samchain/econo-pairs-v1 huggingface dataset:
But in a crisis, swift and determined action is needed, in particular when risks to the transmission of monetary policy go well beyond the non-bank sector and also include fragmentation in the sovereign bond market, as was the case in the euro area. https://www.ecb.europa.eu/press/key/date/2020/html/ecb.sp201119_1~4a1ff0daf9.en.html  4/7  20/11/2020  COVID-19 and the liquidity crisis of non-banks: lessons for the future  Allowing funds to become monetary policy counterparties, however, creates major operational, supervisory and regulatory challenges that cannot be solved overnight. For this reason, the Governing Council launched the pandemic emergency purchase programme (PEPP), which has been designed to serve two objectives: first, to stabilise financial markets and, second, to counter the negative shock to the economic and inflation outlook caused by the pandemic. The announcement of the PEPP had a strong and immediate stabilising effect on financial markets. It instantly addressed the issue of illiquidity, instilled confidence and thereby reduced systemic stress and bond spreads (see slides 3 and 4). Private sector purchases, which also include commercial paper, directly contributed to easing financial conditions for non-financial corporates and to reviving the primary market for corporate bond issuance. [21]  Fixing the fault lines for non-banks But the success of central bank interventions should not distract from the fact that the underlying vulnerabilities in the non-bank sector need a structural fix, not least to mitigate the risk of moral hazard.

(1999), “  Do efficient financial markets mitigate financial crises?”, speech before the 1999 Financial Markets Conference of the Federal Reserve Bank of Atlanta, Sea Island, Georgia, 19 October. [4] The net asset value spread refers to the difference between the price at which exchange-traded fund shares trade and the net asset value of the underlying portfolio held by the fund per share. This may also suggest that exchange-traded fund prices provided more upto-date information, thereby supporting price discovery. See Financial Stability Board (2020),  Holistic Review of the March Market Turmoil, 17 November. [5] Duffie, D. (2020), “  Still the World’s Safe Haven? Redesigning the U.S. Treasury Market after the COVID-19 Crisis”, Hutchins Center Working Papers, No 62, June. [6] It is even conceivable that the market turmoil could have been worse without the more stringent regulatory requirements on dealers, which helped to ensure their resilience during the spring. [7] At the same time, higher cash holdings were associated with substantially weaker performance in 2018-19 compared with previous years, potentially reflecting the high costs of holding cash in a low interest rate environment. [8] Schrimpf, A. et al. (2020), “  Leverage and margin spirals in fixed income markets during the Covid-19 crisis”, BIS Bulletin, No 2, Bank for International Settlements, 2 April. [9] Vivar, L.M. et al. (2020), “  Burned by leverage? Flows and fragility in bond mutual funds”, Working Paper Series, No 2413, ECB, May. [10] Vassallo, D. et al.
The ASEAN Finance Ministers have agreed in 2003 on the Roadmap on Monetary and Financial Integration of ASEAN in the areas of capital market development, capital account liberalisation, financial services liberalisation and ASEAN currency cooperation. In 2007, the ASEAN Central Banks established a task force, chaired by Malaysia, to chart the milestones and timeliness for ASEAN financial integration. To complement the AEC Blueprint, leaders in early 2009 have agreed to an Implementation Plan to promote the development of an integrated capital market within ASEAN. These initiatives along with other regional efforts will effectively transform ASEAN into a single integrated market, and thus strategically position ASEAN as an important economic zone with a role to play in contributing towards global stability and growth. With the broad diversity within Asia, the pace of development will not be equal for all economies. The general agreement is that growth within Asia will be led by China, India and Korea. In a large part, the shape of Asia’s future will be dictated by the dynamic engagement of these prominent growth drivers with other Asian economies and the rest of the world. The prospects for ASEAN to thrive would depend crucially on its ability to engage with these growth drivers and seize on the opportunities that they offer. However, ASEAN must also recognise that at the same time, the level of competition will further intensify within Asia.

