samchain/econo-pairs-v1 huggingface dataset:
Given these evaluations, I would like to remind that in its first monthly meeting of 2013, the Committee highlighted the faster-than-expected credit growth and signaled that macroprudential measures might be continued should this trend persist. Chart 14. Financial Conditions Index  * For further details on financial conditions index, see CBRT Economic Notes No. 12/31 and Report 2012-IV, Box 5.2. Source: CBRT. 2. Macroeconomic developments and assumptions  Now, I will talk about the macroeconomic outlook and our assumptions which constitute the basis for our forecasts. First, I will summarize the recent inflation developments, and then compare the short term forecasts in the October Inflation Report with the actual year-end inflation data in 2012. Then, I will continue with the domestic and foreign demand outlook. Consumer inflation undershot the forecasts in the last quarter of 2012 and stood within the uncertainty band (3–7 percent) with 6.2 percent at the year-end (Chart 15). This lower-thanenvisaged inflation rate was mainly driven by the developments in unprocessed food prices, which were stated to pose downside risk on inflation in the October Inflation Report. Meanwhile, core inflation indicators were broadly consistent with expectations. Chart 15. October 2012 Inflation Forecasts and Realizations (Percent)  * Shaded region indicates the 70 percent confidence interval for the forecast. Source: TurkStat, CBRT. BIS central bankers’ speeches  5  Cumulative effects of the previous year’s exchange rate and import price movements gradually waned.

However, as mentioned, real GDP may behave more positively in the short term than in the Stability Programme. As regards the budget, the path projected for the overall general government deficit is in line with the requirements of the Stability and Growth Pact: declining from 3.1% of GDP in 2017, to 2.2% in 2018 and 1.3% of GDP in 2019. In 2020 a budget deficit of 0.5% of GDP is projected. This path of reduction of Spain’s budget deficit needs to be achieved if the excessive deficit situation (a deficit of more than 3% of GDP) is to end in 2018. Public debt, according to the Stability Programme, is expected to fall gradually, to reach 92.5% of GDP in 2020. In the current environment of high economic growth and low general government financing costs, the budget consolidation required to achieve the deficit targets for the period 20172020 (as measured by the change in the primary structural balance) is relatively small. The Stability Programme includes the stability objectives for 2017 – for each sub-heading of public expenditure – that were approved by Parliament in December last year and extends them to 2020; then, budget balance is projected for all levels of general government, except the Social Security system, which would still record a deficit of 0.5% of GDP. Central government, which currently has the largest deficit, will be responsible for making the bulk of the projected adjustment.
These conventional crises could turn into a financial crisis in the payment system, which is a subject in itself. However, my speech today is limited to conventional vulnerabilities. RIX links together the banks and certain other financial agents so that they can quickly and simply make payments to one another, and it has a turnover of around SEK 500 billion a day. The problem with the Riksbank’s RIX system meant that a number of payments had been erroneously made several times over. This double entry meant that the banks had incorrect balances on their accounts in RIX, which created problems at the end of the day, as banks with a negative balance must borrow money overnight from those with a positive balance. This in turn entailed a disturbance in the functioning of the very important money market, that is, the market where the banks borrow money in the short term. When the error was detected the contingency routines were implemented, which meant that payments could be made without being entered more than once. The problem was due to an error in the communications system that links the banks to RIX. It took a total of five days to find the fault and implement a new solution. Nordbanken’s problems meant, amongst other things, that it was impossible to compile the bank’s normal background data for customer payments. Outwardly this was noticeable in that customers experienced problems using Nordbanken’s bank cards and through delayed payments.

