samchain/econo-pairs-v1 huggingface dataset:
Figure 4 Price of electricity (annual change, percent) 60  60  50  50  40  40  30  30  20  20  10  10  0  0  -10  -10  -20  -20  -30  -30 05  06  07  08  09  10  11  Source: National Statistics Institute (INE). 8  BIS central bankers’ speeches  Figure 5 Output growth (quarterly change, percent) Chile (*)  World  8  8  6  6  4  4  2  2  0  0  -2  -2  -4  -4  -6  -6 05  07  09  11  2  2  1  1  0  0  -1  -1  -2  -2 05  07  09  11  GDP Domestic demand Domestic demand w/o inventory change  Figure 6 Growth forecasts for the year 2009 (1) (annual change, percent) 8  8  5.9  6  6  4  4  2  2  0  0  -2  -1.7  -4  -2  -1.7  -4  -4.7  -6 Chile  Dev. economies (2)  Latin  America  Emerging Asia  Emerging  -5.2  -6  Europe  (1) Consensus forecasts from January 2008 to December 2009. For emerging Asia, forecasts are available as from March 2008. Black bars show actual growth in 2009.

In particular, that US growth would weaken and the European sovereign debt would propagate from the peripheral economies to other countries in the region. As months have gone by these risks have materialized. The crisis that broke out in 2008 has not finished. Although at first the policies applied around the world succeeded in averting immediate damage and an economic depression, there are still many issues that have yet to be resolved before it can be left behind. One such issue is the fragile financial situation of states, banks and households in several developed economies. In Chile, and in most emerging economies, we have been innocent witnesses of the crisis. It has posed new challenges to monetary and financial policy-makers to minimize the impact of external turbulences and allow our economies to continue along a path of sustainable growth. The experience of 2008–2009 taught us lessons for our policy conduct, but, more importantly, it left us the conviction, not only to policy makers but also to the general public, that we are able to mitigate the adversities coming from abroad. Avoiding them is impossible, but we can surely mitigate them. Chile’s macroeconomic policy framework leans on various pillars that must be tended to. To begin with, a fiscal policy that is serious and predictable. Keeping a budget rule based on the structural balance, which permits to shield public expenditure from economic fluctuations and also empower it to support domestic expenditure when needed, is highly beneficial. A second pillar is our high financial and commercial openness.
Monetary policy should aim to stabilise inflation around the target and unemployment around a long-run sustainable rate. It should also be aimed at keeping inflation around the target on average over a longer period of time, to avoid repeating the policy than has led to unnecessarily high unemployment since 1997. The long-run sustainable rate of unemployment depends on the way the labour market functions and on structural conditions, and it must be estimated using empirical methods. These estimates should take into account  BIS central bankers’ speeches  9  the fact that average inflation has been lower than the average inflation expectations since 1997, to avoid a bias in estimating the long-run sustainable rate of unemployment. The problems with poorer matching, increasing long-term unemployment and a larger share of vulnerable groups on the labour market are arguments in favour of a more, not less, expansionary monetary policy so that we can bring down the high unemployment to a longrun sustainable rate. At present, when unemployment has been high over a long period of time, we need a particularly expansionary monetary policy, a large demand for labour and an inflation rate that is temporarily allowed to overshoot the target to bring down unemployment. As inflation on average has fallen below the target, an inflation rate above the target would at present also have the advantage that average inflation over a long period would come closer to the target, something that would contribute to avoiding the unnecessarily high average unemployment that earlier policies have caused.

