samchain/econo-pairs-v1 huggingface dataset:
If the Central Bank had not maintained a tight monetary stance and not raised the policy rate as it has done, it is almost certain that the economy would be swept into a familiar spiral of inflation, currency depreciation and wage rises, benefitting no one but harming us all, as historical experience has taught us. One of the fiercest critics of Central Bank monetary policy has been the Confederation of Employers. They have dismissed the Bank’s monetary policy as having no effect, while claiming that inflation excluding the housing component of the CPI has been only 2½% for some time, and then infer that monetary policy has had no impact on that development, however they manage to reach that conclusion. The Confederation of Employers has suggested monetary policy reforms along the following broad lines: First, to relax the inflation target; second, to remove house prices from the target CPI; and third, to impose a corridor for Iceland’s policy rate differential with abroad, e.g. the European Central Bank. The Central Bank does not consider that any of these proposals would improve monetary policy implementation. On the contrary. Easing the inflation target is highly inadvisable. That would probably drive up inflation expectations of households and businesses and anchor inflation at a higher rate than would be tolerated in neighbouring economies, with correspondingly bad consequences. We should not set less ambitious goals than others. The Central Bank has previously declared its firm support for including house prices in the CPI on which the inflation target is based.

But, a common resolution authority and integrated deposit insurance framework that is both credible and consistent with good incentives are likely to be required, as well. The task at hand will likely require each country to give up a small amount of sovereignty with respect to banking oversight so that the outcome is viewed as fully credible. In my view, this is a critical next step in the “one money, one market” project underlying the EU agenda. I’d now like to introduce Ambassador Vale de Almeida as our next speaker. The ambassador has been here in his current role since August 2010. Prior to his current appointment, he worked as a director general at the European Commission (EC) and has had a long and distinguished career at the EC dating back to 1982. So he is extraordinarily well-versed to speak on the issues of interdependence and the policy challenges we face. Welcome Ambassador Vale de Almeida. BIS central bankers’ speeches  3
(d)  10  09  08  2007  20  0.0 91  93  95  97  99  01  03  05  07  09  11  Sources: Bank of England, published accounts and Bank calculations. Sources: Bloomberg, Thomson Reuters Datastream and Bank calculations. (a) Leverage ratio defined as assets divided by capital. Assets are adjusted for cash items, tax assets, goodwill and intangibles. Capital includes total shareholders' equity adjusted for minority interest, preference shares, goodwill and intangibles. (a) Chart shows the ratio of share price to book value per share. Simple averages of the ratios in each peer group are used. The chart plots the three-month rolling average. (b) Assets are also adjusted on a best-efforts basis to achieve comparability between US GAAP and IFRS with respect to derivatives and off-balance sheet vehicles. (b) Excludes Northern Nationwide and Britannia. Rock  (from  end-2007),  (c) Excludes Northern Rock. Data for Co-operative Bank are used for Co-operative Financial Services. Pro-forma data are used for RBS from 2007 to 2009. (d) Revisions to US GAAP accounting rules on consolidation from 1 January 2010 are applied to end-2009 data giving a clearer measure of leverage.

This risk is emphasised by the fact that far from all of the exporter companies can claim to have a comprehensive natural hedge against currency risks. In some cases companies raise foreign currency debt which is not fully covered by inflows from export activities. In 2008–09 and 2014–15, the Bank of Russia’s assets were used to refinance external loans which had been raised by commodity companies. It is therefore essential to keep monitoring the risks of excessive external debt accumulation, for which purpose the Bank of Russia has instated monitoring of companies’ foreign currency debt levels. Among the many tools for macroprudential risk management are the measures taken by the Bank of Russia towards the deforexation of the economy. Given that in Russia, phases of the financial cycle largely correlate with phases of the commodity cycle, we think these measures need to be countercyclical – allowing banks to accumulate capital during periods of credit expansion and then use it as a cushion in periods of credit crunch. This approach will smooth out the sharpness of fluctuations in the financial cycle and reduce financial stability risks. 4) On credit risk in the banking sector First of all, it must be noted that for the most part credit risks in the corporate segment did in fact come to pass. If we look at the statistics, over the past six months the share of overdue loans has remained virtually unchanged, coming to 6.7% on 1 March 2017.
The mean squared gap for the unemployment forecast is defined as T  (ut,t u*)2 /(T 1), where ut+,t signifies the forecast for unemployment and u* signifies equilibrium 0  unemployment rate. BIS Review 158/2010  5  better stabilisation of the variable in question (see Svensson 2010a, b for further discussion). The mean squared gap shows that the lower repo rate path entails better-balanced monetary policy, as both inflation and unemployment are stabilised better. 5 The fact that a majority of the Executive Board chooses to raise the repo rate despite the forecast for inflation undershooting the target and the forecast for unemployment being high, indicates that monetary policy is addressing something other than inflation and resource utilisation. The fact that high GDP growth is used as an argument in favour of raising the repo rate could be interpreted to mean that monetary policy in practice aims to slow down growth. Figure 3 shows GDP developments in Sweden, the eurozone, the United Kingdom and the United States. Compared with the other economies, GDP fell most in Sweden – a total of almost 8 per cent. It has now recovered to a level that is about the same as the eurozone, higher than in the United Kingdom but far below that in the United States. One could claim that the other economies have substantial structural problems, including problems in the financial sector.

