samchain/econo-pairs-v1 huggingface dataset:
What did a little better as an advance warning signal was the prior growth rate of mortgage debt (Chart 2). The ordering, at least, is in line with post-crisis defaults in the three countries. Chart 1: Level of mortgage debt a poor guide to subsequent distress Per cent  Per cent of outstanding loans 12  8  Per cent of outstanding loans  250 12  Maximum post-crisis default rate (LHS) Debt to income ratio, 2007 Q2 (RHS)  10  Chart 2: Pre-crisis growth rate does better  200 10 150  8  Per cent 16  Maximum post-crisis default rate (LHS) Average debt growth in the three years to 2007 Q2 (RHS)  14 12  6  6 100  4 2 0 NL  UK  50  2  0  0  US  Sources: Bank stats, Office for National Statistics (ONS), DataStream from Refinitiv, Stanga et al. (2017), CBS Netherlands, US Flow of Funds and Bank calculations. Figures are for mortgage loans; default rate defined as non-performing exposures over three months in arrears. 10  4  8 6 NL  UK  US  Sources: Bank stats, ONS, DataStream from Refinitiv, Stanga et al. (2017), CBS Netherlands, US Flow of Funds and Bank calculations. Figures are for mortgage loans; default rate defined as non-performing exposures over three months in arrears. This is obviously a very limited comparison.

And if the value of the collateral should fall below that of the outstanding debt – say because of weakness in the second-hand car market – it’s the lender not the borrower that bears the resulting “negative equity” (the loans are “non-recourse”). One shouldn’t underplay the risks involved in PCPs. Even if they belong primarily to lenders, and even if they’re no greater than more traditional car loans, pound for pound, those risks still exist. But the lenders may have deeper pockets than the borrowers, or at least greater scope for diversification. And as evidenced by their dominance of the market these contracts clearly represent a convenient method of paying for a car, even for households who are otherwise adding to savings. Their growth is not evidence that people are outspending their income in aggregate. The more significant contributor to the rise in unsecured debt comes from student loans. At face value, these are currently worth almost 9% of annual household income, up from 2½% in 2007. However, it’s far from clear this is really debt in the conventional sense. There’s nothing to pay on it, either interest of principal, unless and until annual income exceeds a threshold, one that’s currently set above the median for new graduates. So it’s as if, rather than taking on a conventional loan, students are selling to the taxpayer a “call option”, payable only beyond some trigger point. Another way to think about it is as a tax on graduates’ income with a significant up-front allowance.
In May this year parliament passed a new Central Bank Act with the approval of all 56 members who were present for voting on the bill. A detailed account of the main changes from earlier legislation has been given in the Central Bank’s publications. See i.a. the Central Bank of Iceland’s Monetary Bulletin 2001/3 I shall only mention here that a single target was set for the Central Bank, i.e. to promote price stability. With the Prime Minister’s approval, the Bank was also authorised to specify a numerical inflationary target. The Bank was granted full independence to apply its instruments in order to achieve its main objective. Its financial independence was increased by precluding in law treasury access to short-term funding with the Central Bank, which had previously been precluded with an agreement between the Minister of Finance and the Bank. Provisions on transparency and accountability towards the Government and general public were made more focused. As I mentioned before, one of the Central Bank’s main objectives is to contribute towards an active and secure financial system, or financial stability as it is often known. In recent years central banks in many countries have been increasingly devoting themselves to monitoring financial stability. This development is partly the product of financial market liberalisation and the deregulation of capital movements, and partly a response to shocks which have struck many countries, both currency shocks and banking system setbacks.

