samchain/econo-pairs-v1 huggingface dataset:
After a long period of high housing investment and rising prices, activity in the housing market now appears to be slowing. Seasonally adjusted, house prices have fallen for four consecutive months. In recent years, house price inflation has been accompanied by strong growth in household debt. Credit growth remains high. Higher interest rates and falling house prices may lead to slower consumption growth and a higher saving ratio ahead. There are large regional differences in house price developments, but the trend has been the same since year-end 2006. House price inflation is decelerating in all regions, with a 12month decline in house prices in Hedmark and Oppland and a rate close to zero in Trøndelag. The strong rise in house prices has been accompanied by an increase in turnover up to the summer of this year. The stock of homes for sale has varied somewhat in recent years, but since summer 2006 there has been a sharp increase. This may explain some of the decline in house prices in recent months. The present economic expansion differs from previous upturns in that inflation has remained low so far despite strong growth and increasing capacity utilisation. There are several reasons for this. First, low import prices and high prices for our commodity exports have improved Norway’s terms of trade appreciably. Prices for oil and gas, freight, fish, industrial commodities and engineering products have increased considerably.

Meanwhile inflation on our inflation target measure has also averaged some 2¾% over the past seven or eight years. Helped by the dampening effect on UK inflation of the weakness of the euro against sterling, we have been below the 2½% target now for the past year and a half, and currently - on the standard HICP measure - we have the lowest rate of inflation in Europe at around 1%. Our problem in the UK is the imbalance within the overall economy between those sectors that are competing with producers in the Eurozone, who are under considerable pressure, and the rest of the economy, which is doing relatively well. Believe me, we are very conscious of the desirability of BIS Review 92/2000  2  exchange rate stability with our partners in the single market - even though we recognise that membership of the euro provides only nominal, rather than real, exchange rate certainty, and is, of course, limited to the Eurozone. Why then do we hesitate? The answer - in terms of the economics of the euro - it seems to me - and here I differ from Jean-Claude - is quite straightforward - not a bit paradoxical or bizarre! It is because to join the euro we would have to live with the single monetary policy. It may be that in time we could expect to do so relatively comfortably.
But we do also need to consider whether there might be costs to such an approach. For those policy issues to reach closure, we need to know the way forward on resolution. (ii)  Pure universalism  What of the other end of the spectrum? In principle, an alternative approach would be to shift to a more universal approach. A pure form of universalism would rule out separate resolution or insolvency proceedings, ring-fencing and, therefore, a race for assets. It might encourage  2  Basel committee on Banking Supervision (1992). “The insolvency liquidation of a multinational bank”, Bank for International Settlements. Its key conclusions were: (1) when closing a multinational bank, supervisors should pay attention to the nature and timing of communications among themselves and of their communications with creditors, shareholders and management; (2) the nature of liquidation rules may be relevant to the manner in which multinational banks are supervised; (3) differences in liquidation rules across jurisdictions in a windingup can affect returns to depositors and other creditors and the operations of deposit protection schemes; and (4) coordination and cooperation between liquidators can affect the returns to creditors in a liquidation and can be affected by the role of supervisors in a liquidation. 3  See the Bank’s recently published paper: “The role of macroprudential policy: A discussion paper” and Tucker P M W (2009e), “The debate on financial system resilience: Macroprudential instruments” at the Barclays Annual Lecture in London. 4  BIS Review 33/2010  a more cooperative approach to cross-border resolution.

