samchain/econo-pairs-v1 huggingface dataset:
Fourthly, the central bank’s ambition to steer asset prices directly could perhaps pave the way to a much larger bubble in the future. In other words, can safeguards against financial bubbles and an absence of subsequent economic consequences lead to a moral-hazard type of phenomenon among the market participants? Circumstances must evidently be very special to warrant central bank action to counter asset price bubbles if there is no concurrent upward pressure on consumer price inflation. BIS Review 58/1998  -6-  It is also reasonable that the central bank presents a clear case for such a course of action and does so before such a special situation arises. The Riksbank has started a biannual series of reports on the financial system’s stability. The idea is to draw lessons from our recent experience of a bank crisis and be in a position - should the need arise in some distant future - to discuss any policy measures that might be called for in the event of a risk of financial instability. This could also be done in our Inflation Reports. The situation today in Sweden is very different from the 1980s. Asset prices have been rising steeply since 1994 but indebtedness did not turn upward until quite recently. This suggests that the risk that the banking sector will experience significant problems in the event of a fall in asset prices is relatively small today. However, we must continue to monitor risks in this field in the years to come.

The reason for this conclusion is that that bursting the bubble sooner rather than later reduces the probability of a still larger bubble later on with an even greater downward effect on consumer price inflation. Hasn’t experience taught us that a growing risk of instability may be indicated by a steep increase in asset prices at a time when the credit supply have been expanding at an unsustainable rate for some time? If such a situation happens to coincide with low prospects for consumer price inflation, might there then be grounds for the central bank to depart from its inflation target for the time being in order to curb the increase in asset prices? That special circumstances might prompt a temporary departure from a central bank’s inflation target is not a novel suggestion. It has been discussed, for example, in the context of natural disasters, large supply shocks and so on. And what is a full-blown bank crisis if not a serious economic disaster? At the same time, curbing rapidly rising asset prices when prices of goods and services still show little sign of turning upwards is not exactly an easy task for the central bank. One of the difficulties lies in justifying this to the general public. Another is whether an asset price bubble is actually developing; does the central bank really have better information than the market participants? A third problem is that an interest rate hike might exacerbate the subsequent course of events when asset prices are corrected.
These strong economic links are expected to deepen once Malta accedes to membership of the EU. Malta was officially recognised as a candidate country at the 1999 Helsinki summit and has consistently met the Copenhagen accession criteria, which include the existence of a functioning market economy able to withstand competitive pressures within the Union. Negotiations began in March 2000 and since then 23 chapters have been provisionally closed, including those on Economic and Monetary Union (EMU) and on the free movement of capital. Accession is expected in 2004, subject to the outcome of a referendum to be held early next year. Apart from its political and social dimensions, EU membership offers Malta the opportunity to become fully integrated into the world’s largest regional economy. Membership will guarantee unimpeded access to our major market and requires the implementation of internationally recognised norms and standards, both of which would increase Malta’s attractiveness as an investment location. Moreover, as in the case of other candidate countries, the accession process has spurred market-oriented reforms. As a result, EU accession should contribute to faster economic growth, leading to an acceleration of the process of real convergence and to a steady improvement in living standards. EU membership also entails a commitment to participate in EMU. Before accession, Malta will, therefore, have to adopt key elements of the acquis communautaire related to EMU. This process is well underway.