Proposals for possible solutions From this discussion, I would like to propose the following possible solutions to the Swedish monetary policy problems: We should consistently choose the repo rate path that best stabilises inflation around the inflation target and resource utilisation around a normal level, regardless of whether GDP growth is high or low, and regardless of whether the repo rate is high or low. If the chosen repo rate path then offers a threat to financial stability – which would appear to be a rare situation – this should be taken into account and this repo rate path excluded if it is appropriate. The motives for these actions should then be explained. When choosing a repo rate path, we should take into account house prices and household borrowing if they affect the forecasts for inflation and resource utilisation in the short or long term. If such considerations affect the repo rate path, we must carefully justify our decision. For instance, we should explain why potential advantages in the longer run are greater than potential disadvantages for inflation and resource utilisation in the short run. If house prices and household borrowing become unsustainable, or are judged to entail other problems, then other and better instruments should be used to deal with this than the repo rate. Trying to use the policy rate to slow down house prices and household debt could lead to high costs for the real economy in terms of lower production and employment, and higher unemployment.
These doubts are reflected in a significant increase in risk premia for sovereign debt in these countries, which has prompted them to establish major cost-cutting programmes. This situation is weighing on financial markets, despite the relatively favourable reports of economic recovery at the global level. Indeed, current market uncertainty has reached a high level, although it remains lower than that observed during the recent crisis. To give an example, the VIX index (which measures uncertainty on the equity market) and the CDX index (which measures credit risk) are both rising again. However, they are still significantly lower than at the end of 2008, i.e. at the peak of the subprime crisis (cf. chart 1). The uncertainty associated with the fiscal situation of certain European countries has also triggered another rise in tension on the interbank market for US dollars. To counter this, several central banks, including the SNB, have reactivated swap facilities in cooperation with the Federal Reserve in order to provide dollar liquidity that may be required for the smooth functioning of the markets. In Switzerland, the interbank market has remained calm. Indeed, the ample supply of liquidity has reduced Swiss franc interbank rates. As can be seen in chart 2, risk premia on the Swiss franc interbank market have also declined. They fell by more than a half in May while, during the same period, US dollar risk premia on the interbank market in the US rose again. Alongside the uncertainty, investor risk aversion has grown over the last few months.

Finally, though perhaps over a longer time frame, an expansion in net exports is desirable, in order to rebalance the composition of demand and reduce the UK current account deficit. Let me say a little about each of these in turn. Business investment fell by almost a third in the recession, reflecting the generalised collapse in demand, heightened uncertainty and restricted availability of credit. Although those headwinds have eased considerably, business investment in 2013 was still only just over 1% above its 2010 level. Now it is not too surprising that business investment has been slow to pick up. That is typically the case in business cycle recoveries, as businesses will want to use up spare capacity and to be confident that improved business conditions will persist before they undertake capital expenditures that may be costly to reverse. And the path of business investment so far looks pretty typical, once one takes account of the protracted nature of the downturn in activity. Moreover, there are signs that the desired handoff to business investment is under way. According to the latest official estimates, business investment rose 8.5% over the past year, while investment intentions surveys suggest that this revival is likely to continue through this year (Chart 3). And lending and capital market conditions have improved, especially for larger companies, though some SMEs continue to report difficulty in accessing credit on reasonable terms.
8/16  BIS - Central bankers' speeches  Given the loss in FY22/23, no contribution will be accrued but the Government will still receive $ billion this FY, based on the contribution accrued for FY20/21 when MAS recorded net profits. However, MAS is unlikely to be able to contribute to the Consolidated Fund over the next few years. We will need to generate future profits exceeding the cumulative losses in the latest two FYs of $ billion, before we can resume contributions to the Consolidated Fund. Second, the loss recorded by MAS will not affect the Government's ability to spend up to 50% of the expected long-term real returns on the net assets invested by MAS. As with GIC and Temasek, up to 50% of the expected long-term real returns on the net assets invested by MAS are available for spending by the Government under the Net Investment Returns framework. Under this framework, the expected long-term real rate of return on MAS' net assets is not affected by any single year's investment performance. This rate of return is reviewed annually and is subject to the President's concurrence. To ensure that MAS remains well-capitalised relative to its assets, MAS increased its issued and paid-up capital by $ billion to $ billion in FY22/23. The last time that MAS' capital was increased was in FY11/12, from $ billion to $ billion. As a fully owned subsidiary of the Government, MAS returns a portion of its net profits from time to time, taking into account its capital and reserves.

