samchain/econo-pairs-v1 huggingface dataset:
For most observers, including politicians, this is the most striking issue: the Fed has a dual mandate, including price stability and maximum employment, and the strategy review shifted its emphasis to the latter. The ECB, meanwhile, has a primary objective of price stability, according to the Treaties. Of course it is our duty to stick to the Treaties and our strategic review won’t deviate an inch from them. However let me only remind you that our legal mandate is not, as often assumed, a purely “single mandate”: it is rather a twotiered one that includes at least two other objectives without prejudice to price stability: “to support the general economic policies in the Union” contributing among other aims to a “social market economy, aiming at full employment and social progress”iii; and “the stability of the financial system” iv Furthermore, I would argue that there is less of a difference between a dual mandate and flexible inflation targeting than people think: noticeably, the measures we have taken to offset the effects of negative shocks such as the Global Financial Crisis or the sanitary crisis have a direct effect on growth and employment. As far as demand shocks are concerned, the monetary policy prescriptions are the same. In principle there are conflicts when there are supply shock but inflation targeting central banks also tend not to react to temporary supply shocks but respond only if there are signs of second-round effects.

As you are aware, the preferred inflation measure of the Fed, the PCE index, includes these expenditures.  Last but not least, our inflation objective while clarified should also be credible. I will come back to this with my fourth question about communication. 3. What about the second pillar of the ECB and is there a link with “secondary objectives”? For many, the history of the second pillar of monetary analysis of the ECB seems to be coming to an end. Born as the first pillar in 1999 and coming at the time from the strict following of monetary aggregates by the Bundesbank – and the Banque de France as well –, it became the second pillar after 2003, passing behind the economic analysis of the inflation outlook. And due to the fact that it has progressively fallen into disuse, many suggest we should now call time on it during our strategic review. Is it that sure? Isn’t there another alternative path, more adequate than letting it disappear? There are three possible reasons:  The second pillar allows a cross check on the analysis of inflation.  We could possibly introduce a focus on nominal aggregates, whereas the first pillar focuses by its nature on prices and volumes.  Finally, it would allow reference to some of the “secondary” objectives of the ECB, including financial stability.
Additionally, an integrated ASEAN market will also serve to facilitate the meeting of global standards as SMEs upgrade to meet the more harmonised compliance requirements across the region. Thirdly, SMEs will also benefit from the drive to strengthen connectivity in the ASEAN region. As highlighted in the Master Plan on ASEAN Connectivity, a comprehensive roadmap of strategies has been outlined to address connectivity challenges on three key areas, namely physical infrastructure, institutions and the people in ASEAN. Increased connectivity across all three dimensions will provide the physical and soft elements needed to create the enabling business environment for SMEs. Fourthly, various SME-specific policies by the ASEAN member countries will also benefit SMEs in the region. This includes the establishment of a regional SME internship programme which has assisted SMEs in seven ASEAN countries to enhance the skills of their employees through structured staff exchanges and capacity building workshops. A further initiative is the recent launch of the online ASEAN Marketplace which aims to provide SMEs with information on the business environment in each respective ASEAN country and a business directory of SMEs to facilitate the access to the markets in the region as well as the potential for collaboration of SMEs across the region. To date, more than 1,000 SMEs across the region have registered with this online portal. It is expected to attract more than 20,000 businesses during the course of this year.

