samchain/econo-pairs-v1 huggingface dataset:
For instance, consider a bout of “irrational exuberance” on the part of households, businesses and investors. The increased optimism is associated with an increase in the demand for goods and services from households and businesses, together with increased demand for credit and a reduction in the credit spread. So both PS and FS shift out to the right, as in Chart 12. As drawn, both instruments are therefore tightened. In other cases, it will be appropriate for the instruments to move in opposite directions. For instance a beneficial supply shock will usually generate disinflationary pressure requiring lower interest rates, other things equal. So the price stability schedule shifts in. But it may well also encourage increased borrowing and a compression in spreads, leading the financial  BIS central bankers’ speeches  7  stability frontier to shift out. In this example, monetary policy is loosened at the same time as macroprudential policy is tightened (Chart 13). Superficially this could look as if the monetary and macroprudential policymakers are at odds with each other, though such a rebalancing of the mix of policies is in fact entirely appropriate. There are, however, important qualifications to this somewhat Panglossian view of the ability to maintain both price stability and financial stability by assigning monetary policy to the former and macroprudential policy to the latter. Compared to the impact of changes in interest rates, we have relatively little experience of deploying macroprudential instruments.

The bottom line is that we may yet encounter a few potholes on the way to the exit. But the good thing is that banks are better capitalised now than in the run-in to the crisis, leverage is lower, there is better visibility of counterparty exposures, and we are better placed to deal with financial institutions that get into trouble. So the risk of major financial problems crystallising in the advanced economies should be much lower. Those emerging economies that have financed large external deficits through the accumulation of foreign currency debt may be more vulnerable, however. Let me turn now to the impact of the crisis on the monetary policy framework itself. Before the crisis, the conventional wisdom in central banks was that monetary and financial stability were largely complementary in nature. The maintenance of price stability would help foster stable macroeconomic conditions more generally by anchoring expectations. And the consequent reduction in macroeconomic volatility should help reduce the likelihood of episodes of financial instability. All that was necessary was for banking supervisors to ensure that individual financial institutions followed responsible lending policies and all would be well. Today, there is a tendency to claim that the crisis revealed a fatal flaw in focussing on price stability as the primary object of monetary policy, namely a failure to recognise that it could in some circumstances actually be detrimental to financial stability.
Chile suffered a major banking crisis in the early 1980s, part of which can be blamed on poor regulation, which cost the country, only in GDP terms, a drop of 16% between 1982 and 1983. The lessons learned the hard way have provided the basis for strict banking regulation, where banking business supervision and limits to risk exposure prevent episodes like the ones we are now seeing abroad from being replicated in our economy. Regarding the external scenario we face, consensus projections and information at hand show that the international economy continues to grow and, surprisingly, there is a decoupling between developed economies and the rest of the world. BIS Review 123/2008  1  As can be expected in such a situation, and from the reactions we have seen at the global level, the world will see a deceleration, but from varied levels. While the developed world will probably go through a recession, emerging economies will moderate growth. This may be helped by the current-account surplus accumulation of emerging markets, favored by high commodity prices and more responsible economic policies than in the past. For example, the substantial hoarding of international reserves in many countries, Chile included, allows the financing of deficits for several years to weather the turbulences via domestic growth. Overall, more severe effects on emerging economies’ growth from a prolonged period of weakness in developed countries cannot be ruled out.