John C Williams: The right tools for our time Remarks by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the International Economic Symposium co-hosted by the Deutsche Bundesbank and NABE, Eltville, 10 May 2022. ***  As prepared for delivery Good afternoon. I'm so pleased to be here with you today. We've waited a long time to gather in person. And I think we can all agree that meeting in this charming location was worth the wait. For most visitors, Eltville is renowned for its wine and roses. But for economists, it's a place to convene for weighty discussions on monetary policy. Given the events happening around the world today, there is much to discuss. We are meeting at a time of significant economic challenges and uncertainties. Inflation has reached levels not seen in decades, both in the United States and in many other countries. And recent events-including the war in Ukraine, lockdowns in China, and other supply disruptions related to the ongoing Covid-19 pandemic-are exacerbating near-term inflationary pressures and uncertainty about the global economic outlook. The challenge for monetary policy today is clear: to bring inflation down while maintaining a strong economy. This, of course, is at the heart of the Federal Reserve's dual mandate of price stability and maximum employment. Although the task is difficult, it is not insurmountable. We have the tools to return balance to the economy and restore price stability, and we are committed to using them.
When one distributes one's savings across a number of funds with different allocation, for instance to various industrial sectors, there is less risk, as one would not suffer such great losses if one fund were to show a poor development. However, the financial markets also offer other opportunities for risk management. It is possible to pay someone else to take over a financial risk. This can be done with the aid of various types of derivative. For example, in export deals it is not unusual for payments to be made some time after the goods have been delivered. To avoid negative effects of a change in the exchange rate, the exporter can enter into a futures contract that establishes the rate at which the future income will be exchanged to the exporter's own currency. These opportunities for risk management have crucial economic importance. Without them, many economic projects would be perceived as too risky and would never be realised. And this would lead to a slower development of the economy. Deregulation and the rapid developments in technology and finance have made it possible to transfer these roles to the international stage on a much larger scale than before. Thus, the financial markets' capacity to contribute to increased global growth has been strengthened. Countries importing capital can increase their rate of investment and gain access to more modern technology, while the countries exporting capital can obtain a higher yield on it.

When information is no longer exclusive, it becomes easier to form an opinion of one's own with regard to developments and risks, and not merely to follow others in the belief that they know something you don't. At the same time, it is important to remember that our insight into why financial crises arise and spread is still limited. This means that increased transparency will not in itself be able to solve all of the problems discussed. It must be combined with increased knowledge of these issues. Cautious use of risk models The financial crises have exposed the failings in the various statistical risk models regularly used by players on the financial markets. These are nothing more than very simplified pictures of reality and are based on historical values. And history doesn't always constitute a good base for making forecasts for the future. Financial players must therefore become better at taking into account less probable events when they are analysing the risks of various investments. One example of how this could be done is to supplement the risk models with “stress tests”. These tests are used to analyse how “stressed markets” - ie exceptional, but possible, outcomes or events - would affect the players' current positions. According to the latest quarterly report from BIS, use of stress tests is becoming more widespread and many financial institutes now use them as an integrated part of their risk management.
Therefore, the free funds were invested in non-resident assets against a background of lower return on investment in the global market. The deteriorated loan quality, the obligation to increase the reserve funds and the lower average rate of return were followed by the decline in the banking sector net profit. BIS Review 174/2010  1  For some banks, this situation needs careful monitoring by the governing structures and shareholders in order to identify those operations that would improve the expenditure and income structure and maintain its capitalization levels. With regard to lending, the Bank of Albania has continuously called for greater banking sector commitment in this regard. This has not been a rhetorical-like request considering that we have taken all the necessary actions to meet the banking sector needs with ample liquidity and we have cut the key interest rate several times. These measures, coupled with lower Government borrowing, have provided room for lower interest rates on ALL lending. Nonetheless, their decrease still seems insufficient to push credit demand higher. Loan quality remains a challenge both for ALL and foreign currency-denominated loans. Against this setting, it is essential that banks do not only create in a prompt and rigorous fashion reserve funds according to the regulatory requirements, but they should also complete and improve the procedures and human and financial capacities that enable following-up insolvent borrowers. Complete acknowledgement of loan quality-related concerns and the full commitment of governing structures and shareholders allow for its more rapid and ultimate handling.

Weathering the challenges requires courage and professionalism. In addition, banking institutions should provide an environment where accountable and professional human capacities are in the service of the public and the institution. I am confident that you will prioritize the foregoing matters in 2011. I wish you success in your work and many wishes for the New Year! Thank you. BIS Review 174/2010  3
Yes, especially since we also used a number of administrative measures, controversial at the time, but which now – after the crisis has warranted their use – are considered valid macroprudential instruments. I will name some of them: enforcing maximum loan-to-value ratio, introducing debt service ceilings relative to households’ monthly disposable income (the scope of which was subsequently expanded to include non-bank financial institutions engaged in lending), setting limits to banks’ forex exposure vis-à-vis unhedged borrowers, using differentiated coefficients in stress tests (higher for exposures to EUR than lei, with even stricter coefficients for CHF- and USD-denominated credit). At the time, banks perceived such measure as excessive administrative interference and I even remember a rather uncomfortable discussion with the president of a large foreign bank operating in Romania, who reproved me for the fact that, only a few years after being invited to invest in our country, banks were facing regulatory “innovations” that narrowed their scope of business. 4. Was the unorthodox approach effective? With the benefit of the hindsight, I would say it was, at least to some extent. I see now 3 limitations and 3 benefits of the approach we took 10 years ago. Let me start with the limitations: First, the measures were not entirely successful in cooling off foreign currency lending, as banks found ways to circumvent the restrictions in place by externalising credit portfolios. Forex credit continued to expand, its share in total credit approaching 60 percent by the end of 2008.