Dimitar Bogov: What could SEPA bring for the banking and the real sector in the Republic of Macedonia Speech by Mr Dimitar Bogov, Governor of the National Bank of the Republic of Macedonia, at the event “What could SEPA bring for the banking and the real sector in the Republic of Macedonia”, organized by The Banking Association at the Economic Chamber of Macedonia, in cooperation with the European Banking Federation (EBF), Skopje, 13 May 2014. *  *  *  Honorable Mr. Stavreski, Vice President of the Government of the Republic of Macedonia and Minister of Finance, Honorable Mr. Janchevski, Chairman of the Banking Association of the Macedonian Economic Chamber Distinguished guests from the banking sector in the Czech Republic Dear representatives of the banking and the real sector in Macedonia Ladies and Gentlemen, One of the primary functions of each central bank is to create conditions for stable, reliable and efficient operation of the payment systems. To achieve this function, and according to the best practices of central banks of the EU Member States, the National Bank performs four basic roles in the payment systems: operational, supervisory, development and catalyst role. The successful performing of these functions is closely related to the importance of payment systems for a national economy. The proper functioning of the systems for large payments, which are owned and managed by central banks, is important for the effective monetary policy conduct.
It thus appears as though the new regime has also had a beneficial effect on the stability of the real economy. Now that it appears as though the more fundamental stabilisation policy problems have been managed, it may seem natural to gradually become more ambitious and wonder if things could function even better. However, it is important to have realistic expectations as to what the stabilisation policy can achieve. It has been easy to gain an impression in the recent debate that there are expectations that the fluctuations in both inflation and the real economy – perhaps especially the latter – can be eliminated entirely. When the heads of the National Labour Market Board make comparisons with a situation where unemployment is always around 4 per cent and then claim that the Riksbank bears the responsibility for the difference, they appear to be expressing this view. It is unavoidable that the economy and inflation undergo rapid changes from time to time that cannot be predicted or fully counterbalanced in the short term. No central bank – or any other economic policy decision-maker – can thus steer inflation and economic activity completely in the long term. In actual fact, experiences show there is a substantial risk that actively fine tuning stabilisation policy can reinforce fluctuations in the economy.

The cost of this political shift is more evident so far in new trade expanding opportunities forgone, more than in a broad and major increase in the level of protection or barriers against imports of foreign goods and services. 2  BIS Review 4/2005  This is a difficult political challenge. Success depends in part on how creative we are in equipping our citizens with the skills that offer higher returns in the future. It depends in part on what you might call our commitment to the quality of equality of opportunity in America, for people are likely to be more accepting of change if they are confident of the opportunity for mobility and advancement. And it depends in part on confidence people have in the transitional safety net that is available to bridge the transition to future employment. The last challenge I want to emphasize involves education. The education imperative has always been compelling. It is more so today for several reasons. First, we are seeing a significant erosion in the traditional premium accorded higher education in the United States and in some dimensions of the relative level of educational achievement in America. This cannot be good for the cause of improving the odds of sustaining this productivity surge. Second, U.S. citizens now face the prospect of bearing a much larger share of the risk of paying for health care and preparing for retirement.
The article was more or less an explicit encouragement to readers to withdraw their money from the bank and go to the Riksbank to redeem it for gold: “Anyone who brings SEK 1,000 in banknotes to the Riksbank has the legal right to receive 50 SEK 20 [gold coins] and these currently have a value of SEK 1,450 – 45% profit on the most risk-free of investments”12 The final results were indeed an onslaught of people who wanted to redeem their banknotes at the Riksbank, who were therefore forced to raise the discount rate in order to defend the gold reserve. In connection with this, the Riksbank requested release from the obligation to redeem banknotes for gold, which was subsequently also granted. ...but it was also followed by deflation and recession However, shortly afterwards the trend was reversed. There were various reasons, including the weakening of international economic activity. But the most important reason for the severe turnaround in general prices was connected with the view of the monetary system that prevailed at the time. The political view was that Sweden should return to the gold standard as soon as possible, and to the parity that had applied before the war. To make this possible, the krona needed to be strengthened, which required bringing down prices and 11  See, for example, Fregert (2013) and Hasselberg (2021). 12 Statsvetenskaplig tidskrift, [Political science journal] May 1922, p. 151. 6 [14]  wages. It was therefore recognised that a period of actual deflation would be required.

