samchain/econo-pairs-v1 huggingface dataset:
3  The seminal paper on this issue began is Blanchard, O., and L. Summers (1986), “Hysteresis and the European unemployment problem”, NBER Macroeconomics Annual 1986, Volume 1. 4  For more details see speech by Draghi, M. (2014), “Unemployment in the euro area”, annual central bank symposium in Jackson Hole, 22 August 2014. 5  For details on pre-crisis productivity developments see European Commission (2013), “Catching-up processes in the euro area”, in Quarterly Report on the Euro Area, Vol. 12, Issue 1, March 2013. 2  BIS central bankers’ speeches  What type of supply? This relationship between supply and demand, however, rests on the assumption that structural reforms will have mainly positive short-term effects. But this needs some more qualification. Though the long-term benefits of structural reforms are by and large undisputed6, there are different views about the short-term effects in the academic literature. Reforms can be shown to produce two, opposing sets of forces in the short-term. One is contractionary, as reforms lead to lower prices and higher real interest rates. If monetary policy is at the zero lower bound and unable to respond and fiscal space has been exhausted, higher real rates cause the private sector to postpone consumption and investment decisions and GDP to contract.7 The other set of forces is expansionary. As reforms raise expectations of permanent income, firms bring forward investment and households bring forward consumption. Moreover, for households the prospect of higher potential growth increases the likelihood of future employment, thus reducing precautionary savings and boosting consumption today.

They have other issues that frustrate them, such as why average wages are still two to three times lower than those in Germany and many other countries after 25 years of transition, when at the same time many products carrying the “Made in Germany” label are assembled on our territory. Or why so many companies pay such large dividends to owners abroad and we are unable to be attractive enough for foreign capital to be reinvested on our soil. And this is us – we have a tendency not to accept that there are always trade-offs, there are no free lunches, that for every plus there is a minus. We want everything at the same time, sometimes even mutually inconsistent things. But that is another matter. There is one area, however, where the Czech population has been very conservative over a very long period of time, and that is the area of euro adoption. In the Eurobarometer – a poll you all know – the Czech Republic remains the country where by far the largest share of the population has a negative view towards adopting the euro out of all the non-Eurozone countries. Roughly two thirds of Czechs are against the euro. This is a higher figure than in Sweden, which rejected the euro in a referendum in 2003. Well, public opinion is not as anti-euro as in the UK, where at some point the euro was only “slightly more popular than ebola”, as I read in one British newspaper.
The problem is that the conventions evolved for a positive interest rate environment, and efforts to reverse the direction of these incentives can lead to bad economic outcomes for society. Furthermore, it is costly to change these conventions. In many economic arrangements, including debt and tax payments, people can prepay debts or tax obligations, or make excessive payments on them, and earn a zero return during the prepayment period. For example, suppose that one holds a credit card under existing U.S. rules: one can withdraw funds from an account that is earning a negative rate, and pay one’s  5  Kenneth Garbade and Jamie McAndrews, “Interest-Bearing Securities When Interest Rates are Below Zero,” Liberty Street Economics blog, May 4, 2015. 6  “NEGATIVE INTEREST RATES ON MORTGAGES” Working Group on negative interest rates on mortgages, Business and Growth Ministry, Denmark https://www.evm.dk/~/media/oem/pdf/2015/15–04–28-negativerenter.ashx. 6  BIS central bankers’ speeches  debt to the credit card company in advance of when it is due, earning a zero return during the prepayment period. Similarly, one can make excessive tax payments to the taxing authority, and earn nothing during the period before one receives a refund, thereby avoiding negative deposit rates at banks. Such “zero nominal rate” conventions abound in society, and the lower the negative rate, the more people will search for such ways to avoid the negative rates that might prevail elsewhere.

