samchain/econo-pairs-v1 huggingface dataset:
However, the existence of a mechanism to provide financial assistance to countries facing temporary distress should not be seen as a source of moral hazard. Such risks are prevented both by the strict conditions under which any assistance would be provided and by the fact that the mechanism will be activated only if deemed indispensable in order to counter threats to the financial stability of the euro area as a whole. In addition, the establishment of this permanent stabilisation mechanism will be accompanied by the strengthening of the framework for economic governance in the euro area, particularly as regards the framework for the multilateral vigilance of national policies in the areas of public finances and competitiveness. 4  BIS central bankers’ speeches  III. (d)  Improving economic governance  It is fair to say that the experience of the Economic and Monetary Union (EMU) over its first twelve years has been a historic success. At the same time, it is also fair to say that the credit should go, to a very large extent, to the achievements of the monetary pillar of Monetary Union (the “M” in EMU) rather than of its economic pillar (EMU’s “E”). Yet, monetary policy alone cannot deliver all the benefits of EMU. The economic pillar must also play its part. Unfortunately, this has not always been the case so far. Indeed, national governments have not been sufficiently committed to fulfilling their obligation to guarantee macroeconomic stability and fiscal sustainability in the long term.

Second, the financial tensions led to a disruption of domestic financial intermediation, with severe consequences for both private and public financing. In Greece, the banks – which were reasonably strong in a “stand-alone” sense – were undone by revelations about the weakness of public finances. In Ireland, causation ran in the opposite direction: the bloated and failing domestic banking system imposed an intolerable burden on what, prior to the crisis, had been a superficially strong fiscal position. Regardless of the causation, the consequences were the same: as confidence eroded, the inflow of foreign capital dried up. Subject to a “sudden stop” in external financing, 4 the European sovereign debt crisis – itself inextricably linked with problems in the financial sector – erupted, forcing Greece and Ireland to seek financial assistance from the European Union and IMF. 3. What can we learn from the emerging market crises of the past thirty years? The developments I have just described might give those of you living in emerging economies a sense of déjà vu. And indeed it has become commonplace to draw comparisons between recent events in Europe and the periodic financial crises seen in emerging market economies (EMEs) over the past three decades: Latin America’s debt crisis in the 1980s; the Mexican tequila crisis of 1994; the Asian financial crisis in the second half of the 1990s; and the Argentine crisis of 2001. Extensive economic literature has analysed these events and identified important roles for many of the phenomena I have just described.
The higher international prices of foodstuffs have a strong impact on inflation in these economies, considering that they weigh more in their CPI baskets. Inflation forecasts for 2011 have been raised everywhere. Worth noting is the case of emerging Asia, where by mid-2010 the market consensus expected inflation to average 3.8 percent annually this year, and revised it upward to 4.8 percent last March (figure 4). The baseline scenario assumes that during this year the external inflation relevant to Chile will exceed December’s forecast. In this scenario, the central banks of several economies have either started or continued their monetary policy normalization processes, implying that inflation might be temporarily above their targets, which coincides with the market consensus expectations. Some of them have continued applying alternative measures to tone down increases in liquidity and credit, such as China, India, Brazil and other countries in the region. In some developed economies, although monetary policy has remained very expansionary – with unconventional measures and record-low interest rates – policy makers have explicitly exposed their concerns about future inflation and a few have even considered the option of beginning their cycle of normalization sooner. Thus, in the U.S. and Europe, market expectations regarding the timing of the process’s kick-off have changed (figure 5). Hence, the outlook for world economic growth is somewhat brighter than it was last December. Actual output data in developed economies, especially in the U.S., have exceeded expectations and market consensus projections have been revised upwards.