From all the above it is clear that the Central Bank of Iceland has undertaken the major responsibility of ensuring price stability, which in the sense used in the joint declaration by the Government and Central Bank means a twelve-month rise in the CPI of 2½%. It is not the Central Bank’s role to ensure a specific rate of growth or level of employment, since its instruments are incapable of having any impact on them in the long run. However, it is acknowledged that ensuring price stability creates vital preconditions for economic growth and prosperity. Inflation increased substantially this year and in June it passed outside the tolerance limits as defined in the March declaration. According to the Central Bank’s inflation forecast published in early August, the outlook that inflation would rapidly decelerate towards the end of this year and the beginning of the next, then would move inside the tolerance limits in the middle of next year, and the 2½% target would be reached in mid-2003. The forecast was based on the main assumptions of an unchanged exchange rate from the forecast day, a cooling of the economy and no wage rises in excess of agreements that had already been negotiated. The Central Bank will publish its next inflation forecast on November 8. Tight monetary stance The Central Bank has applied a tight monetary stance for some time now, as reflected in its high policy interest rate.
The Swedish economy has coped relatively well This is a general outline of the international picture. Although the world economy has begun to recover, there is no doubt that it is facing fairly major challenges over the coming years. But what is the situation here in Sweden? Well, in many ways things look rather good. The Swedish economy appears to have coped fairly well in the crisis. Although production fell more in Sweden than in many other countries, the recovery has been much quicker. The situation now looks much more stable than in most other places. One important reason why we have managed so well is, I believe, that it is not so long since we experienced a crisis here in Sweden – both in the bank system and the economy as a whole. The crisis at the beginning of the 1990s was much more isolated than the recent crisis and can in many ways be described as “home made”. But we nevertheless managed to learn some important lessons from it. Stable frameworks provide security… Perhaps the most important lesson is that both monetary policy and fiscal policy need stable long-term frameworks. The previous crisis therefore led to a number of changes in this direction, many of them through decisions made here in the Riksdag. Unlike the situation in the previous crisis, monetary policy is now conducted by an independent Riksbank with an inflation target.

In brief, these involve raising the international requirements regarding the capital and liquidity the banks must hold. For instance, a larger share of the capital must be real equity capital. Another example is that the EU has established a special body, the European Systemic Risk Board, which is to identify risks in the financial system and to provide warnings and recommendations to the countries and authorities concerned. Public finances an acute but difficult problem The two other challenges are rather more difficult. The problems with public finances entail a difficult balancing act for the countries concerned. On the one hand, it is desirable that the  2  This and the third challenge are taken up by, for instance, Olivier Blanchard in the foreword to the IMF’s World Economic Outlook, October 2010. BIS Review 149/2010  3  savings do not increase too much too soon thereby withdrawing public sector demand while private sector demand is still weak. This could lead to a negative spiral, with falling demand and production, where public finances are weakened rather than strengthened. On the other hand, the deficits and the government debt must not continue to grow to the extent that doubts arise regarding the ability to repay the debt at all. Such a situation would hardly be preferable. A further complication is that this time there are many large countries who need to save at the same time. The effects on the global economy could then be substantial, particularly if the balancing act is not successful.
Over time, this variable has provided substantial impetus to productivity growth. But as the chart shows, a lower contribution from TFP is also the main factor behind the decline in productivity growth in recent decades. In the first decades after the war, Norway was able to make use of many of the solutions that had already been developed in other countries. Today, we have caught up with the technological front line in many areas. However, the front line is now advancing more slowly, which will make it harder to grow at the same rate as before. The future growth path for Norway and other advanced economies will to a large extent be determined by technological advances, structural changes and international exchange and cooperation. In some areas, such as meteorology, we have been pioneers. Modern weather forecasting is largely based on the principles laid down by Vilhelm Bjerknes over a century ago. But the results achieved by the “Bergen School” and other meteorologists since then would not have been possible without other innovations. Weather balloons, aircraft and now satellites have helped make it possible to measure atmospheric conditions ever more accurately. And modern computer technology has given us almost instant access to up-to-date weather forecasts. As more and more countries join the technological front line, technological advances may take off again. Good ideas are not confined by national borders, and the conditions for efficient knowledge sharing have never been better.

