samchain/econo-pairs-v1 huggingface dataset:
Relatively high fiscal and current account deficits may weaken the foundation of the building and adjusting them in a smooth manner is a much more sensible thing to do than letting the market forces make an abrupt correction. As regards monetary policy, strict liquidity management represents a step in the right direction. But, of course, monetary policy alone is not enough. Which brings us to the second rule: there is no substitute for a predictable and coherent economic policy mix. Let me stress that it should remain so even when facing the challenges of election years (there are several election rounds in Romania in 2019 and 2020). A significant pace of economic convergence is desired, but the process should unfold sustainably to preserve macroeconomic equilibria and safeguard competitiveness. As I usually put it, to successfully adopt the euro, one should be a marathoner rather than a sprinter. Last, but not least, the third rule might be as follows: when the normalisation wave eventually hits, the magnitude of the impact will depend on how vulnerable emerging economies are to external financing. A contained current account deficit, a long average maturity on public and private foreign currency debt and a coherent mix of countercyclical macroeconomic policies and structural reforms would go a long way in limiting the risks. If proper economic policy actions are not implemented while there is a window of opportunity, the possibility of a forced resort, in a more or less distant future, to sub-optimal measures in the face of adversity cannot be ruled out.

As a matter of fact, back in 2005, being aware of the risks associated with the free capital movement and subsequent ample fluctuations of the exchange rate, the National Bank of Romania decided to adopt a “light” version of inflation targeting. We deemed it more suitable than any other option in terms of sustainably achieving price stability, while limiting the cost of excessive volatility in output and employment. In fact, the NBR’s overall approach has been a balanced one. On one hand, we did not ignore the threat of inflation for the sake of fast and easily gained (and therefore unreal) prosperity. On the other hand, we tried to avoid becoming, in Mervyn King’s words, an “inflation nutter". Let me emphasise that the classic recipe of inflation targeting would recommend a policy rate hike at the current juncture in some of the CEE countries. However, in Poland, Czech Republic, Hungary and Romania, policy rates currently stand below the inflation rate. And precisely because we are not cut off from what is going on around us, the NBR’s monetary policy stance should be assessed in a regional context. But beyond the regional environment, if we look at advanced economies and, in general, at the euro area, we see low inflation and modest economic growth rates prevailing. They do not necessarily call for a tightening of monetary policy. By contrast, CEE countries have rather high inflation and significant economic growth rates, therefore the context would be described in a textbook as adequate for tightening.
A bank failure affects not only shareholders and professional investors, but also all the ordinary people who have put their money in the bank in the belief that it will be safe there. It is not without reason that you often hear the reference to widows and orphans running the risk of losing their money in connection with bank problems. And even if the depositors may in the end recover much of their money in a subsequent insolvency procedure, they may lose access to the money in their bank account, and the possibility to make payments from it, for quite some time. As most of us have most of our money in a bank account, we may find it difficult to quickly find the means needed to pay our rent and food if this happens. And you may also be affected by the failure of other peoples’ banks. For instance, if your employer’s bank gets into problems, the pay-roll account might be frozen and you might not get your salary. And if your employer cannot quickly get credit from another bank, he may not be able to pay his subcontractors and his utility bills. He may also find it difficult to manage the risks in his business, for instance in relation to trades in a foreign currency. At worst, he may need to shut down entirely. A bank failure can thus have negative effects on the real economy.

