samchain/econo-pairs-v1 huggingface dataset:
The stress tests show that the current levels of capitalization of the banking industry would permit it to absorb an episode of sharp GDP slowdown, an increase in CLP funding cost and an exchange rate depreciation. As I said at the beginning, if some of the described risks materialize, the country can resort to its robust economic policy framework, capable of mitigating the negative effects of the external situation. The Central Bank has the necessary mechanisms and tools in place to react decisively to adverse scenarios and reduce the costs on the domestic economy, always honoring the Board’s commitment to conduct monetary policy aiming to ensure that projected inflation stands at 3% over the policy horizon. Now let me share with you some final thoughts. Final thoughts The presentation of our two reports coincides with a period where global financial tensions have increased and are posing great risks. Also with the start of my term as Central Bank governor, in which I expect not only to keep and continue to consolidate the position this Institution has achieved, but also to continue to adjust our policy framework to the challenges that impose us the deep changes that the global economy is going through. In the immediate future, our greatest challenge is to address in the best way possible the effects of the external crisis on our country. To that end, it will be necessary to use both our expertise and the tools available in the right dosage and in a timely basis.

José De Gregorio: Recent monetary policy actions and their effects Speech by Mr José De Gregorio, Governor of the Central Bank of Chile, before the Finance Commission of the Honorable Chamber of Representatives, Santiago, 27 July 2009. *  *  *  Thank you, Mr. President of the Honorable Chamber of Representatives, Representative Mr. Julio Dittborn for the invitation of the Chamber’s Finance Commission to speak about the effects of the monetary policy decisions we have adopted over the course of this year. Last March, at a special session of the Economic, Promotion and Development Commission of this Chamber, we presented our view on the pass-through we then observed in market interest rates of our monetary policy decisions. In following months, the Central Bank has taken additional measures that have significantly increased the monetary stimulus. The possibility of revisiting this subject, now before the Honorable Finance Commission is, therefore, very timely and very welcome, because it gives us the chance to present an analysis of the effects of our latest decisions. I wish to remind you that monetary policy, especially under an inflation targeting regime with a floating exchange rate like the one we have in place in Chile since 1999, is an important stabilizer of the business cycle. Thanks to institutional developments and high degrees of solvency and liquidity of our economy, the monetary policy makers have been able to act with unusual vigor.
On top of this system, banks or similar credit institutions can create money by lending, more or less as they do today. But it is uncertain how credit institutions will behave in a more decentralised system such as this one. It also raises new questions about where the responsibility for licensing and regulation should lie, especially if the system operates independently of national borders. This poses a risk of increased instability and more frequent crisis. Norges Bank’s role Chart: Norges Bank is tasked with ensuring: Norges Bank plays a key role in the financial system. Norges Bank is responsible for keeping inflation low and stable. That secures confidence in the Norwegian krone. We are also responsible for promoting financial stability and an efficient and secure payment system. Banks settle obligations between themselves over accounts in the central bank. If necessary, we can 5/7  BIS central bankers' speeches  provide banks with additional liquidity. At the same time, our role as the bankers’ bank gives us a channel into the wider economy, which we use to implement monetary policy. A change in our policy rate will pass through to banks’ lending and deposit rates. Norges Bank closely monitors developments in the banking industry and the financial system. Innovation and competition can bring better and cheaper services, but can also bring risks associated with, for example, cybercrime, data protection and financial stability. There is also the risk that some participants gain substantial market power.

Banking regulation implicitly provides a trade-off between these considerations. The other main activity of banks is payment services, which are services we use virtually every day. Today, most people in Norway receive money as a bank deposit directly into their account. As long as there are payment solutions that give us cheap and simple access to money, the account is an efficient and safe wallet. Chart: Banks provide payment services But how is it that bank deposits can become money that we can use as payment? An important pre-condition is that there is an infrastructure to enable deposits to be efficiently transferred 2/7  BIS central bankers' speeches  between customers and banks. As the bankers’ bank, Norges Bank creates the money banks use to pay each other, so-called central bank reserves, which are the banks’ deposits at the central bank. Transfers of customer deposits between banks can take place without frictions because a corresponding amount of central bank reserves are transferred between banks’ own accounts at Norges Bank, where banks have a common and trusted means of payment and settlement system. This helps ensure that there is no difference between the money created by DNB and money created by Nordea. The money is interchangeable. For us, it is all Norwegian kroner. As such, banks play a key role in delivering services we want from the financial system, albeit subject to a framework designed by the Norwegian authorities. The banking sector is more strictly regulated than most sectors of the economy.
In short, they should not assume that today’s favourable financial conditions will endure for their entire planning horizon. Concluding remarks Ladies and gentlemen, let me now wrap up. The negative interest rate charged on banks’ sight deposits at the SNB is indispensable from a monetary policy perspective. Given low interest rates around the world and the difficult global economic situation, negative interest – coupled with the SNB’s willingness to intervene in the foreign exchange market – serves to ease upward pressure on the Swiss franc. Negative interest helps to maintain price stability and support economic activity in Switzerland. Of course, the banking sector ultimately benefits if prices are stable and the economy thrives. However, the low interest rate policy is also associated with side-effects. It can have economically undesirable consequences for financial stability. Thanks to measures taken to date and the capital surpluses that banks have in place, these risks are currently manageable for the financial system. Looking to the future, ongoing low interest rates are likely to continue weighing on banks’ profitability; this, in turn, will create an incentive for them to take on more risk. At the same time, imbalances on the Swiss real estate and mortgage markets could be exacerbated over time. Such developments would render the banking system and the economy more vulnerable. It is thus all the more important that banks put aside sufficient capital surpluses and adopt a conservative mindset when assessing the creditworthiness of borrowers.

