samchain/econo-pairs-v1 huggingface dataset:
The banking collapse triggered further currency depreciation and contributed to a significant destruction of household assets (e.g., bank equity, mutual funds, and pension assets). The third shock was the international economic recession in the fourth quarter of 2008 and the first half of 2009. The subsequent recession was shaped by the post-boom adjustment, the three aforementioned shocks, and the policy responses of the authorities. It is an interesting topic for future research to try to quantify the relative effects of the three shocks on the subsequent recession. We cannot take it for granted that the banking collapse is the most important one in that respect, although it commands the first place in the psyche of the population. The asset destruction that was associated with the banking collapse took place in several countries, mostly in Northern Europe, and in absolute terms the loss of the foreign creditors is bigger than that of domestic residents. The currency crisis and the banking crisis are linked, of course, as the banks exacerbated the former. However, with a floating exchange rate, the burst of the unsustainable macroeconomic boom was always going to be associated with a major depreciation, irrespective of what happened to the banks and whether Iceland had a cross-border banking system or not.

In fact, the Central Bank had been predicting a recession in 2009 since at least 2006, as can be seen from the graph that shows predictions for 2009 GDP growth at different dates. The predicted recession was supposed to be a mild one, but then we need to bear in mind that recession forecasts tend to be dampened while the times are still good! 4  BIS Review 139/2010  When all three shocks had hit, the mood changed dramatically, as can be seen from Graph 2. The bleakest forecast was made in May 2009, when GDP was predicted to contract by 11% in 2009 and unemployment for 2010 was forecasted to reach 11%. However, the outcome turned out to be much better – a contraction of 6.8% – and the prospects for peak unemployment have also improved markedly. I think this due not to ordinary forecast errors but to various factors that supported domestic demand and export production in 2009, some of which were temporary. These included temporary permission to withdraw a specified maximum amount from third pillar savings, with use amounting to 1½% of GDP in 2009. This measure is akin to a fiscal stimulus of a similar size. But these factors also included other measures to support households, which mitigated the decline in private consumption. Furthermore, the delay in corporate and household restructuring, although detrimental in the medium term, postponed some of the short-term contractionary effects that tend to accompany it.
*********************** We look to history when we chose a new character, but money has a future not just a past. The selection of the new £ note character is not my only announcement today… because as I alluded to earlier, money is evolving. Today, it is much more than polymer. While cash remains invaluable to many, it is now the second most frequent transaction method after debit card payments.1 And innovation is expected to make other electronic forms of payment easier to make and faster to settle. The technological revolution in finance will bring more tailored products, keener pricing, and more diverse sources of credit for households and SMEs. The Bank is embracing fintech and ensuring that it develops in ways that maximise the opportunities and minimise the risks for society. We aim to enable, empower and ensure. 1  Cash transactions made up 37% of all transactions in 2017. 4  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  4  Enable new technology by developing the right environment for fintech to thrive, such as by upgrading the Bank’s hard infrastructure on which finance relies – such as our large value payments system, RTGS. The Bank is one of the first to allow non-bank payment service providers to directly access its system, something that is lowering the costs of payments across borders. Enabling also means having the right soft infrastructure, such as rules and regulations, to help fintech thrive.

For example, Ehrmann and Fratzscher (2005) estimate that, over one day, about one-third of US Treasury bill rate changes feed through to euro area interbank rates, but that beyond this US monetary policy has no significant impact on the euro area. Neely (2015) finds spillovers of a similar magnitude. Curcuru et al. (2018), in contrast, find that during a one-day period, ECB announcement surprises spill over to US Treasury yields in a similar manner as Federal Open Market Committee announcement surprises spill over to German Bund yields. 2 See, for example, Kim (2001), Georgiadis (2016), Chen et al. (2017) and Iacoviello and Navarro (2018). The  5/6  BIS central bankers' speeches  results for conventional and unconventional monetary policy are similar. Rogers et al. (2014) and Chen et al. (2016) provide evidence on large spillovers from the Federal Reserve’s unconventional monetary policy to the euro area. 3 Ca’ Zorzi et al. (2019) and Jarociński and Karadi (2018) draw a distinction between monetary policy surprises  (the so-called shocks) and other surprises, such as news effects. 4 Spreads relative to speculative bonds (below BBB rating), averaged over all maturities. 5 Corporate bond spreads increase by about 10 basis points and stock markets decline by about 50 basis points  in response to a monetary policy shock that increases one-year government bond yields by 2 basis points. 6 See Ca’ Zorzi et al. (2019). 7 See Miranda-Agrippino and Rey (2018).
This growth in intra-regional trade has been spurred, in part, by the integration of production network and supply chain in the region, especially the emergence of China and its integration into the regional economy. Also, government policies to support freer trade through bilateral and multilateral trade agreements have also had a strong supporting influence. Accompanying the growth in intra-regional trade is a deepening process of financial integration in the region, defined as cross-border investment flows within East Asia. Evidence of this can be seen from the data on cross-border flows in FDI, portfolio investment, and bank lending that point to a rising trend. Also, financial prices in the region’s financial markets show greater tendency to converge. For example, cross-border interest rate and bond yield differentials have narrowed while the volatility in money market interest rates across the region has declined. To me, a key stimulus to the current process of financial integration has to be East Asia’s rapid economic growth and the accompanying growths in intra-regional trade and cross-border investment. Government policies to develop financial markets in the region have also been important in so far as helping to provide a clear direction of policy preference towards greater regional integration. As a result, cooperative government efforts to develop regional financial markets, especially the bond and equity markets, are being carried out in many regional fora.

