samchain/econo-pairs-v1 huggingface dataset:
The reason for this is quite simply that it is more costly in terms of reduced production and employment to force down inflation expectations once they have become established at a higher level rather than to prevent them rising. Parallels between the current situation and 2001 plus 2002 Let us take a look at the current situation and begin with the price rises. Now, as in spring 2001, inflation has risen as a result of temporary factors pulling up the general level of prices. During 2001 mad-cow disease and foot-and-mouth disease pushed up meat prices and poor harvests led to soaring prices on fruit and vegetables. Then as now there was also a water shortage in the hydroelectric power companies’ reservoirs, which pushed up electricity prices. At the moment, it is electricity and oil prices that are soaring and have pushed up inflation figures above the target level in January. This becomes particularly clear if one separates energy prices from the inflation figures for January (Diagram 1). The Riksbank’s assessment is that the upturn in inflation is temporary, as it was in 2001, and we can expect to see lower inflation as early as the late spring and summer. However, our assessment is based on the assumption that those setting prices will not try to compensate themselves for the temporary price increase. If this occurs, there is a risk of inducing tendencies towards an inflation spiral, which the Riksbank could not stand by and witness in silence.

But that could not be a complete solution as it would leave the hosts of the group’s foreign subsidiaries with exposure to Topco being unwilling or unable to pay when it mattered. For that reason, the LAC of Topco needs to be passed down to the ‘systemic’ or otherwise key operating subsidiaries, forming LAC in the subsidiaries themselves. This should probably be in the form of subordinated debt issued to the Topco with write down triggers that would enable losses exceeding the subsidiary’s equity base to be pushed up to the Topco. By transmitting the losses to Topco, the operating company is recapitalised. If Topco itself is bankrupt as a result, it can be resolved in a top-down bailin by the group’s home resolution authority of its own debt. That is the model set out in the paper FDIC/Bank of England issued last December.13 For MPE resolutions, there needs to be sufficient LAC in each of the key subsidiaries that are manifestly relevant to global financial stability. Some of the gone-concern LAC should be issued externally, so that bailin can effect a transfer of ownership. Beyond that, the host authorities of other subsidiaries may want to require sufficient externally issued goneconcern LAC, in order to be confident of being able to execute a local resolution if the subsidiary they host is systemic locally, ie a domestic SIFI.
In addition, the rise in longer-term rates constrains economic activity – making it even more difficult to sustain an economic recovery. Moreover, once confidence begins to erode, it can do so very quickly. Even if a country were willing to pay higher interest rates, this path is not viewed as credible given the implications such rates have for future debt service costs and deficits. Put simply, to wait and see ultimately is likely to necessitate an even bigger fiscal adjustment. In addition, waiting for the market to say “no more” may mean losing discretion as to the timing and magnitude of fiscal tightening. It is very unlikely that the time when market sentiment turns most adverse would also be the most attractive time to have to tighten fiscal policy. Thus, there is a balancing act between solving the longer-term problem of needed fiscal consolidation and, at the same time, not tightening fiscal policy too soon or too abruptly so as to derail the nascent expansion. So what should be done? I believe that moving ahead earlier with a credible plan is preferable to waiting. I am not going to enter a political debate about whether the restraint should be more in the form of higher taxes or lower spending. However, I do believe, like most other economists, that fiscal consolidation that has the least negative impact on investment in physical and human capital is bound to be most effective. That is because fiscal capacity depends on economic capacity.

