samchain/econo-pairs-v1 huggingface dataset:
); (b) maintain financial and price stability; after having policy-engineered their V-shape recoveries, controlled their inflationary consequences and managed destabilizing large capital inflows; (c) calibrate their responses to this transition period of exiting from unconventional monetary policies, using their uneven policy room for maneuver and their preparedness; and (d) make the best possible use of the foreseeable changes in relative prices including their own asset prices; these changes are either occurring or in the making, in the light of the expected shifts in global monetary conditions in the coming months. I will focus my remarks tonight on three issues: (1)  how we prepared ourselves with policies put in place in Brazil and other EMEs over the last few years to sail through a period of intense capital inflows and to be well positioned for the exit from unconventional monetary policies;  (2)  notwithstanding that preparation, what has been the impact and the response to the start of the normalization of monetary conditions; and  (3)  what are the few analytical and policy lessons learned in the last few years with regards to the inflation-targeting framework for monetary policy in the context of the post-crisis challenges. The policy response to large and volatile capital inflows Let me begin by revisiting the rationale of the policies that many emerging markets put in place during the most expansionary phase of advanced economy monetary policies.

I have no doubt that with increased support from other financial service providers and regulators, the institute will increase in stature in human resource capacity-building aimed at developing a critical mass of professionally qualified and competent bankers. To the graduates, the qualifications in Banking and Finance you are obtaining today will certainly not make you an instant expert to tackle challenges in the financial services sector. It will take hard work, determination, and a variety of continuing professional development programmes for you to be able to begin to understand in a comprehensive manner, the banking industry in its entirety. However as graduates from this special Institution, each of you will be given a unique opportunity to prove yourself. I therefore, urge you to work hard and learn from others around you including those with different views from yours. Let me also mention that as graduates from the Zambia Institute of Banking and Financial Services, your progress and performance will be closely monitored and you will be looked upon as role models. I urge you to set the standards for others to emulate. I am confident that all of you will live up to the highest standards and will not disappoint us. I once again congratulate you and your parents, for it is only through their guidance that you are able to achieve what you have today. I wish you all, especially those graduating and those witnessing the graduation of their loved ones, a joyful and wonderful day. Thank you. 2  BIS Review 23/2009
A historical study of financial crises shows that annual economic growth has been about 1 per cent lower in the decade following a crisis than in the decade preceding it. 2 Unemployment also typically remains higher throughout the decade following the crisis. We should perhaps not be surprised by these results. Since the activity level is usually high and unemployment low just before a crisis, we cannot expect economic growth to be as strong after the crisis as it was in the preceding period. Crises can have their advantages. In Norway, and in the other Nordic countries, the crisis years around 1990 brought changes in regulation, more open markets and the restructuring of public and private enterprises. In the crisis, the foundations were laid for the two golden decades that followed for the Norwegian economy. 1  Carmen M. Reinhart and Kenneth S. Rogoff (2010): “From Financial Crash to Debt Crises” NBER Working Paper No, 1579, March 2010. 2  Carmen M. Reinhart and Vincent R. Reinhart (2010): “After the fall”, NBER Working Paper No. 16334, September 2010. 2  BIS Review 123/2010  2. Why should governments repay debt? Governments borrow and save in order to smooth income and expenditure over time. Sovereign debt can be denominated in domestic or foreign currency, and can be issued domestically or abroad. The Norwegian government relied on foreign funding in the 1970s to develop Norway’s oil industry and welfare state.

