samchain/econo-pairs-v1 huggingface dataset:
The combined effect of these developments affected negatively the real sector of the economy, mainly the business sector. In the first quarter of this year, business confidence index fell under its historic average, reflecting a more difficult financial situation. The latter was also shown by the lower-thanplanned realization of fiscal revenues as well as by the decline of loan portfolio quality that banking sector has encountered throughout the period. In the short-term, the public authorities took measures to lessen the impact of the global financial crisis in the economy. Through the significant increase of the fiscal expenditures share designated for investments, mainly in infrastructure, the government supplied an important impetus for the support of the real sector of economy to cope with the global crisis effects. The Bank of Albania has also been active to provide liquidity in the interbank market, with the aim to preserve the stability of the banking sector and to lessen the expected decrease of its intermediation role. We removed quantitative limits in the size of the liquidity injections through our week-long reverse repurchase agreements, and extended the maturity of our injection operations up to three months. Following a cut of the policy rate by 0.5 percentage points in January and the subdued inflationary pressures at home, the monetary policy paid an important attention to the financial stability, by keeping the policy interest rate unchanged throughout the period.

When the conversion from petroleum wealth to financial assets has been completed, the objective will still be to restrict withdrawals so that the real value of the Fund’s capital is maintained - in principle, indefinitely. The Petroleum Fund functions as a buffer against movements in the krone exchange rate when oil prices vary. The cash flow from an increase in oil prices will accrue to the Fund and be invested abroad. In this way, the Fund contributes to limiting an appreciation of the krone and maintaining a stable exchange rate. At times, it seems that participants in the foreign exchange market underestimate the Petroleum Fund’s buffer mechanism. Since the summer of 2004, the krone, measured by the trade-weighted exchange rate index (TWI), has appreciated by about 5 per cent. The chart shows the exchange rate and the price of oil since 1999. There does not appear to be any clear relationship between the nominal exchange rate and oil prices over time. The krone has appreciated in periods with high oil prices, but the same has occurred when oil prices have been low. The correlation between the oil price and the krone exchange rate has varied over time. Since inflation targeting was introduced in March 2001, the average correlation has in fact been zero. This result is worth noting and indicates that the export of capital via the Petroleum Fund has protected the nominal exchange rate from price fluctuations in the oil market.
BIS Review 6/2004  3  The choice of horizon for monetary policy implicitly provides some information about the central bank’s loss function.8 A central bank that places considerable emphasis on inflation and little emphasis on the real economy will choose a short horizon. A central bank that places considerable emphasis on the real economy will choose a long horizon. Behind the choice of a horizon of normally two years lies a perception of how the interest rate affects developments in inflation and output, and the central bank’s trade-off between variations in these two variables. According to theories on optimal monetary policy, the horizon should vary and partly depend on the size and duration of disturbances to the economy. For some types of disturbances, such as demand shocks, the optimal choice may be to achieve the inflation target relatively rapidly. For other types of disturbances, such as cost shocks, a longer horizon may be optimal, provided that confidence in monetary policy is not in jeopardy. Even though, according to the theory, the horizon should be variable, there are some advantages to maintaining a fairly firm horizon that have not been as prominent in the literature. It is crucial that the public and market participants understand how the central bank sets the interest rate in order to contribute to confidence and credibility in monetary policy. According to the principle normally followed by Norges Bank, the interest rate is set with a view to achieving inflation of 2½ per cent at the two-year horizon.

