samchain/econo-pairs-v1 huggingface dataset:
Faced with a demand shock – such as an exogenous increase in consumer spending (for example driven by a change in preferences) – inflation and output would be pushed in the same direction. The monetary  3  For example, policy rates in the United States were being cut well before those in the UK. BIS central bankers’ speeches  3  policy prescription in such cases is relatively simple – monetary policy just has to lean against the demand shock sufficiently that inflation returns towards the target. Tightening policy helps to reduce the deviation of both inflation (from target) and output (from its sustainable path) albeit with somewhat different time lags. For such a shock the challenge for the policy-maker is one of recognition and timing (because demand will usually react more quickly than inflation to a policy change) rather than direction. Things are much, much more complex when faced with real, relative price shocks, such as a rise in world energy prices. Such a cost shock pushes up on inflation but simultaneously pushes down output relative to its previous level. Technically it is a negative supply-side shock. That makes policy-making much more difficult – one can only counter the resulting inflation by exacerbating the fall in output. Moreover, the pressure of demand on inflation becomes much harder to estimate when both actual output and the level of sustainable supply are moving around at the same time. The three price shocks share a common feature – they all represent real shocks to relative prices.

5  The real exchange rate shock is likely to push down on domestic demand but should increase export supply. 4  BIS central bankers’ speeches  disturbances. Attempts to keep inflation at the inflation target in these circumstances may cause undesirable volatility in output”.6 In other words, if shocks drive inflation sufficiently away from the target, the MPC are allowed to choose how quickly to return inflation to 2% and should explain such policy decisions via the open letter system. I have often been asked whether or not changes to the target, or the remit, or to CPI itself would help us to set policy. The answer is a clear no. Of course, the Government can decide to change these things if it wants to, but that wouldn’t magic away the problem. The unfortunate and difficult truth is that the shocks that have hit the economy recently have not been caused by monetary conditions. They are real economy shocks which make us individually and collectively worse off – we have to pay more tax, we have to pay more, in real terms, for petrol, gas, electricity and imported goods or services. The choice that monetary policymakers face is how much of these relative price shocks should be accommodated by a higher level of prices, and how much should be accommodated by a squeeze on nominal wages (and higher unemployment).
This means that the rising demand pressure in the Swedish economy in recent years has not shown up in higher CPI inflation. Contrary effects have come from other factors. To clarify this, we can take a look at inflation’s constituents. Diagram1. Inflation during 1997 until 1999  1. Inflation 1997-1999 CPI and different measures of underlying inflation  4 UND1X = CPI excluding interest expenditure and indirect taxes and subsidies  3  UNDINHX = UNDIX excluding goods that are mainly imported  2 1 0 1997  1998  KPI  UND1X  1999  UNDINHX  Source: Statistics Sweden  1  BIS Review 28/2000  From Diagram 1 it will be seen that in the past three years, underlying domestic inflation (UNDINHX)1 has been almost continuously in the vicinity of the 2% inflation target. The pressure from domestic demand has been countered, however, by a weak international price trend. This is evident from the path of UND1X inflation, which also includes imported prices. The main explanation for the weak development of import prices in this period is the crisis that began in Asia in the autumn of 1997. It can be mentioned that towards the end of 1998, just the prices of coffee, petrol and domestic heating oil lowered the price level in Sweden by almost half a percentage point.

Moving forward, greater investment by the private sector in human capital development and innovation is critical for us to maintain the current momentum. The return on investment on these two areas will be visible in the reduction of the development gap among ASEAN countries. Public-private partnerships to address this gap is essential to foster sustainable economic growth and achieve a globally competitive ASEAN. ASEAN has come a long way in fostering cooperation and collaboration to achieve current levels of development and integration. The principle of ‘prosper-thy-neighbour’ is the defining mantra of the ASEAN movement and has been integral to our achievements so far. Therefore, let us 2/3  BIS central bankers' speeches  develop mutual understanding on the varying degrees of economic development and strategically address the needs of each member country. Let me conclude with a quote, by the author Virginia Burden: “Cooperation is the thorough conviction that nobody can get there, unless everybody gets there”. I believe the spirit of cooperation and dynamism will accompany us on our journey towards building a more vibrant ASEAN Economic Community by the year 2025. 3/3  BIS central bankers' speeches
(vi)  there has been a slight increase in the staffing of control functions (especially compliance), but there are still shortages of qualified staff in some specialised areas (e.g. cyber, digitalisation, internal models). 4  (vii)  the scope covered by compliance is often not comprehensive, clear or well documented. The role of the board of directors, in particular through its oversight committees (Audit, Risk, Appointments and Remunerations) is key to ensure that the internal control functions have the appropriate stature within the institution and are sufficiently resourced. Moreover, the board of directors and its committees should empower the internal control functions to complement the role of the first line of defence. The board of directors needs to challenge the control functions and properly oversee the follow-up of the findings and weaknesses flagged by these functions. It must also demonstrate a willingness to take ownership and be actively involved (“tone from the top”). Risk data aggregation The last point I would like to make is the importance of accurate, relevant and timely data. The SSM pays close attention to supervised institutions’ general data quality, risk data aggregation and risk reporting (RDAR) capabilities, which are deemed essential for proper risk governance and sound risk-based decision-making. Indeed, they have been a key aspect of the ECB’s supervisory roadmap since the SSM was created.