The writer recalls him saying “…if you have only price stability, then you would fall into the trap of attempting to stabilize a price index which is not what is meant by price stability, in the context of a central bank. The attainment of price stability for a central bank means elimination of both excess demand and excess supply in the market so that the market is free of potential inflationary or deflationary pressures” At that time, many in the Central Bank, including the present writer, did not fully understand the wisdom enshrined in that statement. It even led to confusion by many that the Bank had been mandated to stabilize the growth rate as well, in addition to the stabilization of prices. Accordingly, some even charged that the Bank had failed in its tasks, when there was a negative growth in the economy in 2001. In hindsight, it can now be discerned that Mr. Jayawardena’s wisdom was to present the price stability in its totality rather than as a sub part of the issue. We could illustrate this point as follows: An economy produces goods and services, numbering millions, for use by its members. The total of these goods and services, when they are offered in the market, is called the aggregate supply. This aggregate supply consists of real goods and services which the users can consume or use as inputs for further production. Hence, it is known as a real quantity, quite distinct from an imagined or assumed quantity.
It is important to persevere with the economic policy actions undertaken. In this way the levels of competitiveness needed to ensure the smooth functioning of the euro area may be regained, the ordinary funding channels restored and the imbalances built up in recent years, in particular in relation to public finances, finally corrected. These requirements must be met if the economy is to begin to generate employment and to grow. The adjustment continues to fall on domestic demand, weighed down by the correction of imbalances, the fiscal consolidation drive and tighter financing conditions. The external sector continues to soften the impact of domestic spending on activity, due both to the buoyancy of exports and to the slackness of imports from the rest of the world, but its contribution is insufficient to halt the decline in output. In this setting, job destruction continued apace in 2011 and in 2012 to date. And, owing to the uncertain prospects for the Spanish economy, a turnaround is not expected in the very short term. However, as this episode is progressively overcome, the approved labour market reforms will foreseeably have a favourable impact on employment generation, contribute to adjusting working conditions to firms’ specific circumstances and provide for a more efficient reallocation of productive resources, which should ultimately prompt an increase in productivity levels. The cyclical weakness and the adverse behaviour of the labour market have not fed through sufficiently to the cost and price-formation mechanism, which still shows considerable inertia.

Here a particular effort should be made to explain all the decisions adopted by the different levels of government in Spain that have been well-received and valued by the markets, such as structural reforms, pension reform and the recent Organic Law on Budgetary Stability, among others. There should likewise be a common effort, in the interest of all sectors of the Spanish economy, to disseminate and address in depth the additional measures that should shortly be adopted to tackle the crisis. There is no more important or pressing task in the short term than to restore lost confidence. And here, collaboration is called for by politicians and economic and social agents in positions of responsibility, and by all institutions with economic policymaking responsibilities. BIS central bankers’ speeches  5  A fundamental determinant of confidence is the credibility of regulatory and supervisory institutions, based on their ability to exercise their powers professionally and independently. This is always an essential element of a country’s economic reputation, but all the more so when confidence has been called into question and the recovery in growth depends on the external financing of its economy. Adam Smith observed in his famous work that the wealth of nations was then closely related to how open their trade was. And today we can see how the richest and most democratically sound countries in the world are those that have competent and independent regulatory and supervisory agencies that act as a counterweight to governments potentially succumbing to interventionist temptations.
Carbon pricing – like the UK emissions trading scheme – is one tool to provide clarity on the route ahead.6 Other tools include changing business regulation (such as preventing the sale of internal combustion engines), fiscal policies (such as changes in subsidies and taxes) and research funding to spur on private and public sector research and development. 5 6  See IPCC Special Report on Global Warming of 1.5°C. See Participating in the UK ETS. In aggregate, these policies will need to internalise the costs of emissions to drive the shift in activities that I have just described. Our preliminary NGFS analysis suggests that these policies will need to add up to an equivalent global shadow carbon price of over $ a tonne within a decade if we are to meet Paris goals and reach net zero by 2050 [figure 6].7 Considering what that forward shadow carbon price should be is an essential consideration when making any investment decision today. Second, the cost to the economy in aggregate of getting to net zero need not be substantial. Our experience of the transition so far has been that costs for nascent technologies tend to fall much more quickly than we initially expect once they start to gain traction and momentum. Many transition models, including those leveraged for the NGFS scenarios, have for example underestimated how quickly the price of renewables has fallen in recent years. Well-designed policies and new technologies also bring new jobs and can lead to higher growth.