I’ve spent this morning talking about measures to tackle the root cause of the stress last autumn, poorly managed leverage. But LDI funds aren’t the only non-bank to use leverage. [20] And leverage is also not the only vulnerability in the non-bank system. Forced selling that can follow from leverage can also arise from liquidity mismatches[21] or from a lack of preparedness for margin calls. [22] Identifying vulnerabilities is only half the battle. We also need to understand how market participants will behave when a stress hits. To this end, the Bank is very shortly launching its exploratory exercise to enhance understanding of the risks to and from non-banks, their behaviours, and how these behaviours can amplify shocks. As part of this exercise the Bank may reach out to some of you attending this conference. Shining a light on how market participants may behave collectively in a stress will help both the Bank and yourselves better prepare for such events. You’ll hear plenty from us once the exercise is launched. In particular, my colleague Lee Foulger will be giving a speech next week outlining how this exercise will helps us to better understand system-wide resilience. But what should we do about these vulnerabilities? We should seek to contain them and to mitigate their financial stability impact. This is what I’ve laid out today with respect to LDI funds’ leverage. Further frameworks may need to be built up.
Sources: Central Bank of Chile and US Federal Reserve  BIS Review 41/2009  9  Figure 2 Housing prices (nominal index, first quarter 2001=100) 250  250  250  250  200  200  200  200  150  150  150  150  100  100  100  100  50  50  50  50  0  0  0  90  93  96  99  02  05  08  U.S. Case & Shiller index  01  02  03  04  05  Australia Chile  06  07  0  08  U.S. Spain  Sources: Central Bank of Chile and Bloomberg. Figure 3 Accumulated CPI variation by country  (percent)  Japan  0  Colombia Hungary Peru Brazil Czech Rep. Malaysia Mexico S. Korea Israel Norway Poland U.S. Thailand U.K. Sweden Eurozone Canada Switzerland Hong Kong  5  10  15  (a) Between January 2007 and October 2008. South Africa Turkey Chile Indonesia  20  Mexico Colombia Hong Kong Brazil Indonesia Poland Peru S. Korea Czech Rep. Turkey South Africa Sweden  Hungary Norway Israel Eurozone U.K. Canada Switzerland Japan Thailand U.S. Malaysia Chile -3  -2  -1  0  1  2  3  (b) Between October 2008 and January/February 2009 (*). (*) For Canada, Hong Kong, Hungary, Israel, Japan, Malaysia and U.K., data up to January 2009. For the rest, February 2009.

In order to preserve independence of monetary policy, that is, not to subordinate it to the foreign exchange policy nor to a specific value of the exchange rate, the chosen method was a pre-announced and mechanical daily purchase of 50 million dollars. In fact, the degree of independence was such that, later on, the interest rate could be raised when faced with a more complex inflationary scenario, without the need for stopping intervention. Halfway through September, liquidity tensions grew substantially around the world, as well as in Chile. This led the Board to bring the reserve purchase program to an end when almost 6 billion dollars had been accumulated, and the country had reached quite a comfortable international liquidity position, which would enable us to mitigate any possible sudden stop of capital flows. Besides, in view of the worsening of liquidity problems, the Bank announced the supply of liquidity in pesos and dollars through repos and swaps. Later on, in October, the range of eligible collaterals was broadened and the dollar swap program was extended for six months. Then, in December, an extension for all of 2009 was announced for the repos and swaps program, and the range of eligible collaterals was broadened further. The purpose of these measures was to align market rates with the Monetary Policy Rate and to alleviate foreign currency liquidity tensions. Both objectives have been accomplished, and the scarce demand for dollars through swap transactions show that our economy still has a fluid access to the international financial markets.
In this respect, when forming their expectations, economic agents should count on the commitment of the Governing Council of the ECB to maintaining price stability, defined as HICP inflation below 2%, in the medium term. Monetary policy will not accommodate inflationary tendencies in the euro area. It will be critical to ensure that the temporary upward pressure on HICP inflation is not followed by more lasting upward pressure from domestic factors. The interest rate measures taken by the ECB over the past few months were aimed at containing the emergence of inflation expectations and convincing the social partners, as well as the public at large, that price stability in the euro area will be maintained. By ensuring that wages continue to grow at a moderate pace in 2001 and, may I add, beyond next year, wage-setters would facilitate the ECB’s task of maintaining price stability. They would at the same time make an important contribution to maintaining the current strong employment growth in the euro area. The maintenance of robust non-inflationary growth is a challenge faced in many policy areas, as well as by the social partners. Many euro area countries have embarked on a path of structural reform, which they now need to adhere to strictly. Increasing the flexibility of labour markets and deregulating product markets will enhance the growth potential of the euro area by allowing for a better exploitation of the opportunities which are offered, for instance, by the single currency and the new information and communications technologies.

