samchain/econo-pairs-v1 huggingface dataset:
On the inflation side of ledger, despite sharp rises in energy prices in recent months, overall inflation, as measured by year-over-year changes of the consumer price index, is still around 2 percent – significantly lower than last year. The signals from underlying inflation pressures, compensation trends, and longer-term inflation expectations are all fully consistent with our longer-run inflation objective of 2 percent. As you all know, in September, the FOMC took additional action to promote a more robust recovery in a context of price stability – a decision that was reaffirmed in October. In addition to the $ billion monthly purchases of longer term Treasury securities already scheduled to run through year end, the FOMC commenced buying additional mortgage-backed securities at a rate of $ billion a month. The Committee said: “If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgagebacked securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability.”1  1  September 12–13, 2012 Federal Open Market Committee statement, http://www.federalreserve.gov/ newsevents/press/monetary/20120913a.htm. BIS central bankers’ speeches  5  In terms of rate guidance, the Committee said it anticipated that exceptionally low levels for the federal funds rate would likely be warranted “at least through mid-2015” – emphasizing that a highly accommodative stance of monetary policy would remain appropriate for a considerable time after the pace of the economic recovery strengthens.

BIS Review 75/2001  3  The broad use of statistical risk models can have a similar effect. It is, of course, a good thing to use risk models as an aid and we can conclude that they have enabled great progress in the management of financial risks. However, there is an evident problem here. When an increasing number of players are using the same models, they are also likely to react in a similar way when there is unease on the markets, which can reinforce fluctuations and trigger new signals from the models, and so on. What is rational for one individual institute may in this case be irrational as a whole. Increased transparency reduces risk of herd behaviour So is it possible to counteract this type of behaviour? Allow me to begin by emphasising that economic risk-taking in itself is an important factor behind economic growth. However, risk-taking also means that not all investments will bear fruit. This is why we have created national bankruptcy regulations enabling businesses to be liquidated in an orderly manner. For the same reason, we must assume that financial crises will emerge even in the future. On the other hand, we must of course do all we can to avoid such crises spreading unnecessarily. I should also like to stress that I do not believe that different types of taxes aimed at reducing the turnover on the markets are a practicable route forward.
Difference rules thereby avoid introducing the policy mis-calibration and resulting noise that stems from using poorly estimated or mis-specified R- and Y-star measures.23  10  All speeches are available online at www.bankofengland.co.uk/news/speeches  10  I will explore briefly this idea in a narrower setting using a version of a model built by my colleagues Rich Harrison, Martin Seneca and Matt Waldron (a sketch of which is provided in the Annex). Essentially, this is a canonical three equation new Keynesian macroeconomic model estimated for the UK, with a few additional features to ensure more realistic persistence in inflation and output. Although estimated, I would emphasise that this is a stylised representation of the UK economy – I am using it for illustrative purposes, rather than to foreshadow any specific policy decision. In the background of the model are ‘cost-push’ shocks that introduce a difficult trade-off between inflation volatility around target and output gap volatility, which monetary policymakers seek to manage by varying the policy rate. My focus here is on the treatment by monetary policy of shocks to the R- and Y-star concepts embodied in this model. One can think of these as risk premium and productivity shocks. The crucial feature is that shocks to these starred variables have two components: one temporary, the other persistent. Neither policymakers nor households and firms can observe these shocks in real time. Rather, they have to learn about the persistence of the driving shocks over time on the basis of how the observed data evolve.