And of course the future path of the climate risks themselves is subject to huge uncertainty. But given the urgency of our challenge, we cannot let uncertainties and complexities lead to inertia and inaction. Scenarios are generally comprised of three key components:   Transition models that set out how energy production and land-use can adjust to lower emissions and meet a given carbon budget or temperature target;    Physical models that set out projections for how living conditions and extreme weather would shift given a pathway for emissions; and    Economic models that quantify the potential impacts from both transition and physical risk on the economy. This is unfamiliar territory for most central banks, businesses and the financial sector. It is however territory we all need to get familiar with if we are to find the right climate path. Our desire to improve our understanding and capability to measure and monitor these risks inspired us to launch a project to co-design climate scenarios together with world leading climate scientists and 60 other central banks and supervisors that are part of the macrofinancial workstream of the Network for Greening the Financial System or NGFS.4  It has been a truly interdisciplinary effort. We have had to integrate a suite of models across each of the areas – physical, transition, economic, financial – to deliver insights [figure 3].
The evidence at our disposal shows, on the contrary, that the instruments we are currently deploying are having the effect intended. With this in mind, in my remarks this morning I would like to review both the nature of global factors affecting inflation dynamics today, and the developments in core inflation that are more determined by domestic factors. Whether low inflation stems from one or the other, the central bank can act proactively to counter risks to price stability and maintain the anchoring of inflation expectations. In the euro area we have proven that our monetary policy tools work and, with the right calibration, have sufficient traction over the economy to deliver our medium-term mandate. This was reflected in the Governing Council’s decision yesterday to expand our monetary policy stance. The role of global inflation Over the last decade there has been a growing interest in the concept of “global inflation”. This is the notion that, in a globalised world, inflation is becoming less responsive to domestic economic conditions, and is instead increasingly determined by global factors. 1 Looking at the drivers of inflation across advanced economies today, we do indeed see a strong global component in low inflation. Decomposing inflation for the average OECD country, it is clear that since mid-2014 there has been a notable decline in domestic shocks  1  Inflation as a global phenomenon has been documented e.g. by M. Ciccarelli and B. Mojon (2010), “Global Inflation”, The Review of Economics and Statistics, 92:524-535.

This is  2  BIS Review 156/2009  done every September, when the Board of the Central Bank presents its Monetary Policy Report (IPoM) before the full Senate. Nonetheless, the Bank has substantially enlarged its information disclosure function, taking important steps forward during this year. First, since March, the background minutes prepared by the Research Department are published on our website the day before the monetary policy meeting. This way, the public has the same background information as the Board does when making its monthly monetary policy decisions. Also, the Board announced that, as of next December, it will increase the frequency of the IPoM from three to four issues per year. Additionally, the Bank publishes the Financial Stability Report twice a year, in December and June, and publishes its yearly account on the administration of international reserves once a year as part of its Annual Report. But this is not enough. Legitimacy is strengthened through direct, open, and non-exclusive communication with the general public and, for that reason, the aforementioned documents are uploaded onto our website at the same time as they are being presented. In addition, the Bank issues other reports, communiqués, minutes, specialized studies and statistical publications, all of which are available to the public. These are complemented by presentations by Board members or staff, which are also uploaded to the website. The times when central banks’ operations were complex and indecipherable are being left behind.
Norges Bank  Output gap for mainland Norway, based on annual figures 5  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3  -4 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002  -4  Source: Norges Bank  SG CME 08.06..2004  5  The following chart shows a similar estimation using the quarterly figures that I just showed you. Norges Bank  Output gap for mainland Norway, based on annual figures and quarterly figures 5 4 3  5  Annual figures  4  Quarterly figures  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3  -4 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002  -4  SG CME 08.06..2004  Source: Norges Bank  6  We must not and cannot fine-tune economic developments. We must therefore exercise caution in our use of short-term statistics and quarterly figures. Changes in these figures may represent more noise than news. The challenge facing us is to identify the contours of cyclical developments. 16  See Inflation Report 1/2003 for further discussion on the method of calculation. BIS Review 36/2004  9  Allow me to conclude.