The slow pace of financial integration relative to trade, in my view, is a reflection of three specific factors. BIS Review 95/2006  1  First, trade integration has a much longer history in East Asia, of which the key turning point was the introduction of the ASEAN Free Trade Area in 1992. Therefore, trade integration benefits from an established policy structure and a more simplified policy framework of tariff reductions, compared to that of financial integration. Second, financial integration has essentially been a market-driven process, with the policy supports focusing on removing market impediments and developing financial infrastructure. Therefore, there has been less of a deliberate policy push while the different levels of financial market developments in the region also act as a constraint to rapid integration. And the third factor is that, compared to trade integration, financial integration is complicated by a wider set of rules and regulatory framework, especially on cross-border capital flows, that tends to be more difficult to dismantle quickly. At the same time, the policy approach on capital flows liberalization in East Asia has been more cautious following the Asian financial crisis because of the risk of capital outflows and the weakened external financial positions. This, in my view, is one reason that led to a more cautious approach in liberalizing cross-border capital outflows. Let me now come to the second part of my talk, that is, the prospect for financial integration in the region going forward, and what should be the role of policy.
Parallel to the recovery in domestic demand, credit markets continued to rebound robustly in the second quarter, leading to rapid loan growth in the real sector (Figure 28). The ongoing recovery both in commercial and consumer loans indicates that credit conditions support the rebound in economic activity. Accordingly, as in the previous quarter, our revised forecasts are based on an outlook that envisages the gradual removal of financial tightness. 10  BIS Review 133/2010  Developments in global economic activity have been of major concern for our forecasts through external channels ever since the global financial crisis erupted. In this respect, I would like to express our views on the effects of global developments on aggregate demand and the inflation outlook in the second quarter of the year. The uncertainty caused by fiscal problems in the euro area in May, and the consequent sharp depreciation of the euro led to a weaker external demand in the second quarter than envisaged in the April Inflation Report. Global growth forecasts remain basically unchanged compared to the April Inflation Report. However, euro area growth forecasts have been revised slightly downwards, reflecting the change in the outlook owing to the problems in Greece, Portugal, and Spain spreading throughout the financial systems of the euro area – our largest export destination. In this respect, the export-weighted global economic activity index constructed by the CBT implies weaker external demand than that envisaged in April (Figure 29).

Richard Dzina: Luncheon remarks at the Community Bankers Conference Remarks by Mr Richard Dzina, Executive Vice President of the Financial Services Group of the Federal Reserve Bank of New York, at the Community Bankers Conference, Federal Reserve Bank of New York, New York City, 18 April 2018. * * * Good afternoon. I am conscious that I am the concluding speaker for today’s conference, a line usually followed by “and the only thing that separates you from the bar.” In this case, I’m the only thing that separates you from the gold vault, which may be even more compelling, so I’ll keep things brief, but hopefully meaningful. Allow me to share two preliminary comments as prelude to formal remarks: First, convening this conference underscores for me and my colleagues that fulfillment of Federal Reserve mandates in monetary policy, supervision, and financial services does not constitute an end to itself, but a means to an end. The end is to foster conditions and to provide services that support robust and sustainable economic activity on which our nation depends and in which community banks play an integral, indeed indispensable, role. May those of us who have the privilege of serving this great institution, and working within these walls, never forget the ultimate object of our mandate, at which you sit at the center. Second, my perspective in addressing you today is not as overseer, or as policy maker, but as head of Financial Services at the Federal Reserve Bank of New York.
Overall, the evidence that trade has depressed the 10  wages of unskilled workers in the developed world is mixed at best . Instead, most economists have argued that the more important factor behind rising wage inequality in the United States has been the “skill-biased” nature of technical progress – the fact that computer technology seems to have added more to the productivity of high-skilled than lower skilled employees. One recent and well-publicised IMF study made the same point (Chapter 3, World Economic Outlook, April 2017) but this is only the latest in a very extensive and long-lived literature that has reached broadly similar conclusions. 8  Note that this could reflect the effect of a period of unemployment – so-called “scarring” – and needn’t say anything about the impact of trade on wages. 9 Krugman (1995). 10 Harrison et al. (2011) provide a useful survey; Haskell and Slaughter (2003) provide a careful anaylsis designed to distinguish the effects on wage inequality of both technology and trade and find only weak effects of the latter; Stone and Cavazos Capeda (2012) find some effect of imports on wage differentials but, allowing for their impact on productivity, positive effects across the distribution. 10  All speeches are available online at www.bankofengland.co.uk/speeches  10  I can’t possibly do any real justice to this work. Nor should I over-state its results. None of it attributes everything to the nature of recent technical progress or dismisses entirely the impact of trade on inequality.