As this discussion illustrates, the literal-but-symmetric interpretation of the MINIMAX approach to robust monetary policy would imply very ‘activist’ policy responses in the face of uncertainty. In this framework, from having their foot to the floor with the monetary accelerator, policymakers might have to switch in short order to stamping on the monetary brake. Unsurprisingly, on my reading, that characterisation also finds little sympathy in policymaking circles. In the interests of avoiding tail outcomes, such activism threatens to induce volatility into monetary policy, financial markets, the economy and inflation in other circumstances, which is both costly and hard to communicate. But the research on monetary policy and uncertainty as a whole has influenced the discussion and conduct of policy in practice. I would pick out a number of lessons that have been drawn.  The magnitude and evolution of uncertainty and risk can, do and should influence monetary policy decisions.  Not all uncertainty is the same. The way uncertainty influences monetary policy decisions depends on the circumstances and the nature of the uncertainty – its source, its persistence, its magnitude – that is being faced  Monetary policy should not be paralysed in the face of uncertainty. If policymakers were to wait until all uncertainty is resolved before taking decisions, they would wait forever.  At the same time, there is no general rule that says policy responses should either be attenuated or more activist in the face of uncertainty.
That hardly characterises the UK in the past five years, where inflation has averaged well above our 2% target and the real interest rate has as a consequence been pretty low. Moreover, it is by no means obvious that the UK’s economic problem is simply one of deficient aggregate demand. The limited disinflationary pressures coupled with consistently weak productivity growth suggest that the financial crisis may have wrought significant damage to the supply side of the economy. Our November Inflation Report discussed a variety of possible explanations for the weakness in productivity, relative to a continuation of its pre-crisis trend. Some of the weakness may unwind naturally as the recovery gathers pace, some may require policy intervention to fix, and some may persist indefinitely. But it seems unwise to assume that all of it will unwind with a recovery. That part of it which is attributable to a supply-side deterioration will instead be absorbed as a higher price level under a nominal income target. Of course, this issue could be addressed by adjusting the target level of nominal income down for the presumed deterioration in supply, but unfortunately we do not presently have a good handle on just how big this is.

In particular, the collapse in demand after the demise of Lehman Brothers was so sudden and deep that there was no way that monetary policy could in practice have been relaxed early enough, and by a large enough amount, to prevent it. It is, though, a moot point whether policy would have been set even more stimulatory during the latter part of 2009 if we had been operating under a nominal income growth target, given that we were implicitly expecting a rather slow recovery in nominal income growth. Given how stimulatory policy already was, I suspect that we might well have taken the view that it was simply not feasible to get nominal income growth back much faster. The unexpected weakness of nominal income growth in the past year or so does, however, serve to highlight a more significant difference between an inflation target and a nominal income growth target. A remarkable feature of the current cycle has been the juxtaposition of a weak recovery in output with robust growth in employment. One possible explanation is that the financial crisis has led to a fall, possibly temporarily, in the underlying rate of growth of supply. If that is so, then a fixed nominal income growth target would obviously go hand-in-hand with a higher inflation rate, whereas a fixed inflation target would be associated with lower nominal income growth. But this hardly provides an argument in favour of a nominal income growth target.
In this sense, political union is not about moving forward, but about catching up with the depth of economic and financial integration that already exists. What is at stake refers basically to democratic accountability and legitimacy. An important element of legitimacy has been provided in the past, in the European Union and other democracies, by what Fritz Scharpf called output legitimacy (or government for the people), 11 that is, by the effectiveness of the system in ensuring the continuous improvement of the citizens´ quality of life. All advanced democratic countries and consequently the European Union will face challenges in this front stemming from the prolonged period of slow economic growth that has now just started. This is the consequence of two types of processes. First, the adjustment to the form of balance-sheet recession that the crisis represented and the workings of mechanisms of the associated debt deflation. Second, by the structural problems created by ageing populations, globalisation, energy and environmental risks and decreasing returns of technological progress recently underlined by Robert Gordon. 12 To strengthen output legitimacy, the Euro Area has to improve the effectiveness of its decision-making institutions to overcome the present situation of crisis. The decisions and reforms I have highlighted in this talk have precisely that objective. The transfer of some functions to the European level is necessary as I argued here. We should not hide, however, the difficulty in explaining these reforms to the European public opinion to get their support in the present environment.