Now that is a combination worth having, and I think the only one worth having. Thank you. 17 / 17  BIS central bankers' speeches
On the other hand, inflation expectations one year ahead are not as interesting in this perspective. They do not say very much about the credibility of monetary policy, as inflation in the short term can deviate quite substantially from 2 per cent, even if monetary policy is well-balanced. The weak krona The financial crisis has also given rise to large fluctuations in the international foreign exchange markets. Investors have turned to large currencies, which are perceived as more liquid and secure. In this situation the krona has experienced the largest weakening since it was allowed to float in November 1992. The Riksbank does not have any target for the krona, but our assessment is that the weakening is temporary and primarily a result of the financial crisis. We are expecting the krona to strengthen again as the crisis wanes, partly because Sweden has for a long period of time had a stable surplus in its foreign trade. But there is a risk that the weakening will be more prolonged. This would lead to exports strengthening and imports slowing down, but at the same time provide an inflationary impulse. In the current situation this may be an advantage in the short term, as economic activity is now weak and inflation is low. But in the longer term a currency that fluctuates substantially can be a problem. It increases uncertainty. At the monetary policy meeting Lars E.O.

One should not attach too much importance to surveys of inflation expectations. They have their limitations. But they are nevertheless interesting as a part of the base for monetary policy. I believe that the following conclusions can be drawn from Prospera’s most recent survey, published in January: •  Firstly, inflation expectations five years ahead have fallen from 2.6 per cent in October to 2.3 per cent in January. This is good as they were a little too high in October. •  Secondly, inflation expectations in the longer term have not been pushed up by our rapid and large repo rate cuts. As I said, they have instead declined. •  Thirdly, there are no widespread expectations of deflation in the longer term. Inflation expectations five years ahead are close to 2 per cent. The normal correlation between actual inflation and inflation expectations five years ahead also  8  BIS Review 25/2009  indicates that inflation expectations will remain close to 2 per cent even if the CPI falls in 2009 in line with our forecast. •  Fourthly, inflation expectations two years ahead have fallen from 2.8 per cent in October to 1.5 per cent in January. This is slightly more worrying. It is a larger fall than the normal correlation between actual inflation and inflation expectations two years ahead would indicate. The fact that they are far below 2 per cent also indicates that the interest rate should remain low for a longer period of time.
But keeping interest rates low in the future will boost future inflation, thus raising expected inflation and boosting activity today. The problem is that the central bank lacks the incentive to stick to this strategy once economic conditions have improved and the ZLB episode is past, i.e. the policy is time inconsistent. So the central bank needs to have some way of making credible a commitment to what will subsequently seem like future irresponsibility; words alone will not suffice, unless reneging on those words carries a significant reputational cost. It is important to distinguish this policy strategy from simply communicating that policy rates are likely to stay low because output and inflation are expected to stay low. That may help to align expectations with the views of the policy maker and be valuable in aiding transparency, but does not represent the pursuit of a policy strategy under commitment. As noted above, the earlier deflation scare, following the collapse of the dot-com bubble, had already persuaded the FOMC not only to keep the target Federal Funds rate at an especially low level, but also first to indicate that it would remain low for an “extended period” and then to indicate that the monetary stimulus would be withdrawn at only a “measured” pace. This has something of the character of attempting to reap the benefits of being able to commit in the future by sticking to past promises.

But as an academician I was in contact with the central bank already at the beginning of 1990s. At that time, the staff was struggling with very basic issues: a new statistics and data on the newly born market economy, ways how the economy should be analysed and what kind of theory or model should be applied etc. The Czech National Bank was receiving a lot of help from the foreign central banks and international institutions. Today, we are at the level of state-of-art and we do not receive but provide foreign technical assistance. We assist directly to a number of countries as well as our experts are invited to IMF missions around the world. And yet our staff is based primarily on people educated in the Czech Republic. I consider it as a good signal that we have reached significant achievements in economic education and that the problem of missing generation will soon cease to exist. I can only hope that we will continue with this process of catching up and that CMC will keep contributing to it. What can I wish to you personally? Let me recall my recent visit to the Bank of Israel on the occasion of its 50th anniversary. We were having lunch with the Finance Minister Benjamin Netanyahu and we discussed necessary fiscal reforms. Mr. Netanyahu said that for pushing reforms through, one needs three things: the vision, the will and the political power.
A sustained rise in medium-term inflation expectations would represent a threat to our price stability mandate and would not be tolerated.” [http://www.newyorkfed.org/newsevents/speeches/2011/dud110228.html]  6  BIS central bankers’ speeches  and salaries are reflecting heightened unemployment, and show no evidence that potential inflation concerns are placing upward pressure on wages and salaries. Core inflation rates tend to be a reasonable predictor of inflation in the intermediate term. Core inflation remains well below my long-run target for inflation. This gives us flexibility to focus on accommodative monetary policy doing what it can to promote more rapid growth in the economy. As Figure 18 illustrates, the percent of the adult population that is employed now is quite low in relation to recent history, and has shown only a slight improvement over the course of the recovery. So with significant slack in labor markets, stable inflation expectations, and core inflation well below our longer run target, there is currently no reason to slow the economy down with tighter monetary policy. Until we make more progress on both elements of the Federal Reserve’s mandate – employment and inflation – the current, accommodative stance of monetary policy is appropriate. Thank you.

