samchain/econo-pairs-v1 huggingface dataset:
It is true, however, that economic activity has begun to regain momentum as the lockdowneasing plan has moved forward. Should this momentum continue, it would open the way for a more favourable performance in the second half with year. Nonetheless, this is subject to considerable uncertainty. Reflecting this uncertainty, the latest Banco de España projections include several scenarios. The first, “early recovery” scenario depicts a situation in which no significant obstacles would emerge in the coming quarters. Under this scenario, output would fall by 9% in 2020. The second, “gradual recovery” scenario incorporates a more persistent impact of the decline in activity during the lockdown phase and includes fresh outbreaks of the disease of moderate intensity. That would lead to an 11.6% drop in GDP this year. In both cases, we would be before the biggest fall in activity in a single year, and this despite the fact that GDP will grow at a very marked quarter-on-quarter rate in the second half of the year. These forecasts also point to persistent effects in the medium term. In 2022, GDP will stand, respectively, around 4 pp and 6 pp below the level projected in December 2019; the unemployment rate will hold at over 17%; and the public debt/GDP ratio will be between 115% and 120%. Further, we cannot rule out other, more adverse scenarios, resulting, for instance, from the disease unfolding more adversely or from greater harm being inflicted by the crisis on the productive system.

This advises studying the possibility, depending on how economic activity evolves, of extending the public guarantee mechanisms. In re-designing the latter, priority of access to such resources should be for firms with sound viability prospects. The crisis will significantly impact banks’ credit portfolios. The declines in GDP projected for 2020 under the scenarios previously outlined exceed those of any stress test in the past; yet it is true that, if the rebound in activity forecast for 2021 and 2022 were to materialise, this severity would be significantly mitigated. Moreover, the crisis will affect banks differently in terms of their business model and of the distribution of their exposures to the sectors and regions most affected by the pandemic. Overall, then, we must remain vigilant to stave off the risks to financial stability derived from this crisis, and be ready to respond forcefully at the European level if these risks materialise. Second, in the domestic arena, some of the measures already applied should be temporarily extended and recalibrated. It seems right to retain some of the income support instruments for the most vulnerable households, though it is essential they remain focused and designed so as not to distort, for example, labour market participation decisions. It would also be wise to extend furlough-like schemes in certain sectors and firms that will continue to be very affected by social distancing measures.
On the other hand, significant increases in international energy, food and goods prices over the past year imply a substantial squeeze in UK residents’ real incomes, which will weigh on future demand and employment. Looking beyond the shorter term, UK inflation is set to fall as global commodity prices stabilise, bottlenecks in global supply chains ease, and domestic inflationary pressure dissipates as the real income squeeze opens up a margin of economic slack. These two elements define the two sides of the narrow path along which the MPC has to navigate. The MPC sees an upside skew in the risks around the inflation baseline in the latter part of the forecast period. The balance of risk is tilted towards inflation proving stronger and more persistent than anticipated in that baseline. A number of underlying structural developments point in this direction. For example: (1) Brexit may  Page 14  have reduced the contestability of UK labour markets by EU immigrants and workers;[13] (2) the broader globalisation process – which helped contain external inflationary impulses to the UK around the turn of the century[14] – looks to have stalled and may be in retreat, reducing the competitive pressure on UK producers to contain costs; and (3) the impact of aging and longerterm health consequences of the pandemic may have led to a decline in UK labour force participation.