It would be helpful if actual conversions happened reasonably frequently and not only in a rare crisis, demystifying the whole process. One  16  Admati, DeMarzo, Hellwig and Pfleiderer, 2010, “Fallacies, Irrelevant Facts, and Myths in the Discussion of Capital Regulation: Why Bank Equity is Not Expensive,” Stanford GSB research Paper 2065. 17  Duffie, 2010, “Contractual Methods for Out-of-Court Restructuring of Systemically Important Financial Institutions”, in Ending Government Bailouts as We Know Them, Scott and Taylor (eds). Hoover Press. 10  BIS central bankers’ speeches  would also need to make sure that the maturity profile was such that no dominant amount of contingent capital was rolled at any one point in time. There could be an on-going process of monitoring, rather than particular trigger dates that may cause a focus for a “run” during times of stress. Stress tests could also be one of the tools to force conversion of contingent capital securities by bank regulators. In addition to the accounting based capital trigger, capital requirements could be expressed in terms of what scenarios a bank has to be able to withstand, with capital securities triggered when the existing common equity is not sufficient. One argument that has been raised against contingent capital, has been the lack of a natural investor base, reflecting market segmentation between “credit”, “rates” and “equity” investors. We believe strongly that market segmentation is an inefficiency which should not be taken as a given; there are already regular convertible debt securities with an investor base.
It is of crucial importance that the whole policy mix is supportive of this goal. The recent failure to enforce SGP rules in the existing euro  BIS Review 70/2004  1  area should not be taken as an excuse for postponing fiscal reforms in the new EU member states. On the contrary, it should be interpreted as a warning signal that the Maastricht criteria should be met by a sufficient margin prior to euro adoption in order to create an adequate buffer for difficult periods. Having said that, I would like to emphasise that monetary integration is not only about the adoption of the euro by the new EU members; it is a more general process - a continuous improvement of our common institutional framework, monetary strategy and analytical techniques. There is a very solid foundation upon which to build a common future for our twenty-five countries. This year the euro celebrates its fifth anniversary. Let me take this opportunity to congratulate the ECB for the successes achieved so far. The currency changeover, the lack of historical euro-data, the need to build the credibility of the newly established central bank - these were all challenges that were successfully overcome. The euro has emerged as a stable, highly credible, and important international currency. As a result, we can now discuss the monetary integration of all current EU member states with confidence. The word “integration” can mean different things in different circumstances.

They are also likely to rely on importing price stability from abroad during the interim period. Larger countries that have invested heavily in developing a credible independent monetary policy but still have more to do in the area of fiscal policy reforms and flexibility of domestic economies, will probably opt for a more cautious approach. They are likely to prefer avoiding double regime switches, opting instead for a smooth and fast transition from the current regime to euro adoption. The Czech Republic belongs to the latter group. The Czech strategy for euro adoption is based on a cautious timescale. In the pre-EMU period, we want to ensure low inflation domestically, not by importing it. In the strategy, we have pointed to the years 2009-10 as the most likely entry date. In comparison to other new EU member states, this timescale had been viewed as relatively cautious. However, it should be said that other countries in the region have recently pushed back their initially more optimistic estimates. The primary reasons for this more cautious timescale are - in all cases fiscal developments. In the pre-EMU period, we will continue targeting inflation. This strategy has gained a substantial degree of credibility in the Czech Republic since its introduction in 1997. Our inflation target for the period beyond January 2006 is set at 3% (for CPI), which should allow us to fulfil the monetary side of Maastricht convergence criteria, and at the same time to reflect the long-term real convergence needs of the Czech economy.
Moreover, mortgage delinquency rates, even in the most serious category, have started to fall, and data that tracks changes in the proportion of borrowers who are delinquent and then become current versus becoming even more delinquent is encouraging (Charts 9 and 10). Finally, the less serious delinquencies for credit card, auto and student loans have been trending lower, though not the more serious delinquencies (Chart 11). Of course, these recent improvements have come in the context of the stabilization in unemployment and house prices. To ensure that the more favorable trends in household balance sheets continue, the economic environment needs to become more supportive. We should recognize that there is still considerable uncertainty about the level of the saving rate and configuration of household balance sheets that will prevail in the coming years. It is possible that households now perceive the world to be a riskier place than they did before and will want to have more “rainy day” funds. More saving may also be needed to meet higher downpayment requirements for home purchases. Thus, while we may be far along in the adjustment process, it is difficult to judge just how much further we have to go. Turning now to the issue of credit availability, there is no question that credit conditions are still tight.

Banks will then record low losses and may increase their lending. Investments financed by loans may push up property prices. When the bubbles burst, either in the housing market or in the stock market, asset prices fall and many will want to reduce their debt. This reduces demand and may lead to a fall in prices. Deflation in Japan is clearly related to the property and stock market bubble that burst in the early part of the 1990s. The build-up of financial bubbles may make the financial sector more vulnerable to any disturbances in the economy at a later stage. A sharp rise in asset prices and debt build-up may pose a risk to economic stability. In order to reduce this risk it will in certain situations be appropriate to apply a somewhat longer horizon than the normal time horizon of two years for achieving the inflation target. This presupposes that financial market participants are confident that inflation will be low and stable over time. Norges Bank has stated that if it is necessary to deviate from the normal response pattern in order to promote financial stability, the Bank will give notification of this. Closing remarks Interest rates are now low both globally and in Norway. This applies to both nominal interest rates and real interest rates. Interest rates differ from what we were accustomed to earlier, and real interest rates are lower than the interval normally arrived at as a result of analytical attempts to estimate the theoretical equilibrium interest rate.
On behalf of the Board of Governors, I wish to register our profound gratitude to the Centre for Central Banking Studies of the Bank of England and the UK Treasury Department for collaborating with WAIFEM to build capacity for macroeconomic management in the West African sub-region. Our particular thanks go to Messrs. Simon Gray and Tony Smith, who represent these collaborating institutions at this course, for taking time off their busy schedules to share their wealth of knowledge and experience with us. 2.0  The need for liquidity forecasting  This course could not have come at a more auspicious time than now when all the countries in the West African sub-region are operating the indirect approach to monetary management and for that purpose most have instituted monetary policy committees (MPCs). MPCs bring together the major stakeholders in monetary and fiscal management with responsibility, among other things, to derive the quantum of liquidity for mop up from, or injection into, the economy through Open Market Operations (OMO). The overriding objective has been to keep inflation at low and stable level. In recognition of those objectives this course augurs well in filling the capacity gaps in liquidity forecasting as an essential input in the design of sound monetary policy administration in countries of WAIFEM member banks.