Towards the end of 1995 the growth of production slackened and the increase during 1996 probably stopped at between 1 and 1.5 per cent. However, the slowdown seems to have been relatively gentle. The demand situation appears to be good, particularly when one BIS Review 38/1997  -2-  considers that the growth of private sector production was held back by marked destocking in 1996. Stock adjustments are not uncommon after some years of rising output and they do not seem to have had negative effects on private consumption. In the second half of 1996 private consumption picked up and export demand went on rising. As the destocking comes to an end, domestic and international demand should therefore be able to generate an accelerating growth of production this year and in 1988. Considering the economy’s unutilised resources, I do not expect inflationary capacity restrictions to arise in the coming years. If inflation expectations also remain low and confidence in economic policy in general is stable, this, too, will contribute to a subdued development of future inflation. Since the autumn there have been some months in which the level of consumer prices was lower than a year earlier. In a price analysis, however, it is important to distinguish transitory effects on inflation from the underlying inflationary process. In January this year the level of consumer prices was 0.1 per cent lower than a year earlier. Strictly speaking, however, what Sweden is experiencing is not deflation.
A more even distribution of the Fund’s ownership will provide us with the opportunity to take part in the value creation in regions with strong growth. This implies a reduction in the allocation to European equities and an increase in the allocation to the Americas and emerging economies. High economic growth in Asia can provide sound returns on investments in that region even though today’s equity prices already reflect expectations of higher growth in eastern than in western regions. A more even distribution will nonetheless improve the trade-off between risk and expected rewards. The currency composition of the bond portfolio should also be adjusted. According to the guidelines, the distribution in the bond portfolio should be based on the volume of sovereign debt issued by each country. This has resulted in rising loans to countries that have issued  BIS central bankers’ speeches  3  new debt. The risk linked to that strategy came into evidence in the wake of the financial crisis. A distribution of government bonds that is based on GDP will reduce this risk. Moreover, it has been proposed that government debt issued by emerging countries also be included in the portfolio. The consequence of this is the same as for the equity portfolio, that is to say a reduction in the Fund’s European holdings. The financial crisis showed that many securities move in tandem. The number of bonds in the portfolio has been more than halved over the past few years.

In recent years, with the financial crisis and the sovereign debt crisis, the real return has been lower, averaging about 2½ percent since 1998. 1  Source: Lie, E. and C. Venneslan: Over evne. Finansdepartementet 1965–1992 [Beyond our power. Ministry of Finance 1965–1992]. Pax forlag, 2010. 2  See Report no. 25 to the Storting (1973-74): “Petroleumsvirksomhetens plass i det norske samfunn” [The role of petroleum activity in Norwegian society]. 4  BIS central bankers’ speeches  We should be careful about taking a rear-view mirror approach to forming expectations about the future. Equity prices fluctuate considerably and there is a possibility that the results of the past few years will be counterbalanced by good years ahead. But changes in the global economy affect the growth outlook and the balance of risks, and hence financial market returns as well. (Chart 9: Real return on 10-year government bonds) The yield on the presumably safest long-term government bonds can provide a basis for estimating the return on the Fund. Returns exceeding this will reflect the risk we are willing to take. In 2001, real interest rates on long-term government bonds averaged around 3 percent internationally. Real interest rates have since fallen and long-term real interest rates are now at a historical low of between 0 and 1 percent. At the moment, it would seem that economic growth ahead will be more modest than in the favourable pre-crisis years.
By creating the petroleum fund, Norway has managed to save the revenues and keep them separate from its domestic economy. Furthermore, the fund managed by Norges Bank is now seen as a model showing the way for other sovereign wealth funds. 2  BIS central bankers’ speeches  Even though monetary policy in Norway – and Sweden – is geared towards an inflation target, the development of the exchange rate cannot be ignored. It is also worth noting that both the Riksbank and Norges Bank pursue their monetary policy in the shadow of the ECB. Both central banks have to take into ac-count the effects on the exchange rate of its monetary policy, since the value of the krona greatly influences import prices and ultimately inflation. This may imply a monetary policy stance that is not optimal in terms of stabilizing the domestic economy and its financial system. In fact this is one of the main issues in economic policy in Sweden and Norway these days. Central banking is not limited to finding and optimal strategy for monetary pol-icy. What central banks can and need to do is shaped by the developments in the whole world economy, and largely influenced by political circumstances, in-side and outside our own countries. Both formal cooperation and informal ex-changes of ideas is now intense between central banks in many countries, and in particular between Norges Bank and the Riksbank, who continue to face very similar challenges.