For example, legislation currently before Parliament will explicitly make price stability the primary objective of monetary policy, strengthen the legal and operational independence of the Central Bank of Malta and formally prohibit central bank financing of public sector deficits. In practice, the Central Bank has been formulating monetary policy independently since 1994, using market-based instruments, including open market operations and reserve requirements, which are similar to the ones currently used by the Eurosystem. The adoption of the euro would be the final step in a process linking the Maltese economy and the euro area. Compared to the current regime it offers a number of additional advantages, which are highlighted in the literature on optimum currency areas. Specifically, it should reduce transaction costs; result in lower interest rates in Malta; ease access to the growing European financial market; and lead to more transparent pricing of goods and services. It should also act as a spur to the integration process with the EU since countries with the same currency tend to trade more with each other. From an institutional point of view, it should allow Malta to be represented in the decision-making processes of the European System of Central Banks (ESCB) that affect it even today. Here I would like to support the view put forward recently, among others by Governor Wellink of De Nederlandsche  BIS Review 46/2002  1  1  Bank , about the need for adequate representation of national central bank governors in the decisionmaking bodies of the ESCB.
The National Accounts for the first quarter of this year show that GDP growth was 2.2 per cent, which was 0.6 percentage points less than we had forecast in April. In principle, we are now facing the same type of problems in our deliberations, that is,  BIS Review 77/2008  7  rising inflationary pressure and weaker economic activity. The way we Executive Board members finally decide to balance these factors and all of the other new information we will receive is something we will return to at our monetary policy meeting on 2 July. We are six Board members and it is during the coming weeks that each person will finally form his or her opinion of how the economy will develop in the future and what monetary policy is required to attain the inflation target at the same time as avoiding excessive fluctuations in the real economy. Material reworked into a Monetary Policy Report After the second large monetary policy group meeting the Monetary Policy Department continues its work and compiles the first draft of the Monetary Policy Report. The Department now has close contacts with the Executive Board. A formal Executive Board meeting is held the week after the second meeting with the focus being on the forecasts. The editorial work on the Monetary Policy Report continues and is regularly checked with the members of the Executive Board.

3 A more recent example of this phenomenon is provided by Japan, where the persistent deflation which has gripped the country since the early 1990s has consistently led, ceteris paribus, to a heavier debt burden for households that had contracted mortgages in the boom phase of the late 1980s and deterioration of banks’ balance sheets. In a symmetric fashion, high inflation – which, historically has also consistently meant volatile inflation – threatens the very foundations of the financial system because of the resulting capricious and unpredictable redistribution of wealth between debtor and creditor institutions. The most glaring example of such a phenomenon is provided by episodes of very high, or hyper-inflation, such as those plaguing a significant fraction of belligerent nations in the aftermath of World War I. Evidence from the Great Inflation episode of the 1970s is, although less dramatic, equally telling. Altogether, historical evidence therefore leads us to conclude that, although not sufficient, price stability is indeed a necessary precondition for financial stability. I now turn to a final point concerning the relationship between financial and price stability, namely the need to preserve the stability of the financial system in order to prevent the emergence of “tail risks” to price stability. I will start by discussing risks on the downside – that is, the possibility that the economy falls into a deflationary spiral – and I will then turn to those on the upside.
1 The second reason why it is reasonable for Bank Rate not to have increased already is that the relationship between the real economy and inflation has not been as one would have expected: Chart 2 shows that while most real variables – such as unemployment – are at or beyond levels at which Bank Rate had been raised in the past, most nominal variables – such as wage growth and inflation – are below. For example, despite unemployment declining by three percentage points from its peak in 2008, headline inflation has fallen by five percentage points over the same period to a record low of –0.1%. This is the inverse of what one would have expected based simply on the historical negative correlation between inflation and unemployment. 2 Of course much of this weakness in inflation is due to movements in commodity prices and the exchange rate. Since 2008 we have learned more about how movements in the exchange rate, in particular, affect inflation. Contrary to the body of literature developed during the period of Great Stability, changes in the exchange rate do have a large and persistent effect on inflation through their effect on import prices.