Between December 2002 and March 2004, the interest rate has moved from a high to a low level. The real interest rate is now lower than a real interest rate that implies balance in the economy in the long term – the neutral real interest rate. A real interest rate that is lower than the neutral rate will stimulate activity and fuel pressures in the economy even after the effects of the interest rate fall have been exhausted. Calculations may indicate, on an uncertain basis, that the neutral real interest rate for Norway is between 2½ and 3½ per cent. It has probably fallen somewhat in recent years. Real post-tax mortgage rates and deposit rates at banks are also very low. Household debt is higher than household deposits in Norway. The fall in interest rates pushed up house prices. Higher housing wealth provides increased borrowing opportunities that are used. Household debt has risen by around 11-12 per cent over the past year. Household debt is now more than one and a half times as high as disposable income. The accumulation of debt partly reflects structural adaptation over time to a deregulated credit market and partly low interest rates. The higher debt burden has made households more vulnerable. A gradual normalisation of the interest rate will probably contribute to curbing the rise in house prices and gradually bring down debt accumulation. Conclusion Two and a half years after we started to lower interest rates it would appear that inflation is moving up, albeit slowly.
In the current crisis, the MA has worked as expected and has shielded insurers from the market dislocations that occurred in March of this year. As spreads have increased, annuity writers have not had to recognize the full impact on their capital requirements and have been able to discount their liabilities at a higher rate. In Chart 1, you can see both corporate spreads and the resulting MA. As spreads widened in mid-March, as you can see, the MA from this portfolio would have tracked it closely, absorbing much of the impact on insurers’ balance sheets. Importantly, however, this analysis assumes that the underlying assets have not been downgraded. If and when downgrades increase, the MA will reduce. The point of MA is to separate the noise from the signal, the signal being represented by an asset’s rating: if the rating is unchanged, then changes in spreads are identified as noise and absorbed by the MA. If assets are downgraded, then the decrease in rating is reflective of increased risk borne by insurers, and which we expect to be appropriately capitalized. As the effects of Covid-19 have developed, we have been working to provide further guidance to insurers in cases where Solvency II could be unhelpfully misinterpreted, in order to avoid unintended consequences. For instance, the recent follow-up to insurers on the letter3 from Sam Woods to clarify the PRA’s position on the treatment of covenant breaches and insurers’ internal ratings during Covid-19. Another supervisory action was taken in relation to the TMTP.

However, we recognise that there are prudential risks and complexity within the matching adjustment that could be reduced. Some of these arise from the mechanics of the MA. When the MA – which is designed and calibrated with liquid, traded assets with fixed cash-flows in mind – is applied to assets that are illiquid or have some risks to fixity of cash-flows, then assessing its suitability becomes a much greater challenge. 5  All speeches are available online at www.bankofengland.co.uk/news/speeches  5  The size of the MA benefit that a firm can take on its liabilities is driven by the credit rating assigned to its assets. This rating may be assessed by an external rating agency or the insurer itself – and the difficulty in modelling the behaviour of long-dated, illiquid assets creates some prudential risk. If an asset is too highly rated, a firm may be holding insufficient reserves to meet the risk of default or downgrade. Other risks arise from the type of investment that the MA’s strict eligibility criteria incentivise – such as securitised credit which can lack transparency. While the MA is a valuable part of the solvency framework, we are looking to reduce the complexity and operational burden on firms – and ourselves. Third, reporting requirements. The PRA is ready to consider certain short-term suspensions in some aspects of reporting, including the expansion of quarterly reporting waivers and some group reporting. Short-term suspensions could include removing quarterly reporting requirements for more firms or extending the use of annual reporting waivers.
An example is a structured programme with the opportunities for other countries to have a one-to-one engagement with the countries featured in the reports. In this spirit, IRTI, can explore the opportunity through the Regional Office to jointly collaborate with the International Shari’ah Research Academy for Islamic Finance (ISRA), Islamic Banking and Finance Institute Malaysia (IBFIM) and International Centre for Education in Islamic Finance (INCEIF) for greater synergy in international research and training, as well as capacity building. In concluding, I wish to congratulate the IRTI team, that has worked diligently with the Council of Islamic Banks and Financial Institutions (CIBAFI) and Thomson-Reuters in producing this report. It is my hope that there is further continuity in developing such country references that can showcase the offerings of Islamic finance to the global community. With this, more jurisdictions can contribute towards advancing Islamic finance as an alternative financial system that adds diversity and vibrancy to the economy. Thank you. BIS central bankers’ speeches  3

