflation-targeting countries are biased in their monetary policy communication towards stabilising inflation.2 The criticism is hence not levelled at how inflation targeting is conducted in practice; it recognises that the central banks in inflation-targeting countries do take account of the real economy.
And the growing liquidity in the offshore RMB market has led to the development of RMB financing and forex markets, with an estimated daily turnover of around 2 to 4 billion US dollars for spot and forward transactions. I will come back to the development of Hong Kong as the offshore RMB business centre later. So, we are seeing a trend that RMB is increasingly used in Mainland China’s external trade, followed by direct investments and portfolio investments. The offshore RMB market is growing with increasing breath and depth, serving the useful function of the intermediation of RMB funds. And these developments are bringing tremendous business opportunities, which corporations and financial institutions cannot ignore. 2  BIS central bankers’ speeches  What next? Now, it’s worth emphasising that this has all taken place only since 2009. So, they are very much just first steps and we should expect further developments in the future. If we look ahead a little, what might we see? Well, given what we’ve seen in terms of economic growth and liberalisation of policy, it would not be at all surprising to see the proportion of trade being conducted in RMB continue to rise in years ahead. Longer term, many ask about the possibility of the RMB playing a more equal role alongside the dollar and the euro. On this, I would point out that the more widespread use of RMB has been a progressive and market-driven process, and I expect this to continue.

This baseline scenario assumes a policy framework that the measures outlined in our exit strategy are completed by the end of the year, and that policy rates are kept constant at current levels for some time followed by limited increases starting from the last quarter of 2011, with policy rates staying at single digits throughout the forecast horizon (in other words, 3 years). In this respect, noninterest instruments will be actively used in order to address the risks on financial stability stemming from rapid credit expansion and deterioration in the current account balance. The European Central Bank reluctantly joined the ranks of the Federal Reserve, Bank of England and Bank of Japan that have engaged in monetary expansion due to fast-growing debt problems in Europe. As a result, materialization of the first scenario has become more likely, as illustrated in the right-hand part of the chart. In that case, the scenario described in our Inflation Report of October 2009 might come up on the agenda. According to this scenario, on account of the expansionary fiscal and monetary policy on a worldwide scale, coupled with rising risk appetites and the relative improvement of credit risk across emerging markets including Turkey, capital inflows to these countries will continue to hold strong. The low level of resource utilization as well as the strong tendency of cost shocks, which reduce the prices of imported inputs, to reflect upon consumer prices suggests downside risks on inflation in the short term.
4  BIS Review 51/2002  Secondly, ERM2 provides to the new member states a necessary and useful interim stage between the EU accession and the adoption of the euro. The choice of monetary and exchange rate policies in new member states has been diverse. ERM2 is a suitable and flexible means for the harmonisation of varied monetary policies and applied tools. The post-accession period will most likely be a serious test phase to most member states - definitely Estonia - in elaboration of their economic and fiscal policies and relevant co-operation with the EU institutions. Participation in the development of economic policy guidelines sets relatively high demands both on actual policy formulation and institutional co-operation. Naturally this process will have two parties - the present applicant countries will have joining in the EU processes whereas the “old” member states will have to study the key problems the new members states face in their economic development. The post-accession ERM2 phase is an appropriate time for the establishment of the comprehensive co-operation in the economic policy area on the national as well as the European Union level. The “testing” of the economies’ competitive abilities will also be crucial - not by means of the exchange rates but interest rates. Maastricht criteria For Estonia like for all new member states the only possible way to join the euro system is to do it in full compliance with the letter and spirit of the EU Treaty.

My remarks today will focus, in particular, on the issues relating to innovation, which is indeed derived from the investment in research and development, and from the investment in the workforce in the sector. Innovation is key to sustaining growth and securing the competitive advantage. Innovation is about developing new Islamic financial products and services and increasing the range of products and services to meet the more sophisticated and complex requirements of today’s consumers and businesses. It is also about improving the overall efficiency by which the products and services are being provided. Innovation will also involve the introduction of new structures that may contribute towards enhancing convenience for consumers and businesses. Finally, it may also contribute towards creating new markets or expand the existing markets for Islamic products and services. Industry practitioners thus have an important role to promote innovation. Financial institutions need to equip their business strategies with research and development to design new innovative products and services. Such innovative financial products and services which are credible, competitive and Shariahcompliant would indeed find a ready market. The introduction of the global sovereign sukuk more than two years ago was an important innovation that has since gained significant ground. Innovation can also take the form of the application of technology to improve convenience for customers and reduce the cost of financial transactions. In embracing new leading-edge technology, the potential for the Islamic financial industry to provide new products and services will be enhanced.