One of the most important and immediate consequences would be impact on trade finance which is a critical issue for emerging economies and Asia. This is because our economies and financial structure is more dependent on it, compared to some western economies. Let me elaborate. International trade is a major driver of GDP as our export is part of the global and increasingly integrated regional supply chain. However, many of our exporters are SMEs not large conglomerate. These local SMEs rely on bank financing, as our financial system remains more bank-based than market-based. Supplier of trade financing is still banks in western countries, especially European banks. The deleveraging of European banks can reduce the supply of trade financing and impact growth and development. To address this, it is important that Basel Committee recognizes that trade financing has relatively large impact on Asia, compared to the western economies for which Basel III is mainly geared. Treatment of trade financing in leverage ratio framework will create incentive for banks to shift away from trade financing towards other types of financial transactions, including derivatives which have lower impact on leverage ratio, but can earn higher return. This is because they are assigned lower credit conversion factor even though trade financing is less complex, more familiar, has low liquidity risk as they are self-liquidating, and most importantly, it clearly serves real sector. We believe these rationales argue for a more appropriate treatment of trade financing to ensure that the Basel III framework is appropriate for Asia.
François Villeroy de Galhau: Monitoring financial stability, with active monetary policies Speech by Mr François Villeroy de Galhau, Governor of the Bank of France, at a conference at the London Business School, London, 23 November 2017. * * * Accompanying slides Ladies and Gentlemen, Price stability and the prevention of financial imbalances are often two sides of the same coin. Indeed, price stability and financial stability are supposed to be complementary and mutually beneficial. During the recent crisis in the euro area, the transmission mechanism of monetary policy was hampered by a fragmented interbank market, as borrowing conditions deteriorated in stressed countries. The resulting deterioration in the economy in turn contributed to a further worsening of the financial stress, in what we call a real-financial feedback loop. To cope with this difficult situation, the policy response in the euro area was twofold. First, we adopted an active monetary policy and launched unconventional measures that included the credit easing package. Second, we set up a Banking Union and assigned new macroprudential powers and tasks both at the European level (the ECB, the ESRB) as well as at the national level. In France, the Haut Conseil de stabilité financière (HCSF or High Council for Financial Stability) was created in July 2013 as the French authority with the legal ability to impose binding macroprudential measures. The economy is now recovering, so the medicine seems to have worked. However, our attention is now turning to the potential side effects of our treatment.

3 “The future of finance and the outlook for regulation”, Remarks by Vítor Constâncio, Vice-President of the ECB, at  the Financial Regulatory Outlook Conference organised by the Centre for International Governance Innovation and Oliver Wyman, Rome, 9 November 2017. 4/4  BIS central bankers' speeches
This allowed NOKIA to free up capital for the most profitable activities of the company. Today the company has more than 50,000 employees. At the end of last year, the market value of NOKIA was about NOK 1,700 billion, which is four times the market value of all the companies listed on the Oslo Stock Exchange. The economy needs creative destruction to develop. The tendency may have been for the Norwegian authorities to provide various types of support to businesses and industries that have existed for some time. When the government intervenes, the authorities tread a fine line between business development and conservation. It is thus important to tread carefully, so that capital and labour are not tied up in less profitable activity. The required rate of return and the need for restructuring in the business sector often conflict with the need for stability and security for the individual employee. Local communities may suffer. The answer is not to oppose restructuring. The best solution is to develop and take advantage of skills and expertise. This also requires extensive adaptability and labour mobility. The welfare state The restructuring that we are facing in the Norwegian public sector is hardly of less significance than the changes in the business sector. During the last decades the Norwegian welfare state has expanded BIS Review 14/2000  14  rapidly. Household income and consumption have also shown steady and strong growth. We have also witnessed a sharp expansion in the production of services in both the public and private sector.

And if it happens again we will again risk destabilising international financial crises. From the other side, in the absence of mutual trust, there will be increasing pressure to break up the global capital market. Regulators and supervisors who cannot trust the implementation of standards in other jurisdictions will defend stability in their own jurisdictions by raising barriers. Ring-fencing of capital and liquidity, non-recognition of foreign firms, restrictions on activities and extra territorial rules are just some examples of what can happen. Such action minimises the risk of international crises. But the cost is the rolling back of financial globalisation with less effective and efficient intermediation of global savings. So without mutual trust, the danger is either slipping back into weak regulation and supervision and regulatory arbitrage risking further crises or fragmentation of the international financial sector – a rolling back of financial globalisation that will damage global growth. Mutual trust will not be easily achieved. It will require more than hope and faith in our fellow man. Perhaps one day it can be founded on international law and treaty. Until then, however, it has to be built on the institutions and machinery established by those initial G20 meetings in Washington, London and Pittsburgh in 2008 and 2009. And in particular, on the work by the Financial Stability Board and the IMF. 6  BIS central bankers’ speeches  The Financial Stability Board has already established peer review mechanisms to assess implementation in its members.
There could therefore be a point to following both these lines in the internal analyses. 13  Woodford (2012) illustrates this in a formal model analysis. 4  BIS central bankers’ speeches  imbalances – that leans against the wind – could be that it takes longer for inflation to attain the target than it would have if the central bank had not included financial imbalances in its deliberations. Although this policy can be justified in ensuring a good development in the longer-run perspective, in practice there are of course limits as to how much and for how long inflation can be allowed to deviate from the target. This has been a very important point in my own monetary policy deliberations and I will return to this at the end of my speech. The dividing line in the debate: how effective are the respective policy areas? Another important thing to note is that a monetary policy that leans against the wind is not intended to replace macroprudential policy measures. This could of course be necessary if there is no macroprudential policy in place or during a period when macroprudential policy is being organised. But once it is in place, macroprudential policy shall be the first line of defence against financial imbalances. This is definitely my opinion and as far as I can see it is shared by most of those participating in the debate, that is, even those who think that monetary policy should be able to lean against the wind.