So given that, once one has waded into the ocean and implemented a negative nominal rate, how low can rates realistically go? Unfortunately, there is no simple answer. As I have noted in this talk, negative nominal rates introduce a number of legal, operational, and economic frictions associated with. These complications limit the pass-through of negative nominal policy rates to households and businesses. In addition, because the negative rates are costly in terms of resources, they limit the potential stimulus to aggregate demand. Negative nominal rates may also adversely affect the profitability of financial institutions and thus make financial conditions less accommodative than they would be otherwise. Addressing the complications of negative nominal interest rates includes redesigning debt securities; in some cases, redesigning financial institutions; adopting new social conventions for the timeliness of repayment of debt and payment of taxes; and adapting existing financial institutions for the calculation and payment of interest, the transfer and valuation of debt securities, and many other operations. These innovations will require considerable time, resources, and effort. A benefit-cost analysis thus must weigh the potential advantages of negative rates against the costs of pushing back the tide of all of these conventions and institutions that have proven useful under positive nominal interest rates. That calculation likely will differ across countries, across institutional environments, and across the expected levels and duration of negative rates. 10  BIS central bankers’ speeches
A payments strategy for the 21st century  Remarks made by Andrew Hauser, Executive Director, Banking, Payments and Financial Resilience  Payment Strategy Forum “Launch of the Final Strategy”, London 29 November 2016  1  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  Thank you very much for the opportunity to speak to you today at the launch of the PSF’s Payments Strategy st  for the 21 century. I want to start by emphasising that this is not the Bank of England’s strategy – or the UK authorities’ as a whole. And that in fact is its great merit: because it has been drawn up by a genuine partnership of those who actually provide and use retail payments services, with the interests of those users uppermost in their minds. But that doesn’t mean the Bank has been ‘hands off’, or lukewarm over the direction of travel. Quite the reverse. We have a deep interest in, and responsibility for, maintaining the stability of sterling payments. First, through our statutory responsibility for the supervision of the major payments schemes. Second, by ensuring that all material payments either settle in, or are backed by, central bank money – the safest form of settlement asset. And, third, through our role as member of some schemes as a bank in our own right. It is sometimes said that a focus on stability impedes innovation. But there is no reason why that has to be true.

To make a domestic retail payment, you can use physical cash (drawn from a bank or a LINK ATM), a cheque, a credit or debit card, a real-time payment over FPS, or a batch payment across Bacs. Wholesale payments may go through CHAPS or the embedded payment schemes of CREST or LCH. 1  http://www.bankofengland.co.uk/publications/Pages/speeches/2015/799.aspx 2  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  2  Cross-border payments might use a correspondent bank, a direct link to an overseas RTGS system or CLS. In fact, it’s easy to list 10 or 15 payments pathways without even trying. Each system does a great job for its own customers. But each operates, by and large, in splendid isolation from one other, requiring different standards and languages, technologies, fees and governance frameworks. Those frictions in turn create barriers to entry for new payments providers, and can also pose risks to system-wide resilience, making it hard (sometimes impossible) to reroute payments between systems in the event of outages. Those characteristics are increasingly anomalous in a world in which payments users are demanding ever more seamless services – in real time, 24/7 – at lower cost, using the latest technology, providing rich information – and, perhaps most importantly of all, in ways that are secure against increasingly innovative forms of cyber attack. That is why it is timely to look afresh at the UK’s retail payments systems, as the PSF has done.
One instrument (namely, the interest rate) is often not enough for pursuing two objectives. More generally, the two objectives should be addressed with more than one instrument. The choice of instrument will depend on both the cause of the financial fragility and the institutional setting of each country. For a start, central banks should work closely with “micro-prudential” supervisors, communicating potential risks so that these can be incorporated into the supervision process or into changes in regulation. A regional house bubble would be a good example of this kind of coordination, with supervisors adjusting provisions accordingly. In addition, central banks  4  Chapter V, Financial Stability Report 1st half 2009, Central Bank of Chile. http://www.bcentral.cl/publicaciones/politicas/pdf/ief2009_1.pdf  BIS Review 76/2010  5  should consider macro-prudential regulation that adjusts capital, liquidity or asset quality regulation through the cycle or in periods of higher risk taking. Finally, central banks should not discard using their balance sheet to “correct” the prices of financial assets when these asset prices are leading to increased vulnerabilities in the financial system. In EMEs this is typically the case of a boom where there are signs that the currency may be strengthening beyond its fundamentals, in which case a mechanism of selfinsurance, such as accumulation of reserves, may help to smooth the transition and to have the economy well-prepared for potential reversals of capital flows. In the case of Chile, we have intervened three times in the exchange rate market since the currency was allowed to float in 1999.