In January 1817 it was the only bank in the country. It received deposits, but charged a fee for that service. Thus, today’s situation with depositors having to pay for keeping their money in the bank is not entirely a new phenomenon. In the 1870s Norway joined a currency union with Denmark and Sweden that lasted until the outbreak of the First World War. The Scandinavian countries enjoyed strong economic growth during this period. Large cross-border capital flows supported the industrialization of the Scandinavian countries, and financial integration driven by the gold standard and the currency union was probably a contributing factor to the favourable development. Both Sweden and Nor-way were relatively poor countries situated on the outskirts of Europe when Norges Bank was founded 200 years ago, but with the advent of industrialization in the late  BIS central bankers’ speeches  1  19th century both countries began their journeys to become two of the richest nations in the world. Economic and political developments in Norway and Sweden have also showed similar patterns in the period since the Second World War. The role of the central banks was very limited in both Sweden and Norway. The monetary policy decisions were made by the government and Norges Bank became more of a technical implementer of government policy. For much of the 1970s and 1980s, economic policy in both Norway and Sweden lacked a long term strategy and credibility. Inflation and wages soared, and lost competitiveness resulted in repeated devaluations.
No matter how the Commission’s concrete proposals are followed up, I am confident that Norges Bank will continue to be a useful public institution. 7/8  BIS central bankers' speeches  1 Official Norwegian Reports 2017:13. New central bank act. Organisation of Norges Bank and the Government  Pension Fund Global. 8/8  BIS central bankers' speeches

The Governing Council fully supports all steps to avoid the occurrence of excessive deficits and all efforts to reduce the public debt and bring the fiscal stance into line with the stability programmes in individual member countries in order to ensure the credibility of the commitments made under the Stability and Growth Pact. In the same vein, we very much support the continued initiatives to foster structural reform. We welcome the focus placed on these issues in the context of the forthcoming Barcelona summit and we are looking forward to swift and determined delivery of essential structural reforms in the goods, services and labour markets to promote the euro area's growth potential. 2  BIS Review 9/2002
Asset purchases promote this mandate by putting downward pressure on longer-term interest rates, supporting mortgage markets, and helping to make broader financial conditions more accommodative. The current purchases reduce interest rates and ease financial conditions through the same transmission channels as previous purchase programs. As has been widely discussed in the academic literature, one of the most important channels is the portfolio balance effect.4 This theory relies on the premise that financial assets are imperfect substitutes in investors’ portfolios, and, as a result, a rise in the demand for a particular financial asset relative to its supply – reflecting the Federal Reserve’s asset purchases, for example – will increase its price and reduce its yield. After selling that asset to the Federal Reserve, investors may rebalance their portfolios by investing in other assets, raising the prices of those assets, lowering their yields, and easing overall financial conditions. The Federal Reserve’s asset purchases are designed to remove risk from the portfolios of private investors. For example, Treasury and agency MBS purchases remove duration risk, thereby lowering longer-term interest rates and reducing private-sector borrowing costs. Furthermore, agency MBS purchases also remove prepayment risk from the market, since homeowners have the option to prepay their mortgages at any time. Investors generally demand an extra return to bear this risk, which is incorporated into agency MBS yields and passed along to borrowers in the form of higher primary mortgage rates.

In the case of free assets, foreign currency investments are more diversified and are also partially hedged against exchange rate risks. Around half of the free assets are currently exposed to currency risks. The risks relating to the National Bank’s assets are primarily assessed and monitored using the value-at-risk method. Moreover, a number of different stress analyses are increasingly being carried out. In risk measurement, it is taken into account that the investment horizon, in particular for the monetary reserves, is a long-term one. Where monetary assets are concerned, gold price and exchange rate risks - notably those on the dollar - play a decisive role. Interest rate risks, while significant in their own right, are quite small by comparison. The overall risk with free assets is considerably lower. On the whole, the credit risks are relatively small. The National Bank’s investments are valued daily at market prices, thus making it possible to form an up-to-date impression of the earnings situation. Owing to the high degree of risk exposure to the gold price, the exchange rate and the interest rate level, the earnings situation can change dramatically from quarter to quarter and year to year. In this year alone, the quarterly returns on total assets fluctuated between +2.7% and -3.2%. So far this year, the National Bank’s assets have yielded 1.3% overall. Given its long-term investment horizon, short-term fluctuations generally do not present a problem to the National Bank. The long-run yield is of greater importance.