Caleb M Fundanga: Economic and environmental growth of Africa Speech by Dr Caleb M Fundanga, Governor of the Bank of Zambia, at the 2nd Green Accord Media Forum, Rapolano, Italy, 3 November 2004. The references for the speech can be found on the Bank of Zambia’s website. * 1. *  *  Introduction  The world community faces unprecedented ecological challenges in the twenty-first century. Many political and business leaders have embraced the idea of sustainable development, calling for economic growth without destroying the natural environment or depleting the natural resources on which future generations will depend. Yet the concept has remained controversial, and implementation has been difficult. The task for policy makers and corporate leaders will be to find ways to meet both economic and environmental goals in the coming decade, without sacrificing either (Post-LawrenceWeber, 1999). In Africa, environmental issues are also frequently sidelined on most policy makers’ agendas due to insurmountable economic and social problems that the continent continues to face. Notwithstanding the economic and social hardships, as Africa constantly strives towards attaining economic development, environmental sustainability remains a key area of concern (UNEP, 2003) although usually remote to most economic policy makers. In addition, environmental sustainability is hardly seen by many in Africa as an underlying factor in economic development yet it is so critical that, if adequately and promptly addressed, will have positive secondary effects on other crucial areas pertaining to economic development and people’s welfare.
responsible wage settlements that help to restore workers’ purchasing power without setting off a wage-price spiral. The ongoing expansion in labour supply should provide some relief to labour market tightness. The relaxation of our border restrictions and resumption of foreign worker inflows should help to moderate labour cost pressures. To prevent a further build-up in labour cost pressures, it is important that the inflow of non-resident workers continues unimpeded. The risk of a wage-price spiral is contained for now but bears watching. A concern in several advanced economies with some degree of wage indexation is that wages and prices start chasing each other and inflation gets worse and more entrenched. If real wages increase faster than real productivity, the increase in unit labour costs will lead to firms raising prices to protect their margins, setting off a second round of wage increases and a wage-price spiral. Automatic wage indexation is rare in Singapore and the pass-through from prices to wages has been historically weak. Nonetheless, the risk of a wage-price spiral cannot be discounted, especially in the context of a tight labour market and high inflation. To contain the risk of a wage-price spiral, it is important that real wage growth not exceed real productivity growth persistently and firms do not pass on in prices the full impact of wage cost increases. MANAGING DEBT AMID RISING INTEREST RATES  One of the key challenges posed by the combination of rising prices and rising interest rates is the burden imposed on debt servicing.

Lucas Papademos: Eurosystem and Bank of Russia cooperation programme Introductory statement by Mr Lucas Papademos, Vice President of the European Central Bank, on the occasion of launching the Eurosystem and Bank of Russia cooperation programme on banking supervision and internal audit, Moscow, 20 March 2008. *  *  *  It is a pleasure for me to be here in Moscow today, together with my esteemed colleague First Deputy Chairman Melikyan of the Central Bank of the Russian Federation and His Excellency Ambassador Marc Franco, Head of the Delegation of the European Commission to Russia. I would first like to thank First Deputy Chairman Melikyan for his kind opening remarks and all those who have contributed to the organisation of this ceremony. I would also like to greet the representatives of the eight national central banks of the Eurosystem who accompany me here today, marking their strong institutional commitment to and support for this cooperation programme: the Deutsche Bundesbank, the Bank of Greece, the Banco de España, the Banca d’Italia, the Banque de France, De Nederlandsche Bank, the Oesterreichische Nationalbank and the Suomen Pankki-Finlands Bank. Today, we are taking a further step that advances the increasingly close cooperation between the Bank of Russia and the Eurosystem, by signing a protocol which accompanies the contract for the Eurosystem cooperation programme with the Bank of Russia that was signed by Ambassador Franco earlier today.