Anita Angelovska-Bezoska: Financial regulation, implementation and transition effects on emerging market economies Speech by Ms Anita Angelovska-Bezoska, Vice-Governor of the National Bank of the Republic of Macedonia, at the Fourth OMFIF Main Meeting in Europe, Ankara, 5–6 September 2013. *  *  *  Special thanks for the preparation of the background note to Ana Mitreska, Monetary Policy and Research Department and Natasa Andreeva, Financial Stability and Banking Regulation Department. Mihajlo Vaskov and Ljupka Georgievska also contributed to the drafting of the Note. Background note prepared for the participation of the Vice Governor Anita Angelovska Bezoska at the Fourth OMFIF Main Meeting in Europe, Ankara, Turkey, 5–6 September 2013. Since the onset of the global financial crisis the financial regulatory overhaul has been put high on the policy agenda with the aim of increasing the resilience of the banking system and thus promoting global financial stability. Stronger banking system will be better placed to absorb financial or economic shocks and prevent transmission of these shocks to real economy. The regulatory reform basically addresses the lessons learned from the crisis that insufficient capital and liquidity buffers, non-adequate on and off-balance sheet risk coverage and excessive leverage can undermine the stability of the financial system leading to contraction of the economic activity that can further aggravate the financial instability and require public sector intervention to avoid full-blown banking crisis. In this vein the reform will undoubtedly contribute to creating more sound and resilient banking system that is a key for sustainable growth.
As such, it is often natural for the main focus of policy to be concentrated on the prospects for demand. But judgements about supply also matter, particularly so in the aftermath of a deep recession. In recessions, demand typically falls by more than supply. An output gap opens up – the economy can supply more than is currently demanded. And unless that gap is closed, it will push down on costs and prices. The job of monetary policymakers is to loosen policy, so that demand is brought back into balance with supply and inflation remains close to target. Exactly how expansionary policy should be depends critically on the size of the output gap. But assessing the size of the output gap is very difficult, for exactly the reasons we have been discussing today. Early estimates of economic activity can be revised substantially, so it is hard to know just how weak demand and output really are. And it is equally difficult to know the extent to which the supply potential of the economy has been affected by the recession.13 This difficultly greatly complicates the setting of monetary policy. Indeed, in a series of influential papers, Athanasios Orphanides (eg Orphanides 2003) has argued that over-estimates of the size of the output gap played an important role in the policy mistakes that led to the period of persistently high inflation in the US in the 1970s and 80s. 13  6  Or indeed, if shocks to supply were instrumental in causing the recession.

So what could account for the recent poor productivity performance? One possibility is that the weakness of measured productivity growth may exaggerate the true extent of underlying weakness. Let me explain. An encouraging aspect of the recent recession is that although unemployment increased, it rose by far less than we might have feared given the depth of the recession. The recent data on employment and unemployment are worrying in that context, with unemployment edging up over the summer, after having previously fallen by over 50,000 from its peak in early 2010. If this weakening in the labour market continues that could materially change the relationship between output and employment. But to date, companies appeared to have held onto a greater proportion of their labour force than in past recessions. My own experience of speaking to businesses at the depth of the recession is that this was driven by a desire to retain valuable skills and experience. Many companies had learned from past experience how difficult it is to re-employ skilled workers once let go. But a consequence of this labour hoarding is that the amount of output produced per worker fell very sharply, in many cases partly because working hours were cut back. And although there has been some rebound since then, the level of labour productivity has still not recovered to its previous level. This greater retention of labour suggests that firms may be sitting on a substantial degree of spare capacity.
Phase 2a: The acute phase of the coronavirus crisis – broader purchases of securities for continued market functioning On 11 March 2020, the World Health Organisation (WHO) announced that Covid19 would be considered a pandemic. Many were, of course, concerned about health risks, but many were also concerned about how the economy would be affected. International economic prospects weakened rapidly. Many economies closed down almost completely and service sectors in particular were hit hard. It was very uncertain how long the pandemic would last and how households and companies would get through it. In this situation, both central banks and other authorities reacted quickly, and comprehensive support packages were presented. The aim was often to facilitate the overwintering of companies so that their operations could be restarted once the economies had reopened. The Riksbank saw a risk that the great uncertainty would mean that households and companies would encounter ever higher interest rates on their loans and that this would impair their ability to cope with the pandemic. In March and early April 2020, this risk was reflected in, among other things, the fact that interest rates on mortgage and corporate bonds began to rise rapidly and that the markets for these bonds were functioning poorly. The risk was therefore that concern over weak economic developments with more and more payment defaults would be self-fulfilling through a vicious circle, where rising risk premiums lead to ever-increasing problems and even higher interest rates.