Page 1  The economic situation and monetary policy − speech by Huw Pill Given at ACCA Cymru Wales  Page 2  Published on 20 May 2022  Huw Pill talks about what we’re doing to bring inflation down. And he gives his view on the outlook for the UK’s economy. Speech Good morning everyone. It is a great pleasure to speak here in Cardiff this morning. Thanks are due to: Lloyd Powell, Head of the Association of Chartered Certified Accountants (ACCA) Cymru Wales, for the invitation to speak here today; to Steve Hicks and Ian Derrick – the Bank’s Agents in Wales – for organising a fantastic visit, of which this is one of the highlights; and of course to all of you for coming this morning at what I am sure are busy and challenging times. On Wednesday, we learnt that UK consumer price inflation currently stands at 9.0%. [1] The MPC forecasts that it will rise to double digits in the fourth quarter of this year. For a monetary policy maker charged with achieving an inflation target of 2%, this is obviously a very uncomfortable situation. But, of course, my discomfort as an MPC member in these circumstances is as nothing to the challenges facing those most directly exposed to the current cost of living crisis. These are difficult times for many people, especially for the less well off, who spend a higher proportion of their income on energy and food, where recent price rises have been most significant.
Nonetheless, I doubt this is quite what Keynes had in mind as the economic possibilities for our grandchildren. If lower hours are not a full answer, retraining workers in line with their comparative advantage might be. One important dimension of this is education. School education has tended to focus on developing the core cognitive competences – for example, reading, writing and arithmetic. Smart machines have long since surpassed humans in their ability to do the first and third of these. And they are fast catching-up on the second. That begs the question of whether there are other skills where humans’ comparative advantage is greater. For example, humans are known to possess an equally-important class of non-cognitive skills – self-confidence, self-esteem, relationship-building, negotiation skills, empathy. In studies of children, these non-cognitive attributes have been found to be as, if not more, important than cognitive competences in enhancing jobs, incomes and well-being (Heckman (2007)). In a world in which machines came to dominate tasks involving core cognitive processing, the importance of, and skill premium attached to, non-cognitive skills is likely to rise. The high skill – high pay jobs of the future may involve skills better measured by EQs than IQs, by jobs creating social as much as financial value. Yet our education system, at present, has a strongly cognitive slant. Perhaps in future that will need to change, with as much effort put into cultivating social CVs as academic ones.

Shariahcompliant corporations that are listed in major global Islamic stock market indices, such as the Dow Jones Islamic Market Indices and the FTSE Global Islamic Index, are able to enhance their profiles among the prospective investors, including those with inclination towards socially responsible investment. In Malaysia, similar listing opportunities are available through the FTSE Hijrah Shariah index and the FTSE Bursa Malaysia EMAS Shariah index for Shariah-compliant investment, that has been designed to provide a broad benchmark for investors that wished to invest in Shariah-compliant stocks. Malaysia operates a dual financial system that comprises the conventional and the Islamic financial system. Businesses are able to select the financial offerings that best serve their requirements. While Malaysia has progressively liberalised our financial system, the liberalisation of the Islamic financial system has been at a more rapid pace. The motivation for this is to forge greater international economic and financial linkages. Liberalisation of the conventional sector has been more gradual and sequenced to ensure that the financial system promotes balanced growth while remaining stable and sustainable. The robust legal and regulatory framework, together with the availability of a large and diverse pool of talent and expertise in Islamic finance, forms the solid components in the system to meet the requirements of businesses. There is also Shariah certainty in Islamic finance through a robust Shariah governance framework, which comprises Shariah committees at the industry level and the Shariah Advisory Council at the regulatory level.
The convergence of metal prices toward their production costs has been somewhat faster than thought a year ago. In the case of copper, the price forecast for 2014 in this Report has been lowered by more than 10 percent in one year. Other demand components, such as consumption, have posted a more gradual deceleration, in line with still favorable, yet moderating, fundamentals. International financial conditions have also been normalizing, which, while positive over the medium to long term, has caused increased volatility, higher risk premiums and capital outflows in emerging markets, together with a widespread depreciation of currencies vis a vis the U.S. dollar. BIS central bankers’ speeches  1  In Chile, contrasting with past episodes, the financial effects have been bounded. The risk premium, for instance, is the same or slightly higher than previous values. Unlike other emerging economies, Chile has seen a drop in interest rates in the recent past, and the Central Bank has not intervened in the forex market by selling reserves as have other countries. Nonetheless, consistently with our macroeconomic policy regime, we have seen a substantial impact on the exchange rate. Actually, the Chilean peso depreciation is in the upper half of the group of emerging economies (figure 1). The real exchange rate has also depreciated significantly and is above its averages for the last fifteen and twenty years (figure 2).