One of the examples of this is the fact that we did not utilise the scope for rate cuts that - according to a stricter interpretation - deregulation and other supply factors had created during the last few years of the 1990s. The clearest example of how we attempted to convey that our inflation targeting policy was flexible rather than strict was the clarification of monetary policy that the Executive Board published in 1999. In that, we explained that it may be appropriate in some situations - e.g. in the event of large shocks and deviations from target - to refrain from bringing inflation back to target too quickly in order to mitigate the adverse consequences for output and employment.1 We expressed this in terms of there being reasons to occasionally depart from our simple policy rule - that the repo rate is normally raised if inflation one to two years ahead is forecast to be above 2 per cent, and vice versa if inflation is forecast to undershoot the target. Explicit framework as basis The strategy that we in Sweden have chosen for dealing with the “flexibility problem” could, in simplified terms, be described as that we, when we have found it necessary, have in various ways modified and adapted a framework - mainly represented by an explicit symmetric target, regular publication of detailed decision-support data including forecasts, and a simple policy rule for how the repo rate is normally adjusted against the background of the forecasts.
In Norway, the government used covered bonds in a swap arrangement that was in operation between November 2008 and October 2009.9 The swap arrangement was a response to banks’ substantially weaker access to long-term funding after the Lehman Brothers bankruptcy. The arrangement dampened the effect of high risk premiums in the market and complemented the policy rate cuts that were made in the same period. Extraordinary loans for banks Providing longer-term loans on extraordinary terms was an instrument commonly used by many central banks at the start of the financial crisis. In the euro area, this instrument remained in use after the turbulence had subsided in the form of the so-called TLTRO programmes. The terms of the loans are intended to spur banks to maintain or increase growth in lending to households and enterprises. Norges Bank regularly lends to banks, but only in the short term in order to regulate liquidity in the banking system. In normal times, when markets are functioning normally, it is not our job to compete with the private investors that fund banks. However, if banks’ funding markets cease to function, as in 2008, the situation is different. In Norway, central bank loans on extraordinary terms are more likely to be provided in order to bring down short-term money market rates, known as Nibor rates, closer to the policy rate. This could be considered in a situation where the policy rate is near its lower bound while short-term market rates are substantially higher.

It is not for us to remind you that one of the attributes of being factual and accurate is to be able to verify information as much as possible. Ladies and Gentlemen, it is for this reason that the Bank of Zambia finds immense pride in organising this event, whose objectives are to interact with the media so as to: 1. Share information on the role and functions as well as operations of the Bank of Zambia in the Zambian economy;  2. Discuss recent developments in the Zambian and global economy; and  3. Provide an outlook on future economic and financial developments. Through this interaction, we also seek to clarify certain economic and financial terminologies that are frequently used in economic or business reporting. At this juncture, Distinguished Colleagues, allow me to outline the recent macroeconomic performance in Zambia and its projected outlook. The Zambian economy has recorded robust economic growth rates for over a decade now with GDP growth averaging at 6.4% in the last 10 years. This growth has been broad-based, extending beyond the mining sector to the agriculture, forestry and fisheries; manufacturing; construction; transport, storage and communications; and financial intermediaries sectors. In 2013 Zambia’s overall macroeconomic performance was generally buoyant relative to other countries in the region and the world economy in general. Real GDP growth was registered at 6.5 percent in 2013 from 7.3 percent in 2012. The growth was higher than 4.9% and 3.0% growth for sub-Saharan Africa and for the global economy in 2013, respectively.
Finally, it seems particularly dangerous to raise inflation targets at the current juncture, as one should expect nominal interest rates to rise roughly in line. Even if expected long-term real interest rates were thus unchanged, the fall in bond prices would lower wealth and worsen the already-impaired balance sheets of financial institutions. In summary, raising inflation targets does not seem the most appropriate response to the crisis. It is surely far better to seek ways of reducing their frequency and impact. Rather than raising the target rate of inflation, an alternative and theoretically more appealing approach would be to target the price level rather than the inflation rate. The difference between inflation and price-level targeting is obviously that, under the former, any undershoot or overshoot of the price level relative to the path implied by the target is ignored in subsequent periods, whereas, under the latter, those control errors have to be clawed back, thus returning the price level to its originally expected path. Consequently the price level should revert to its trend under price-level targeting, whereas it will be differencestationary under inflation targeting. In the standard New Keynesian macroeconomic model with sticky prices and forward-looking agents, the optimal policy under commitment delivers such a trend-stationary price level, even though welfare only depends on the inflation rate. That is because it provides the necessary history-dependence in policy to ensure that the policymaker goes through with promises that are otherwise time inconsistent; see, for instance, Svensson (1999).