This – along with the SNB’s willingness to intervene in the foreign exchange market – has helped to relieve pressure on the Swiss franc. The effect of the negative interest rate on the exchange rate is currently playing a decisive role in enabling the SNB to fulfil its monetary policy mandate. It allows the SNB to counter the aforementioned consequences of the Swiss franc appreciation on economic developments and inflation. Without the negative interest rate, inflation and economic growth in Switzerland would be lower. 3  Low interest rates and Swiss banks’ profitability The negative interest rate thus remains indispensable from a monetary policy perspective, and has, as explained, achieved the desired effect. A monetary policy geared to price and economic stability is also a precondition for a profitable, stable financial system. An environment of decreasing prices and low growth would lead to reduced demand for banking business and increased credit defaults, losses and write-downs. At the same time, the exceptionally low interest rates are fraught with significant challenges. Above all, over time they can have economically undesirable consequences for financial stability. We have arrived at the main topic of my remarks today, namely, how does the SNB assess the effects of low interest rates on financial stability? The answer to this question largely depends on the extent to which low interest rates affect banks’ profitability.
Third, wage increases of the past three quarters affect current wages with a summed coefficient of less than 0.5, implying that lagged impulses fade within a few quarters. Fourth, the effect of price pressures on wage increases is empirically weak; wages respond less than proportionately to prices during the year. Combined, these estimates suggest that the pass through from costs to domestic prices is subject to relatively contained momentum and feedback effects. But the entire course of the pass-through process is still characterised by a degree of persistence. Accordingly, in the absence of further major global price shocks, domestic inflation should not accelerate further in Q4, but could remain elevated relative to the historical average. A key upside risk factor influencing the ongoing pass-through to consumer prices is the behaviour of cost mark-up by businesses. Profit margins might have been impaired in the earlier period when global costs shocks were intensifying, and businesses might be inclined to restore them at least partially in the period ahead. Monetary policy stance has progressively tightened Singapore’s short-term AS curve is gradually shifting to the right as global costs subside and non-resident worker inflows pick up. Wages in the first half of the year traced out a temporarily steeper portion of the Phillips Curve but are expected to revert to their historical configuration in the period ahead. The external components of the IS curve could moderate in the quarters ahead. These represent pro-equilibrating movements, but we are alert to unexpected developments and fresh shocks.

For example, by the 1770s, London bankers had begun to settle in notes issued by the Bank of England, a highly-regarded, but at that time, private bank. BIS Review 130/2007  1  10 A low-risk settlement asset was particularly important in the unregulated world of the goldsmiths, in which credit risk was acute and liquidity shocks – like the one we have experienced of late − were common and dangerous. In a sorry letter to an associate 1 , one goldsmith wrote to another in the 1660s: “I have beene by many accidents much postpon’d…ye money due to mee is soe farre off that I can not make it useful to mee. All Credit in London is much Shortened of late.” 11 Showing all the optimism which continues to characterise bankers today, he added: “ I am attempting a way to enlarge my owne (credit) and doubt not to effect it to his Maties. [Majesties] advantage as well as my owne, if I am (like ye lame dogg) but helpt over this style.” 12 Further efficiency gains were then obtained by settling interbank obligations over the accounts of a single institution. This innovation was sometimes put in place by the public authorities; in other cases it developed naturally, such as when the London bankers adopted Bank of England deposits as the ultimate settlement asset in 1854. 3.
3 Second, the extent of recent Swiss franc appreciation presents Switzerland’s economy with exceptional challenges which should certainly not be underestimated. But one thing is clear: entrepreneurial thinking is remains important. We have the utmost respect for this entrepreneurialism and for the employees who are being called upon to support these adjustments. Inflation outlook Let me now turn to the inflation outlook. The SNB’s mandate is to ensure price stability in the medium term, while taking due account of economic developments. We remain committed to maintaining price stability and the decision to exit the minimum exchange rate has not altered our mandate in any way. Last year, the inflation rate – as measured by the consumer price index (CPI) – hovered around zero. This year, inflation will decline well into negative territory. This is first and foremost due to two factors: Swiss franc appreciation since the discontinuation of the minimum exchange rate and the sharp fall in oil prices. Last year, oil prices fell by some 40% in Swiss francs. According to an economist’s rule of thumb, this should translate to a decline in CPI inflation of almost 1 percentage point. The low inflation we are witnessing is thus in large part attributable to the collapse in oil prices. The important thing to remember here is that the effects of both the Swiss franc appreciation and the oil price drop are temporary. They will not jeopardise price stability. 3  Cf. Bäuerle, G. and E. Steiner (2013): “How do individual sectors respond to macroeconomic shocks?

