samchain/econo-pairs-v1 huggingface dataset:
ways to delink reserves creation from monetary policies and exchange rate management appear promising and, although very complicated, should be encouraged. These are extremely difficult issues. But I want to pay tribute to the leadership taken by Korea on this question during its G20 Presidency. Conclusion To conclude, I would like to outline what I see as the main lessons central banks should draw from the crisis. First, financial crises are a pervasive feature of modern capitalism. While the exact timing of a crisis is hard to predict, situations of financial fragility, when some sectors have increased their debt and leverage in parallel to asset prices, reduce the resilience of financial systems to asset price reversals. Second, timely and determined interventions of central banks can quench the thirst of financial markets for liquidity and limit the spill over of liquidity squeezes to the real economy. Central banks have demonstrated that their international cooperation could be relied upon even under extreme stress in financial markets that have become integrated at the global level. Third, central banks should both prepare to manage future financial crises and design their policies in order to minimise the risks of future financial crises. For the least, central banks should avoid that their policies stimulate potential excessive risk taking, which although benign in good times, increase the scale of insolvency in the event of an asset price reversal. This is the best way to limit the risks to price stability over the longer run. Thank you for your attention.

Any structure needs to be funded. The use of emergency support should be reduced over time. Maximise Value – The Bank of Cyprus has received substantial capital. It needs to manage its loan book, restructure loans and maximise value. This will not be best achieved through a fire sale. Support the Economy – As the largest and most important bank in the country the recovery of the Bank of Cyprus is vital to the recovery of Cyprus. The bank must continue to prudently lend to business and consumers. BIS central bankers’ speeches  1  The Cypriot economy and the Bank of Cyprus have undergone a severe shock. However, both Cyprus and the bank are resilient and can emerge strongly. It is important to recognise that substantial progress has been made. The Bank of Cyprus is now adequately capitalised and has exited resolution. New management is in place and they are working on preparing the strategy and restructuring plan. The ECB’s Governing Council has recognised the steps taken to restore confidence. Continuing the efforts to create a stronger and safer Bank of Cyprus is in all of our interests. I look forward to hearing the panellists’ views on how this can best be achieved. 2  BIS central bankers’ speeches
Later on, it is expected to gradually reduce to 20 billion US dollars by the end of 2022. I would like to emphasise once again that the fiscal rule mechanism smooths out the impact of a decrease in the current account balance on the domestic economic environment. However, it only pertains to oil price fluctuations. I would like to stress that we have slightly changed our approach to publishing forecast scenarios. The key rate decision relies on our baseline macroeconomic forecast and the analysis of uncertainties and risks for the baseline forecast. This is the reason why we will continue to publish the baseline scenario four times a year in our press releases and Monetary Policy Report following core meetings. We will release our supplementary scenarios – the high oil price scenario and the risk scenario that assumes that prices will plunge – in the same manner as the baseline scenario but once a year, in the Monetary Policy Guidelines. It is determined by the essence of these scenarios that remains almost unchanged across the meetings. The 2020–2022 Guidelines will be published on Monday. Winding up, I would like to comment on monetary policy prospects. 2/3  BIS central bankers' speeches  After the five years of the evolution from tight to moderately tight and then to neutral monetary policy, we have finally entered the key rate range we consider as a probable neutral interval.

As a result, we may only expect GDP growth to accelerate to 2-3% by the end of 2022, rather than in 2021. A higher economic growth rate should primarily be driven by the shift to a more extensive implementation of national projects and other governmental measures aimed at removing structural constraints. This will promote an increase in investment demand and a quicker rise in labour productivity, household income and, accordingly, consumption. Lending will sustainably expand over the entire forecast horizon supporting economic growth. Corporate lending will annually increase at a pace of 6-10%, and household lending will grow by 10–15% each year. Mortgage loans will account for the bulk of household lending growth. Meanwhile, macroprudential measures will gradually reduce the growth pace of consumer lending. We have updated the balance of payments to factor in the world economy dynamics, prices for oil and other Russian exports. We assume a gradual decline in oil prices to 50 US dollars per barrel in 2021 (as compared to 55 US dollars considered earlier). If external demand weakens, prices for other Russian exports will drop, too. In such conditions, the current account balance will shrink from 83 billion US dollars (5% of GDP) this year to 28 billion US dollars (which is about 2% of GDP) in 2022. Given the actual dynamics observed since the beginning of the year, we have also slightly lowered the 2019 forecast for the private sector’s financial account balance from 50 to 40 billion US dollars.
Summers, L (2013), speech at IMF Fourteenth Annual Research Conference in Honor of Stanley Fischer. Susskind, R and Susskind, D (2015), The Future of the Professions: How Technology Will Transform the Work of Human Experts, Oxford University Press. Swinney, P (2018), ‘The wrong tail’, Centre for Cities. Universities UK (2017), ‘Patterns and Trends In UK Higher Education’, Universities UK. Van Reenen, J, Bloom, N, Draca, M, Kretschmer, T, Sadun, R, Overman, H and Schankerman, M (2010), ‘The Economic Impact of ICT’, SMART N. 2007/0020. Willetts, D (2017), A University Education, Oxford University Press. 26  All speeches are available online at www.bankofengland.co.uk/speeches  26  Annex Chart 1: World GDP per head since 1000 AD 1990 International Dollars  7000 6000 5000 4000 3000 2000 1000 0  1000  1100  1200  1300  1400  1500  1600  1700  1800  1900  2000  Year Sources: De Long (1998). Chart 2: UK productivity, real wages and GDP per head Index, 1760 = 100 1800 1600 1400 1200 1000 800 600 400 200 0 1760  1810  1860  Productivity  1910 Real wages  1960  2010  GDP per head  Sources: Bank of England, ‘A millennium of macroeconomic data’, available online. Notes: Labour productivity per head uses GDP at factor cost. Real wages defined as nominal wage divided by GDP deflator at factor cost.