The primary difference between Norway and countries which have chosen to base their monetary policy regime on an inflation target is to be found in the interaction between monetary policy and fiscal policy. The role of the Petroleum Fund The Norwegian economy is small and open. Fluctuations in oil prices and oil revenues pose a considerable challenge to Norwegian economic policy. The Government Petroleum Fund plays an important role in stabilising developments in the mainland economy. A large portion of the central government’s oil and gas revenues is invested abroad through the Petroleum Fund. Balance in the Norwegian krone market is maintained by investing foreign exchange earnings abroad, thereby curbing the effect of fluctuations in oil prices on the krone exchange rate. Some of the petroleum revenues are used to finance central government budget expenditure. The portion used by oil companies in Norway, partly to finance investment, also has an effect on the mainland economy. The portion of central government oil revenues that is not used domestically is credited to the Petroleum Fund’s account in Norges Bank. Norges Bank acquires foreign exchange equivalent to the allocation to the Petroleum Fund. Foreign exchange earnings from the state’s direct financial interest in oil activities (SDFI) are transferred directly to Norges Bank, while the remainder is purchased in the market. The Petroleum Fund’s capital, as well as the return on this capital, is invested abroad.
10  BIS Review 67/2009  Figure 17: Risk Premium Developments 5 Year CDS Spreads (29.06.2007=1)  41  900  36 31  700  Brazil  26  600  S. Africa  21  500  Hungary  16  400  S. Korea  11  300  6  200  1  06 07  10 07  EMBI+ Turkey EMBI+  800  Turkey  02 08  06 08  10 08  100 12 03 06 07  02 09  06 07  09 07  12 07  03 08  06 08  09 08  12 03 08 09  Source: Bloomberg. In the first quarter of 2009, the Turkish lira did not widely differentiate from the currencies of other developing countries in terms of changes in value. Having said that, the relatively low level of volatility in the Turkish lira – one of the currencies with the highest volatility historically and susceptibility to the global risk appetite – became more evident in 2009, the year during which the distinctive characteristics of the countries came to the forefront (Figure 18).

Moreover, when the sharp decline in non-agricultural employment is taken into account, it is estimated that the level of disposable income will remain low for a while and the precautionary saving tendency will continue to curb domestic demand. Within this framework, we believe that the recovery in economic activity will be gradual and the downward pressures on inflation will continue. Despite the downward revision in the outlook for economic activity, there have been no major developments that require revising the oil and food price assumptions stated in the past Report. Therefore, the forecasts have been based on a framework in which oil prices would hover around USD 55 per barrel throughout the forecast horizon. The previous assumptions for oil prices at 55 USD per barrel, and food inflation of 7.5 percent for 2009 and 6 percent thereafter are maintained. Distinguished Members of the Press and Dear Guests, In line with the framework that I have presented so far and based on the assumption that there will be measured policy rate cuts in the short run and after that policy rates will be kept constant for a while, our revised forecasts suggest that with 70 percent probability, inflation will be between 4.8 percent and 7.2 percent (mid-point 6.0) at the end of 2009, and between 3.5 percent and 7.1 percent (mid-point 5.3) at the end of 2010. We expect inflation to come down to 4.9 percent by the end of 2011 (Graph 27). Graph 27.
News conference  Berne, 16 June 2022 Andréa M. Maechler  Introductory remarks by Andréa M. Maechler I will begin my remarks with a review of developments on the financial markets over the past half-year. I would then like to discuss the lowering of the threshold factor mentioned by Thomas Jordan. Situation on the financial markets Volatility on the financial markets has increased again significantly since the beginning of the year (cf. chart 1). This was driven by the sharp rise in inflation abroad and by attendant expectations regarding a speedier tightening of monetary policy – especially in the US. Indeed, the Fed has already raised the target range for its federal funds rate in several increments and signalled its intention to increase rates further. In addition, the war in Ukraine and the associated sanctions have exacerbated existing supply bottlenecks and led to surges in energy and commodity prices. These developments have dampened growth expectations and increased uncertainty on the financial markets. On the government bond markets, the change in monetary policy direction has had a pronounced impact. In the US, nominal ten-year Treasury yields have risen almost 2 percentage points since the beginning of the year and most recently were standing at well above 3%. Shorter maturities were particularly affected by this revaluation, with a narrowing of yield differentials between long and short maturities. Such a flattening of yield curves is typical in a period of rising inflation and interest rate expectations.