Fourth, government authorities may be reluctant to apply stricter requirements to domestic banks, fearing that their competitiveness may weaken. Such a drift in regulation towards a – too low – minimum level is important to avoid. For Norway, it is essential that rules are applied both strictly and equally in the Nordic countries. Allow me to conclude. The world economy is these days in the deepest recession in the post-war period, in spite of the strong use of various measures. Most markets and countries, including Norway, have been hit by the crisis. Norges Bank has set the interest rate at a low level to curb the decline in activity and counteract an excessive fall in inflation. In accordance with its mandate, Norges Bank has given weight to anchoring and strengthening expectations that inflation will be low and stable ahead. This enhances the effectiveness of monetary policy. Thank you for the opportunity to present these opening remarks. BIS Review 60/2009  5  6  BIS Review 60/2009  BIS Review 60/2009  7  8  BIS Review 60/2009  BIS Review 60/2009  9  10  BIS Review 60/2009  BIS Review 60/2009  11  12  BIS Review 60/2009  BIS Review 60/2009  13  14  BIS Review 60/2009  BIS Review 60/2009  15  16  BIS Review 60/2009
Eva Srejber: Should monetary policy subdue inflated high debts and asset prices in an inflation-targeting regime? Speech by Ms Eva Srejber, First Deputy Governor of the Sveriges Riksbank, at the Adam Smith Seminar, Thun, Switzerland, 28 June 2006. References for the speech can be found on the Sveriges Riksbank’s website. *  *  *  Introduction Today I intend to discuss how central banks should react to debts and asset prices that increase at a rate which is not sustainable in the long term. When the Riksbank decided at the beginning of the year to raise its policy rate, saying that one of the reasons was the rapid rate of increase in household borrowing and house prices, this was perceived by some people as meaning that we had introduced a new objective for monetary policy. However, this is not the case. Our focus then – as on other occasions – was on inflation developments. Another factor was that we also wanted to avoid further pressure on the rate of increase in house prices and debts and thereby reduce the risk of a large fall in demand and a low inflation rate in the future. How should central banks behave in a situation like this, when models and forecasts indicate an inflation rate that is on target, while there is some risk that sharply rising house prices and debts will jeopardise the target later on? There is no common view on this issue among either central banks or academics.

Fiscal domination remains a constant risk to price stability, as it came out of the experience presented here by Mr. Baschi (Turkey). We hope that the commitment of the government for developing a better coordination of monetary and fiscal policies will continue in the future, as the Minister of Finance, Mr. Malaj stated in his speech. This idea was further elaborated on in the presentation authored by Mr. Hida and Mr. Haderi. Dollarisation or FX may constitute another obstacle that places financial stability and monetary policy independence at risk, as argued by Mr. Driessen. Therefore, it is a problem that needs attention. What inflation rate should be targeted remains a subject of debate. This concern was presented by Mr. Olters. The Bank of Albania is closely addressing this issue in a very prudential manner, so that it does not become an obstacle for economic growth. In light of the above difficulties for passing to a new regime, as stressed by Mr. Mayes, it is important to implement a robust strategy so as to avoid large mistakes. Price stability, as stressed some times during the conference, helps economic growth. On the other hand, the second pillar of the Bank of Albania, the financial stability, is likely to play a more important role for economic extension. But, as Mr. Blejer stressed in his speech, stability should not be turned into an end in itself. A good regulated but undeveloped financial sector may be as ineffective as a deregulated sector.
This is owing to the diversified nature of Thailand's exports. For example, electronics count for only 26 per cent of our total exports while they count for 36 and 60 per cent of Taiwan's and Singapore's exports, respectively. Furthermore, the US takes in more than 40 per cent of Taiwan's electronics exports. So, a US rebound would likely benefit them more than us. Therefore, while we are hopeful that the US economic trend is more upbeat, we harbor a healthy dose of reservation insofar as the immediate gains brought on by the US recovery are concerned. Another risk to growth is in the effectiveness of policy stimulus to meet the growth challenge. In the past few years, various fiscal stimulus packages have been the principal motor driving the economy. Later this year, however, the necessary consolidation will take place to ensure fiscal sustainability, and sound economic management will demand a right mix of policies. Having achieved external stability and price stability, there is room for monetary policy to be more accommodative to growth. On this point, I wish to emphasize that even though our focus today is on economic recovery, the Bank of Thailand's monetary policy objective remains that of maintaining price stability. 2  BIS Review 16/2002  It is my belief that an important pre-condition for growth on a sustained basis is a stable macroeconomic environment. However, I doubt that macroeconomic policy alone will be sufficient for long-term economic growth. We, therefore, need to look beyond macroeconomic policy.