For Sweden there is also membership of the European Union and possibly of EMU. ·  Analytical requirements are heightened in general. Matters are becoming increasingly complex. Another factor here is the new technologies with electronic payment systems, for example. ·  In our case there is also the crisis in the early 1990s and the lessons we have tried to learn from it. I shall now say something about the work we have done in recent years in three respects: Concentrating on cores activities; Strength and security; and Management with an executive board. BIS Review51/2001  1  Concentrating on core activities A good performance presupposes that we concentrate our resources to what is really important. The starting-point here is, of course, our main statutory functions, namely to maintain price stability and promote a safe and efficient payment system. For three hundred years the Riksbank has owned a paper mill and a note-printing works in Tumba and a mint in Eskilstuna. These are largely manufacturing operations. Through the Tumba works, in the past decade the Riksbank has been active in export markets and produced banknotes on behalf of a number of countries. Besides manufacturing notes and coins, we distribute them. Like McDonalds and the food chains, we send our products, wrapped in plastic though not deep-frozen, to everywhere in Sweden. In our case the security requirements are, of course, considerably higher. But is this really something we should be doing? At the Riksbank we decided it was not.
Through negotiations in the WTO, earlier on the GATT, agreements have been reached on removal of trade barriers, dismantling of tariff barriers, removal of subsidies, introduction of anti-dumping measures, and agreements have been entered into for textiles, agricultural products and other goods and services. Today, almost all countries participate as members or observers in these negotiations and the issues are far-ranging. Political changes in many regions have amplified the tendency of increased globalization. Over the past few decades, China has changed course and is now a member of the WTO. Its share of total exports is growing rapidly. The countries within the Commonwealth of Independent States (CIS) have increased their exports markedly since the early 1990s. India is at the starting-line. Many of these countries have large labour forces that offer their services at very low wages, and these labour resources are available to companies that compete on world markets. The working-age population in rural China for instance is nearly the same as that of the entire OECD area. Many are seeking new opportunities and work in the urban areas. Low labour costs and more efficient transport and communication attract labour-intensive production. Production of goods and services is being transferred from Norway and other high-cost countries to amongst others the Baltic countries, Poland, China, India or other emerging economies. There are many examples showing that competition in selling highly skilled services is also intensifying. Norwegians are offered myopia surgery in Turkey.

More importantly, while we adhere to the macroeconomic framework it will shield the economy when oil prices fall and our terms of trade are reversed. Thank you for your attention! BIS Review 30/2006  5
I am very much aware of the challenges facing Italy today – including, until very recently, the flow of migrants – all the more so because of our shared culture and history, and, today, our shared institutions and challenges. As a central banker, however, I am going to focus on the economic issues, and notably on our shared currency and the euro area. ** To start with, let me just remind you of some stylised facts about Italy, which are often too quickly forgotten. Italy has many strengths: it is the euro area’s second largest manufacturing economy, after Germany and ahead of France. Its export performances have improved in recent years, thanks notably to an increased specialisation in high-end products1 and to the talent of its imprenditori, from Brescia to Bologna. Moreover, thanks to the reforms undertaken by successive Italian governments since 2012, its macroeconomic position is on the whole solid [slide]. To highlight just a few key figures: its net external position is almost balanced (-5% of GDP in 2017), and better than France’s; its current account has been in surplus since 2013 (2.8% of GDP in 2017); and its private sector debt is lower than the euro area average. Yes, Italy – just like Europe – has much more to be proud of than people say. Pride means that we can be more serene, without being aggressive. But it should not prevent us from being lucid. Italy is indeed expanding at a slower pace than it should be [slide].

Otherwise, persistently high public debt/GDP ratios will leave us chronically vulnerable to the possibility of adverse macrofinancial shocks arising in the future. This programme should include a clear definition of the budgetary objectives and their timeframe, along with details of the measures needed to attain them. It should also be based on a prudent forecast of macroeconomic developments. Further, it should include an appropriate response to possible slippage, and be compatible with an improvement in the quality of public finances. In this respect, it will be a priority on the expenditure side to subject the various items to exhaustive review, with the aim of identifying the areas in which there is room to improve efficiency. It is important that the recommendations further to AIReF’s assessments be taken into account as soon as possible. We also need a comprehensive review of the tax system, in order to improve its revenueraising capacity and its efficiency. Comparison with the other European countries can guide us here. And, once again, the results of AIReF’s recently published review of tax benefits are a significant contribution in this connection. 11  Conclusions In sum, following an unprecedented recession, we face a gradual recovery in the economy, which is still incomplete and uneven, and subject to high uncertainty. Against this background, the ECB’s actions since the onset of this crisis and the recent approval of the European recovery plan are also an unprecedented common European response.
One of these messages was our expectation that the cards industry in Europe will issue “chip-only” cards from 2012. But if the industry decides to retain the magnetic stripe on cards for practical reasons, we would ask that any data enabling the processing of magnetic stripe transactions should be removed. This should ensure that sensitive account information can no longer be copied. The current levels of fraud clearly show that something needs to be done urgently in this respect. The increasing level of card-not-present fraud carried out over the internet can be addressed by the introduction of secure payment protocols (e.g. 3D Secure or virtual cards). To encourage the use of such security measures, a liability shift – which has been used, for example, as an incentive for EMV migration – could be applied. BIS Review 159/2010  3  Clearly, SEPA requires a harmonised minimum level of security for retail payments to ensure transparency and a level playing field. In order to achieve this, we need to have more clarity about the security requirements as well as about the actors involved in setting these requirements. We have recently launched the idea to set up a Forum for Security Issues and have received a positive feedback from banks. Such a forum would monitor market developments. In addition it could enable the relevant authorities, including banking supervisors and central banks, to align their expectations on security. The Eurosystem is currently investigating what could be the precise mandate and composition of such a forum.

