samchain/econo-pairs-v1 huggingface dataset:
Lars Heikensten: Six monetary policy issues  Speech by Mr Lars Heikensten, First Deputy Governor of the Sveriges Riksbank, at Umeå School of Business and Economics, in Umeå, on 7 November 2000. *  *  *  First a word of thanks for the invitation to visit Umeå and talk about monetary policy. The Swedish economy is developing favourably. Growth has been impressive in recent years, averaging around 3% in annual terms, and at present the rate may be even higher. This has contributed to a rapid reduction of unemployment and strongly rising employment. A look at the statistics shows that the present expansion of employment in Sweden is the fastest since the labour force surveys were first published in the early 1960s. And although growth has been strong, inflation has remained moderate. The explanations for the good circle in which our economy is now moving are not simple. But I do believe that one contributory factor is the realignment of economic policy that has been achieved in the past ten to fifteen years. This has involved deregulating the credit and foreign exchange markets, modifying components of the transfers system and paving the way for stronger competition. All this has helped to improve the workings of the economy. Another factor, perhaps the most important, has been economic policy’s commitment to stability, with price stability as a statutory objective and a successful consolidation of the public finances.

Blinder, A S, Goodhart, C, Hildebrand, P, Lipton, D, and Wyplosz, C (2001), How Do Central Banks Talk? Geneva Reports on the World Economy 3, International Center for Monetary and Banking Studies and Centre for Economic Policy Research. Blinder, A S (2007), “Monetary Policy by Committee: Why and How?” European Journal of Political Economy, Vol. 23(1), pp. 106–23. Blinder, A S, Ehrmann, M, Fratzscher, M, De Haan, J D, Jansen, D J (2008), “Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence”, Journal of Economic Literature, Vol. 46(4), pp. 910–945. Chehal, P and Trehan, B (2009), “Talking about Tomorrow’s Monetary Policy Today”, FRBSF Economic Letter, 35. Cruijsen, Carin A B v d, Eijffinger, S C W & Hoogduin, L H (2010), “Optimal Central Bank Transparency", Journal of International Money and Finance, Vol. 29(8), pp. 1482–1507. Demiralp, S, and Jordá, O (2002), “The Announcement Effect: Evidence from Open Market Desk Data”, Economic Policy Review, Federal Reserve Bank of New York, Vol. 8(1), pp. 29–48. Dincer, N N and Eichengreen, B (2014), “Central Bank Transparency and Independence: Updates and New Measures”, International Journal of Central Banking, Vol. 10(1), pp. 189–259. Eggertsson, G and Woodford, M (2003), “The Zero Bound on Interest Rates and Optimal Monetary Policy”, Brookings Papers on Economic Activity, Vol. 2003(1), pp. 139–233. Gaballo, G (2018), “Price Dispersion, Private Uncertainty, and Endogenous Nominal Rigidities”, Review of Economic Studies, Vol. 85(2), pp. 1070–1110. Goodhart, C and Lim, W B (2011), “Interest Rate Forecasts: A Pathology”, International Journal of Central Banking, Vol. 7(2), pp. 135–171.
10  BIS Review 36/2005  Table 2: The persistence of inflation 1950-2005 Persistence 1950-59  0.5  1960-69  0.3  1970-79  0.7  1980-92  0.8  1993-2005  0.2  Source: ONS and Bank of England calculations. Note: Persistence in this table is the sum of the coefficients on lagged inflation in a regression of quarterly inflation on a constant and 4 lags. The measure of inflation is RPI before 1976 and RPIX from 1976, seasonally adjusted. Chart 4: Catching a cricket ball  ball A  F  BIS Review 36/2005  11  Chart 5: The variability of expected future interest rates, US and UK Basis points 20  15 US  10  5 UK 0 1992  1994  1996  1998  2000  2002  2004  Source: Bank of England calculations. Note: variability is calculated as the standard deviation of daily changes in the ten year instantaneous nominal forward rate over a yearly window. 12  BIS Review 36/2005  Chart 6: The variability of inflation and output, 1955-2004 standard de viation of inflation, pe r cent  8 A  7 1970-1979  6 5 1980-1992  4 3 1955-1959  2 A  1960-1969  1  1993-2004  0 0  1  2  3  4  5  6  7  8  standard de viation of GDP growth, pe r cent  Source: ONS and Bank of England calculations.