This episode is also special because the high inflation was followed by a severe deflation, that is, a fall in the general price level, 1921-23. Fortunately, we have not experienced any such dramatic fluctuations in inflation since then. In his book “Money and Power” on the history of the Riksbank, Gunnar Wetterberg notes that at this time the Riksbank's governors were faced with a series of questions that neither they nor most other scholars knew how to deal with. The war and the first post-war years thus became a difficult time for monetary policy.8 The organisation of the monetary system played a major role in the course of inflation. Prior to the war, Sweden had a gold standard, which had been introduced in 1873 in connection with the establishment of the Scandinavian monetary union. The gold standard meant that the krona was linked to gold and that the Riksbank had an obligation to exchange notes for gold at a fixed price. This meant that the krona had a fixed exchange rate against other countries that had the equivalent system. The gold standard was abandoned in connection with the outbreak of war in 1914, and the same happened in other countries. In the countries directly involved in the war, the war efforts required rapid and immediate funding. Budget deficits grew and were financed by the government borrowing from the central bank, that is, through printing money. The money supply and price level thus rose sharply around the world.
We believe that excluding this item, in line with the international practice, could give a better proxy for recent inflation trends. 8  BIS Review 20/2008  Figure 12: Output Gap 6 4 2 0 -2 -4  Monetary Tightening  -6  07-III  07-I  06-III  06-I  05-III  05-I  04-III  04-I  03-III  03-I  02-III  02-I  01-III  01-I  00-I  -10  00-III  -8  Monetary conditions continue to support the disinflation process. Despite the recent rate cuts, monetary policy can still be considered to be in the restrictive territory. Underlying rate of monetary expansion remains modest, consistent with a relatively restrictive monetary stance. Although medium term interest rates followed a downward trend in the past quarter, 2-year-real rates at this point fluctuate between 9 and 10 percent, implying a nonaccommodative monetary stance. Moreover, the currency remains strong, curbing inflationary pressures and easing the impact of rising commodity prices on domestic production costs. (Figure 13).

Clearly, it was not by chance that some countries found themselves in a more difficult situation than others. It was mainly those countries that had implemented inappropriate economic policies in the past. This is also why the first responsibility in this situation is for countries to make determined reforms and convince markets that they are credible. But many were already doing this, only for interest rates to rise even higher. There was an element of fear in markets’ assessments that governments, acting alone, could not remove. Markets were not prepared to wait for the positive effects of reforms to emerge. In our view, to restore the proper transmission of monetary policy, those unfounded fears about the future of the euro area had to be removed. And the only way to do so was to establish a fully credible backstop against disaster scenarios. 2  BIS central bankers’ speeches  We designed the OMTs exactly to fulfil this role and restore monetary policy transmission in two key ways. First, it provides for ex ante unlimited interventions in government bond markets, focusing on bonds with a remaining maturity of up to three years. A lot of comments have been made about this commitment. But we have to understand how markets work. Interventions are designed to send a clear signal to investors that their fears about the euro area are baseless. Second, as a pre-requisite for OMTs, countries must have negotiated with the other euro area governments a European Stability Mechanism (ESM) programme with strict and effective conditionality.
In this way, the expertise in the NCAs will be fully utilised, while final decisions will rest with the ECB – in keeping with the objective to have a European approach to supervision. For less significant smaller banks, the balance will be tipped more towards decentralisation. The responsible supervisor will remain the national authority. However, banks will still be integrated into the single system of the SSM. They will be supervised according to a single supervisory model that we are currently developing, which will be approved by the future Supervisory Board, and the ECB has the legal right to take over direct supervision of any bank at any moment. Turning to the macro-prudential limitations, the SSM will create new possibilities to make use of macro-prudential policies to curb pro-cyclicality in credit supply and volatility in crossborder flows. It will introduce two important changes to macro-prudential policy-making at the European level. The first change is related to instruments. As part of the Capital Requirements Directive IV/Capital Requirements Regulation, the SSM will gain a series of new macro-prudential powers. These include, among others, the counter-cyclical capital buffer, the systemic risk buffer and the macro-prudential elements from Pillar 2. These instruments are designed to help cool credit-led booms and/or provide additional buffers in downturns to mitigate credit crunches. There is some scepticism in academic circles as to the effectiveness of these tools, but a recent study on the Spanish experience with dynamic provisioning suggests we should be more optimistic.