The deviations enter the loss function quadratically. Large deviations from the targets are thereby deemed to be a considerably more serious disadvantage than small deviations. In the event of large deviations between inflation and the inflation target, or substantial imbalances in the real economy, the use of relatively strong measures may be appropriate. The trade-off between inflation stability around the inflation target and stable growth in output is expressed by parameter . The higher is, the greater the emphasis on real economic stability in relation to stability in inflation. With a is the definition strict inflation target, i.e. emphasis is only placed on inflation, is equal to zero. of flexible inflation targeting. Although the loss function has two add factors, both of which are given emphasis, a fundamental difference is that the monetary policy authorities can choose the inflation target but not the level of potential output. In practice, no central bank uses a loss function of this kind directly. What inflation-targeting central banks do in practice does, however, contain elements of the thinking behind this theory. 6  See the box “Flexible inflation targeting and indicators of pressure in the real economy” in Inflation Report 3/03, p. 46, for a more detailed description of the different indicators. 7  See for example Svensson, Lars E. O. (2002): “Monetary Policy and Real Stabilization”, in Rethinking Stabilization Policy, A Symposium Sponsored by the Federal Reserve Bank of Kansas City, Jackson Hole, Wyoming, August 29-31, 2002, pages 261-312.
Moreover, in 2016, the wealthiest region in Romania was almost four times richer than the poorest one (measured by the regional GDP per capita as a percentage of the euro area average). The second guiding principle towards sustainable and smooth convergence is to keep going. By this, I mean that progress, once made, should not be undone. We now need to maintain the economy on an upward trend, while being extremely careful to preserve the macroeconomic equilibria restored through a painful adjustment after the crisis. The only way ahead is by means of a coherent macroeconomic policy mix and resolute structural reforms aimed to boost the economy’s growth potential, while making it more resilient. This approach should never leave room for pro-cyclical policies. As we have clarified that the consistency and the sustainability of real convergence are extremely important, now it is time to discuss how monetary policy can support these two dimensions of the convergence process. It is beyond any doubt that countercyclical monetary policy favours smooth convergence. This has always been one of the guiding principles for calibrating the stance of NBR’s monetary policy, as well as for developing and employing our policy tools. An example of the latter are the unorthodox prudential measures taken before the global crisis to mitigate the impact of extremely volatile capital flows; with these in mind, the IMF mentioned the NBR as being among “the pioneers” of what was later referred to as “macroprudential instruments”.

François Villeroy de Galhau: Pushing back the limits of insurability Closing remarks 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 10th international conference on insurance, Paris, 26 October 2018. * * * Ladies and Gentlemen, I am delighted to be with you today to give the closing remarks at this tenth international conference on insurance, organised under the aegis of President Bernard Spitz. We don’t say it often enough: the financial sector is one of the French economy’s key strengths. Another point that bears repeating is that, within this financial sector, insurers play a critical role in financing our economy. This will be the first point that I touch on. I will go on to look at regulatory developments, hailing the progress made in the last year and picking out some European challenges that we must face together. I will close by speaking about “the limits of insurability”: your theme today is as old as your profession, which dates back to the bottomry arrangements used to protect shipping ventures in ancient times and the first recorded insurance policy written in Genoa in 1347. But the question has taken on a renewed urgency today with the emergence of new risks, particularly those relating to climate change. **  I. Insurers play a critical role in financing the economy. The ACPR recently published its annual statistical report, which showed that the French insurance sector is in good shape.
We will then be back to managing monetary policy through the more traditional tool of the overnight lending rate that anchors the yield curve. Enter forward guidance This is no small matter. Quantitative easing has made life easy not only for corporate treasurers and homeowners and consumers burdened by debt, but also for money market operators. It has run up the price of stocks and bonds mostly in straight-line fashion, and it has taken volatility out of the marketplace, allowing market operators and their clients to profit with little effort. The question of when and under what conditions the FOMC will begin to raise the base rate off the floor is understandably of intense interest. For example, every quarter, FOMC participants each provide forecasts of the year in which they presently think the target overnight rate will be raised, based on what they individually consider to be the proper conduct of monetary policy. This has given rise to what I consider a rabid focus on the economic projections, or “dots,” that accompany our FOMC statements on a quarterly basis. Monty Python could almost have written a sketch on the pundits’ preoccupation with the dots. 4 Truth be told, although many of us have econometric models and all of us have a phenomenal team of economists who help us develop our projections, these estimates are, in the end, largely guesswork. Especially the further out in time they go.