Same as most central banks throughout the world, the National Bank, as specified by the Statistical Research Program generates three sets of macroeconomic statistics: •  Monetary statistics that includes processing and presentation of data on the money supply (monetary aggregates), banks' interest rates on approved credits and accepted deposits, and many other data on the banking sector;  •  Balance of payments statistics that includes processing and compiling data on the developments in the balance of payments in the Republic of Macedonia; and  •  External debt statistics that includes processing and presentation of data on the foreign debt of the country. The National Bank has developed all these major sets of macroeconomic statistics in line with the international recommendations and standards. The harmonization of the method of developing such statistics with the international recommendations and standards has permanently been subject to verification by international institutions and organizations, primarily by the International Monetary Fund, as an institution that creates the methodological standards and recommendations in the area of central banking statistics. I would like to take this opportunity to mention the report of the so-called IMF ROSC (Report of the Observance on Standards and Codes) Mission, where the assessments of the  BIS Review 100/2006  1  central bank statistics are particularly positive, i.e. the development of the NBRM monetary and balance of payments statistics is largely harmonized with the international recommendations and standards.
I hope that the trend towards increasing economic and cultural openness will continue. People continually seek new opportunities to trade and communicate with one another, and find new ways to benefit from one another’s knowledge and possibilities. It is fundamentally a very positive development which gives poor and rich people enormous opportunities for greater wealth and reduced suffering. In order to make use of this potential, intensive international collaboration is required, and energetic national efforts. Sweden and all other countries must adapt their national systems so that they can cope with the increased contacts with the outside world and so that other countries can benefit from increased contacts with us. Issues of financial stability and macroeconomics are intimately related to this. The IMF therefore has an increasingly important function to fill. Economic developments, not least in the financial sphere, take place quickly, however. In order to be able to make an active contribution, the IMF and other financial organisations must continually be reformed and keep in step with this development. The meetings in Prague are a part of this reform process. 7  BIS Review 78/2000

With these words of welcome I now turn the floor over to Mr. Moises Schwartz, the Director of the IEO to set the scene for the discussion of the workshop. 2  BIS central bankers’ speeches
Since 2016, several new legislations, policies and action plans were introduced, while existing financing mechanisms were strengthened to support the uptake of green initiatives. As 2020 approaches, Malaysia is committed to continue implementing its strategic long-term plans and green friendly policies. Budget 2020 is reflective of this commitment, with the allocation of a matching fund of RM10 million towards a joint United Nations SDG-government fund to co-finance SDG initiatives 2/5  BIS central bankers' speeches  in Malaysia. While government funding is important to realise the SDGs, most of the investments would need to be sourced from the private sector. An annual target of RM350 billion from private investments by 2020 was identified in the national roadmap for the SDGs, in line with achieving the targets of the 11th Malaysia Plan. Thus, financial institutions are expected to embark on new financing and investment opportunities towards sustainable projects and practices. There is a large financing gap needed to be filled to realise the SDGs in developing countries, which is estimated to be between USD 2.5 – 3 trillion annually. One major sector to drive a green economy is renewable energy. Projections provided by the Sustainable Energy Development Authority (SEDA) estimates that RM 33.5 billion is needed by private sector financing to achieve the national target of 20% installed capacity of renewable energy by 2025 in Malaysia. Beyond that, financing is needed for other important sectors such as education, healthcare, social entrepreneurship and food production to galvanize sustainable development.

One prospect is that ageold ideas that have shaped most of our history are revived, such that the prosperity of some cannot be achieved without the poverty of others; international and supranational organisations lose their relevance as places for negotiating and finding compromise solutions; the affirmation of 7 / 10  BIS central bankers' speeches  the self, of the identity, becomes the first requirement of every policy. In such a world, freedom and peace become accessories which can be dispensed with as needed. But if we want these values to remain essential, fundamental, the path is a different one: adjusting existing institutions to change. This process of adjustment has so far encountered resistance because the inevitable national political difficulties always seemed to be above such need. This reluctance has resulted in uncertainty about the capacity of institutions to respond to events and has strengthened the voice of those who want to pull down these institutions. There should be no doubt: this adjustment will have to be as deep as the phenomena that revealed the fragility of the existing order, and as vast as the dimensions of a geopolitical order that is changing in a way that is not favourable for Europe. The European Union wanted to create a sovereign where there was not one. It is not surprising that in a world where every point of contact between the great powers is increasingly a point of friction, the external challenges to the existence of the European Union become increasingly threatening.
BIS Review 124/2006  1  3.  global investment drought hypothesis advocated by the IMF 5 , which puts emphasis on low Asian investment following the Asian crisis in creating savings-investment imbalances in these countries;  4.  negative US savings, in the household sector stimulated by stock exchange bubble and later by a lot of local housing bubbles 6 ; and in the public sector, however there are very different estimates about the impact of the budget deficit in the United States on the US current account deficit ranging from 0.2 to 0.5 7 ;  5.  effects of Asian crises in 1990s combined with the pursuance of export-led growth model in Asia 8 ;  6.  shocks changing the relative investment prospects of various parts of the global economy 9 , such as productivity shock in the United States in the mid-1990s or the inability of Asian countries to generate good quality financial assets;  7.  much higher rates of return enjoyed by United States on its foreign assets than the cost of its foreign liabilities 10 , this cushioned the trade deficit impact on net international investment position and was labelled as US ‘exorbitant privilege’;  8.  global imbalances are optimal choices of rational US consumers 11 , who expect that the USA will account for a bigger share of global GDP in the future;  9.  there are theories about imbalances originating from the statistical offices’ failure to account properly for the US exports of ‘dark matter’ 12 .