As part of its contribution to improved business reporting last year, the Bank of Zambia invited Mr Allan Beatie, International Business Editor, with one of the leading global newspapers, the Financial Times, to share views with journalists here in Zambia. Distinguished Ladies and Gentlemen, there are a myriad of pointers that can be given to where economic, business and financial information can be found. As a starting point, I would like to suggest that journalists look around this room and will no doubt recognize the rich collection of invited guests who hold significant information from which we can learn a lot. These are people who can stimulate debate, provide relevant information, validate it, and explain its proper use. Colleagues, allow me now to focus on one key stake-holder mentioned above, namely the business and financial writers’ fraternity. It is heartening to note that the judges feel that the standards of reporting have improved significantly. I am also pleased to note that those who have been past prize winners are continuing to apply themselves effectively and raising the standards of the profession as a whole. It is therefore my delight to be able to officiate at August gathering of business and financial writers knowing they are all putting in a more than average effort to attain today’s awards. Ladies and Gentlemen, the top prizes over the last 3 years have been designed to build capacity in the journalists nominated.
Chris Salmon: Remarks given at the first meeting of the Working Group on Sterling Risk-Free Reference Rates Remarks by Mr Chris Salmon, Executive Director for Markets of the Bank of England, at the first meeting of the Working Group on Sterling Risk-Free Reference Rates, London, 18 March 2015. *  *  *  Over the past two and a half years, the Bank of England has been firmly committed to benchmark reform. Much has already been achieved by regulators, administrators and market participants. Those achievements include the Wheatley Review of Libor, the development of IOSCO Principles for Financial Benchmarks, the FSB’s recommendations on interest rate benchmark reform, and most recently the extension of the UK regulatory framework to cover additional critical benchmarks – including the interest rate benchmarks, SONIA and RONIA. But there is still much to do. The way ahead was signposted in the July 2014 Financial Stability Board Report, “Reforming Major Interest Rate Benchmarks”. That Report recommended a “multi-rate” approach involving the strengthening of existing “IBOR” rates (such as LIBOR) by using, to the greatest extent possible, transactions data; and developing alternative near risk-free reference rates (RFRs) for use in derivatives contracts.

Malaysia has always been open, friendly and fair to foreign investors. Foreign investment in Malaysia dates back to more than a hundred years ago. In fact, foreign investors have been major partners of our economic growth. Foreign investment had contributed significantly towards the expansion of the country’s manufacturing sector, the creation of employment and the birth of economic hubs. Today, foreign investors remain key allies in our quest to become a high income nation. Periodic reviews and dismantling of burdensome regulations have been our ethos. In 2009, we reduced barriers for partnership with local companies and liberalised 27 service subsectors. Since then, at least 15 more subsectors have been liberalised. These measures have boosted investments in many corridors around Malaysia. Malaysia is a profit centre with no restriction in repatriation of profits even during difficult times. Foreign investments have indeed yielded significant returns for investors. Returns on FDI have grown by an average of 13% per annum, higher than Malaysia’s nominal GDP growth of 7.7% and one of the highest in Asia. Clearly, Malaysia is a regional profit centre where foreign investments are protected and is allowed to operate in a conducive environment. More importantly, profits by investors are freely movable. Malaysia does not impose any restriction on the repatriation of profits, even during difficult times. A fact sometimes missed by analysts. Even during the 1997 crisis, we did not restrict the movement of profits from Malaysia. Our compass in attracting investment has always been guided by seeking quality, rather than quantity, of investments.
One of the most comprehensive evidence has been produced for New Zealand’s firms, showing that inflation expectations among business leaders are not so different from household expectations. In Europe, Banca d’Italia has also developed a very rich and informative firms’ expectations survey since 1999. The Bundesbank has also conducted a very interesting survey asking tradeunions and employers what was the relevant inflation underlying the last collective wage agreement. Comparative information on such issues across the Euro area would be very useful. I am convinced that more analysis on firms’ expectations would produce very valuable and relevant information for our monetary policy. Conclusion Let me now conclude by saying that we need to better measure consumer and firm inflation expectations. This lack of information prevents our communication policies from being fully efficient. One important question for monetary policy is what kind of communication tools can be used to better communicate with the general public and influence their inflation expectations. This conference is a unique opportunity to benefit from the analyses of the most distinguished experts on the various exciting issues that are related to household expectations. I wish you very fruitful discussions. Thank you for your attention. 4  Figure 1. Long term inflation expectations for the Euro area  Source: BIS report “Recent developments in the global economy” (August 2019) -  5  Figure 2. Households perceive quite well the overall evolution of inflation  Source: B. Coeuré (2019).

