samchain/econo-pairs-v1 huggingface dataset:
Monetary easing was met by a premature and uncoordinated fiscal tightening. Between 2013 and 2018, fiscal policy tightened by around 2.5 percentage points of GDP, while in the United States it loosened by around 0.8 percentage points. This contributed to the slower recovery and weaker price pressures we experienced. Many observers, myself included, were already highlighting this inconsistency before the pandemic.2 But the crisis, by its very nature, forced us to take a much-needed change of direction. Fiscal policies had to step in to offset lost private sector income, because monetary policy could not target the sectors most in need of help. And we have now seen how powerful this can be: in the fourth quarter of last year, compensation of employees in the euro area fell by more than 2%, but real household income actually rose by 0.6% thanks to powerful government transfers. In parallel, monetary policy has continued to deliver the financing conditions necessary for all sectors of the economy to respond to the crisis, making a superior policy mix possible. Strong policy support will continue to provide a bridge over the pandemic and well into the economic recovery. The ECB is committed to preserving favourable financing conditions throughout this period. On the fiscal front, the European Commission expects the euro area fiscal stance to loosen by 2.5 percentage points of GDP this year.3 Better policy alignment has also extended to supply-side policies.

It undertook a swathe of regulatory reforms targeted at banks and nonbanks alike. Since 2011, European banks have nearly doubled their core capital ratios to over 14%.1 We also saw the creation of European banking supervision to give us a broad European view of risks to financial stability. This meant that, when the pandemic hit, the financial sector could play a fundamentally different role. Instead of being a source of instability, banks could be mobilised to enhance our response to the pandemic, rapidly funnelling liquidity to the economy. From March to May last year, bank lending to companies in the euro area rose by almost € billion, the largest jump on record in a 1/4  BIS central bankers' speeches  three-month period. The increase in bank capital before the crisis meant that supervisors could free up € billion of additional capital for new lending. And thanks to European banking supervision this decision was taken quickly and collectively, rather than in a drawn-out negotiation between multiple national supervisors. This joint European action also averted the risk of stigma that we had previously feared. What the financial crisis taught us, essentially, is that there is no trade-off between effective regulation and supporting growth. A robust financial sector is an asset during a crisis. And our experience during the pandemic has proven the wisdom of this lesson beyond doubt. The importance of credible commitment But the financial crisis also had a more profound impact on Europe, morphing into the euro area sovereign debt crisis.
Lars Nyberg: Prices and costs in the Swedish payment market Speech by Mr Lars Nyberg, Deputy Governor of the Sveriges Riksbank, to Scandinavian Card Markets, Stockholm, 25 January 2005. *  *  *  To begin with, I would like to thank you for the invitation to participate in this conference. In my previous speech at this forum in 2003, I mentioned the pricing of card products and of other payment instruments as an area of special interest for us. I announced then that the Riksbank, in consultation with the banks, had launched a research project related to this issue. The aim was to examine how well the price structure for retail payments reflects the underlying production costs for these services. Today, given the short time at my disposal, I will confine myself to discussing the results of this study.1  The evolution of card payments in Sweden and in the Nordic countries In order to achieve a more efficient payment system the prices for payment services should be based on production costs, including not only costs in the producing unit but also the end users’ and the intermediaries’ costs. Other things equal, transparent and cost-reflecting prices give users the information they need to choose the payment instruments that cost less to produce. It is usually assumed that society’s total payment-related costs are lower the larger the use of electronic payment instruments.