In the view of the President Van Rompuy’s Report, a stable EMU needs to be built on four pillars: financial union, fiscal union, economic union and political union. Member States have been able to decide a remarkable sequence of reforms in the past few years and there is now a much clearer vision of what rules and institutions are essential for monetary union to function more effectively. The single currency needs strong common institutions. Strong institutions to supervise and stabilise the financial market; to guide fiscal policies; to coordinate economic policy, guarantee competitiveness and encourage sustainable growth. This is the vision that should guide us in all our endeavours to definitely overcome the European crisis. Thank you for your attention. 6  BIS central bankers’ speeches
3  This figure measures the estimated foregone aggregate output compared to a counterfactual non-crisis scenario under which euro area GDP would have expanded at an average rate equal to its long term growth potential. 2  BIS Review 65/2009  These propositions are useful in order to better understand the rationale and the nature of the policies that have been pursued by the ECB in managing the current crisis. In particular, when assessing the role of the ECB in supporting financial stability, it is important to distinguish between actions that involve a change in the monetary policy stance – that is, a change in the policy rate and/or an expansion of central bank money – and the management of liquidity that aims to mitigate the impact of shocks on the interbank money market so as to ensure its orderly functioning and the efficient transmission of monetary policy impulses to the economy. Since the financial turbulence erupted in summer 2007, financial and economic developments as well as central bank policy responses can be usefully examined and assessed over two time periods. During the first period, from early August 2007 until early October 2008, the ECB did not ease the stance of monetary policy – as defined by its key policy rates – to address financial market tensions. On the contrary, in July 2008, it raised its key policy rates by 25 basis points to counter increasing inflationary pressures and mediumterm inflation risks.

These measures are complementary to the actions of the ECB and play a crucial role in improving the financing of the economy and fostering its recovery. To give an idea of the scale of the governments’ banks support measures, let me mention a few figures: until early May, banks in the euro area had received just over EUR 113 billion of capital injections from governments and around EUR 300 billion of government guarantees. However, only one third of the commitments for capital injections had been used until the end of April and a smaller fraction, less than 18%, of the commitments to guarantee new bank debt have been called for. The use of government credit guarantees varies considerably across countries for several reasons. For example, banks’ needs for such guarantees depend on the time profile of the maturity of their debt, but they also reflect the relatively retrained demand for loans by the private sector. Moreover, the unlimited financing provided by the ECB also explains the subdued demand in most countries for guarantees on shortterm debt with maturity less than one year. Finally, certain factors might have discouraged the use of government guarantees, such as the associated “stigma effect” and the pricing, which may appear high in current market conditions. Overall, the use of government guarantees on bank debt is considered satisfactory in most countries.
In the case of foreign trade, it can require the repatriation and liquidation of export revenues and set a term for import coverage while, in the case of financial flows, it can impose reserve requirements as it, in fact, did in the 1990s. The BCCH is also authorized to accumulate and maintain international reserves. This has a direct impact on the country’s international liquidity position and, in the last instance, on the stability of cross-border financial flows and, therefore, the normal functioning of the domestic financial system. Since the BCCH’s origins, banking regulation and supervision have been entrusted to the Superintendency of Banks and Financial Institutions (SBIF) which depends on the government through the Finance Ministry. There is also a supervisor for securities and insurance and for pensions. This institutional arrangement has, in general, worked well over the years. In order to ensure the necessary coordination and communication between the different authorities, a committee was created a few years ago that brings together all the financial sector supervisors and in which the BCCH also participates. It has allowed the BCCH to make its view on issues of systemic importance known to the supervisors. Numerous initiatives implemented by the BCCH over the past decade underline its firm commitment to financial stability.

Financial cooperation Financial cooperation is a critical component of this effort. Financial services is a significant part of our (6-7%) regional economy, and is a growing sector. But it is not just the size of the market that makes financial services important. The Asian Crisis has demonstrated that with globalisation and greater ease in transferring funds around the world, it is more critical than ever that our financial sectors be sound, and our economies not be weakened by excesses. In recognition of the importance of the financial sector, the ASEAN Finance Ministers started to meet in February 1997. We have introduced important co-operation initiatives, such as the ASEAN Surveillance Process to keep track of economic and financial trends and to provide early warning of economic vulnerabilities, and the ASEAN Finance Work Program to improve financial procedures, standards and corporate governance within member countries. These are important mechanisms to guard against a repeat of the Asian Crisis. To further liberalise and integrate our markets, the Finance Ministers last year endorsed a roadmap for regional financial integration. This will guide us towards greater liberalisation and integration of our markets. To keep ASEAN on the radar screens of international investors, Finance Ministers are planning to organise joint road-shows to Europe and the US to promote the investment opportunities in ASEAN. One possible area for collaboration is in the capital markets.