1 There are four types of qualifying local intermediaries: Selected Registered and  Exempt charities with a valid Fundraising for Foreign Charitable Purpose Permit; Charitable Institutions and Not-For Profit Organisations established by Financial Institutions in Singapore, as specified by MAS; Selected Grantmakers under the Ministry of Culture, Community & Youth's Grantmaker Scheme; and, Other selected entities, as approved by MAS. 16/16  BIS - Central bankers' speeches
Household access to banks or financial markets which is typically limited for low- income households defines who will be directly and indirectly affected by changes in interest rates, and thus who will react more strongly to monetary policy impulses. More generally, household response to changes in monetary conditions depends on each household’s income and indebtedness profile; that is, on their disposable income profile. All these variables indicate that two different income distributions can potentially induce many different impacts on the economy for the same monetary policy1.  Access to credit has improved after the crisis, mainly due to lower interest rates (Figure 13), income growth (in particular for low-middle income households) and the introduction of a state-guaranteed “First House” program (Figure 14) (which mainly compensated for the lack of savings by allowing for a very low advance payment). When “First House” program was changed to allow only local currency guarantees, the share of local currency mortgages skyrocketed (Figure 15), reducing the vulnerability of foreign exchange evolution, but increasing the risk of a future interest rate shock on low-middle income households.  National Bank of Romania introduced a series of macroprudential measures starting from 2004 (Figure 16). Yet, macroprudential rules put in place to foster financial stability can affect households unequally. For example, relaxing or tightening access to mortgages through caps on debt-to-value ratios may affect the distribution of household wealth.  Monetary and macroprudential policies alone cannot address the imbalances in the RRE markets.

Housing cost overburden rate - Romania percent 60  1st  50  47% 44.9%  40 24%  30 20 10 0 2007  2008  2009 1st Q  2010 2nd Q  2011  2012  3rd Q  2013 4th Q  2014  2015  2016  5th Q  Note: percent of population with costs more than 40 % of disposable income Costs include rental or mortgage interest payments , cost of utilities such as water,  Source: Eurostat  Figure 11. Savings behavior in Romania - 2016 percent 100 90  82.7  80 70 60 50  34  40  25.9  30  19.1  20 6.6  10  14.4  11.6 2.9  2.5  0.3  0 EUR 0-2,200  EUR 2,200-11,000  EUR 11,00022,000 % in total number of depositors  EUR 22,000100,000 % in total deposits  >EUR 100,000  Source: BDGF  9  Figure 12. Access to mortgage loans percent 14  12.3  12 10 8 6 4.0  4 2  2.0  1.5  0.9  0 1st q. 2nd q. 3rd q. 4th q. 5th q. Note: Share of households with mortgage loans in total households, by income quintiles Source: Ministry of Finance, Central Credit Registry, Credit Bureau  Figure 13.
This in turn could lead to lower inflation and economic activity. The central bank’s response is to lower the policy rate. Chart: Financial stress does not arise As a starting point for our model exercise, let us first assume that neither the central bank nor other economic agents recognise that financial stress could arise. The blue lines in the panel show the path for the policy rate, the output gap, inflation and the financial imbalances in this case. Capacity utilisation increases and inflation returns to target. However, the low interest rate level leads to an increase in the financial imbalances. Let us return to the extended model, and assume that the central bank recognises that financial stress could arise further out and takes into account the possible impact of financial imbalances on inflation and output. This scenario is represented by the red lines. The policy rate is still reduced, but to a lesser extent. In this scenario, it takes longer for inflation to move up to target. The policy stance also results in a somewhat weaker increase in activity. 4  BIS central bankers’ speeches  At the same time, the slightly higher policy rate contributes to mitigating the build-up of financial imbalances. So far, we have assumed that financial stress has not occurred. Hence, we have not reaped the benefits of the “leaning against the wind” strategy. Now, let us see what occurs if financial stress does arise further out.