Nevertheless, the Celtic tiger was not immune to the challenges that the financial crisis posed to many of the world’s advanced economies. On the contrary: Ireland has had to deal with more severe challenges than most. Much has been written about how Ireland arrived in this position. But let me state this right at the beginning: Ireland is not the only country that needs to reform. Fiscal consolidation and growth enhancing structural reforms are needed everywhere in Europe to remain competitive on a global marketplace. Ireland is, however, one among several countries with more severe adjustment needs. Our view is that to set the correct course, we must be clear-headed about the reasons why we are where we are. To frame the issue somewhat bluntly, the Irish State and people woke up to a painful new reality when the Irish housing bubble burst at the onset of the international financial crisis in 2007. Extraordinarily high growth in the run up to the crisis had gone hand-in-hand with the build-up of economic and financial imbalances. The path back to full fitness has been enormously difficult and entailed wrenching economic, financial and social change. And the path has not been smooth. Indeed, about one-and-ahalf years ago the economy was close to cardiac arrest. The patient required life support – kept alive with the substantial assistance from international lenders, as well as the continued levels of extraordinary support from the Eurosystem. But progress since then has been good: the programme is on track. So far, Ireland has delivered.
In fact, these bouts of extreme instability have disrupted the potential growth trends, which in some cases have taken years to recover. On the whole, these episodes may be associated with too much financial liberalization too soon. The unique global backdrop, as well as the economic outcomes in terms of growth and volatility that I have just shared with you, presents a real dilemma and at times tension in emerging Asia. And nowhere is this tension more palpable than it is in the realm of exchange rate and capital account regimes. While benefits from trade integration are appreciated and shared by billions the world over, net benefits from international financial integration have not been so apparent in Asia and emerging economies in general. This is consistent with an observation that Asian emerging markets rely increasingly more on trade integration because it is judged to be a safer mode of risk-sharing with the world. As a result, while the pace of financial integration has far outstripped trade integration in advanced economies, it has only managed to keep pace with trade integration in emerging markets. 3 Ladies and Gentlemen, Asian economies and policymakers have come a long way in their attitude toward macroeconomic risk management since 1997. Countries have taken unilateral actions to promote economic and financial resiliency. Having appreciated the evidence that macroeconomic stability provides an environment that is conducive for sustained growth, Asian emerging markets have continued to pursue fiscal discipline and more flexible exchange rates on the whole.

But we will try wherever possible to be sympathetic to AIs’ concerns on compliance costs. Terrorist financing The most obvious thing we need to do is to incorporate into our guideline specific recommendations relating to terrorist financing. In particular, we need to make AIs aware of their responsibilities under the United Nations (Anti-Terrorism Measures) Ordinance that was enacted in July of this year and will begin to come into operation in the near future. The New Ordinance is intended to meet Hong Kong’s commitments under the FATF’s eight Special Recommendations on Terrorist Financing. To that end, it criminalises the financing of terrorism and associated money laundering and provides for the freezing of terrorist-related funds. It also imposes an obligation on AIs and other persons to report knowledge or suspicion that funds are linked to terrorism. We have already asked AIs to report to the JFIU suspicious transactions that may be related to terrorism. But the legal obligation to do so is now clear and unambiguous, as is the criminal offence of dealing in terrorist funds. AIs therefore need to ensure that they have the necessary measures in place to comply with the law. This is not an easy task. It is accepted that terrorist financing is difficult to detect even when AIs are provided with lists of terrorist suspects. The FATF published in April of this year a document called Guidance for Financial Institutions in Detecting Terrorist Financing that I would recommend you to look at.