Despite the strong fundamentals of the Chilean economy, we are not immune. We are a small, open economy, so external developments can and do affect us. Now, allow me to describe in detail the macroeconomic scenario we believe to be the most likely one in the coming quarters, and associated risks. Macroeconomic scenario Our baseline scenario assumes that in 2014 the emerging markets will grow below their averages of recent years. China is a case in point, whose growth forecast has been steadily revised downward during the past several months and is now even below the officially defined target of 7.5 percent per year (figure 4). Other Latin American economies, including Brazil, Mexico and Peru, have also revised downward their respective projections. This owes to a number of factors. On one hand, the weaker fiscal and monetary impulse in Brazil, poor growth in Mexico and a slowdown in investment and exports in Peru. On the other hand, Argentina and Venezuela are making substantial corrections to their growth outlooks for the year, of the order of 3 percentage points down (figure 5). All this contrasts with the developed world, where growth forecasts for the year have been revised upward, although with different nuances. Worth noting is the improved performance of the United States and confirmed signals of recovery in the Eurozone.
But a system-wide shock with a broader impact on market liquidity conditions could quickly change the situation. Liquidity at fund level may be squeezed if many investors wish to liquidate their unit shares at the same time. The resulting first-mover advantages and selling pressure could amplify stress in financial markets, especially if conditions are already fragile. One reason why the Federal Reserve Bank of New York decided to facilitate the private-sector bail-out of LTCM was precisely because it was concerned about market dislocations should the company fail on some of its obligations. Letting LTCM go into disorderly fire-sale liquidation was seen as risking a severe drying-up of market liquidity, which could have damaged financial markets and the wider U.S. economy.4 Considering the current global and domestic uncertainties affecting financial market developments, I am seriously concerned about declining market liquidity and the role that investment funds might play in a possible stress scenario. Liquidity mismatches and leverage are structural in nature and often build up slowly over time. In the euro area, we observe that investment funds have been taking on higher credit and duration risk in the current market environment. And we have strong indications that liquidity risks are building up in the fund sector. The share of less-liquid assets in that sector has been growing constantly since the global crisis, while liquidity and cash buffers have been declining.

In emerging Asia, two key areas where there is the need and opportunity for further progress are in the financial system and in the monetary policy framework. The financial sector plays an important role in the flexibility and adaptability of economies to change, in the resilience of economies and in the capacity of the monetary authorities to respond to adverse shocks to asset prices or demand. Although much has been achieved in Asia over the past decade, as the damage inflicted by the crises has been repaired, further reform will be important to the capacity of these economies to innovate and grow and to live more comfortably with openness to capital flows. This requires stronger banks and more developed capital markets. Thus far, we have seen more progress on the former than the latter, but both are important and there remains considerable scope for broadening and deepening capital markets in emerging Asia. The extent of financial innovation in the industrial economies makes it possible for Asian countries to take advantage of huge  BIS Review 65/2007  3  improvements in the efficiency of financial intermediation. Embrace of these reforms will help ensure that high levels of domestic savings are deployed more efficiently, that companies and financial institutions are able to manage risks more effectively and that the financial system is more resilient in the face of future stress. Monetary policy regimes in much of Asia are burdened by two different types of constraints on independence.
Timothy F Geithner: Liquidity risk and the global economy Remarks by Mr Timothy F Geithner, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the Federal Reserve Bank of Atlanta's 2007 Financial Markets Conference – Credit Derivatives, Sea Island, Georgia, 15 May 2007. *  *  *  Thank you for giving me the chance to join you today. Although this is a conference primarily about credit derivatives, I am going to talk about some of the broader changes we are seeing in financial and credit markets, and their implications for policy. You are meeting during a period of remarkable change and exceptional conditions in financial markets. Financial markets over the past several years have been characterized by an unusual constellation of low forward interest rates, ample liquidity, low risk premia and low expectations of future volatility. In some markets, asset prices have risen substantially, and credit growth has expanded rapidly. In credit markets more generally, spreads have declined to levels that reflect very low expectations of near term losses and credit standards have weakened. It would not be accurate to say this is a world without volatility, for we have had a series of episodes of sharp declines in asset prices and increases in volatility. But these episodes have been contained and short lived, with markets recovering relatively quickly and with little appreciable effect on global economic activity. These conditions are global in nature, though they take somewhat different forms in different markets.