Conclusions Summing up, our results imply that there might be considerable cost savings to be made by the banks through a more transparent and cost-based pricing This is because such a pricing strategy would lead to changes in the pattern of demand. Consumers would have economic incentives to shift to those instruments that are less costly to produce. According to our cost estimates, they would use debit cards more and credit cards and cash less and they would increase their use of electronic credit transfers and direct debits at the cost of paper-based credit transfers. A more cost-based price strategy would result in private customers facing transaction fees on paperbased and electronically-initiated credit transfers and in the introduction of transaction fees for cash withdrawals. Fees for acquiring services would have to decrease. The fact that Swedish banks do not take any fees whatsoever for cash withdrawals, while such fees can be observed in the other Nordic countries, may very well be the explanation for our greater use of cash and lesser use of card payments. Based on the data on variable costs and volumes, the banking sector could lower their variable costs by around 560 million Swedish kronor annually if bank customers replaced charge and credit cards and cash with debit card payments. The shift from paper-based to electronically-initiated credit transfers could result in a further reduction in the banking sector’s variable costs of almost 200 million Swedish kronor annually. One interesting issue to consider is the reason for this pricing strategy.
Third, that the system does not do business and exist on the basis of an implicit commitment that the State will have to use public money, the public’s money, to bail out firms that get into trouble. And fourth, that the public can place trust in firms and markets based on their reputations and the transparency of their dealings. Regulation is important and it can help to foster that trust, but it cannot substitute for the trust that the public needs to have, in firms and markets. The State is not there to support the industry, and regulators are not there to substitute for trust in and the reputation of firms and markets. Some important principles follow from the identification of the public interest in financial stability. First, a competitive financial system can only exist if it is rooted in stability: competition and stability cannot be traded off in a binary sense. Second, the public should not define financial stability as preventing all financial firms from failing. In other sectors of the economy firms fail without putting at risk the funds of the public or taxpayers’ money. We will not truly have solved the too big or important to fail problem and thus the public money problem until we have tools at our disposal which enable us to resolve large institutions if they get into trouble. This will create the right incentives for risk management. And third, regulators must use their judgement to mount a robust challenge to stop dangerous business models and investment practices.

This last point is vital. Financial services is an industry where arbitraging rules and regulations is habitual, even addictive. Money is made this way. We have no desire unduly to suppress enterprise and innovation, but doing the right thing and preserving financial stability means accepting the spirit of the rules. This is not a small change. Let me give you one important example. The new Basel agreement emphasises loss-bearing capital – capital that can bear losses outside insolvency. It must stay that way, and not be chipped away under the banner of arbitrage masquerading as innovation. I have been asked a number of times in the last week whether I think that the new Basel agreement sets capital requirements high enough. My answer is that if the capital buffers are in future genuinely loss bearing capital with no tricky wrinkles, and we keep to this outcome, we have taken a good step forward. Sadly, that was not the case with Basel 1 in the late 1980s when I started out as a banking supervisor. The consultation document on regulatory reform in the UK published by the Government at the end of July emphasised the need for a judgement-focused approach by regulators “so that business models can be challenged, risks identified and actions taken to preserve stability”. What does this mean?
The MPC is accountable for hitting the inflation target. Developments in the rest of the world certainly affect us. And inflation will not always be close to target. But ultimately UK inflation is our responsibility: it is made and controlled in Threadneedle Street. The credibility of monetary policy relies on companies and households having confidence that the Committee will keep inflation close to target. After a series of failed monetary frameworks in the 1970s and 80s, the gains in credibility associated with the introduction of inflation targeting and the creation of an independent policy committee greatly improved the functioning of our economy. The task of maintaining low and stable inflation was made substantially easier, and we enjoyed a sustained period of economic stability. We lose those hard-fought gains at our peril. The MPC stands charged on four counts. Why is inflation so high? Why has inflation been so much higher than we expected? Could inflation remain high? And how is the current stance of policy consistent with the inflation outlook? My task today is to make the case for the defence. Why is inflation so high?

That uncertainty maps into differing views as to exactly how accommodative monetary policy needs to be. On the one hand, there is a risk that the strength and durability of the recovery may disappoint. Our economy still faces considerable headwinds, especially within the household sector, where real incomes have been squeezed and many families may not yet have adjusted fully to the implications of the substantial fiscal consolidation now in train. On the other hand – as I’ve discussed – there is a risk that inflation may remain higher for longer than currently expected. Either because global price pressures continue to add to domestic inflation or because the persistent period of above target inflation starts to become ingrained in wage and price setting behaviour. It is still too early to reach any firm conclusions, but it seems likely that the terrible events in Japan and the political upheaval in the Middle East and North Africa will add to both of these risks. The huge disruption in Japan and the uncertainty associated with events in Libya are likely to dampen global demand, at least in the short run. But the accompanying increases in energy prices are likely to add to domestic inflation. At the MPC meeting two weeks ago I voted to raise Bank Rate to 0.75%. Even with this increase in rates, the stance of monetary policy would remain highly stimulatory. Bank Rate would still be close to an historic low and the stimulus from our programme of quantitative easing would be unaffected.
Our studies continue to show that in our small, open economy, the exchange rate has a significantly greater impact on growth and inflation compared to domestic interest rates. Hence, MAS has been tightening monetary policy by allowing a stronger rate of appreciation of the $ nominal effective exchange rate since April 2010. However, with respect to cost pressures arising from the supply-side, monetary policy should aim to temper, but not fully offset. Higher labour costs in the short term due to permanent supply-side shifts are part and parcel of the market’s equilibrating process to guide the economy to a sustainable growth path. But MAS will be vigilant to the risks that these price developments can set off second-round price effects if left unchecked. The appropriate monetary policy response thus depends on the nature and persistence of the shocks that are affecting prices. Herein lies the monetary policy challenge: how do we distinguish between the relative importance of demand and supply factors in driving cost and price increases in the economy? On one hand, there could be a risk of keeping policy too loose and unhinging inflation expectations. On the other hand, stamping out inflation aggressively could forestall the important signalling role of relative price adjustments, as well as add to transitional costs, including the negative impact on growth. Let me illustrate with the example of ongoing changes in our labour market.