This does not yet account for the losses relating to under-reported taxes which is directly enabled by a cash economy – a cost borne by society as a whole. A 2005 study estimated this figure to be USD100 billion annually in the United States alone The task of calculating the relative total cost of cash and cashless payments is a difficult one. Apart from the methodological challenges, the findings for each study are also likely to differ according to the nuances of each country. Nonetheless it is a worthwhile endeavour. Policy makers around the world have made positive progress in this area, and I believe we will see more efforts on this front in the coming years. This leads to another dimension of the social cost consideration, which is the impact on financial inclusion. Millions of people live in rural areas globally, with little or no access to the modern infrastructures necessary to facilitate cashless solutions. The availability of cash is therefore paramount in ensuring that they continue to be seamlessly included in the financial system. At the same time, the success of mobile payments operator M-Pesa in rural Kenya has demonstrated that cashless alternatives can in fact be a means to promote financial inclusion for the unbanked. Here in Malaysia, where mobile banking transactions have tripled in the past year, there is potential to leverage the high mobile penetration rate to improve financial inclusion. Stability The third element is stability.
I will go on to look at why, post-pandemic, the market might be very different to the post-GFC period and some of the broader implications were house prices to resume their pre-GFC trend of rising significantly above earnings. Finally I will look, at what, if any, implications this might have for policy. 1  Countries included in this calculation are: Australia, Belgium, Canada, Switzerland, Germany, Denmark, Spain, Finland, France, United Kingdom, Ireland, Israel, Italy, Japan, South Korea, Luxembourg, Netherlands, Norway, New Zealand, Sweden, United States. The authors acknowledge use of the dataset described in Mack, A., and E. Martínez-García. 2011. "A Cross-Country Quarterly Database of Real House Prices: A Methodological Note." Globalization and Monetary Policy Institute Working Paper No. 99, Federal Reserve Bank of Dallas. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  2  The post financial crisis period. In the 30 years following the liberalisation of the financial sector in the 1980s, outside recessionary periods, house prices in the UK grew consistently faster than earnings. There were two periods of particularly fast growth in house prices relative to incomes. The first was in the late 1980s, ahead of the early 1990s bust, and was driven by that liberalisation. The second was from the late 1990s up until the global financial crisis, and may have been linked to the Bank of England’s independence in 1997 and the consequent reduction in interest rates as inflation expectations and risk premia fell.

Spain had an oversized banking system, excessively concentrated on lending to the residential property sector and highly dependent on international wholesale financing. In 2008, the consolidated assets of the banking system amounted to 304% of GDP, bank lending to the property sector (in the broad sense of the term) reached 99% of GDP and bank debt held by non-residents accounted for 24% of GDP. Moreover a significant number of deposit-taking institutions suffered from institutional and governance shortcomings. Over the last decade many of these vulnerabilities have been resolved; in particular, those relating to the high level of non-financial private sector debt, which is now at levels similar to those in the rest of the euro area (having fallen by almost 70 percentage points of GDP from its peak in 2010). The weight of lending to property and construction activities has decreased by 47 percentage points of GDP. This reduction in non-financial private sector debt has been reflected in a decrease in the size of the financial sector and, in particular, in bank balance sheets in Spain, since business abroad has proved to be one of the main determinants of the resilience of some institutions. Thus, over the last ten years, the total assets of business in Spain have contracted by 20% (a fall of 72 percentage points of GDP) and employment in the sector has fallen by 32%.
Moreover, by virtue of the stock effect, the yield compression was expected to be long-lasting and to halve only after five years. Owing to changes in macroeconomic conditions and the need to adapt the monetary policy response, several recalibrations were made to the APP. [28] Accordingly, as is shown in Chart 9, the contemporaneous term premium impact changed over time, reaching its maximum of more than 100 basis points in mid-2016, when markets were expecting a significant expansion of the APP in light of increased uncertainty induced by the Brexit referendum outcome. When the end of net purchases was announced in June 2018, the impact on ten-year sovereign bond yields was estimated to be around 90 basis points. The additional duration extraction associated with the renewed net purchases that started this month has contributed to a further compression of the term premium. Currently, staff estimate the euro area sovereign ten-year rate to be more than 100 basis points lower than in a counterfactual where the APP never happened, and the curve to be distinctly flatter (see again Chart 8). Finally, there are also complementarities between the APP and other instruments, which I will briefly summarise. [29] First, the APP helps maintain the excess liquidity conditions that keep the euro short-term rate € the interbank overnight rate in the euro area, near the ECB’s deposit facility rate, which in turn contributes to avoiding undesirable bouts of interest rate volatility.