If bonds are highly substitutable (as might be in the case of UST and JGB) then if Japan were to stop buying US debt instruments the effect on US rates would be minimal. PBoC cannot stop buying foreign debt instruments as it would imply very big appreciation of renminbi, it can change the currency structure of its reserve holdings. This would force a change in composition of debt in hands of private investors and the impact on US rate would be small again. •  in the scenario of rapid adjustment of US current account deficit, for example following sizeable Asian currencies appreciation, current account surpluses in EM would have to correct massively, some countries may find that their current account surpluses are smaller than debt amortizations, and history shows that in 18 percent of cases sudden stops in emerging markets took place under current account surpluses. •  Calvo view implies very low risk of US long term rates going up (high likelihood of soft landing, low likelihood of hard landing), and relatively high risk of some emerging markets experiencing sharp current account reversals and possibly sudden stops. •  Calvo view is reinforced in the recent paper by Faruqee, Laxton, Muir, Presenti (2006) 18 , which shows that even when a new wave of protectionism hits the global economy, the US growth will slow only marginally by 0.2 percent, while impact on Asia could be sizeable, reducing growth by more than 1 percent.
Our banking system is sound and safe, despite a challenging operating environment: capital and liquidity levels remain well above global standards; loan quality and profitability compare favourably with global peers. We do not take this for granted. We are keenly aware that Hong Kong as an IFC plays an outsized role not only in supporting the local economy, but also in underpinning trade and investment activities across the region. Our banking assets are 9 times our GDP; the equity market 16 times; and assets under management 13 times. Hong Kong is the largest US dollar funding centre in Asia, and is second in the world only to London and New York. In a highly interconnected global financial system, where so much depends on the stability of IFCs, we strive to be a responsible stakeholder. We seek to achieve this — by putting in place mechanisms to closely monitor market developments and behaviours; by continually improving our regulatory regimes to mitigate risks in the financial system; by building buffers and planning for contingencies on sunny days, and by swiftly implementing contingency plans when storm clouds approach; and by contributing to policy deliberation and standard setting at international regulatory forums. We also build resilience by enabling market participants to seize new opportunities to deepen and expand Hong Kong’s role as an IFC. This brings me to my third word: opportunity. Opportunity For many decades Hong Kong has been intermediating the trade, investment, and financial flows between China and the world.