In other words, looking at a cross-section of UK companies, secular innovation (for the upper 1% or 0.1%) has co-existed with secular stagnation (for the remaining 99%). The two are engaged, not so much in a secular struggle, as a secular stand-off. Technological diffusion, and hence productivity growth, has been the casualty. 67  Andrews, Criscuolo and Gal (2016). Department for Business, Energy & Industrial Strategy (2017). 69 Haldane (2017). 70 Productivity figures refer to the non-financial business sector, but other sectors for which data are not available over the full ten-year period are also omitted. 68  19  All speeches are available online at www.bankofengland.co.uk/speeches  19  There have been one or two recent studies which have been quoted as questioning the importance of this “long tail” issue for the UK. 71  These pieces use the same data used here. The problem arises not from the  data but from the (mis)interpretation placed on them by these studies. All of these studies show, very clearly, that the UK has a significant long tail problem. Appropriately defined, they also demonstrate that this tail has lengthened during the course of the crisis. To give one example, my Bank colleague Patrick Schneider recently published a blog post showing that a good chunk of the slowing of productivity growth since the crisis could be accounted for by workers in the top quartile of the productivity distribution. 72  This is entirely consistent with the tale of two companies.
And we are much better able now than we were to ensure that a failing bank can if necessary be stabilised so it can continue to provide critical services to the economy. What remains to be done? However more remains to be done. First and foremost, we need to implement fully the reforms I have mentioned. Banks need to continue to build up the necessary loss absorbency and to restructure as necessary to ensure operational continuity in resolution. This is perhaps an obvious point, but one that needs repeating. It is 10 years since Northern Rock failed and memories may be beginning to fade. 6  All speeches are available online at www.bankofengland.co.uk/speeches  6  Ensuring that we have a better option than insolvency or a bailout, is not costless. And, as that cost becomes apparent in a number of jurisdictions, there are increasingly voices calling for the reforms to be watered down or abandoned. It is argued that they are too expensive for banks, especially small banks, to implement and will restrict lending to the real economy. On the cost, I would emphasise the cost not only to the taxpayer but to the economy as a whole of disruptive bank failure. In the UK, the going concern capital regime is based on assurance of there being an effective way to resolve failing banks. Absent such assurance, if this risk of disruptive bank failure remained as in 2008, we would require banks to hold appreciably more capital to absorb losses.

There is no growth without credit, and without growth, savings lose their value. Therefore, it is imperative that short-term goals do not prevent the adoption of a strategic and longer-term vision. Banks should invest with a view to developing functions related to financial consultancy services for their clients. They need to persistently seek to explore the market, to identify potential clients – especially households and small enterprises – and, most importantly, to help them design bankable proposals and projects. At this phase, the reduction of concentration and the diversification of credit portfolios are key elements. This requires that you design and set up relevant structures, processes and products, and plan for adequate financial resources. In parallel, you should continuously assess the surrounding environment, which certainly affects your activity. Thus, if there are concrete proposals for additional legal amendments or supervisory practices, I invite you to formulate and submit them officially to us and other relevant public authorities, so that we can, together, make a swift decision on them. In 2/3  BIS central bankers' speeches  this process, the Bank of Albania will always support initiatives that lead to an eventual improvement of financial intermediation levels and safeguard the stability of the banking sector and of the financial system. Second, our ambition should aim higher than the 3, 4 or 5% annual growth rate. The country needs more optimism, which means higher growth rates and more structural reforms. The banking sector has both a direct and an indirect role to play in this regard.
If not even this, contrary to expectations, were to prove sufficient and inflation expectations were to remain low and impossible to influence, or were to change to lasting expectations of deflation, then a possible last resort is my suggestion of a foolproof way of getting out of a liquidity trap. This method entails a price level target where the currency is depreciated and the exchange rate held at a temporary exchange rate target until the price level target has been attained. This dramatic method is most efficient in creating expectations of a higher  BIS Review 19/2009  9  future price level and could provide sufficient stimulation to the real economy. I consider it very unlikely that this method would be needed in Sweden, but I believe it is good that it is available as a last resort. On the other hand, “quantitative easing” in the form used in Japan, that is, a temporary targeted increase in the banks’ reserves with the central bank, would probably be completely ineffective. There are probably many in the central bank world who are hesitant about openly discussing the advantages and disadvantages of monetary policy in a zero interest rate situation and the unconventional methods that are available. Many would perhaps even prefer to exclude some of the alternatives without any particular justification. With a zero lower bound for the interest rate the central bank’s credibility and its possibilities to affect inflation expectations are even more important than usual.