But you can I think see a broad-brush correspondence between these high-level developments and the more specific trends in the UK’s clothing and textile sector. Until the early to mid-1970s import penetration was roughly stable and real clothes prices fell at the relatively gentle pace of 1% or so a year (Charts 3 and 4). We’ve seen the same broad stability, in both trade and prices, in the years since the financial crisis, during which global trade growth has also slowed. But the years in between saw a marked rise in import penetration and very rapid declines in real UK clothes prices, particularly over the second half of that period. 2  Tariffs began to fall in the 1950s, container ships, which materially reduced shipping costs, were first developed later that decade, and the first regional trade agreements (notably the EEC) were made in the 1960s. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Chart 3: Import penetration started growing in  Chart 4: Real UK clothes prices fell steeply  1970s, rose strongly in 90s, stable post-crisis  between mid-1970s and the crisis  35  clothing and textile imports, % of consumption  30 25 20 15 10 1965 1970 1975 1980 1985 1990 1995 2000 Source: ONS and UN Comtrade Database  Source: ONS  Cumulatively, those declines were pretty spectacular. Even in nominal terms, clothes in the UK were on average cheaper in 2008 than they had been in 1975 (Chart 5).
GDP slowed from rates of 3 to 4 per cent in recent years to between 1 and 1.5 per cent in the first half of this year. At the same time, since last year the krona has weakened around 15 per cent. These two forces have pulled the Riksbank’s inflation forecasts in slightly different directions at different times in the past year. Roughly speaking, with a given potential growth rate, inflation tends to be subdued when economic activity slackens, while a weak exchange rate pulls in the opposite direction and may lead to higher price increases: directly through rising import prices and indirectly by stimulating activity via export production. In addition, sudden exchange rate movements can affect inflation expectations. Here I should like to be precise and a little formal and say that it is neither the current economic situation nor the current exchange rate that constitutes the starting point for the Riksbank’s comprehensive inflation forecast and monetary policy. What we use instead is an assessment of the future economic situation and an opinion about the exchange rate’s future path. But if economic activity slackens suddenly and unexpectedly, it does tell us something about the strength of the cyclical path and the probable future course. The same applies to the exchange rate.

At the same time, households adjust their consumption, not least of capital goods, to a more realistic assessment of income’s long-term trend. Seen in the context of innovations, there is no ready-made pattern for either the occurrence of a cyclical downturn or how quickly it can be reversed. A third basic insight from the Austrian school concerns economic policy’s limitations. If a leap forward in technology leads to a period of unsustainable growth of investment and consumption, there is bound to be a recoil. As argued in the 1970s not least by Fredrich Hayek, perhaps the foremost of the Austrians and a Nobel prize-winner, the necessary adjustment after a supply shock cannot be avoided by trying to bridge the trough with measures of economic policy. As an adjustment to more realistic expectations must come, a bridging policy will simply postpone it and presumably make it more difficult when it eventually happens. But history also teaches us that after a period of what I would call growing pains, optimism about the new technology’s potential will be restored in a more orderly and realistic form. Neither the sudden downturn in the global economy nor the terrorist attacks on 11 September should have changed the grounds for a positive appraisal of the new technology in the somewhat longer run. Signs in the summer of stabilisation in the United States During the summer there were signs that economic activity in the rest of the world was becoming more stable.
One of these factors is that economic agents look to the future when they make decisions about consumption and investments, wages and prices, and want to take account of economic policy not only as it is today, but also as they expect it to be tomorrow and in the future. This is particularly evident in foreign exchange and financial markets, where exchange and interest rates are influenced when participants shift large amounts partly on the basis of their expectations concerning economic policy and economic developments. Financial market expectations concerning economic policy are entirely different today from what they were 20-30 years ago. Behaviour can change from being very rational to herd behaviour. The issues that receive attention, and that govern movements in exchange and interest rates, change. It is thus important that the authorities do not sow doubt, but on the contrary act in a long-term and predictable manner. The authorities must be credible and inspire confidence. There must be a good match between the stated objectives of economic policy and what is actually done to achieve them. This is the most important reason why the implementation of monetary policy has been delegated to the central bank in Norway,  1  Cf. Official Norwegian Report (NOU) 1973:36 (price problems). BIS Review 50/2002  1  as has been the case in other comparable countries. In Norway, the responsibility for interest rate decisions was delegated to Norges Bank in 1986. The other factor is the special challenges to stabilisation policy posed by petroleum revenues.