Many critiques had pointed out, and the technical staff in the Bank had experienced, that the Bank could not succeed in its main task of taming inflation and bringing about price stability, if it was saddled with other tasks that would go against its main objective. Hence, there emerged a general consensus that the central bank should do only what it can do effectively and not otherwise. That consensus required the Central Bank to pursue a single objective, viz., the attainment of price stability. Following this consensus that emerged through the consultative process involved in the modernization, the technical staff of the Bank proposed an amendment to the Monetary Law by mandating the Bank with the task of attaining two core objectives. They were the attainment of both “price stability” and “financial system stability”. When the draft law was submitted to the then Governor, Mr. A. S Jayawardena, for clearance, he had changed the “price stability” to “economic and price stability”. The puzzled and bewildered technical staff flocked into his room seeking a clarification, since it was not in line with the accepted international trend. The writer recalls that even the Resident Representative of the IMF too was puzzled by this seemingly inappropriate mandate being added to the Bank’s objectives. But, Mr. Jayawardena, assuming his usual erudite and serious posture, offered a different explanation which had never occur red to the technical staff.
In fact, this is a central axis in the conceptual framework modern monetary policy is based on, from the different notions of the Phillips curve to the Neo Keynesian models of general equilibrium that today sustain our forecasting and analysis. With this in mind, we have attached to our December Monetary Policy Report a special study on the functioning of the labor market. It is based on the analysis of new databases that allow us to understand some of the clues to how this market operates, that were beyond our reach in the recent past. The analysis of the labor market, even if done with the intention of drawing macroeconomic implications, must pay attention to its structure and to the way in which the individual decisions of millions of workers and employers—that differ from each other in more ways than one—determine how the aggregates behave. However, studying this diversity empirically is no easy task, and is often absent from the macroeconomic debate. Most labor market indicators that are regularly reported and discussed in the public scene, including wage indexes, unemployment rates or job creation, are not only highly aggregated, but also represent net movements. This implies that much relevant information, such as differences in the behavior of different groups or changes in the composition of the flows, is not present in the analysis or public debate.

As a working assumption, we estimate that it will oscillate around these values throughout the projection horizon. Inflation As I mentioned at the beginning, after being under 2% annually almost the entire second half of 2017, headline inflation has been rising this year, to approach 3% in recent months. Although part of this rise is explained by the more volatile CPI items and the peso depreciation, inflation of the basket components that are more sensitive to the activity gap (ie. services and non-tradables) has increased gradually but steadily over the course of 2018 (Figure 7). In terms of projections, the drastic fall in fuel prices results in a downward revision to CPI inflation this year and next, ending 2018 and 2019 barely below 3%. Towards 2020, once these effects fade out, the CPI inflation will be around 3%. The CPIEFE—total CPI excluding food and energy componentes—inflation, in turn, will approach 3% in the first half of 2019, to later stay in the neighborhood until the end of the projection horizon (Figure 8). Monetary policy About monetary policy, the same as in September, the Board considers that the evolution of macroeconomic conditions makes it necessary to gradually withdraw the current monetary stimulus. Key in this judgment is our assessment of the size of the capacity gaps compared with the magnitude of the monetary stimulus: while the former has decreased, monetary policy is still very expansionary.
Zeti Akhtar Aziz: Global challenges and local opportunities Keynote address by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the IBBM-APABI Conference: “Global challenges and local opportunities”, Kuala Lumpur, 8 May 2012. *  *  *  It is my honour to officiate this Asian-Pacific Association of Banking Institutes (APABI) Conference hosted here in Kuala Lumpur by the Institute of Bankers Malaysia (IBBM). This Association has an important role in bringing together financial industry training institutes that share a common goal to equip financial institutions with the capacity to deal with the transformational developments that are shaping the financial sector – by supporting the continued renewal of its most valuable asset, human capital. The global financial industry is experiencing a period of profound change. In the advanced economies, decades of exceptional growth are giving way to contracting financial and economic conditions, greater regulation and significant government intervention, while in the emerging world however, financial and economic growth have continued. In addition, the intensification of policies and reforms to address structural issues in several of the major advanced economies will also have a significant bearing on the future growth prospects for many financial institutions and businesses. This is reinforced by the implementation of new prudential standards, both at the national and global levels, which are also set to substantially redefine the expected norms and the boundaries of modern finance.

Philipp Hildebrand: Swiss monetary policy and financial markets Summary of a speech by Mr Philipp Hildebrand, Member of the Governing Board of the Swiss National Bank, at the Autumn forecast of the Swiss Institute for Business Cycle Research, Zurich, 5 October 2006. The complete speech can be found in German on the Swiss National Bank’s website (www.snb.ch)  *  *  *  Transparency and communication enhance the impact and the precision of monetary policy. Monetary policy functions through expectations. This means that it is first and foremost expectation management. Central banks strive for transparency regarding their methods and approaches. All in all, the current economic and, in particular, the structural uncertainties are resulting in a greater range of possible economic scenarios and thus also in an increase in the range of expectations regarding our future monetary policy. In other words, being transparent does not automatically mean being predictable. Therefore, the Swiss National Bank (SNB) considers it particularly important to communicate its monetary policy concept to the markets and the public. This allows them to arrive at similar conclusions to those reached by the SNB. BIS Review 92/2006  1
Ultimately, monetary policy can do little to offset the real impact of real shocks: all it can do is support the necessary and inevitable adjustment of the economy to that real shock in a manner that guarantees inflation will remain at its 2% target on a sustainable basis over the medium term. Higher international energy prices weigh on UK real incomes and spending power. This is inevitable – monetary policy cannot avoid these effects. An important question in this context is how the inevitable cost of higher imported energy prices is distributed across UK residents. [22] Understandably, firms and households will seek to resist the impact of higher energy prices on their spending power by seeking to pass those costs onto their customers or employers and by raising their own prices and wages. But at the aggregate level, attempts to shift the unavoidable cost to someone else are self-defeating. All they achieve is to create additional nominal demand pressures on resources that ultimately will create inflation and endanger the achievement of the inflation target. [23] Other things equal, that element of inflation driven by firms’ and households’ attempts to avoid the real cost of higher energy prices is likely to persist as long as energy prices remain high, not just while energy prices are rising.