Jean-Pierre Roth: Steps to strengthen the Swiss financial system Introductory remarks by Mr Jean-Pierre Roth, Chairman of the Governing Board of the Swiss National Bank and Chairman of the Board of Directors of the Bank for International Settlements, at the news conference, Bern, 16 October 2008. *  *  *  Pursuant to art. 5 of the Swiss National Bank Act (NBA), the SNB shall contribute to the development of our economy and the proper functioning of our monetary system. This is why the SNB has decided to extend a loan not exceeding USD 54 billion to the special purpose vehicle (SPV) set up to take over illiquid assets currently held by UBS. A similar offer has also been extended to the CS Group, which has refrained from making use of such a possibility. For the SNB, this operation is highly unusual, both with regard to its scope and the reasons for it. Scope of operation As to the scope of the operation, USD 54 billion is clearly a substantial amount for the National Bank. I would like to emphasise, however, that the loan amount is entirely guaranteed by the portfolio assigned by UBS, i.e. securities valued at USD 60 billion in the UBS balance sheet. Given the fact that in the past twelve months, UBS has made aggressive write-downs on its risky positions and that its portfolio is fairly diversified (it does not only consist of toxic assets), we feel that the risk of further losses on this portfolio is limited.
And, indeed, wage growth has been, and remains, subdued (Chart 9). But other factors have conspired to push inflation well above the MPC’s 2% target. First, the substantial depreciation of sterling, though helpful to the necessary re-balancing of the UK economy, also simultaneously raised import prices. We initially underestimated how strong this impact would be, but we now think that the rise in import prices as a result of depreciation has added somewhere between 4¼% and 6½% to the level of consumer prices. Second, commodity prices – especially oil prices (Chart 10) – have been on something of a roller-coaster, rising sharply on the back of strong growth in the emerging economies up to mid-2008, then falling back sharply as global activity collapsed at the end of 2008. They have subsequently rebounded, reflecting both the recovery, especially in the emerging economies, and temporary adverse supply factors (bad weather affecting agricultural commodities; unrest in the Middle East and North Africa affecting oil). Finally, the increase in the standard rate of VAT has also boosted inflation. The blue swathe in Chart 11 shows our estimate of the combined contribution of these three factors, for a range of plausible assumptions, together with the actual inflation rate (the red line). The green swathe is the implied contribution from all other influences on inflation.

Earlier this year, I augmented these regional visits with a “Townhall Tour”, partnering with charities, citizen and faith groups to engage with new sets of people across the whole of the UK. These are, by design, listening events. The main messages are captured in my blog and animations and photos from each of the events. 49  The Townhalls have made clear to me the benefits of asking open questions, uncontaminated by priors and prejudices. They have taught me a lot about the economic and financial issues that really matter to people, only some of which are captured by economists’ theories and surveys. They have underlined for me the 47  Whittaker et al (2017), for example, found that patients were willing to wait longer for an appointment with a doctor with good listening skills. 48 Holmberg and Thelwall (2014). 49 Available from the Bank’s website at http://www.bankofengland.co.uk/Pages/outreachevents.aspx 12  All speeches are available online at www.bankofengland.co.uk/speeches  12  benefits of harnessing non-expert opinion when it comes to understanding the economy. And the Townhall visits, while not making me a super-forecaster, have thereby hopefully made me a slightly less bad one. These Townhall visits are also an eye-opener for anyone in any doubt about the importance of the economy and economic policy to the everyday lives of most people. When someone tells you that a higher cost of living is, for them, the choice between heating and eating, it makes everyday economics real. It makes the MPC’s concerns about rising inflation concrete.
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.

Policies are needed to address the structural strains in the demand side (at household level), while structural reforms are still needed on the supply side as well. 1  Voinea, L. and Monnin, P. (Feb. 2017), “Inequality Should Matter for Central Banks”, Blog of the Council on Economic Policies, https://www.cepweb.org/inequality-should-matter-for-central-banks/  4  Figure 1. Home ownership percent 100 90 80 70 60  50 40 30 20 10 0 RO LT SK HU BG PL LV EE CZ ES SI PT CY FI  IT BE IE SE NL UK FR DK AT DE  Source: ESRB Report on Vulnerabilities in the EU residential real estate sector - 2016  Figure 2. Household gross debt-to-income ratio  Figure 3. Household mortgage debt-to-income ratio  Source: ESRB Report on residential real estate and financial stability in the EU, 2015  5  Figure 4. Overcrowding - Households with dependent children RO  70 LV PL  overcrowding %  60  BG  HU SK  50 IT  LT  40 CZ  30  AT  EE  20 DE  10  DK  SE  UK FR NL  IE BE  55  60  65  70  SI ES  FI CY  0 50  PT  75  80  85  90  95  100  homeownership % Source: Eurostat  Figure 5. Average no. of rooms per person No.
But it seems likely there are also incipient positive effects stemming from the structural reforms already implemented, which may be responsible for the high rate of job creation in this phase of the recovery and the rise in productivity. That would show how efforts to heighten incentives for labour market participation, to further market liberalisation and to create an environment conducive to innovation and the development of human capital ultimately bear fruit, highlighting the need for sufficient political resolve to persevere with the course of action embarked upon. At the end of the first half of 2007, the outlook for the euro area is the brightest in recent years. For one thing, domestic demand is expected to retain its current momentum. Investment in particular should continue to benefit from the persistence of propitious financial conditions, the strength of corporate earnings and the soundness of companies’ financial position, while household expenditure should continue expanding thanks to favourable employment developments. For another, exports are expected to continue faring favourably despite the likely easing in world growth. This central scenario faces the downside risk of a bigger-than-expected slowdown in the world economy. But, in contrast, a better performance of the European labour market might raise forecast growth rates. The inflation outlook for 2007 and 2008 suggests the rate of change of the HICP will hold at around 2%, in line with the definition of price stability.