And the characteristic reluctance of savers to invest outside their home market may be diminishing. Alongside these longer terms trends, financial markets today also show the effects of other forces. The extraordinary growth in earnings of energy and commodity exporters, the substantial rise in wealth that has come with rapid growth in China, India, and other emerging markets, together with efforts by many of those governments to stem the appreciation of their currencies, has led to a rise in capital flows, official and private, into the United States and other major economies. These flows seem large enough to have had a material effect on global interest rates and asset prices. These changes in economic conditions reinforce each other. The long period of relative economic and financial stability has reinforced expectations of future stability, reducing implied volatility and risk premia, increasing comfort with higher leverage, and encouraging flows of capital into riskier assets. BIS Review 49/2007  1  The low level of real interest rates that has prevailed in much of the world through this expansion has contributed to relatively accommodative financial conditions. The high levels of reserve accumulation by governments with heavily managed exchange rate regimes put downward pressure on forward interest rates, potentially distorting asset prices. The increase in size of sovereign wealth funds, the shift in assets to hedge fund and private equity managers, and the possible reduction in home bias among private savers have increased the amount of mobile capital in search of higher returns.
Their model has positive features: (slide 10) equity capital amounts to 121% of GDP in the United States, compared with only 52% in the euro area, which means that in the United States innovation finds appropriate financing more easily. But it also has limitations that we should be mindful of: excessive cost of equity can have harmful effects. To meet the financial challenge, savings have a central role to play. I will focus on two avenues for steering them into productive investment. First, savings should be reoriented towards the long-term, more easily than towards direct risk-taking. French and, more generally, European savers are more risk-averse than American ones – and this is probably not going to change. The first savings motive in the euro area is indeed insurance against unexpected events (mentioned by more than 50% of households).viii But at the same time, savers are more and more concerned by the increase in life  5 expectancies and the need to prepare for retirement: old age provision ranks as the second most important savings motive (nearly 40%).ix Therefore it makes sense to offer savers new, complementary forms of savings products, that are less liquid during the first years, but that include some form of longterm capital guarantee. These new products would provide financial intermediaries – in particular life insurers – with liabilities long enough to take pooled risks – in the form of equity investments essentially – and savers with the higher returns offered by equity over the long run.

On the basis of the current level of oil prices and oil price futures, annual inflation rates  BIS Review 23/2007  1  are likely to fall during the spring and summer before rising again towards the end of the year and then most likely hovering again at around 2%. The new ECB staff macroeconomic projections foresee annual HICP inflation averaging between 1.5% and 2.1% in 2007 and between 1.4% and 2.6% in 2008. Compared with the December 2006 Eurosystem staff projections, the upper bound of the range projected for inflation in 2007 is somewhat lower, largely reflecting the fall in oil prices. By contrast, the projected range for inflation in 2008 is slightly higher, largely on account of the anticipated stronger economic growth, which could exert more intense pressure on factor utilisation and factor costs. In this context, let me remind you of the conditional nature of these projections, which are based on a series of technical assumptions, including market expectations for future short and long-term interest rates as well as for oil and nonenergy commodity prices. At the policy-relevant medium-term horizon, the outlook for price developments remains, in the Governing Council’s view, subject to upside risks. These relate to the possibility of renewed oil price increases and additional increases in administered prices and indirect taxes beyond those announced and decided thus far.
Personally, I do not much like the notion of a list of “systemically important firms” because, as a previous generation of policymakers taught us, what proves to be systemic  4  Blunden G, “Supervision and Central Banking”, Bank of England Quarterly Bulletin, August 1987. BIS Review 134/2009  3  depends so very heavily on the circumstances. For example, it judged it safe to let Barings fail because the causes were clearly idiosyncratic and, just as important, the financial waters were calm. But essentially the same group of senior officials judged that it would not have been safe, in the circumstances of the time, to leave unaddressed the distress amongst fringe banks in the Secondary Banking Crisis of the mid-1970s, or amongst small banks in the crisis of the early 1990s. In both cases, actions were taken to stop the problems spreading to larger banks. But I do agree, of course, that banks are woven into the fabric of the financial system in potentially dangerous ways should carry more capital and liquidity than otherwise. That amounts to overturning a consensus that, assessed on an atomistic basis, greater diversification in a bank’s risks is a sufficient reason for lower regulatory requirements. The FSA published some thoughts on this area earlier today. Third – and this is a major departure from the past – we need a regime that recognises that inevitably regulation and supervision is flawed and, occasionally, will prove seriously wanting. However good a country’s supervision, banks and other firms will fail.

The second is that the financial system is a system. One that contains complex and shifting inter-connections. And one that can generate pronounced credit cycles, which even if they initially affect only asset values, eventually can materially affect the real economy. This is why the macroprudential debate is so important. It has been a long time coming. 11 This evening I have outlined some of the Bank’s current thinking on where it might be feasible to develop a toolkit of useful macroprudential instruments. It is not a set of firm recommendations. An open discussion is needed before anyone can reach that point. But I hope it is a useful contribution. We plan to expand on it in a discussion paper over the next few weeks. 11  The beginnings of the macroprudential debate can be traced back at least to Crockett, A (2000): “Marrying the micro- and macroprudential dimensions of financial stability”, BIS Speeches, 21 September 2000. BIS Review 134/2009  11