6  BIS Review 36/2004  Both the formulation of a precise inflation target and the aim of striking a balance between the objectives of stable output and inflation could invite a repeat of earlier attempts at fine-tuning. But here it is important to adhere to the lessons drawn from the 1970s and 1980s. The uncertainty underlying the decisions taken must not be underestimated. There is uncertainty as to the current state of the economy, the underlying driving forces and the economy’s functioning, including expectations formation and the impact of monetary policy. Economic models are tools that help us address some of this uncertainty. Inflation targeting places new demands on our models and our use of models. In an uncertain world, risk analysis is a very important part of the work. The aim is as much to understand the economics of the forecast as to produce quantitative estimates. In central banks, dramatic developments in macroeconomic modelling have taken place over the past 10 years. At Norges Bank, we have started work on developing modelling tools for inflation targeting. We are inspired by and work closely with other central banks and the IMF and draw on our long experience of model building in Norway. We are working on several different models and we are assessing other building blocks that we need to support our work in setting interest rates under an inflation targeting regime.
Although the way in which they steer their individual money markets differs, ultimately they provide just the amount of liquidity that is necessary to maintain the key monetary policy rate at the targeted level. The SNB reacted rapidly, and was the very first central bank to provide additional liquidity, which it did on 9 August, by means of fine-tuning measures. In the course of the following days, we continued to provide the banking system with generous supplies of funds as part of our regular auction procedure. In this way, we succeeded in rapidly defusing tensions on the call money market. Since then, we have carrying out fine-tuning measures on a consistent basis, in order to dampen sharp fluctuations in the call money rate in either direction. This has allowed us to stabilise the very short-term Swiss franc money market. However, we were unable to prevent risk premiums in interbank business from rising, since this is largely independent of our measures. As can be seen in graph 2, the three-month Swiss franc Libor had risen to 2.90% by mid-September 2007, which was substantially above the level targeted by us. By international standards, however, the increase in Libor was minimal. Our monetary policy decision of 13 September was aimed at further calming the Swiss franc money market, by bringing the three-month Libor back down to around 2.75%. With this in mind, we made funds available to banks for a term of three months. We did this from the day of the monetary policy assessment onwards.

More broadly speaking, the RMB is now the seventh most used payment currency according to the Society for Worldwide Interbank Financial Telecommunication (SWIFT), and the ninth most actively traded currency according to the Bank for International Settlements (BIS). 4. To me, the extent and pace of the development of offshore RMB business depends on three key factors. The first factor is the relaxation of controls and restrictions by the Mainland authorities. The second factor is the availability of the necessary financial market infrastructure, such as clearing and settlement systems. The third factor is the awareness and willingness of corporates and financial institutions, especially banks, to develop RMB business opportunities. 5. Since the RMB trade settlement pilot scheme was launched back in July 2009, the Mainland authorities have incrementally removed many controls and restrictions on the flow of RMB out of and into the Mainland. Presently all trade and current account  BIS central bankers’ speeches  1  transactions between Mainland China and other parts of the world, as well as inward and outward direct investment into and out of China, can be conducted in RMB. Moreover, some cross-border portfolio investment flows, such as investments into China’s bond and equity markets, can also be made in RMB via the RMB Qualified Foreign Institutional Investors (RQFII) scheme. 6. More importantly, in April this year the Mainland and Hong Kong authorities announced a milestone project, i.e. the Shanghai-Hong Kong Stock Connect scheme.
Should such a risk materialize, the CBRT will not react to temporary price movements, yet the Bank will not tolerate any deterioration in expectations.” Likewise, at the Monetary Policy Committee meeting held on 27 March; after pointing out that “uncertainties in oil prices pose upside risks to the inflation outlook”, we underscored “[…] we will continue to closely monitor supply-side developments and we will not tolerate any deterioration in inflation expectations”. In view of the current level of inflation, I would like to re-underline on this occasion that it is essential to eliminate upside risks. To this end, last month, we implemented a “strong, effective and temporary” monetary tightening in order to eliminate the impact of recent cost developments on inflation expectations. We will closely monitor factors affecting inflation in the forthcoming period and additional monetary tightening (AMT) will be repeated when deemed necessary. Dear Participants, At this point, I would like to give you a quick overview on the monetary, financial and fiscal policies that Turkey has implemented for economic stability. The global demand shock that came after Lehman crisis brought steep declines in commodity prices with it. In response, expansionary monetary policy as well as supportive fiscal and financial policies were implemented at the same time.

In the face of these developments, we welcome the recent concrete steps, as part of the medium term program in Turkey, towards reducing the dependence on energy imports by shifting to domestically produced and renewable energy sources. These measures will hopefully ease the susceptibility of the current account to commodity prices in the long run. The key question in the short-run is how to smooth out the impact of the commodity prices on the domestic economy in the short to medium term, while there is a heightened degree of uncertainty regarding financial and real factors. In Turkey, ex-refinery fuel prices, in addition to the 18 percent-Value Added Tax (VAT), are also subject to the Special Consumption Tax (SCT). Special Consumption Tax, which is not only a fixed tax but also comprises a major part of the final prices of fuel products, helps to smooth out significant fluctuations in crude oil import prices. Thus, consumers are less affected by such fluctuations. Esteemed Guests, It seems that uncertainties regarding commodity prices will continue to be an important factor to be considered carefully in policy implementations in the forthcoming period, too. I believe that the papers presented in this conference will guide us in overcoming the policy challenges we will face along the road. Thank you very much for your interest and participation. 4  BIS central bankers’ speeches