Is there, for example, a risk of a situation arising where Norges Bank tightens monetary policy to achieve the inflation target, while at the same time the central government authorities increase the use of petroleum revenues (more than implied in the fiscal policy guideline) in order to increase employment and reduce unemployment? 2  4  Report 29 (2000-2001) to the Storting: Guidelines for economic policy. BIS Review 50/2002  There are various factors that can prevent the interplay between monetary and fiscal policy from 3 functioning. Interplay functions well when the decision-making bodies are conscious of how one body’s decisions influence the decisions of the other. Unless this fact is recognised, a decision will not produce the result that was planned. The economy may move in a very undesirable direction, with 4 high interest rates, sluggish economic growth and deterioration in the state’s financial position. However, even without continuous coordination, a fairly good result may be achieved if fiscal policy 5 acts as “leader” and monetary policy as “follower”, to use expressions taken from game theory. The authorities determine fiscal policy knowing how monetary policy will react. Today’s flexible inflation targeting establishes a firm framework for monetary policy and provides clear guidelines on how monetary policy is to respond in different situations. The fiscal policy authorities can internalise the monetary policy response pattern. This is only natural, since the mandate for monetary policy was laid down by the Government and the Storting.
Fadilj Bajrami: Continued cooperation with central banks of the Western Balkans Address by Mr Fadilj Bajrami, Vice Governor of the National Bank of the Republic of Macedonia, on the occasion of the first Programme Steering Committee Meeting of the ECB Regional Cooperation Programme with central banks in the Western Balkans, Tirana, 17 April 2014. *  *  *  Honorable Governor Fullani, Honorable Governor Hamza, Dear Mr. Sturm, Dear Mr. Rumbold, Representatives of central banks, Ladies and Gentlemen, It is my honor and pleasure to be here with you in Tirana on the occasion of the first meeting of the Steering Committee for the joint cooperation project between the European Central Bank and the national central banks of the Eurosystem, and the central banks of the Western Balkans. As my colleagues have already noted, most of the activities of the project will be devoted to identifying the needs of the central banks of Albania and Kosovo in the process of their joining the European System of Central Banks, by strengthening their capacities and compliance with the standards of the central banking in the EU. Last year, the National Bank of the Republic of Macedonia successfully implemented such a project in cooperation with the ECB and the Eurosystem. The project implementation has clearly identified the changes that the NBRM should focus on during its preparations for accession to the European System of Central Banks.

One particularly successful area is wealth management, and its prospects remain good. In fund management, global mandates are now increasingly being managed out of Singapore. The industry is also expanding in breadth and depth. Beyond marketing and portfolio management, fund management firms are also locating regional functions such as trading, risk management and research in Singapore. More hedge funds are also setting up here, adding to the industry’s diversity. Private banking should continue its sterling performance, as Asia-Pacific is the fastest growing region for private banking in the world. According to Merrill Lynch, Asia-Pacific high net-worth individual wealth jumped 11% last year, supported by high savings rates and robust GDP growth in key regional economies such as China, South Korea and Australia. This figure could be an underestimate, given the low penetration of high net worth individuals in Asia by private banks. Bankers managing private  wealth will be attracted to locations which enjoy political and social stability and possess wellrespected regulatory, legal and accounting systems. Singapore has all these attributes and is well placed to become a premier centre for private banking business in Asia. Reputable and well regulated regimes like Singapore can provide a location of choice for investors and financial intermediaries alike, especially with the renewed emphasis on corporate governance and integrity after the excesses of the dotcom era. We can exploit this advantage to become a regional risk mitigation centre, for instance in the areas of clearing & settling OTC and exchange-traded products.