Inflationary pressures stemming from high productivity growth in the tradable sector of fast-growing economies – known as the Balassa-Samuelson effect – have also been cited as one of the main reasons for higher inflation in catching-up economies, such as those of the accession countries. A closer examination of inflation developments in the accession countries shows, however, that the Balassa-Samuelson effect alone cannot explain the persistence of inflation differentials vis-à-vis the euro area. Moreover, notwithstanding its importance, the Balassa-Samuelson effect should not be overstated when explaining current inflation rates in the accession countries. Indeed, most empirical studies estimate the Balassa-Samuelson effect within a range of 1 to 2 percentage points. This does not mean, however, that the pursuit of real convergence conflicts with further progress on disinflation. On the contrary, the process of disinflation should be advanced in the accession countries, at a pace determined by the overall economic situation and in particular by the need for these countries to increase real convergence. The Maastricht inflation criterion, which will not be revised to take into account any possible Balassa-Samuelson effect, should not be seen as an immediate requirement for these countries, but rather as a medium-term objective for central banks. As the experience of some euro area participants shows, progress in nominal and real convergence can be, and should be, pursued in parallel.
It consists of setting a quantitative inflation goal to anchor expectations, which in our case is 3% with a tolerance margin of plus/minus one percentage point, to be met most of the time. 1  1  There is wide empirical debate on the effects of inflation targeting regimes on the volatility of inflation and output. Gonçalves and Salles (2008) show that output volatility and inflation volatility are actually reduced in inflation targeting emerging economies. BIS Review 150/2008  1  To operationalize this objective – because the Central Bank controls inflation imperfectly and with lags and its purpose is not to cause output to deviate significantly to achieve its target – inflation deviations are corrected over a two-year horizon. In other words, the monetary policy is conducted in such a way as to have forecast annual inflation two years ahead stand at around 3%. The instrument of monetary policy is the interest rate. It could be some monetary aggregate, but virtually everywhere central banks will rather use the interest rate for well-known reasons that are beyond the scope of this meeting. 2 What is inconsistent is to use both variables as monetary policy instruments, which certainly complicates the interpretation of the two-pillar strategy of the European Central Bank. Simply put, setting a monetary aggregate and the interest rate at the same time is tantamount to setting the price and the amount to be consumed for gasoline. Supply and demand constraints imply that you can peg either one, but not both.

The latter displayed different behaviour, according to maturity term. Short-term interest rates in the money market decreased, consequent to base rate cut and improved liquidity conditions. Long-term interest rates rose under the conditions of a high demand for long-term funds and growth of risk premium. Primary market interest rate rise was transmitted to interest rates of new Lek-denominated loans of more than 1-year maturity, influenced even by the overall lending tightening tendency. *** The Bank of Albania deems that the issues of liquidity, internal and external balances in the economy and the financial soundness constitute direct challenges on macroeconomic stability and long-term development of the Albanian economy. Their treatment should be constantly oriented towards the need for observing the necessary macroeconomic balances of the country. Price stability, smoothing of monetary indicators volatility, a sound and efficient financial system, as well as sound public and private sector’s balance sheets, impact on reducing the risk premium in the economy. Also, they open the way to attract foreign investments and cut the cost of borrowing from international markets. In this way, they provide an irreplaceable contribution to the country’s long-term growth. Further promotion of this growth requires constant structural reforms in the economy, which should not only address the deficiencies of our economy but also precede future development trends. Investment in infrastructure should be a priority of funds use in the economy.
Eddie Yue: Remarks at Media Standup Remarks by Mr Eddie Yue, Chief Executive of the Hong Kong Monetary Authority, at Media Standup, Hong Kong, 2 October 2019. * * * Ladies and gentlemen, 1. Today is my first working day as the Chief Executive of the HKMA. Apart from the transition to a new position, I will also be faced with a challenging external and domestic environment. This includes the weakening of global economic momentum, uncertainties over the ChinaUS trade conflict and Brexit, unpredictable monetary policy stance across central banks especially in the US, and the social events in Hong Kong in recent months. All these have presented huge challenges and uncertainties for the Hong Kong economy. 2. Our key priority in the next few years is to maintain Hong Kong’s monetary and financial stability. 3. And, the foundation for this stability is the Linked Exchange Rate System (“the Link”), which has helped Hong Kong weather different financial storms since 1983. I’ve been involved in the operation of the Link throughout my career in the HKMA and I have also gone through two financial crises. I firmly believe that the Link is the most appropriate monetary system for Hong Kong. We see no need and have no intention of changing this well-established system. 4. Our banking system is also robust and sound. I’m confident that Hong Kong’s financial system is well positioned to cope with market volatilities. 5. We will also reinforce Hong Kong’s role as a premier international financial centre.