Between September 2021 (when I first joined the MPC) and its peak at the end of August, the January future price of UK wholesale natural gas rose by a factor of eleven. 17. In the MPC’s forecasts, our initial technical assumption was that gas prices would follow a random walk (in other words, they would stay at their then high level permanently) and then shifted to assuming they would follow the (downward) path implied by market futures prices. 18. For a critical assessment of this approach, see Beaudry, P., T.J. Carter and A. Lahiri (2022). ‘Looking through supply shocks versus controlling inflation expectations: Understanding the central bank dilemma,’ Bank of Canada working paper no. 22-41. 19. The Bank of England employs a suite of wage and price models as part of the analytical machinery underpinning the MPC’s quarterly macroeconomic forecasts. These models capture variants of the Phillips curve, with spot wage or price  Page 14 developments depending on measures of inflation and inflation expectations, as well as import prices and measures of economic slack. See, for example: Speigner, B. (2014). ‘Long-term unemployment and convexity in the Phillips curve,’ Bank of England working paper no. 519 and Esady, V., B. Speigner and B. Wanengkirtyo (2023). ‘Revisiting the effects of long-term unemployment on inflation: The role of non-linearities,’ Bank of England working paper no. 1018. 20. See Pill, H. (2023). ‘UK monetary policy outlook,’ speech by Huw Pill at the Money Market Association of New York University, 9 January. 21.
Consequently an increase in the value of a bank’s equity resulting from, say, a rise in the value of its (risky) assets will lead it to expand its debt (through deposit or wholesale funding) and a corresponding increase in its assets, either through extending new loans or acquiring additional securities. So as looser monetary policy boosts asset prices, it encourages an expansion in banks’ balance sheets, putting further upward pressure on asset prices. Leverage targets therefore act as an amplification mechanism. But the number of relatively safe borrowers/projects is limited. So the extension in the volume of loans is also likely to involve moving along the risk spectrum towards more risky borrowers. Looser monetary policy is not the only factor operating through these channels. Two other macroeconomic factors are potentially relevant. First, a number of authors have focussed on the role of international payments flows in the crisis, with capital flowing “uphill” from emerging economies, such as China, into the United States and some other advanced BIS Review 111/2010  3  economies (see, for instance, Obstfeld and Rogoff, 2009, and the references therein). Bernanke (2005) attributes this to a “savings glut” in the surplus countries. Possible drivers include: an inadequate household safety net and restricted capital market access for enterprises in China; the accumulation of precautionary holdings of international reserves by emerging economies following the Asia crisis; and rational savings of the windfall gains from higher oil prices on the part of oil producers.

Political initiatives to reduce regulatory inconsistencies would substantially support the supervisory convergence efforts. At the same time, there is a political objective to enhance the dynamism and competitiveness of the EU economy – the so-called “Lisbon” objective – and an efficient, integrated financial market is an important part of achieving it. The fact is that if we are to reap the full benefits of European integration, and meet the political objectives set in Lisbon, we need to find ways to ensure that the banking industry can operate with maximum efficiency and also that supervision is not unduly burdensome and promotes a level EU playing field. But we need to do this while also ensuring that depositors are adequately protected and that financial stability is preserved. In summary, the challenge is how to ensure both minimum gaps and minimum overlaps in supervision. Much progress has already been made in the banking context, but it is necessary to go further. BIS Review 84/2005  1  What should be the guiding principles for a European approach to dealing with these challenges? There are a range of views on how EU banking regulation and supervisory structures should face up to the challenges of the 21st century. What’s more, these opinions are not static, which makes for a complex situation. Among the most ambitious perspectives are those which advocate a single EU banking or financial services supervisory authority.