the rudiment of the Central Bank continues to distribute banknotes and coins, attract funds, extend credits to banks, organize international payment operations. As late as in the sixties of the preceding century the competences of the National Bank, i.e. the Head Office in Macedonia started to be distinguished from the competences of the commercial banks. At the same time, however, the dependence of the Head Office in Macedonia on the National Bank of Yugoslavia of that time, increased - a process which was the same for all former Yugoslav republics. In fact, the activities of the Head Office of the Republic of Macedonia were reduced to performing only routine operations of executive and operational character. All policies, decisions and regulations were created and adopted in Belgrade. The second period, period of institutionalization, represents some kind of a turning point in central banking. In 1971, instead of head offices of the former Yugoslav republics, national banks of the republics and provinces were established, including the National Bank of the Republic of Macedonia. In 1972, the Parliament of the Republic of Macedonia adopted for the first time a law on the National Bank of Macedonia on the level of the Republic, while in 1974 it was defined also with the Constitution of the Republic of Macedonia. The first Governor, appointed in 1972, was Stojan Kjosev, who was until then a member of the Executive Council of the Republic of Macedonia.
In regard to inflation, after a period in which inflation was below the levels the Fed judges to be most consistent with its statutory objectives, on a year-over-year basis, headline CPI (consumer price index) has increased more than 3 percent, which is somewhat above this desired level. The rise in commodity prices over the past year probably will push up headline  BIS central bankers’ speeches  3  inflation further in the next few months. It is noteworthy, however, that even with the sharp rise in oil and food prices over the past year (and notwithstanding the more recent drops), there has been limited pass-through into the prices of other goods and services. In fact, most measures of underlying inflation trends – such as core inflation (which excludes volatile food and energy prices) – remain below levels consistent with our mandate for price stability. Going forward, futures markets do not signal that investors expect rapid ongoing increases in commodity prices from current levels. Provided these prices stabilize (or indeed retreat further), I would expect headline inflation to move back to a more mandate-consistent rate. While this process plays out, however, it is critical that we ensure that inflation expectations do not become unmoored. It is much harder to keep inflation in check if people begin to raise their expectations of inflation. At this point, measures of inflation expectations overall remain stable. Economists at the New York Fed have examined inflation expectations using a unique survey that we sponsor.

I recognize fully that there can be no return to pre-crisis business as usual – whether on the part of the financial sector or on the part of regulators like ourselves. We must learn from the economic catastrophe of the past few years so that the financial system is able to perform its essential role in supporting economic activity without being a source of instability for the economy as a whole. All in all, there is a lot to keep my colleagues and me quite busy – even in normal times. National economic conditions Now, what is the outlook for and risks to economic activity, employment and inflation in the nation? Since the recession ended in 2009, the economy has grown at a relatively modest pace. Economic growth in the first quarter of 2011 was somewhat softer than anticipated, with the  2  BIS central bankers’ speeches  advanced reading of real gross domestic product (GDP) – that’s the economic output of the economy – increasing at only a 1.8 percent annual rate. A number of factors contributed to the slowdown. Construction activity fell – likely reflecting the continued large supply of unsold homes – and government expenditures at the federal, state and local levels declined. In addition, real consumption growth (that is, spending on goods and services adjusted for price increases) in the first quarter was slower than in the last quarter of 2010.