“We’ll see”: 摸 石 頭 過 河 The point is: Forward guidance can be a complicated monetary policy tool. I had an interesting discussion about this two weeks ago with a couple of the members of the Bank of England’s Monetary Policy Committee (MPC). They noted that Chris Giles of the Financial Times has devoted a substantial amount of thoughtful attention to the discussion of forward guidance. In Giles’ Money Supply blog post of Oct. 2, 2013, he wrote: “Forget triggers, thresholds, knockouts and long lists of conditions. Paul Fisher, the Bank of England’s head of markets, says everyone is wrong to think forward guidance is complicated. The policy was summarized in a single simple sentence of the [Bank of England’s] explanatory document, he said in a speech today. This is the sentence,” and I’m quoting Giles quoting Paul Fisher: “In essence, the MPC judges that, until the margin of slack within the economy has narrowed significantly, it will be appropriate to maintain the current exceptionally stimulative stance of monetary policy, provided that such an approach remains consistent with its primary objective of price stability and does not endanger financial stability.” To a central banker, that may have seemed about as concise a Delphic statement as possible.
Also taking place in conjunction with this Forum is the ceremony for the inaugural “The Royal Award for Islamic Finance” under the auspices of Bank Negara Malaysia and the Securities Commission, to commemorate the contribution of the world’s most outstanding individuals in global Islamic finance. Let me conclude by taking this opportunity to record our appreciation to the many distinguished speakers for their contribution to GIFF 2010. Let me also once again, express our deep gratitude to the Prime Minister, Yang Amat Berhormat, Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak and to Duli Yang Teramat Mulia Raja Dr. Nazrin ibni Sultan Azlan Shah for gracing this Forum. Thank you. BIS Review 140/2010  3

As we all know, there are many uncertainties when dealing with an assumption of political nature. And, for this year in particular, our forecast team had a hard time making fiscal assumptions. On the one hand, the government is trying to accelerate budget disbursement and push through infrastructure projects. On the other hand, the country is  BIS central bankers’ speeches  1  undergoing structural reforms in many areas. Some on-going reform processes, such as those related to fighting corruption 1, cannot help but delay government spending and investment. This is dynamism of the current reform period. Some measures incur “short-term pain” but are necessary to create “long-term gains”. (Slide 2) Underlying fundamentals and medium-term outlook Ladies and gentlemen, Despite headwinds and disappointing growth last year, the underlying fundamentals that have been attracting investors to Thailand are still in place. The country’s overall economic stability remains sound against a backdrop of low unemployment, well-anchored inflation and a strong current account position. (Slide 3) Thanks to the painful lessons of the crisis back in 1997 and the adjustment thereafter, the main sectors in the economy (be it banks, corporate, households or government) have also kept their leverage in check. The banking and corporate sector had undergone a dramatic change and now possesses a fairly healthy structure. NPLs of the banking sector dropped from 43% during the crisis, to 2.3% in 2014, while debt-to-equity ratio in the corporate sector declined from 5.1 in 1997 to 1.3 in 2014.
Banks should take advantage of opportunities to raise lossabsorbing capital, and should recognise the importance of using profits to rebuild capital rather than pay out higher dividends and compensation. But we must not forget the principle underlying the Basel approach: asking banks to maintain a buffer of capital above the minimum requirement allows them to run the buffer down in circumstances like the present. Rebuilding the buffer is a task for the future. So even though the Bank of England would have preferred an agreement to set capital ratios at higher levels in the long run, we have no intention of asking UK banks to adopt a faster timetable for implementation of Basel III. That logic should apply to any reforms we choose to implement. We should not expect to change the financial system for the better overnight. Rather we need radical reforms that will give us a much more robust system in the long run, accepting that it may take a period of many years to get there. As with a bank levy, it is no criticism of Basel III to say that it is not a “silver bullet”. The difficulty of identifying and calibrating the difference between the private and social costs of maturity transformation means that there is merit in having a basket of different measures to rein in excessive risk-taking. In the area of financial stability, it makes sense to have both belt and braces. 6.

The challenge with this approach is to prevent the costs associated with the activity of maturity transformation from gravitating to another set of institutions – the “shadow” banking system. Whatever solution is adopted, the aim must be to align private and social costs. 5. Why Basel III is not a complete answer  Lauded as a new standard, Basel III is seen by some as the answer to the failure of regulation to prevent the financial crisis. It is certainly a step in the right direction, an improvement on both Basel I and the ill-fated Basel II, and we should all welcome it. But if it is a giant leap for the regulators of the world, it is only a small step for mankind. Basel III on its own will not prevent another crisis for a number of reasons. First, even the new levels of capital are insufficient to prevent another crisis. Calibrating required capital by reference to the losses incurred during the recent crisis takes inadequate account of the benefits to banks of massive government intervention and the implicit guarantee. More fundamentally, it fails to recognise that when sentiment changes only very high levels of capital would be sufficient to enable banks to obtain funding on anything like normal spreads to policy rates, as we can see at present. When investors change their view about the unknowable future – as they will occasionally in sudden and discontinuous ways – banks that were perceived as well-capitalised can seem under-capitalised with concerns over their solvency.
We know that rapid growth in demand tends to put upward pressure on prices. So with numbers like these perhaps it’s not surprising to see inflation going up, here and in other countries. In the UK, annual CPI inflation has risen from ½% to 2½% in the past four months. That’s more than half a percentage point higher than in late 2019, immediately before the pandemic. The MPC expects inflation to rise significantly further, to well over 3%, over the next six months. But in some ways the extent of the rise is a bit surprising. The economy may have grown very strongly over the past year but that’s only because it contracted so spectacularly in the first half of 2020, during the first phase of the pandemic. Even now, it’s still a long way from where it was before all this began. Growth of 5% in Q2 would still leave UK GDP 4% lower than at the end of 2019. And economic contractions don’t normally lead to higher inflation. We can identify a number of contributory factors, things that help to account for this contrast, right off the top. One is base effects. Arguably, comparing economic growth over the past eighteen months with the change in prices over the past twelve isn’t quite fair. One of the reasons annual inflation has risen so steeply through this spring is that prices of goods (energy in particular) fell significantly a year earlier, during the first phase of the pandemic.