Zeti Akhtar Aziz: The development of the Malaysian bond market Remarks by Dr Zeti Akhtar Aziz, Governor of the Central Bank of Malaysia, at the Launch of the Electronic Trading Platform by Bursa Malaysia, Kuala Lumpur, 29 April 2008. *  *  *  Let me first of all thank Bursa Malaysia for inviting me to say a few words on this occasion of the launch of the Electronic Trading Platform. This initiative marks another important advancement in the development of the Malaysian bond market. The Electronic Trading Platform will take over the function that was previously performed by the Bond Information and Dissemination System (BIDS). Bank Negara established BIDS ten years ago, in 1997 to provide market information on domestic debt securities. BIDS was developed as a centralized database that provided information on the terms of the issue, details of trade done and the relevant information on the various debt securities, to facilitate increased transparency and efficiency in the bond market. BIDS therefore aided the price discovery process thereby promoting secondary and primary activities in the bond market. BIDS was revolutionary in its time as authorities in other jurisdictions subsequently launched similar initiatives in their respective markets. This Electronic Trading Platform is a significant enhancement to the mechanism in the development of a more vibrant bond market. Indeed, this development is timely because the Malaysian bond market is now at the threshold of its next stage of development. Several factors have brought the development of the bond market to this threshold.
I very much hope that I can convince you today why this is so. As I shall demonstrate later, the financial significance of Asia is indisputable. Yet, in many parts of Asia, financial intermediation, which is so important to promoting economic growth and development, remains elementary. There is I think an urgent need for Asia to harness its substantial financial resources for promoting growth and development but also for minimising Asia’s vulnerability to financial instability. With financial globalisation, the ability of Asia to get this right has significant implications for global finance. I also hope that I can, at the same time, raise your interest in some of the specific monetary and financial issues that we are tackling, in the region as a whole and in individual economies, with a special emphasis on China, including Hong Kong, where I come from. Asian finance Let me begin with a description of Asian finance, as I see it. There are six characteristics I would like to draw your attention to. The first is the financial significance of Asia. As I mentioned earlier, this is phenomenal. It is easy to appreciate this by pointing to some impressive numbers, such as those relating to the amount of foreign reserves held by Asian economies and the amount of portfolio and foreign direct investments going into, or coming out of, Asia. Indeed, there are seven economies holding foreign reserves in excess of $ billion and all seven of them are in Asia1.

But the questions that should be asked are whether they are sufficient; and if not, what is. These are issues that have been occupying our minds post-Asian financial crisis, for I certainly do not wish, in the case of Hong Kong, to mobilise once again, in whatever other form or guise, in the type of high-profile intervention in the stock market we organised in 1998. But there is, as yet, no regional consensus on the need for a long-term solution and what it might possibly be. Meanwhile, it is a fact that there has recently been a discreet drift, or at least temporary diversions, in the smaller emerging markets of Asia away from financial openness. They seem to have become more ready than before to regulate the outflow and inflow of funds, through a variety of formal or informal measures. The measures fall into two categories and are applied, where considered appropriate, selectively, targeting a specific group of market participants, for example non-residents, or activities of a specific purpose, such as those considered speculative. The first of these limits the convertibility of the domestic currency, in either direction, and the second limits the ability of banks to expand their assets or liabilities denominated in the domestic currency. So far these have proven to be  BIS Review 66/2004  3  helpful in maintaining monetary and financial stability after the crisis of 1997-98, and, most important, have not undermined the flow of foreign direct investments.
Jacqueline Loh: Strengthening Asia's bond markets Keynote address by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of Singapore, at the Asia Securities Industry & Financial Markets Association's Annual Conference, Singapore, 17 November 2016. * * * Andrew Ng – Chairman, ASIFMA Mark Austen – CEO, ASIFMA Greg Medcraft – Chairman, Australian Securities and Investments Commission, and my fellow keynote speaker Fellow regulators and central bankers Distinguished guests Ladies and gentlemen 1  It is my pleasure to join you this afternoon at the 10th ASIFMA Annual Conference. 2 When I last spoke here two years ago, the global economy was confronted by what the IMF described as “legacies, clouds and uncertainties”, and was forecast to grow at just 3.3%1. Two years on, in 2016, the IMF has lowered its forecast for the current year further to 3.1%, reflecting a more subdued outlook for advanced economies, before recovering to 3.4% in 20172. This is below the immediate pre-GFC average of 4.2% over 1998–2007, though more aligned with its long-term average of 3.1% over 1980–1998. 3 The medium-term growth story for Asia is bright. The IMF’s outlook for the next five years is for emerging and developing Asia to grow by a robust 6.3%, well above the forecast for the US (1.9%), Europe (1.5%) and Japan (0.5%), and will underpin the higher investment returns in this part of the world. 4 Asia’s bond markets have softened in recent years but has much potential alongside its relatively strong economic growth outlook.