In short, he needs much more depth. Second, cross-functional adaptability. Job functions and business lines are no longer as static and predefined as they used to be. It is increasingly important that finance professionals are exposed to a broader range of business areas. Movement across business lines generates fresh perspectives that could in turn help to drive innovation and identify new areas of competitive strength. A compliance professional, for instance, may start off on compliance matters that pertain to credit activities. Over time, it would be useful to widen his compliance knowledge in other areas of business such as capital markets. This broader exposure will help him to think about compliance and risk management issues across different functions of the bank in a more consistent and coherent fashion. Such a capability will be a key asset when taking on larger functions and responsibilities in the bank. Third, Asian knowledge and expertise. Asia is a diverse mix of economies. They are at different stages of development, with different financing needs and different regulatory and governance structures, not to mention different cultural norms. To operate a successful regional business franchise, finance professionals will need a deep understanding of these differences and know how to navigate the different terrain. Take for example, a corporate banker, who may be advising the treasurer of a Singaporebased multi-national corporation with operations in the region. Each jurisdiction may have different rules and regulations that could impact the cash management and credit needs of this client.
Paul Tucker: National balance sheets and macro policy: lessons from the past Speech by Mr Paul Tucker, Deputy Governor for Financial Stability at the Bank of England, at the Society of Business Economists’ Annual Dinner, London, 28 February 2012. *  *  *  The spectre hanging over the world economy these past years – the drag on our recovery – has been deleveraging. Around the world, households, some firms, banks, governments, whole economies are acting to reduce their debt overhang. By selling assets, cutting spending, deferring investment. What gets delevered – as the ugly phrase goes – is a balance sheet. Balance sheets became stretched. Sectorally. Nationally. Through much of the industrialised West. The idea of over-borrowing, of overstretched balance sheets, is hardly novel. Economists are taught about the importance of stocks of debt; about “budget constraints”, beyond which a borrower’s expected future income, their wealth, is insufficient to service and repay their accumulated debts. But, by and large, economic commentary focuses on flows – the path of output, consumption, and investment and the current account balance. I exaggerate, of course – not least because cumulative flows create stocks. Nevertheless, it is salutary to remind ourselves that less than a decade before our crisis broke, we – the West – had been preaching to emerging market economies (EMEs) the necessity of monitoring, and even managing, the national balance sheet. That was in the wake of the Asian and Latin American financial crises of the 1990s.

In fact findings show that the implications of this in the long term for the ability of households and businesses to get a loan are relatively modest – although there is considerable uncertainty around this result. As such, while other risks may arise during a transitionary phase, the most significant risk arises from the potential for stablecoins in particular to undermine confidence in money and payments, and hence in the wider financial system. As we discussed a few minutes ago, the risk of a loss of confidence in the credibility and stability of private money is not theoretical. Loss of confidence in private money can be a major threat to financial stability. But it is equally true that private money can be made acceptable as a widespread means of payment – indeed, as I covered earlier, the vast majority of money held for transactions in the United Kingdom is already private. So, with the right regulation, a stablecoin could potentially be made safe for wide-scale use. Our existing regulatory framework seeks to ensure that the public is able to trust the reliability and stability of the money it uses every day. Banks are subject to extensive rules and requirements to ensure that consumers can use privately-issued money with confidence and interchangeably with cash. These core rules and requirements were developed over time – in many cases via trial and error, with new rules introduced following financial crises.