But what is more, household and corporate purchases of financial assets inside and outside Spain increased, the result being that gross financing required by both sets of agents climbed from 35.6% to 44.7% of GDP. Indeed, although household consumption posted a somewhat lower growth rate than in 2005, as disposable income moderated even more, household saving as a proportion of household disposable income continued falling. Given that investment in housing continued to increase at a high rate, household net borrowing rose to 1.5% of GDP. Nonetheless, changes in interest rates and property price levels themselves began to temper the demand for housing, with the volume of transactions easing off and a slowdown in prices. Yet significant underpinnings for the dynamism of housing demand in the medium and long run remain as a result of socio-demographic factors – such as the thrust of immigration, the growing incorporation of women into the labour market and the reduction in the average family size – which will continue to translate into substantial increases in the number of households. These socio-demographic factors, which were not present in the final stages of the previous upturn in this market, will allow activity to stabilise, on this occasion, at higher levels than was the case then. In the new setting of less relaxed financial conditions, Spanish households began to resort less to credit as a means of financing their expenditure.
This broad flexibility within our statutory legislation (which came into force in 2004) proved to be a huge advantage during the crisis, also by comparison with other central banks. For instance, we were quickly in a position to issue our own debt certificates and develop a large market for them. We do not use these SNB Bills because we need money. They are used to absorb excess liquidity in the money market. Second, our independence is not unconditional. With the privilege and duty of independent action comes a particular responsibility. And whoever bears responsibility in our democratic constitutional state must be accountable for his or her actions, for the means chosen and the results achieved.6 Consequently, under article 7 of the National Bank Act, we maintain a regular exchange of information with the Federal Council, and the SNB and the Federal Council inform one another of decisions that will have a significant economic or monetary impact. This is important for us, because it ensures that we are familiar with the fiscal political framework within which we conduct our monetary policy. Nevertheless, each body retains full  4  Cf. also Message on the revision of the National Bank Act of 26 June 2002, FF 2002 6107 to 6109. 5  Together with the possibility of re-election, this helps to set the incentives for members of the Governing Board in a way that ensures that long-term fulfilment of the statutory mandate is also in their individual interest.

On the other hand, we can take risk onto our balance sheet should we regard this as absolutely necessary in order to fulfil our mandate. In this respect, the lesson learned from the crisis is that, in good times, we need to ensure that our balance sheet is as robust as possible, so that we can burden it in bad times. Finally, in terms of staff, our independence is expressed by the fact that the members of the SNB executive bodies – the Governing Board members and their deputies – are appointed by the Federal Council for a fixed and comparatively long term of six years.5 Ladies and Gentlemen, our independence is not unlimited, however. First, it is not absolute but related only to our mandate. It is not we ourselves but the Swiss legislators who charge us with maintaining price stability. Incidentally, that also applies to mandates other than the monetary policy core mandate, which I will not be talking about today. The SNB has specified its monetary policy mandate and rendered it measurable. A situation of price stability prevails when the consumer price index (which is calculated by the Swiss Federal Office of Statistics, and not by us) shows an average annual rate of below 2%. Deflation is also regarded as a failure to attain the objective of price stability. Where we are independent is in our choice of the means by which we fulfil this mandate. Under article 9 of the National Bank Act, we may use a great many instruments, as needed.