–  Export quantities continued to improve with the year-on-year growth rate in a high positive. This represents both the pick-up in our trading partners' purchasing power and our staying ability to compete. Another factor that continued to firm up the recovery process came from the fiscal front. –  During the first four months of fiscal year 2002, the budget disbursement rate accelerated compared to same period last year. This front-loaded fiscal stance will surely contribute to a sooner recovery. I must note here, however, that the jury is still out on what these early signs may portend. I believe the impassioned judgment on the speed of the recovery must await more data. Ladies and gentlemen, It is rather unfortunate that while economists are busy debating whether these early signs point to a tangible recovery, the recent strong boom in the stock market seemed to have overwhelmed that debate. On this point, let me say that we need to distinguish between the recent asset price performance and the economic fundamentals. It is true that the performance of the listed SET firms has improved. The improvement was led in part by better-than-expected profitability of listed companies. Corporate profits in general were also on the rise in 2001, compared to 2000. With this improvement, we are now more able to segregate the winners that is, the strong performers -- from those lagging behind. This presents a stark contrast to the previous pictures in which almost all sectors were judged to have performed poorly.
While the PRA has not yet consulted on a reform package, it has recently published a Discussion Paper[5] seeking views on a range of areas that are likely to be key in forming such a package. Our intent lies in finding a set of reforms that protects policyholders and enables even greater investment flexibility than we have seen already, whilst reducing any misaligned investment incentives. To achieve this intent, the Solvency II reform package we develop must address the two significant deficiencies in the current regime: a risk margin calibration that is overly sensitive to interest rates; and an allowance for retained risk – the FS - that varies very little, if at all, as credit risk premia vary across assets and over time. The risk margin is currently pulling more than its weight in the current Solvency II construct – the resulting incentive being for insurers to reduce the insurance risk they are taking. However, the MA as currently formulated rewards taking certain non-insurance risks, potentially in significant quantum, and with a set of incentives that may be misaligned. We therefore see quantitative reform of both the risk margin and Matching Adjustment, as integral to any package. The PRA seeks a calibration package that is better able to capture how liability transfer values are likely to be impacted by the assets held to back the business. Such a package should also take account of different financial and economic conditions that might pertain at the point that a transfer became necessary, including times of stress.

It is essential that we all ensure that there is a real-time and ambitious approach across the globe. Second, central banks shall continue to be active players in innovation. A few have already launched digital currencies, some – including the Eurosystem – are testing it in pilot experiments. We at the ECB decided a two-year investigation phase under the leadership of my colleague Fabio Panetta, before taking a decision about whether to go further by the end of 2023. Retail CBDCs have caught the attention of the public; however, they raise sensitive questions, especially regarding the use cases for households and the role of commercial banks. That is why I would call for a ceiling of the individual CBDC holdings. Let us not forget the other possible digital currency, a “wholesale” CBDC for banking institutions. DLT could bring the benefits of central bank money digitalisation to a new level, with increased efficiency of some interbank processes and the development of new services, especially in a cross-border context. Let me be clear, CBDC is not about the Big Brother of central banks threatening the free world of decentralized finance. Rather it could be about providing further tools to help make Defi successful and sustainable. The Banque de France carried out nine successful experiments in 2021, with a wide array of partners and on different segments, and a new series of experiments focusing on cross-border payments will take place in 2022.
When the ECB made its monetary policy even more expansionary in spring 2015, we extended our monetary policy measures by both cutting the repo rate below the previously assumed lower bound of zero, and purchasing government bonds (that is, using quantitative easing). As the financial markets were functioning normally, the measures had the desired impact on the interest rates charged to  19 The way that a lower neutral interest rate affects the conditions for monetary policy was something I discussed in greater detail in October last year: see Skingsley (2020). 20 See Bernanke (2015). 21 See Elmér et al. (2012) for a description of the Riksbank’s monetary policy measures during the financial crisis. 7 [20]  households and companies. Inflation began to rise towards the target (see Figure 3). Developments during the financial crisis and the European debt crisis that followed made it perfectly clear that a flexible monetary policy toolbox is useful both in times of financial unease and in normal circumstances, to safeguard target fulfilment. I will return to this issue later on. Discussion on central banks’ mandates and tools In the wake of the financial crisis, financial stability quite naturally became a standing point on the agenda. One of the main effects of the crisis was the emergence of a new policy area: macroprudential policy. In many cases, responsibility for this policy was given to the central bank.