Therefore, in addition to the other elements I mentioned earlier, such as risk controls and data quality, a clear and sound risk culture is also needed. This was an important element in the recent financial turmoil, particularly the episode triggered by the collapse of Silicon Valley Bank, although many of the underlying factors in that case have yet to be properly analysed. Nevertheless, some aspects can be highlighted: shortcomings in banks’ risk management, ineffective governance and an inappropriate business model, including in terms of interest rate risk, asset/liability management profile, liquidity risk and NBFI2 exposures.3 Others have also pointed to the gaps in regulatory and supervisory frameworks and the long period of low interest rates and ample liquidity. While these latter factors are all true, this episode has shown that even today some banks still fail to comply with basic risk management and governance practices. But what are the fundamentals of risk management and oversight by banks? Beyond the Basel Committee’s 2015 corporate governance principles for banks,4 there is no single approach to good corporate governance. The clear objective is to achieve sound risk management and decision-making. Banks’ board of directors, senior management and risk management function should be able to ask the right questions in a timely manner and take credible decisions to strengthen operational and critical resilience. This seems to be the real challenge, even today.
Retailers will also have to consider temporary storage space for cash-boxes and additional transport requirements. The Riksbank is likewise working to make the period with double currencies as short as possible. There are, however, other aspects to consider. Incorporating euro in the system will take time. Just the work of distributing the new banknotes will be time-consuming. We shall be looking into what is feasible in practice. Time will also be needed to adapt the automatic teller systems (Bankomat and Minuten) to the new currency. Another matter to be investigated is whether the distribution of euro to banks, post offices and possibly retailers can start before the date on which the new currency becomes legal tender. Moreover, some consumer interests, for instance, have said than many consumers would prefer a relatively long changeover period in which to get used to the new currency. The question of the period with double currencies therefore calls for further discussion in order to arrive at a solution that everyone can accept. Retailers have also put forward the view that it should be possible to provide change only in euro from day one. We believe this may be difficult both in practice and on the grounds of the accepted BIS Review 41/1997  -5-  changeover principle of "no compulsion - no prohibitions". It has been said that people in general are to be free to decide whether to use euro from the start on 1st January 1999 or to wait until the changeover is completed in 2002.

The decisions on this and certain other matters have been deferred, however, and will now be taken by those countries that join the euro area from the start. TARGET is to be tested this summer and is to be fully ready for use by 1st January 1999. Summary and conclusions Most of the evidence today suggests that the economic and monetary union will move to Stage Three on 1st January 1999. For Sweden the question is whether we should join the euro area from the start, wait a while or try to remain outside for good. I hope that we will soon be having a more lively debate on this very important issue. The question of EMU has now been largely examined and discussed by the financial sector, the authorities and big businesses. The time has come to spread the debate and information to other groups in society. In time the krona will lose ground Even if Sweden decides to stay outside, the single currency will affect us. Our analyses, together with other organisations, of what might happen in that event point to a relatively sizeable use of euro, particularly in the securities market. In time, the use of euro may spread like water rings to other parts of society. The extent to which the euro is used will among other things depend on its strength relative to the krona but also on market assessments of the probability of Sweden joining.
Even though the analysis of the cumulative impact and the interactions between regulations is still in its early days, vigilance is required to ensure that the implementation of reforms does not result in a reduction of financial activities, such as market making that are vital for preserving market liquidity, financing investments and firms and ultimately the real economy. The foreseen banking structures reform and European Financial Transactions Tax (EFTT) are cases in point. In both projects, an appropriate approach should strike the right balance between limiting risks associated with trading activities and the need to preserve financial activities that are useful if not essential to the development of the real economy. Doing so would be fully compliant with the overarching objectives of the Capital Markets Union. 2  BIS central bankers’ speeches  Having better integrated markets within the European Union (EU) would also mean the emergence of more reciprocity issues as regards macroprudential policies. At the macro level, authorities should then closely review the potential additional vulnerabilities and risks attached to the CMU both at the domestic level and on a cross-border basis. Authorities will also have to strengthen their analytical framework and possibly complement their macroprudential instruments which are mainly bank-based at the current juncture. I will conclude with some remarks regarding longer term work, namely how to harmonize further domestic legal regimes and the institutional architecture. The Commission’s green paper has identified some areas for longer term work, including the need for further harmonization of insolvency regimes, securities laws and tax regimes.