SPEECH  The yield curve and monetary policy  Speech by Philip R. Lane, Member of the Executive Board of the ECB, Public Lecture for the Centre for Finance and the Department of Economics at University College London London, 25 November 2019  Introduction It is a pleasure to speak this evening at University College London (UCL). In my contribution, I wish to share some thoughts about the yield curve and monetary policy. [1] UK data offer scholars a unique opportunity to take a very long view: the long-term nominal gilt yields shown in Chart 1 reach all the way back to 1826, the founding year of UCL. Over the past 200 years, gilt yields have never been as low as today. That long-term nominal yields have decreased substantially over recent decades is not specific to the United Kingdom but applies across advanced economies: long-term German yields and euro area overnight index swap (OIS) rates (which are the closest measure of a euro area-wide risk-free rate available) are currently ranging near record lows. [2], [3] Long-term rates in the euro area have even reached negative territory. [4]  Chart 1 UK, US, DE and euro area OIS long-term interest rates (percentages per annum)  Sources: Bank of England, Bloomberg, FRED, Jordà et al. (2019), Thomson Reuters. Notes: For the United Kingdom, the series is the rate on a consol, taken from the Bank of England data series “A Millennium of UK Data” (Thomas and Dimsdale, 2017).
Although the world economy froze significantly in the last year, other important dimensions of the external scenario, such as the terms of trade and international financial conditions, took a course that is favorable to us. Actually, Chile’s economic performance has been quite different from that of many other countries. The main advanced economies are still struggling with the consequences of the financial crisis that resulted in the world recession of 2009. They have a long road ahead to resolve the imbalances and weaknesses associated with this situation before they can resume sustained growth. The Eurozone countries have made progress in resolving their fiscal and financial problems, as well as strengthening the institutional pillars of the monetary union. These steps have been welcome by the markets, but the efforts must continue. Achieving a solution is a slow, costly and complex process, considering the great number of players involved. There is also the ongoing deterioration of the economic situation, which only makes things worse and complicates the required adjustments. Countries suffering negative growth rates and high unemployment for too long already cannot easily implement new austerity measures. Furthermore, the core European economies, which until recently had been relatively spared of the recession of the peripheral countries, have begun showing signs of weakness. Accordingly, the risks in the Eurozone remain. In the United States, the recovery of output and demand is weak, insufficient to quickly absorb its high unemployment.

To explain this, allow me to draw your attention to developments in yields on bonds with a BBB rating, i.e. among the less high quality bonds in the Fund’s portfolio. The above chart shows the pronounced changes in the difference in yield between these bonds and government bonds, or the credit spread. This does not per se reflect a higher risk of bankruptcies. If this were the case, perhaps half of these solid companies would have to file for bankruptcy in the course of a few years. In this analysis from the Bank of England, risk premiums on corporate bonds are instead divided into three components. One component takes account of expected losses and another uncertainty with regard to expected losses – in other words, fear. The third primarily indicates that these bonds have become illiquid, or more difficult to buy and sell. These liquidity premiums, and perhaps also premiums for the initial panic and fear, do not pose a problem for a fund like the Government Pension Fund. On the other hand, a prolonged period of fear and liquidity shortages – if the authorities are not able to reverse these developments – could lead to higher future losses. The Fund’s fixed income portfolio is well diversified across different types of bonds and different regions and the active strategies had low correlation in normal markets. However, the financial crisis revealed that these strategies were exposed to more underlying, systematic risk.
APRA started signalling its concerns to bank executives during 2002 and in 2004 went on to increase the capital requirements on uninsured “Low Doc” loans. More generally, APRA seems to have been quite strict in ensuring that loan origination standards were maintained and banks made prudent provisions for losses. This robust regulatory response was complemented by a slightly tighter monetary stance and numerous “open-mouth operations” by the RBA highlighting the growing risks in the housing and credit markets. The effect of these actions was to take some of the steam out of the housing market and ensure that banks were in a better position to withstand the global financial crisis when it finally broke. (For a fuller discussion of the Australian experience, see Paul Bloxham, Christopher Kent and Michael Robson, 2011.) Other examples of macroprudential regulation in action include: successive increases in risk weights on commercial and residential property loans by the Reserve Bank of India during 2005–8; dynamic provisioning after 2000 in Spain; and quantitative constraints on mortgage lending in Hong Kong in 1994. There are several other instances. Like Molière’s M. Jourdain, some have been speaking prose all along; the rest of us just need to catch up. The evidence suggests the effectiveness of these tools is, though, variable and we should therefore not expect too much from them (see Committee on the Global Financial System, 2010).