Lars E O Svensson: Monetary policy with a zero interest rate Speech by Mr Lars E O Svensson, Deputy Governor of the Sveriges Riksbank, at SNS – Centre for Business and Policy Studies, Stockholm, 17 February 2009. The original speech, which contains various links to the documents mentioned, can be found on the Sveriges Riksbank’s website. *  *  *  The Riksbank conducts a policy of flexible inflation targeting, which aims to stabilise inflation around the inflation target and also to stabilise the real economy. To achieve this, the Riksbank sets the repo rate and publishes a forecast for the repo rate in the years ahead. The repo rate and the expectations of future repo rates that arise from the repo rate path affect market interest rates, which in turn affect aggregate demand and inflation. During the financial crisis, the functioning of the financial markets has deteriorated and the transmission mechanism from the repo rate path to inflation and the real economy has weakened. In order to improve the functioning of the financial markets and strengthen the link between the repo rate path, market rates, inflation and the real economy, the Riksbank has taken a number of special measures. 1 Although the discussion of monetary policy often focuses on the repo rate and the repo rate path, it is important to realise that it is the real interest rate and the real repo rate path that mainly affect aggregate demand, not nominal interest rates.
The Federal Reserve Bank of Dallas is responsible for the Fed’s activity in the light green area – the Eleventh District – home to 27 million people in Texas, northern Louisiana and southern New Mexico. Roughly 96 percent of the district’s output comes from Texas. 2  BIS central bankers’ speeches  Here is a chart showing the disparate behavior of the economies in the 12 Federal Reserve Districts, as measured by employment growth. You will see that going back to 1990 – some 22 years – the Eleventh Federal Reserve District has outperformed the other Federal Reserve Districts in job creation. In terms of employment, the Dallas Fed’s district went into the recession last and was one of the first to come out. We have since punched through previous peak employment levels. Here is the job creation record of the so-called mega-states within the United States since 1990. And last, and just for fun, here is the record of Texas’ job creation over the past two decades versus resource-rich countries, such as Australia and Canada, as well as versus the major countries of Europe, the U.S. and Japan. BIS central bankers’ speeches  3  Indulge me for a minute here. I share these with you not to engage in stereotypical “Texas brag” or because St. Andrews has become a popular destination for recent generations of undergraduate scholars from Texas. I do so to illustrate a point, specifically the influence of fiscal policy on the effectiveness of monetary policy.