Distinguished Ladies and Gentlemen, allow me to conclude my remarks by reminding commercial banks that they must become proactive in identifying new markets and developing appropriate new products and services, especially for the excluded population if they have to remain competitive and relevant in our fast growing banking sector. As has been echoed at various meetings, the Bank of Zambia has financial inclusion as one of its strategic objectives and initiatives by market players to make this vision a reality are always highly commended. The Bank of Zambia will play its own role and make every effort to create an environment that supports innovation and market developments by financial institutions. Managing Director, distinguished Ladies and Gentlemen, It is therefore, the Bank of Zambia’s expectation that Zanaco and other banks will take advantage of opportunities arising from the general positive economic outlook on account of improving macroeconomic conditions and improvements so far recorded in various sectors of the economy and foster greater developments in the financial sector. Finally, let me extend my gratitude to the Board of Directors and the Managing Director of Zanaco inviting me on this occasion to mark the official launch the Ndola west Branch. It now my honour and privilege to declare the Ndola west Branch officially opened. I thank you. 2  BIS central bankers’ speeches
It is therefore important that practitioners and academics alike better understand how this channel propagates policy stimulus through financial markets, within and across economies. The zero lower bound, forward guidance and exchange rates Let me start by briefly recalling the two main propositions I made in my earlier remarks in July. One was that there is compelling empirical evidence that central bank asset purchase programmes are often associated with substantial cross-border capital flows. My first slide illustrates this point quite clearly for the euro area. 1 / 11  BIS central bankers' speeches  The second proposition was that asset purchases affect the exchange rate in broadly the same way as conventional monetary policy – that is, through expectations of interest rate differentials. To date, there is very little evidence to suggest that currency movements are a direct consequence of the impact on the supply of and demand for currency when investors rebalance their portfolios across borders. It is this second proposition that I would like to examine today in greater detail. In doing so, it is helpful to start by recalling the basic relationship between exchange rates and interest rate movements. I do this on the second slide. On the left-hand side you can see that, in the past, there has often been an intimate relationship between short-term interest rate differentials – measured here using bonds with a maturity of two years – and movements in the exchange rate, at least for the euro and US dollar pair.

Benoît Cœuré: Monetary policy, exchange rates and capital flows Speech by Mr Benoît Cœuré, Member of the Executive Board of the European Central Bank, at the 18th Jacques Polak Annual Research Conference, hosted by the International Monetary Fund, Washington DC, 3 November 2017. * * * I would like to thank T. Kostka, A. Mehl, I. Van Robays and J. Gräb for their contributions to this speech. I remain solely responsible for the opinions contained herein. Central bank asset purchase programmes are often catalysts for significant cross-border capital flows. By compressing the (excess) return on domestic bonds, they encourage investors to rebalance their portfolios towards foreign, higher yielding assets.1 Such capital flows have reached historical dimensions in the case of the ECB’s asset purchase programme (APP), with both resident and non-resident investors moving out of euro-denominated securities and into bonds issued predominantly by the safest non-euro area sovereigns. I examined these flows in detail in a recent speech at the ECB’s Foreign Exchange Contact Group meeting.2 One intriguing observation I made in this speech was that there was no evidence of a causal link between such capital flows and exchange rate movements. Findings based on event studies instead suggest that, around the time of central bank asset purchase announcements, investors price the exchange rate mainly on the basis of the information these programmes provide to markets about the expected future path of short-term interest rates.
6  BIS Review 13/2006

The plan is underpinned by a political commitment to spend only the expected real return of four per cent over the business cycle. Nevertheless, we should not underestimate the risk that extraordinary economic circumstances could turn a surplus into a deficit. The accumulation of capital in the Fund reflects the depletion of a non-renewable resource, which is exchanged for financial assets through the Fund’s investments. Sound returns on  BIS Review 68/2009  1  these investments will help us cope with future financial commitments linked to an ageing population. But at the same time as the wave of an ageing population flows towards us with its demand for public services and increased consumption, we also should ask if investments in Norway could be an alternative to those we make in international financial markets. And clearly, a good argument could be made for investing more in schools, universities and research to develop our human capital. But that should be possible in any case, given the increased spending the fiscal rule already allows for. It could also be argued that we should invest more in our domestic infrastructure, for example roads and highways. This may be important for regional reasons. But on the margin, these investments are probably not adding very much to our economic growth. To illustrate this point, the net present value of road projects in the new 10-year national investment plan is estimated at some minus NOK 20 billion after positive effects on road safety and the environment have been taken into account.