Each situation may call for an appropriate response and we now know that this includes massive and direct interventions in markets, to some extent similar to foreign exchange interventions. It is plain that this type of action has no constraints in terms of amounts or timeframes; such amounts are unlimited because central banks can absorb the liquidity injected and they inherently have no liquidity problems in their currency. Moreover, I believe that the fact that central banks have shown that they are able to take such action is in itself likely to limit the emergence of asset price disruptions by limiting speculation. Some recent modest purchases under our Securities Market Programme have acted as a strong reminder that we were still monitoring very closely the evolution of key markets. But this does not mean that markets and market participants should always expect central banks to make such interventions. Similar to its lender of last resort function, the role of buyer of last resort that central banks can take on must not extend to insolvent issuers and must not, at the risk of causing a very dangerous moral hazard, be systematic each time a problem arises. Such interventions must result, as rapidly as possible, in a return to normal market functioning, which is the only way to ensure a truly efficient allocation of capital and which enables us to determine economic agents’ expectations. Thank you very much for your kind attention.
We have therefore worked with the Government on two measures to enhance the resilience of the SGS market. MAS will be empowered to either adjust the issuance size or vary its subscription amount to stabilise an auction. This will mitigate the risk of disorderly trading in specific securities or further volatility in the secondary market. In the event of extreme market conditions or disruption, MAS will be empowered to cancel an auction. In ensuring stability and resilience of the financial sector, a key anchor is a central bank backed by a strong balance sheet. We have increased our total capital and reserves to $ billion, representing close to 11% of MAS’ total assets of $ billion. This will position us well to navigate through a potentially volatile financial market environment, and allow us to implement a broader range of measures to stabilize the Singapore financial system should the need ever arise. While local institutions withstood the crisis and remained sound, a large number of local investors were adversely affected when the credit-linked structured notes they bought defaulted or were redeemed early. Although the defaults were triggered by an unprecedented financial crisis, it has been a painful experience for affected investors. MAS has responded by taking prompt measures to require affected financial institutions to review complaints rigorously. MAS’ approach was for financial institutions to review complaints on a case-by-case basis. Settlement offers are made by the financial institutions taking into account the particular facts and circumstances of each transaction.

12  Figure 1 Inflation indicators (*) (annual change, percent)  8  8 CPI  6  6  Services EFE  4  4  2  2 Goods EFE  CPIEFE  0  0  -2  -2  -4  -4 13  14  15  16  17  (*) As from January 2014, the new indexes with base year 2013=100 are used, so they are not strictly comparable with earlier figures. EFE: excluding foods and energy. Sources: Central Bank of Chile and National Statistics Institute (INE). Figure 2 GDP  Impact of seasonal factors on the Imacec (*)  (real annual change, percent)  (annual change, percentage points)  4  4  0.3  0.3  2  0.0  0.0  0  -0.3  -0.3  -2  -2 -0.6  -0.6  -4  -4 -0.9  -0.9  -6 -1.2  -1.2  -8 -1.5  -1.5  Resto 2 Total  0  -6 RR.NN. -8 15  16  17  Apr.14 Apr.15 Apr.16 Apr.17  (*) Difference between annual variations of the original and the seasonally-adjusted non-mining Imacec. Source: Central Bank of Chile.
Dental care and other medical services are also offered, at prices that are substantially lower than here. The Norwegian oil and gas company Norsk Hydro reports that almost 300 000 hours of engineering services for the natural gas field Ormen Lange were supplied by Indian engineers, located in India. The shift in the division of labour is now influencing real wage growth in industrialised countries. The risk that a business will have to wind up operations or move abroad is dampening costs as bargaining power is being transferred from workers to employers. In a number of European countries, wage growth is also being influenced by labour inflows from the new EU member states. Increased trade has engendered higher demand for shipping services and favourable freight rates for a period. This has in turn led to a boom in the shipbuilding industry. At the same time, high energy  BIS Review 30/2006  1  prices are boosting investment in the petroleum and electricity sectors, with considerable impetus to the engineering industry. Growth in Asia is also having a favourable impact on many metal prices. Norway’s terms of trade are improving. Prices for our imported goods are falling in relation to prices for goods we export. The impact of the rise in oil and gas prices is particularly strong, but the terms-oftrade gains for the mainland economy have also been high. The situation in Norway differs from that of its Nordic neighbouring countries.