To me, Raeburn’s work provides a fitting visual metaphor for the ideal countenance of a central banker: The Reverend Walker skating forward confidently and with grace upon a notably uneven, rocky surface on an icy, dark, blustery day. An alternative depiction is Edvard Munch’s The Scream from Norway’s Gunderson Collection, now on temporary exhibit at the National Gallery. (There are four versions of this pastel, one of which recently sold for $ million at auction at Sotheby’s. If you haven’t been into Edinburgh to see the Gunderson version, I am sure you read about Sotheby’s record-setting auction.) 6  BIS central bankers’ speeches  In sharp contrast to Raeburn’s painting of composure, The Scream depicts a panicked form. In an autobiographical epigraph, Munch wrote that he conceived of the painting after a period of exhaustion and despair: “I stopped and leaned against the balustrade, almost dead with fatigue. Above the blue-black fjord hung the clouds, red as blood and tongues of fire. My friends had left me, and alone, trembling with anguish, I became aware of the vast, infinite cry of nature”.1  I am going to conclude by suggesting that the image that best behooves central bankers as guardians of financial stability and agents of economic potential is that of Henry Raeburn’s Reverend Walker. To be sure, central bankers everywhere are fatigued and exhausted and increasingly friendless.
There is also a more prominent role for financial institutions to advocate for or provide advisory services to businesses in sustainability areas. For Islamic finance, green sukuk issuances have served as a bridge between Islamic finance and sustainable investment. However, more is required for Islamic finance to have greater impact and this pursuit can be further enhanced with the VBI initiative. With this Islamic financial institutions will be able to play an important role in supporting the 2030 Government’s Shared Prosperity Agenda. Nevertheless this will not be without its challenges. Balancing different priorities on the social, economic and environmental fronts is a delicate act, as these may seemingly pull in different directions. It is inevitable there will be issues and challenges that need to be addressed on the path to attaining sustainability goals. I would like to touch on three key challenges and share the Bank’s views and strategies in responding to these and to further accelerate our journey. First, is the low level of awareness, understanding and appreciation of sustainability practices and what it entails among stakeholders. This has led to limited integration of sustainability-related consideration in individual and institutional practices. Knowledge gaps among financiers in technical areas of the sectors relating to sustainable or green financing such as renewable energy, sustainable agro-production and manufacturing, and social entreprenuership has naturally contributed to apprehension in financing new and relatively unknown sectors. A necessity in achieving scale will be to inculcate awareness on the need for and benefits of a green and sustainable economy.

Indeed, regardless of whether decisions are taken by a general Bank Board or a specialized Policy Committee, the ‘ideal’ system for decision-making should encompass the following basic properties: a)  diversity of opinions  b)  regularity  c)  separateness  d)  staff independence  e)  openness  f)  dealing with uncertainty  Diversity of opinions is a consequence of the basic lesson we have learnt from the history of monetary policy. Milton Friedman said in 1968: ‘The first and most important lesson that history teaches about what monetary policy can do – and it is a lesson of the most profound importance – is that monetary policy can prevent money itself from being a major source of economic disturbance’. This implies that relative smoothness in practical decision making seems to be desirable for any monetary policy practice. In this regard, international experience and experimental research1 have shown that decisions taken by a ‘decision-making body’ seem to be superior ex post to decisions taken by an individual, as the latter are more vulnerable to sudden changes in monetary policy stance. It is argued that a significant improvement in policy conduct can be associated with policy makers learning from each other’s decisions. Regularity means not only that the decision-making body should meet on a regular basis, but in particular that the decision-making process should be taken in a standard framework and should be based on a standard set of policy documents.
The June 2014 Eurosystem staff macroeconomic projections foresee a gradual increase in annual HICP inflation towards levels consistent with our definition of price stability. The pace of the increase is, however, slow. From 0.7% in 2014, inflation is expected to reach 1.1% in 2015 and, more uncertainly, 1.4% in 2016. All three figures have been revised downward in comparison with the March 2014 ECB staff macroeconomic projections and portray a situation distant from our objective of keeping inflation below but close to 2% in the medium-term. Inflation developments alone go a long way in motivating the combination of the measures announced by the Governing Council of the ECB on 5 June, to provide additional monetary policy accommodation and to support lending to the real economy. This package included further reductions in the key ECB interest rates, new longer-term refinancing operations targeted to stimulate credit creation, and preparatory work related to outright purchases of asset-backed securities. In addition, the ECB committed to an extension of the fixed-rate full allotment regime in tender procedures and decided to suspend the weekly fine-tuning operation sterilising the liquidity injected under the Securities Markets Programme. Over time these measures will contribute to a return of inflation to levels closer to 2% and safeguard the anchoring of medium to long-term inflation expectations. Nevertheless, with policy interest rates close to the effective lower bound and persistently timid growth prospects, there is a small, but non-insignificant risk that any additional adverse shock may open the door to a more protracted period of low inflation.

The increase in the balance sheet was dependent on the demand of primary liquidity by the banks, facilitated however, by the provision of liquidity through a regime of fixed rate full allotment of banks’ demand, introduced in September 2008. The impact on overall monetary conditions was, as before the crisis, dependent on the behaviour of the banks to passthrough the higher monetary base into credit and broad money, which did not happen. What did happen was a justified fulfilment of the role of lender of last resort but not a new type of monetary policy instrument in the sense of aiming at a new transmission channel. The adoption of a fixed-rate full allotment regime of liquidity provision, which has been in place since and was recently extended until December 2016 (at the very least) was indeed an extraordinary unconventional measure. It supported the banking sector and avoided a more detrimental credit crunch. However, the size of our monetary base declined significantly during 2013 when banks decided to start the repayment of their previous high borrowings. On the other hand, as per the following table, total outright purchases of assets by the ECB under two different programmes was not behind the increase of the balance sheet as they represent a relatively small proportion of total assets compared with other central banks.