19 Singapore already offers an excellent ecosystem of financial institutions, professional services like legal and accounting, credit rating agencies, and market infrastructure for Asian companies to issue, market, list and trade their bonds. To make it more attractive for Asian issuers to raise international capital in Singapore and benefit from the ecosystem here, we will introduce an Asian Bond Grant scheme next year. The scheme aims to broaden the base of issuers in our bond market, which will add to the breadth and diversity of debt instruments for the 4/7  BIS central bankers' speeches  investing community. Qualifying Asian issuances will be able to offset up to 50% of one-time issuance costs such as international legal fees, arranger fees and credit rating fees. We have consulted with local market participants on various aspects of the scheme to ensure a smooth implementation. I am glad to say that the industry has been supportive of this initiative, and together we are confident that this will enhance Singapore’s value proposition. Encouraging rated issuances 20 Even as we draw Asian issuers to Singapore, we want to encourage these issuers to be rated. Credit ratings improve general market transparency by providing independent and comparable assessments of the credit worthiness of issuers. Together with business and financial information provided in the offering documents or company announcements, credit ratings can assist investors to better understand the issuer’s business and financial health.
Thank you  9  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  9  Annex Chart 1: Level of GDP and potential output(a) Index 1997Q1 = 100 160 150 140 130 120 110  Potential output GDP  100 1997  2000  2003  2006  2009  2012  2015  2018  (a) Potential output is defined as the level of GDP achievable if all factors of production were utilised at their long-run equilibrium levels. Its projection is a matter of judgement for the Monetary Policy Committee, consistent with the Committee’s forecast for the output gap. The historic path therefore reflects, in part, a sequence of judgements by current and past MPCs rather than the output of any one model. Source: Office for National Statistics and Bank calculations Chart 2: Impact of Covid-19 pandemic on labour productivity as estimated from Decision Maker Panel (b) Percentage impact of Covid-19 on labour productivity per hour 12 10 Between-firm Within-firm  8 DMP Labour Productivity (private sector)  6 4 2 0 Feb MPR Labour Productivity -2 (whole economy)  DMP TFP (private sector)  -4 -6  2020 Q1  2020 Q2  2020 Q3  2020 Q4  2021 Q1  2021 Q2  2022+  (b) See Bloom et al (2020) for details. The impact of Covid-19 in the February 2021 MPR forecast is estimated as the difference between the February 2020 and February 2021 forecasts.

Employment, total hours worked and unemployment all tend to be highly persistent, so a rise in unemployment means – based on history – that it will be higher a year from now. That said, the UK labour market has adjusted relatively quickly to large shocks in the past (Broadbent, 2012). In normal times, around 9% of workers change jobs every year, but the tendency to persistence provides evidence from the past of the effects of a mismatch between the skills of job seekers and those required by hiring firms. As I noted earlier, some of the sectors hardest hit by the pandemic employ more young and low-skilled workers, who may find it hard to move between sectors (Haldane, 2020). That difficulty will be amplified if the jobs involve different tasks. Bank staff have analysed the task content of different jobs to quantify the extent of task reallocation required in various scenarios. In a relatively extreme scenario where the pattern of consumer spending is unchanged from 2020 Q3, staff estimate that the extent of the task reallocation over coming years would be higher than in the recent past, but much less than occurred during the 1980s and early 1990s. That was a period of 4  All speeches are available online at www.bankofengland.co.uk/news/speeches and @BoE_PressOffice  4  significant structural change during which the share of employees working in the manufacturing sector fell from 26% to 16%. There are two important points I would emphasise here.