But it is possible that the increased proportion of households on fixed rate mortgages means the full effect of 15  See Hansen and Sargent (2008)  Bank of England  Page 15  policy takes longer to come through and/or is larger when it does, such that inflation comes down more quickly through 202316. Given the uncertainties we face it is important also to be humble about what we don’t know or still have to learn. I favour a watchful and responsive approach to setting policy17. Although my bias is towards further tightening, if the economy develops differently to my expectation and persistence in inflation stops being a concern, then I would consider the case for reducing Bank Rate, as appropriate. Conclusion Let me conclude with two salutary tales. First a personal one. In a speech I gave in February 2022, I repeated the MPC’s collectively agreed line that some further modest tightening was likely to be appropriate in the coming months. I stressed the word modest as being significant and went on to say that “I do not envisage Bank rate rising to anything like its pre-2007 level of 5%, let alone to the kind of levels we used to see before the MPC was formed in 1997”. That speech was on 22 February, two days before Russia’s invasion of Ukraine. Given the experience of the last year, we have to expect and plan for there being further shocks and be ready to respond accordingly. Second a historical one.
Overall, taking the APP, negative rates and rate forward guidance together, ten-year sovereign bond yields would have been almost 1.4 percentage points higher in 2018 without those measures. These yield compressions have been transmitted further to an easing of financing conditions for non-financial corporations and households. [30]  Interpreting signals from a flattening curve under central bank asset purchases The significant effect that our monetary policy had on the yield curve helped to improve financing conditions and ease the monetary policy stance. At the same time, the strong impact of our own policy makes it more difficult to read the information that the yield curve may incorporate regarding the outlook for the economy. An important and currently relevant example is the question as to what extent a flattening yield curve signals a weakening of the economic outlook. There has been a considerable body of literature devoted to this question. An important strand focuses on the negative correlation between the slope of the yield curve and the probability of future recessions, and the possible economic mechanisms underlying such a pattern. I will just briefly highlight how important it is to take our own action into account when interpreting the signals reflected in the yield curve. For the euro area, and for Germany over earlier years, we see indeed the regularity that recessions tend to have been preceded by a flattening yield curve (see Chart 2 again).

Notes: Surprise impact normalised to 10 basis points for the six-month maturity. Why do we see a stronger effect on longer maturities when the rate cut takes place in negative territory? One factor here is that cuts in negative territory were often accompanied by communication or at least market perceptions that the ECB was willing to lower the negative rate even further, if warranted by subsequent economic conditions. As a case in point, for the final two of the last five rate cuts, the introductory statement at the press conference clarified that the ECB’s Governing Council “expects the key ECB interest rates to remain at present or lower levels”. This type of communication about the scope of negative rates can provide accommodation even in the absence of actual rate cuts. This mechanism adds another dimension to the standard channels of rate forward guidance. Let me elaborate on this point. Consider the situation in which the central bank is perceived to be constrained by the zero lower bound. Guided by an understanding of the central bank’s reaction function and a depressed macroeconomic outlook, markets may think that in one year’s time, the central bank would like to set negative rates with positive probability but that, if constrained by the zero lower bound, the best the central bank can do in those states of the world is to keep rates at zero. In technical terms: the presence of the lower bound induces a censored distribution for future short rates.
Encik Abdul Rasheed Ghaffour: Realising financial well-being Address by Mr Encik Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Federation of Malaysian Consumers Associations (FOMCA) Conference 2017 "Towards an Effective Financial Education Strategy for Malaysia", Kuala Lumpur, 3 October 2017. * * * It is my great pleasure to have the opportunity to speak at the FOMCA Conference this morning. I would like to express my appreciation to FOMCA for the commendable initiative to gather the minds of leading stakeholders in the area of financial literacy today. The theme of today’s conference — ‘Towards an Effective Financial Education Strategy for Malaysia’ — is indeed relevant; and will certainly provide a great opportunity for government agencies; corporates; consumer associations; academicians and all of us present here today to exchange ideas and discuss this important issue on financial education. Today, we are living in an environment that is becoming increasingly challenging. “Bits and bytes” are slowly replacing “brick and mortar”. At the same time, Malaysians are facing socio-economic changes, including demographic shifts, urbanisation and increasing life expectancy. These factors affect, not only the way we experience financial services, but also the necessary knowledge for consumers to make good financial decisions to realise financial well-being. Therefore, ensuring Malaysians have the right knowledge, skills and behaviour – to make informed financial decisions – is an important agenda for our nation.