Better monitoring the general public's inflation expectations is not an easy task since inflation expectations of firms or consumers are not directly observable. For the moment, reliable data on consumers or firms’ inflation expectations are quite scarce in the euro area whereas in other jurisdictions expectation surveys have been developed quite extensively – famous and recent examples include the New York Fed Survey, the Tankan survey in Japan or the different surveys developed by the Bank of England. In this respect, the new Bundesbank household survey contributes to fill the gap and it is also an excellent example of the recent efforts made by central banks to collect new and better information on expectations of economic agents. II. Communication of central banks should also target households  For the moment, our most reliable information on the general public’s inflation expectations in the euro area comes from the consumer survey conducted by the European Commission. When comparing the different sources of inflation expectations with consumer survey expectations, we can see that they deliver a very different message on the level of inflation expectations, compared to financial markets. European households perceive an inflation rate close to 10% whereas their inflation expectations are closer to 5%. One implication of such a result is that we need to improve a lot our communication to a more general audience. Another conclusion we can draw is that, if households are not well aware of the level of inflation, they perceive quite well the overall evolution of inflation over time (Figure 2).
But despite the extraordinary policies in major economies, despite reassuring words of global authorities, despite considerable reform efforts, the healthy state of full recovery seems to be constantly pushed away from us. At this point in time, the world is still struggling in what I would like to describe as the state of “indecisiveness”. First is the indecisiveness that we have about growth prospects. Mixed signals and counteracting forces abound, and it has become less obvious how global economic forces will -equilibrate. The talk of the two-speed or three-speed world, which was heard frequently earlier this year, proves to be an oversimplication of a much more complicated reality. Among advanced economies, the U.S. and Japan seem to have gathered some tangible traction as of late. But one should be reminded that the impact of sequestration in the U.S. is still yet to be felt fully. And one should also be reminded that for Japan, contradicting policy objectives could lead to considerable trade-offs, coupled with the fact that the public debt situation there could become more sensitive to possible rises in bond yields given that we are already in the later stage of the global easing cycle. On the other hand, emerging Asia continues to post relatively high growth compared to the rest of the world. But in the absolute term, economic momentum seems to be losing some steam, and it is also possible that the extent of the shadow banking problems in China could be underestimated.

Protecting intellectual property rights and minimizing regulatory burdens for businesses are the two key areas that continue to require reform efforts. I would like to note that several moves in the right direction are already in place. Government’s massive investment plan in water management and long-term infrastructure is one of them. At the very least, the attempt has managed to elevate the urgency of infrastructure upgrading to the status of a national reform agenda. On a related note, the government also has the plan to push Thailand toward an innovation-driven economy. While these are laudable initiatives, challenges still remain in the implementation phase, and more work remains to ensure that we get the biggest bang for the baht and that fiscal discipline is respected. (3)  Leveraging existing opportunities around us  Ladies and Gentlemen, The third ingredient I would like to discuss today is the importance of identifying opportunities surrounding us and leveraging them. Upgrading efforts that I spoke about at length should put the country in a better position to reap benefits from these opportunities, which can make the route to prosperity less arduous. The timing is still on our side. First is China’s changing role in the international trade – from a large manufacturer of export goods to a large import country of the world. Even with signs of losing some steam, one should not forget that even a 6-to-7 percent growth of today’s Chinese economy still adds far more to global demand than the double-digit growth of the past decade.