Today over 60 per cent of foreign direct investment into the Mainland is routed through Hong Kong. A similar figure applies to China’s outward investments. Hong Kong is the pre-eminent fund-raising venue for Mainland corporates, through equity IPOs, debt issuance, bank lending, and various forms of private investment. In recent years, two major developments in financial linkage have been gaining momentum. One is the continuous opening of the Mainland’s financial markets to global investors through the various northbound Connect schemes with Hong Kong. The other is the increasing southbound traffic, again through the Connect schemes, that enables Mainland investors to invest in overseas financial assets. These are significant developments. They demonstrate China’s confidence and willingness to be connected to the global financial markets. The southbound schemes also send a clear 2/4  BIS central bankers' speeches  message: as China’s economy grows and its people become more affluent, both institutional and retail investors look for more diversified allocation to overseas assets. Let me offer some context here. When we think about the northbound traffic, we should bear in mind that, in global terms, China’s stock and bond markets are second in size only to their US counterparts. For the southbound traffic, we are talking about managing the wealth of the world’s second largest economy and most populous country. And we are only in the early stages of these two-way flows through the Connect schemes. Hong Kong is the natural choice of venue to host the Connect schemes.
The pursuit of credible and reassuring fiscal adjustment measures will contribute to the consolidation of the recovery because such measures inspire confidence in all those on whom economic prosperity depends. But has sufficient account been taken of the social risks involved? The main problem consists of the level of unemployment. As I said, a return to confidence, in particular fiscal confidence, is essential for the consolidation of the recovery and thus for the creation of lasting employment. The confidence to which you refer is measured in particular by the credit rating agencies. Isn’t it necessary to reassess their role? Why can’t the EU have its own credit rating agency? This is one of the major areas that is being looked into at the global level. Past events have shown how risky it could be to rely blindly on the analyses of the credit rating agencies. Financial institutions and investors must assume overall responsibility for the decisions that they take. How can monetary policy and EU economic policy be better coordinated? We have a monetary federation, which has provided monetary stability on a continental scale for 330 million citizens. Necessarily, this must be accompanied by very close monitoring of fiscal policies and strict compliance by fiscal policies with the reference framework that we set ourselves. On behalf of the Governing Council, I have always asked for strict compliance with the Stability and Growth Pact and the introduction of closer monitoring of developments in competitiveness within the euro area.

These currencies – or, in the case of the euro, the currencies that preceded it – have been floating since the collapse of the Bretton Woods system at the beginning of the 1970s. The US Secretary of the Treasury and the Chairman of the Federal Reserve System say that a strong dollar vis-à-vis other major convertible currencies is in the interests of the United States. I share this view entirely. A dollar that is strong and credible among the major currencies of the industrialised countries is in the interests of the United States, it is in the interests of Europe and it is in the interests of the entire international community. On the other hand, the second topic is that of emerging market economies which have considerable current account surpluses and exchange rates that are not sufficiently flexible. On this issue, commitments have been made by the G20. A move towards more flexible exchange rates, involving a gradual and orderly appreciation of their currencies vis-àvis the major convertible currencies, is also in the interests of the emerging economies concerned and in the interests of the international community. Isn’t there a risk that the fiscal consolidation in the majority of European countries will slow down the economic recovery? No, I don’t think so. A consolidation of the recovery and a return to sustainable growth crucially depend on confidence: the confidence of households, the confidence of firms and the confidence of savers.
Moreover, according the IMF’s latest assessment from January this year, the deficits are expected to fall even more slowly than was predicted as recently as September last year.1 According to the IMF, the advanced economies reduced their cyclically-adjusted deficits by an average of less than  1  2  Fiscal Monitor Update, January 2012. IMF  BIS central bankers’ speeches  one percentage point between 2010 and 2011, as shown in Figure 2.2 These deficits are expected to fall by as much or, if you prefer, by as little, in 2012. If we look at the euro area separately, the reduction between 2010 and 2011 was slightly larger, that is 1.3 percentage points. However, it should be noted that a large part of this reduction was due to improved public finances in Germany and not in the countries where such an improvement is needed most. Despite a continued improvement during 2012, the assessment is that public finances in the euro area will, on average, still be in deficit. Consequently, the average level of public debt is expected to increase from almost 90 per cent of GDP in 2011 to 92.5 per cent in 2013 according to the IMF. In order to reduce the level of debt instead, several European countries would need to transform the relatively substantial deficits of today into surpluses over a period of several years. Figure 2.

Another argument supporting better functioning labour and product markets is that the monetary policy of the Eurosystem is and can only be geared to the euro area as a whole. It can thus not take into account purely national or regional developments. The cyclical positions of participating countries have not yet completely converged, although – with the single currency in place – some national differences may disappear over time. This requires national policies and labour and good markets to be increasingly flexible in order to be able to respond effectively to economic shocks that can affect any monetary union. A single currency does not call for uniform wage developments or for uniform economic and social policies in general. On the contrary, where national or regional economic and productivity developments are different, this should be reflected in different policy responses and wage developments. BIS Review 116/1999  2  Budgetary policies, too, are crucial for setting the necessary conditions conducive to growth and employment creation. Sound public finances, with lower public debt and tax burdens, contribute to a reduction of long-term interest rates, reduce uncertainty and increase private capital formation. Thus, they not only facilitate the task of monetary policy to maintain price stability, but also strengthen the conditions for sustainable growth conducive to employment creation. Conversely, unsound fiscal policies tend to increase inflation expectations and force monetary policy to keep short-term interest rates higher than would otherwise be necessary.