What we don’t know is what the shape or timescale of the recovery will be. It’s going to be some time before we have a clearer view of the effects on other industries, including autos, higher education, manufacturing, and professional services. Our Response Despite this extraordinary uncertainty, at the Federal Reserve we worked quickly to put measures in place to support the economy and set the foundation for a strong recovery. During the first half of March, the Federal Open Market Committee (FOMC) brought the target range for the federal funds rate to near zero.1 The FOMC has indicated that it expects to keep interest rates at this level until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.2 Bringing interest rates down to near zero serves two purposes. First, low interest rates make it easier for households and businesses to meet their borrowing needs. Second, they foster broader financial conditions that will help promote the rebound in spending and investment needed to return the economy to full strength. The New York Fed The New York Fed has important and unique responsibilities in supporting liquid and wellfunctioning financial markets. Working alongside our colleagues in the Federal Reserve and other agencies, we are taking rapid and significant actions to supply liquidity and to stabilize critical parts of our financial system.
However, the growing rate of the deficit has accelerated in the recent years, which has brought the negative net investment position of the largest economy in the world down to the vicinity of 30% of the GDP in 2005 and - according to all available forecasts - will continue to deteriorate it rapidly. The large US current account deficit is related to a negative balance of household savings and a sharp increase in real property prices, observed not only in the USA but in all Anglo-Saxon countries 6 in the recent years. Moreover, the US current account deficit is financed to a large extent from purchases of American debt securities by Asian central banks and - in the years 2004 and 2005 - to a growing increasing extent by public institutions managing foreign exchange reserves in oil-exporting countries. Foreign exchange reserves have increased substantially over the recent years. In China, for example, reserves of the People’s Bank of China increased from USD 166 billion in December 2000 to USD 819 billion in December 2005, and it is broadly expected that - in terms of size of its foreign exchange reserves - China will outdistance the to-date leader Japan, whose FX reserves reached USD 847 billion in December 2005, and that Chinese reserves will exceed USD 1 trillion in 2006 7 . As yet, there is still no definition of global imbalances that would be commonly accepted by most of economists.

In spite of the fact that the interest rates of many central banks have been reduced to their historical lows in the recent years (they have been brought down to zero in Japan and were at the level of 1% in the USA for some time), and in spite of a high growth in prices of oil and other commodities, inflation in the largest world economies still remains low. The Federal Reserve Bank increased its interest rate from 1% to 4.5% over the past two years and the markets expect further rises, to the level of about 5.0%, whereas the interest rate on 10-year US Treasury bonds has been fluctuating at around 4.5% for a few years now. This phenomenon has even received an official name of “the Greenspan’s puzzle”. The yield curve in the US is inverted, which means that the interest rate on 2-year bonds is higher than that on 10-year bonds; in the light of the present knowledge, this should indicate an oncoming recession. Meanwhile, according to the present forecasts, the economic growth rate in the USA will slow down only slightly in 2006 and will remain close to the potential GDP. In 2005, the current account deficit in relation to the GDP in the USA exceeded 6%, and many forecasting institutions expect its further deterioration. Meanwhile, contrary to what the theory of economics says, the dollar exchange rate, instead of falling, appreciated against the euro by 13% in 2005.
For this reason, in 2017, the ARRC recommended SOFR as the main U.S. dollar reference rate for the post-LIBOR world.8 No other rate has the depth of transactions of the repo market that underlies SOFR, which proved to be resilient even during the market stress last spring.9 That is essential as a foundation for the enormous markets such as the hundreds of trillions of dollars of derivatives currently based on LIBOR. As we move forward to the post-LIBOR world, we must make sure that we are building a house with a sturdy foundation with the most robust reference rates available. With that foundation securely in place, we can build a house with an assortment of reference rates that can meet the specific needs of particular borrowers and lenders. Best practices have been developed for the use of reference rates that are fit for different purposes.10 11 Conclusion To close, I'll say that as we look toward a world without LIBOR, we need to not only count down, but also measure up. In preparing for the transition, it's time to dig out the tape measure from your toolbox and use it twice. It's critical that we reflect on how we got here and make decisions that won't land us back in the same situation we've worked so hard to solve. As each of you make your own decisions around the LIBOR transition, realize that By continuing usedrawing our site, you to our that Termswill of Use and as Privacy Statement. You learn morefinancial about how system.