On the other hand, it is not etched in stone, and in the final analysis, experience will reveal the truth. The liberalisation strategy can be implemented in various ways and adapted to actual developments. Sound ideas on this subject are most welcome. But at this juncture, I believe it is best that we follow the path already mapped out, with strong emphasis on safeguarding the foreign exchange reserves, financial stability, and Treasury financing. 4  BIS central bankers’ speeches
Giavazzi, Francesco and Mishkin, Frederic S. (2006), “An evaluation of Swedish monetary policy 1995-2005”. Report from the Riksdag 2006/2007:RFR1, Sveriges Riksdag. Goodfriend, Marvin and Mervyn King (2016), “Review of the Riksbank’s Monetary Policy 2010–2015”, Reports from the Riksdag 2015/16: RFR 16, Sveriges Riksdag. Goodhart, Charles and Rochet, Jean-Charles (2011), “Assessment of the Riksbank’s monetary policy and work with financial stability 2005-2010”, Reports from the Riksdag, 2010/11:RFR5, Sveriges Riksdag. 16 [21]  Gourio, Francois, Anil K. Kashyap and Jae Sim (2018), “The trade offs in leaning against the wind”, IMF Economic Review 66 (1), 70¬-115. Heikensten, Lars (2008), More To It than Just ’Leaning Against the Wind’. Article in the Financial Times, 5 June 2008. Ingves, Stefan (2007), Housing and Monetary Policy: A View from an Inflation-Targeting Central Bank. In Housing, Housing Finance and Monetary Policy, Jackson Hole Symposium Conference Proceedings, 433-443, Federal Reserve Bank of Kansas City. Ingves, Stefan (2012), “Stora risker med alltför låg ränta” [“Major risks in excessively low interest rate”], debate article, Svenska Dagbladet, 18 October. International Monetary Fund (2015), “Monetary policy and financial stability”, IMF Policy Papers. Jansson, Per (2013), “How do we stop the trend in household debt? Work on several fronts”, speech at SvD Bank Summit, Stockholm, 3 December. Jansson, Per (2014), “Swedish monetary policy after the financial crisis – myths and facts”, speech at SvD Bank Summit 2014, 3 December. Kockerols, Thore and Christoffer Kok (2019), “Leaning against the wind: macroprudential policy and the financial cycle”, ECB Working Paper Series No. 2223.

Public inquiry required for a decision It is clear just from this short review that the introduction of an e-krona could have major consequences for both monetary policy and society as a whole. On the other hand, as I have also pointed out, it would involve a major change in a historical perspective if the Riksbank no longer issued any state-backed means of payment that can be held by the general public. Considering how economically important the issue is, the Riksbank cannot take the decision on its own as to whether an e-krona should be introduced and, if so, in what form. It is a decision that must have substantial political support and where parallels can be drawn with the changes in the payment system in 1809 and 1904 that I mentioned earlier. 26 Some economists see a more negative interest rate as the best solution to create room for manoeuvre for monetary policy in a world of very low neutral interest rates, like today – better than, for example, increasing central bank inflation targets. This, it is thought, could work even if there is still physical cash by creating an exchange rate between physical cash and e-money and steering it, see for instance Rogoff (2017) and Lilley and Rogoff (2019). 13 [21]  In May this year, the Riksbank therefore submitted a petition to the Riksdag on the need for a public inquiry into the future payment market.