Today, I would like to share with you – our vision to realise financial well-being for Malaysians through financial literacy and financial education. Let me begin by sharing four observations on the state of financial literacy in Malaysia. First, Malaysians tend to have low financial resilience and are vulnerable to financial shocks. Among others, based on Bank Negara Malaysia’s Financial Capability and Inclusion (FCI) Survey conducted in 2015- more than 75% of Malaysians find it difficult to raise even RM1,000 of immediate cash money for emergencies. 32% of Malaysians – can only cover a week’s worth of expenses, at most, should they lose their source of income. In cases of emergencies, Malaysians resort to cutting down on spending; or borrow from external sources, such as friends and family members; or even depend on credit lines, such as credit cards and instalment plans. An ideal situation is to have a financial buffer that is sufficient to cover living expenses of at least three to six months in the event of loss of income. Second, the same survey also revealed that a significant number of Malaysians like to “live for the moment” and display short-sighted tendencies – focusing on “instant gratification”. This observation tends to be true, particularly among the millennial generation. Millennials are more passionate in keeping pace with the latest digital lifestyle.
Experimenting with all stakeholders We not only engage with fintechs to facilitate their development, we also experiment with them. As central banks and supervisors, we are integral players in financial innovation. The Banque de France Lab, a laboratory for innovation, works closely with numerous fintechs to identify, explore 2/3  BIS central bankers' speeches  and experiment with new solutions. Another example of our commitment to cooperation to promote innovation is the establishment of the European branch of the BIS Innovation Hub, which chose Paris as well as Frankfurt. The Banque de France’s openness to innovation is one of the priorities of our strategic plan “Building 2024 together": “capture more innovations with the business lines and their ecosystems, and accelerate their implementation”. I would like to take two recent examples: central bank digital currencies (CBDCs) and artificial intelligence. At the Banque de France, we carried out a programme of nine “wholesale” CBDC experiments with some fintechs. We were able to test several use cases (including securities settlement or cross-border payments) with several different technical solutions – public blockchains, private blockchains, other “distributed” solutions. We have identified the interests of players who do not have access to central bank money today in settling in a CBDC tomorrow, and explored possible linkages and synergies between wholesale and retail CBDCs.

François Villeroy de Galhau: Bank of France - how the commitment to fintechs is being implemented Speech by Mr François Villeroy de Galhau, Governor of the Bank of France and Chairman of the Autorité de contrôle prudentiel et de resolution (ACPR), at the ACPR-AMF Forum Fintech, Paris, 11 October 2021. * * * Dear Minister, Ladies and Gentlemen, I am very pleased to welcome you to the Banque de France this morning for this annual ACPRAMF Fintech Forum – and I would also like to welcome Robert Ophèle, Chairman of the AMF. Mr. Minister, dear Cédric, you have once again given us the pleasure of being present for this second forum. The strong attendance of public officials testifies to our collective commitment to fintechs, which I am convinced are indispensable to the financial sector, as a driver of creativity, vitality and efficiency. Previously a garden in the making, the fintech ecosystem is now growing in leaps and bounds. This is especially the case since these start-ups have benefited from the acceleration of digitisation in finance resulting from the health crisis. Moreover, 2021 was a record year for fundraising in the sector: EUR 1.7 billion had been raised by the end of August 2021, which is already twice as much as for the whole of last year, and this year also saw the birth of the first French fintech “unicorns".
A more efficient method would be to limit the directives to fundamental principles and to delegate the detailed design and further development to a special committee. Furthermore, by involving the national supervisory authorities closer in the legislation process, the idea is to make it easier and quicker to adapt the rules and regulations to new market trends and behaviour. Since the Lamfalussy Group’s proposals touched on the delicate division of responsibilities between the Council of Ministers, the European Commission and the European Parliament, difficult negotiations have been needed to gain acceptance of the new model, but it is now being applied to the proposals for a directive presented most recently for the securities markets in the EU. Perhaps there are more pitfalls ahead in the work on making EU legislation on financial services more efficient, but ambitions for achieving results in this field have now clearly been raised. Efficiency and stability must - and can - go hand in hand So far I have talked a lot about the importance of efficient financial markets and effective means of adapting legislation to new conditions. However, measures to ensure the stability of the financial systems are at least as important. An economic policy aimed at macroeconomic stability is a fundamental precondition for a stable financial system. However, this is not sufficient in itself - special measures aimed directly at the financial system are also required.

This should not necessarily be seen as a failure with regard to the initial ambitions, but is also a result of new trends in the financial system making new demands of the regulatory systems, which it is to be welcomed that the political system embraces. And there has also emerged a partially new view on the purposes of government rules and regulations, which has been a process that has taken some time as it is based on a long tradition of fairly detailed provisions regarding which transactions were allowed or forbidden and who should do what. This has applied at least to financial services primarily aimed at the household sector, which has made it difficult to continuously adapt the financial sector to changing market conditions and has entailed considerable costs for the consumers. Now the emphasis is on ensuring that those who produce the services are clear in showing what they have to offer and what risks may be involved in different financial commitments, which gives the customers greater scope to decide for themselves how they want to make their arrangements. Continued pressure for political initiatives The EU has high ambitions to make the European economies more efficient. At the summit meeting in Lisbon two years ago the heads of state and government adopted a strategy aimed at making the EU the most competitive, knowledge-based economic area in the world by the year 2010! Financial integration plays an important role in realising this strategy.