we use cookies together, youtoare theagree blueprint serve the foundation forcan our global This isbythe house we're going to live in for a long time. Let's build it to last. reviewing our Privacy Statement. 1 Alternative Reference Rates Committee, ARRC Commends Decisions Outlining the Definitive Endgame for  LIBOR, March 5, 2021. 2 Alternative Reference Rates Committee, Progress Report: The Transition from U.S. Dollar LIBOR, March  31, 2021. 3 John C. Williams, 901 Days, Remarks at Securities Industry and Financial Markets Association (SIFMA),  New York, July 15, 2019. 4 Forum on Ongoing Innovation in Reference Rates for Commercial Lending, Presentation materials,  Federal Reserve Bank of New York, New York, November 18, 2020. 5 Alternative Reference Rates Committee, ARRC Identifies Market Indicators to Support a Recommendation  of a Forward-Looking SOFR Term Rate, May 6, 2021. 6 Alternative Reference Rates Committee, Second Report, March 2018. 7 John C. Williams, 537 Days: Time Is Still Ticking, Remarks at LIBOR: Entering the Endgame, Webinar,  July 13, 2020. See also: Financial Stability Board, Reforming Major Interest Rate Benchmarks, November 20, 2020; and Bank of England Financial Policy Committee, Interim Financial Stability Report, May 2020. 8 Alternative Reference Rates Committee, The ARRC Selects a Broad Repo Rate as its Preferred Alternative  Reference Rate, June 22, 2017. 9 John C. Williams, 537 Days: Time Is Still Ticking, Remarks at LIBOR: Entering the Endgame, Webinar,  July 13, 2020. See also: Federal Reserve Bank of New York, IOSCO Compliance, as of May 2021.
In this account, failures of financial regulation and supervision – rather than of monetary policy – lay at the heart of the crisis. 1 Yet an influential body of opinion takes an opposing line, claiming that an overly accommodative monetary policy – at the global level, and perhaps especially in the United States – was among the key causes of the crisis. 2 Its advocates argue that short-term interest rates were kept “too low for too long” following the bursting of the dot-com bubble at the turn of the century, and led to the economic imbalances that ultimately threatened the financial and macroeconomic stability of the world economy. The truth probably lies somewhere between these two extremes. No doubt financial regulation and supervision were weak. No doubt price stability is necessary but insufficient per se to achieve financial stability. Yet there is also no doubt that a monetary policy which turns out to be too lax to achieve price stability is likely to be responsible for fuelling excessive credit growth and thereby creating the potential for financial instability. There is substantial literature explaining this relationship, on which I will not elaborate further. 3  1  See: B. Bernanke (2010), “Monetary policy and the housing bubble”, speech at the 2010 AEA meetings http://www.federalreserve.gov/newsevents/speech/bernanke20100103a.htm. 2  For a response to Bernanke (2010), see: J. Taylor (2010), “The Fed and the crisis: A reply to Ben Bernanke”, Wall Street Journal (11 January).

Lars Heikensten: What is happening in the United States and how will it affect us? Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, to the Swedish Shareholders' Association, Malmö, 9 March 2001. *  *  *  First I want to express my thanks for the invitation to speak to you here. It is always a pleasure to visit Malmö at this time of the year; the signs that spring is approaching are more numerous and clearer down here. The current focus for forecasters — around the world, I would say — is the U.S. economy. As usual when activity is turning, opinions among economists differ greatly. This reminds me of the remark someone made to the effect that if you placed all the economists in the world in a long line, they still would not reach a joint conclusion. That I think catches the mood at present among economists, though assessments do seem to be following a pattern. American economists generally appear to be considerably more optimistic than economists with an outside view of the United States. The United States has unquestionably been acting as an economic engine for global growth for almost a decade. It is equally clear that to a large extent it is the U.S. economy’s future path that will steer international economic activity and thereby the conjunctural situation in Sweden. Against this background I shall be considering a number of questions to do with the American economy and outlining some conceivable outcomes.