The Swiss franc temporarily appreciated immediately following the outbreak of the war in Ukraine. The trade-weighted Swiss franc exchange rate, however, was recently below its level at the beginning of the year (cf. chart 4). Adjustment of the threshold factor I would now like to discuss the lowering of the threshold factor from 30 to 28 as mentioned earlier by Thomas Jordan. With this technical adjustment, which will take effect from 1 July 2022, we will ensure that sufficient amounts of sight deposits are subject to negative interest, and that the latter is being passed on to the money market as intended. From March 2022, upward pressure built up on the short-term rates on the secured money market. This stemmed from the fact that the exemption thresholds had risen over time due to the dynamic calculation model, which meant that there were no longer sufficient amounts of sight deposits subject to negative interest. To keep the secured short-term money market rates close to the SNB policy rate, the SNB provided additional liquidity to the money market via repo transactions as a temporary measure. However, given that the increase in exemption thresholds is structural in nature, it is appropriate that we lower the threshold factor. This will result in the secured short-term money market rates being close to the SNB policy rate again without the SNB having to regularly provide larger amounts of liquidity. The SNB will continue to regularly review the basis for calculating the exemption threshold and adjust it as necessary.
Also, at the statistical closure of this FS Report we did not observe any significant changes between the funds managed by the AFPs, in contrast to the significant transfer of affiliates to the E fund documented in the previous Report. 7  It is also worth noting that the financial position of local companies presents no big diversion from previous Reports, despite the fact that local economic activity has performed worse than expected. Total debt to GDP declined slightly, largely explained by external financing sources (figure 12). Meanwhile, the greater dynamism of bond issues has focused mainly on the refinancing of liabilities, while the growth rate of commercial loans remains low. The group of companies that report to the SVS increased their profitability at the end of 2016. However, about 70% of this increase has its origin in non-operational sources. Finally, those firms in productive sectors that do not report to the SVS and have no external debt, posted a decrease in their bank debt recently. This, combined with information from the Bank Credit Survey, reflect lower financing needs of these firms, which is consistent with the evolution of local economic activity. The less dynamic economy has marginally affected the repayment behavior of firms, increasing the credit risk of the commercial portfolio. Although delinquency levels are fairly low, since the last FS Report some NPL indicators showed increases. This, coupled with the fact that the fraction of loans rated sub-standard remained relatively high, has worsened the quality of the commercial portfolio (figure 13).

With this, the MPR is between 150 and 200 bp below its levels considered neutral. The speed with which we have made this reduction responds to our conviction that the medium-term inflation outlook was revealing a scenario that jeopardized the fulfillment of the policy goal. All this, because of the implications that the evolution of the macro scenario, in particular weak activity, had on them. Considering the cuts already made, we believe that monetary policy is now highly expansionary and consistent with inflation at 3% over the projection horizon. Within this horizon we will see in the coming months that annual inflation will fall again, approaching 2%. We will also see months of poor activity, as shown by the latest Imacec. But the improvement in external conditions, the disappearance of specific factors that have affected activity and prices, and the monetary impulse itself, will allow the economy to regain more growth in the second half of this year and in 2018, with capacity gaps that will begin to close in the course of 2018 at the same time that inflation will converge to the policy target. This, by the way, does not mean that the MPR will not be adjusted again, but that in the most likely scenario no new changes are needed, and that the most important thing will be to let the monetary impulse permeate the economy for as long as necessary in order that, combined with the other mentioned factors, it will generate a visible convergence to the policy target.
On reflection, I think that the latest global crisis that originated in advanced economies is very similar to that of the Asian crisis a decade ago, particularly the boom-bust cycle caused by excess liquidity. And, in the aftermath of this crisis, advanced countries are taking the path of responses that Asian countries took over the past ten years. Allow me to put into perspective this similar path of crisis responses, so that we can see more clearly what needs to be done individually and globally. Experience of Thailand and Asia In the Asian case, Thailand in particular, premature opening of the financial sector with the opening of offshore banking units led to excessive capital inflows that could not be effectively arrested by the high interest rate policy, given the fixed exchange rate regime and lack of effective policy tools. The macroeconomic mismanagement was aggravated by lax supervision of financial institutions and the lack of adequate risk awareness by the public and private sectors. All these factors led to asset price bubbles that eventually burst. But, the Asian financial crisis has made Thailand a very different place a decade later with much stronger economic resilience, together with significant progress of regulatory and institutional reforms. Today, our macroeconomic policy framework has emphasized not only monetary stability but also financial stability with a broader and more in-depth surveillance that now covers household, financial, and real estate sectors.

Time, spirit of cooperation and  BIS Review 34/2010  3  good global citizenship, as well as maintaining policy and risk focus will be essential for all of us going forward. Thank you. 4  BIS Review 34/2010