BIS central bankers’ speeches  7  Capital requirements and leverage constraints both affect the overall size of banks’ balance sheets. But credit booms and busts are often associated with excessive lending to particular risky segments of the market. So instruments to affect the composition of balance sheets are also potentially useful, for instance through selective variation in the risk weights applied to the calculation of capital ratios. Quantitative controls applying to particular sorts of loans, such as maximum loan-to-value ratios on mortgages are another option, as are minimum haircuts on repo and similar financial transactions between intermediaries. Finally, since excessive maturity mismatch is an aggravating feature of financial crises, banks could be asked to increase their holdings of reliably liquid assets as the risk of instability builds, in an analogous fashion to the capital buffer. Macroprudential policies are sometimes described as the missing instrument, but in reality many of these tools are familiar to regulators and there is already international experience in their application, often from emerging economies (though in some cases their application has been aimed at restraining aggregate demand rather than reducing the risk of financial instability). Indeed, the Australian experience nearly a decade ago is a prime example. Over 2002 and 2003, house prices here rose nearly 40 per cent, stimulated in part by changes in the tax treatment of housing, increased competition in credit markets and the attainment of a low inflation macroeconomic environment; alongside this, there was a similarly rapid rate of expansion in mortgage lending (see Chart 3).
There is no doubt that as a central bank we have been actively following these global trends and updating our statistics to new dimensions for the last ten years. We have been compiling sectoral financial accounts as an important tool for better tracking of vulnerabilities in the economy, and the first public release is scheduled for 2020. Aware of the risks that may arise in segments of the financial system outside banks we have upgraded the 1/3  BIS central bankers' speeches  statistics on deposit-taking institutions, with statistics on other financial institutions (pension funds, insurance companies, investment funds, leasing companies, financial companies). In the context of financial systems and markets, we were particularly focused on securities statistics, ensuring a better analytical infrastructure for timely risk detection. We have developed a broad and diverse database of financial stability indicators, and have been involved in the IMF reporting system on all key financial stability indicators, but also on some of the so-called “recommended” indicators. Hence, as a central bank, we have been constantly following international initiatives, enriching the statistical framework. Yet we must be aware that the enriched statistical framework also creates many new challenges. The increasing granularity of data and their frequency create an ecosystem with exponential growth in the volume and availability of data. The heterogeneity and complexity of the currently available data require a holistic approach to their transformation into official statistics.

Agents have always been and will continue to be important agents, including agents of change in the insurance sector as they are uniquely positioned to read the pulse of customers. This change could involve the insurer-agent relationship and the balancing of customers’ interests. The time could be appropriate for general insurance agents to reorganise themselves into an industry 3/4  BIS central bankers' speeches  association that can effectively mobilise the power of collective action and enable the agents as a cohesive force to better serve customers’ interests. This will also put in place a foundation for the possibility of setting standards on conduct, education and self-regulation of individual agents. Cultivating a solid industry association is neither an easy nor a short-term task but the benefits are immense. The Bank remains optimistic that agents will continue to play a key role in Malaysia’s insurance industry, and will be crucial to take us to the next level. In all this, agents must not deviate from their raison d’etre, i.e. intermediating between the insurer and the customer. Ultimately, we all should recognize that it is the interests of the customers, which is at the heart of it. Jack Ma of Alibaba, aptly said it, “Customers should be number one.” The challenge presented upon you today, is to embrace the Digital Economy and not lose sight of this. On that note, let me once again thank PIAM for the opportunity to share some thoughts with you today and I wish you a productive convention ahead.
See ‘[De]Globalisation and Inflation’, 2017 IMF Michel Camdessus Central Banking Lecture given by Mark Carney, 18 September 2017. 3 See ‘The Global Outlook’, speech by Mark Carney, 12 February 2019. 2  4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  Those at the core of the IMFS need to incorporate spillovers and spill backs, as the Fed has been doing. More broadly, central banks need to develop a better shared understanding of the scale of global risks and their consequences for monetary policy. We cannot all export our way out of these challenges. In a global liquidity trap, there are gains from coordination, and other policies – particularly fiscal – have clear roles to play. And acting earlier and more forcefully will increase their effectiveness. In the medium term, policymakers need to reshuffle the deck. That is, we need to improve the structure of the current IMFS. That requires ensuring that the institutions at the heart of market-based finance, particularly open-ended funds, are resilient throughout the global financial cycle. It requires better surveillance of cross border spillovers to guide macroprudential and, in extremis, capital flow management measures. And it underscores the premium on re-building an adequate global financial safety net. In the longer term, we need to change the game. There should be no illusions that the IMFS can be reformed overnight or that market forces are likely to force a rapid switch of reserve assets.4 But equally blithe acceptance of the status quo is misguided.

I wish all the participants fruitful deliberations and hope that at the end of this fourday training seminar, we will be more and better equipped in tackling this ugly problem – money laundering. I thank you all and wish our facilitators a pleasant stay in Freetown and a safe return journey. 2  BIS Review 79/2006