One can summarise this by saying that we need to better understand, clarify and explain the effects of new monetary policy tools. We are far from alone when it comes to this challenge. The Bank of England recently had to relate to an investigation that emphasised that these elements needed to be developed with regard to QE programmes. 31 We are working continuously on developing our analyses and communication of monetary policy. As I mentioned earlier, I think that the proposal for a new Sveriges Riksbank Act is good in several aspects. This includes the extended scope for the political system to examine our activities. Information, scrutiny and evaluation are central conditions for our strong independence. The world has changed a lot since 1668, but the Riksbank’s monetary policy task has remained a common denominator over the years. If we are to supply a monetary policy with price stability as objective, we need to accept that the conditions change over time and that the tools need to be updated when these changes occur. Independence is a large measure of confidence to hold in trust. Continued freedom with responsibility will enable the Riksbank to contribute to good economic developments going forward. Thank you for listening! 30  See, for instance, Melander (2021) and Di Casola (2021). 31 See Bank of England (2021). 12 [20]  References Alesina, A. and L.H. Summers (1993), “Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking.
Demand growth can then be brought into line with the growth of production capacity and result in a more stable path. By acting in good time in a manner that is predictable, it is hopefully possible to avoid interest rate adjustments that are more drastic. Meanwhile, economic agents can continue to count on stable, low inflation. An example of the good results that can be achieved with a forward-looking monetary policy is the US economy. With a judicious and timely tightening of the monetary stance, the Federal Reserve has contributed to a long period of sustainable growth. Since the gradual increase from 3% between 1993 and 1994, the fed funds rate has fluctuated between around 4.5 and 6%. This has accompanied a notably good economic development, with the longest postwar period of unbroken growth. The latent inflationary pressure has been held in check without arresting growth. Similar reasoning lay behind last week’s interest rate increase. The positive trend has been aided by the consolidation of federal finances. On the other hand, if inflation has already risen to a high level that is expected to last, the central bank may have to resort instead to larger interest rate increases to signal its determination to fulfil the inflation target. That weakens economic activity and risks a renewed increase in unemployment. Thus far the argument – and the question of which alternative is most advantageous – seems fairly simple. But that is where the difficulties begin.

By the response received, this initiative will inspire the many talents within the Malaysian research community to be more engaged to think and delve into greater research on Malaysian economic and development issues that have great importance to the country and the region that is expected to persist in our prevailing and future environment. With the official opening of the World Bank Group Knowledge and Research Hub, I believe the Hub is well-positioned to become a regional centre of excellence that promotes learning opportunities, thought leadership and innovation. Being located in Sasana Kijang, which in Sanskrit means a meeting place, it is hoped that the Hub would benefit from synergies with the institutional cluster of intellectual excellence that are also located right here in Sasana Kijang, including the Alliance for Financial Inclusion, the SEACEN Centre, and the Islamic Financial Services Board. On behalf of Bank Negara Malaysia, allow me to express our great optimism of this partnership in bringing knowledge, expertise and best practices to realise greater  BIS central bankers’ speeches  1  regional and international collaboration. Today, the winner of the Young Malaysian Researcher Prize 2016 will be announced. With this, let me conclude my remarks and invite Dr Axel Van Trotsenburg, to deliver his remarks. I also look forward to the address on 'Shared Prosperity' by Dr Kaushik Basu. 2  BIS central bankers’ speeches
The low interest rate level is facilitating the servicing of high household debt and house prices are high. Households in Norway are more confident about the future than households abroad. Since October last year, the key policy rate has been raised by a total of 0.75 percentage point to 2 per cent. The low interest rate level will in itself contribute to pushing up demand. Inflation expectations are probably stable and real interest rates are very low. At the same time, the krone exchange rate is very strong in real terms. The projections published in the June Monetary Policy Report suggest that the key rate should be held at today’s level to around the end of the year and then gradually be raised to a more normal level. 2  BIS Review 113/2010  In our Monetary Policy Report we present our own forecasts for the key policy rate ahead. The central banks in New Zealand and Sweden communicate their interest rate expectations in the same way. Some central banks use more qualitative statements, while others do not provide any indication as to future interest rate setting. Interest rate forecasts as a monetary policy instrument When preparing our interest rate forecasts, we give weight to the following main criteria: 1. The interest rate should be set with a view to stabilising inflation at target or bringing it back to target after a deviation has occurred. 2.

Global companies may see their chains of supply disrupted by strikes in far away lands. We have no control over these events and no possible way to guess where the next catastrophe – natural or manmade – will occur. Let me return to global finance. I have said before that the world today is less likely to witness the recurrent crises that afflicted so many countries in the 1980s and 1990s. I am convinced that this is the case. By choosing a flexible exchange regime, they have chosen a more resilient system, and many of them are pursuing sensible macroeconomic policies that should help them navigate turbulent waters more safely than in the past. But I am also convinced that not all countries are equally well prepared to cope with free capital mobility. For those countries with weak institutions and underdeveloped financial sectors, globalisation means more rather than less vulnerability. International financial integration may look like a blessing when foreign capital flows in, but it will look like a curse when foreign investors head for the door. The present monetary order is more resilient than the previous regime of fixed exchange rates, but crises can still occur, and if they occur they are more likely to be extensive and spread rapidly. And globalisation, of course, goes far beyond financial integration. Global companies are located all over the world. They have to deal with different legal frameworks, with different business cycles, with different political realities.