Carlos Massad: New economy, old cycle? Remarks by Mr Carlos Massad, Governor of the Central Bank of Chile, in a panel discussion organised by the Bank for International Settlements, Basel, Switzerland, 10 June 2001. * 1. *  *  Introduction  The new economy involves changes: faster and cheaper communications, higher labor productivity, savings in the supply chain in the business to business sector, and improvements in inventory control. It also involves growing integration of world markets. As a counterpart, we are experiencing increased volatility in stock prices and terms of trade. Krugman has gone even further, to assert that “growing 1 integration does predispose the world economy to more crisis” . What are the consequences of these changes on emerging market economies? Furthermore, we Central Bankers have faced many changes, and must be prepared for changes, whatever their source. How should these economies respond to those changes? These are critical issues today for almost every emerging economy. 2. Any impact on the real economy? Globalization of international financial markets over the last decade, a by-product of cheaper and faster communications, has led to an increase in asset return correlation around the world. Swings in the Dow Jones, NASDAQ and in fixed rate instruments lead to adjustments in portfolio decisions the world over that have implications for the real economy. The higher the correlation of returns, the lower, on this ground, the incentive for short-term capital movements.
Fines for bad behavior drain resources that could be better used to expand access and improve services, but billions of dollars in avoidable penalties are just the start. The time spent handling a legal crisis is time not spent on more productive pursuits. Moreover, I worry that, in the long term, an industry that develops a reputation for dubious ethics will not attract the best talent.3 In contrast, a trustworthy financial services sector will be more productive and better able to support the economy. Reliable financial intermediaries can help increase the flow of credit, promote economic growth and make the financial system more stable. This is why restoring trustworthiness must be the ultimate goal of reforming culture. The industry’s shared norms—its culture—will not change by mere exhortation to the good, whether from me or from the industry’s CEOs. In my experience, people respond far more to incentives and clear accountability than to statements of virtues and values. The latter are worthy and necessary, but remain aspirational or even illusory unless they are tied to real consequences.4 What does it mean for a firm to profess to putting the customer first, if employees are compensated and promoted regardless of what’s good for customers? Or, worse, if they are not held to account for activities that can harm customers? If we focus on nothing else in today’s conference, let’s explore how best to structure incentives and reinforce accountability to align with core purposes and first principles.

Housing cost overburden rate - Romania percent 60  1st  50  47% 44.9%  40 24%  30 20 10 0 2007  2008  2009 1st Q  2010 2nd Q  2011  2012  3rd Q  2013 4th Q  2014  2015  2016  5th Q  Note: percent of population with costs more than 40 % of disposable income Costs include rental or mortgage interest payments , cost of utilities such as water,  Source: Eurostat  Figure 11. Savings behavior in Romania - 2016 percent 100 90  82.7  80 70 60 50  34  40  25.9  30  19.1  20 6.6  10  14.4  11.6 2.9  2.5  0.3  0 EUR 0-2,200  EUR 2,200-11,000  EUR 11,00022,000 % in total number of depositors  EUR 22,000100,000 % in total deposits  >EUR 100,000  Source: BDGF  9  Figure 12. Access to mortgage loans percent 14  12.3  12 10 8 6 4.0  4 2  2.0  1.5  0.9  0 1st q. 2nd q. 3rd q. 4th q. 5th q. Note: Share of households with mortgage loans in total households, by income quintiles Source: Ministry of Finance, Central Credit Registry, Credit Bureau  Figure 13.
Chart 2: Investment Grade corporate yields have also moved lower in recent years Per cent 12 10 8 6 4 2 1997  2001  2005  2009  2013  0  Source: Merrill Lynch Chart shows the nominal yield on the average UK corporate bond with a maturity of more than 18 months. The average maturity is typically 10-12 years. 8  BIS central bankers’ speeches  Chart 3: Market implied measures of long-term inflation expectations have been stable Per cent 6 5 4 3 2 1 0 1992 1995 1998 2001 2004 2007 2010 2013  -1  20-year average (RPI) inflation rate implied by comparing the yield on nominal and index-linked gilts Headline CPI inflation Source: ONS and Bank calculations  Chart 4: Unit wage cost growth has not returned to pre-crisis rates  Unit wage costs  1997  2001  2005  2009  Year on year growth (%) 8 7 6 5 4 3 2 1 0 -1 -2 2013  Source: ONS and Bank calculations.

Yet, in the case of these countries, there is a real risk posed by speculative capital inflows. As long as negative real interest rates prevail in Europe, straying too far away from our regional peers in terms of policy rate would invite considerable appreciation pressures. While helpful in terms of taming inflation, these would not be welcome, given Romania’s increasingly significant external imbalance that is singular in the region in terms of size and trend. It owes to the faster growth of domestic absorption than that of domestic output, as well as to non-price competitiveness issues manifest in certain production sectors. Therefore, striking the right balance in terms of the interest rate differential is of the essence. After the tightening undertaken so far in Romania (including three policy rate hikes in the first half of 2018), it is probably wise to proceed cautiously in the future. 2/3  BIS central bankers' speeches  Which brings me to the last issue I would like to address: what is advisable in terms of economic policies in order to cope with any future adverse developments. For the sake of simplicity, allow me to try to formulate three general rules that are instrumental in dealing with such developments. First of all, irrespective of the possible scenarios, it is wise to put your house in order before the storm comes. One example is fiscal consolidation, which is paramount for the economy.