samchain/econo-pairs-v1 huggingface dataset:
A report from this group will be published later in the year. Academic and industry evidence points to at least three channels through which ICPF behaviour could generate pro-cyclicality: Market Conventions: Investors face an acute information problem when judging the performance of their fund manager (Rajan (2005)). One way of mitigating that problem is by benchmarking fund performance, either to others in the industry or to an industry-wide index. That is an important reason why relative return benchmarking and index-tracking is commonplace. There is also evidence that investors adjust their portfolios on the basis of these relative metrics – for example, with stronger inflows into funds whose relative performance has been superior (Chevalier and Ellison (1997), Feroli et al (2014)). These market conventions have the potential to amplify pro-cyclical swings in asset prices and investor flows. For example, in market upswings fund managers are likely to try and juice-up returns by searching for yield in an attempt to outperform their benchmark. The reverse occurs in the downswing when there will be a quest for safety to boost relative return rankings. But if everyone is playing this game, the result will be pro-cyclical pressures on asset prices, adding exuberance to the upswing and pessimism to the downswing. This increases the potential for mis-pricing in asset markets – by turns, risk premia becoming first too thin and then too fat. Relative return benchmarking creates, in effect, a Red Queen Race for the asset management industry (Ridley (1993), Haldane (2012b)). Other asset management conventions may also generate pro-cyclical swings.

10  BIS central bankers’ speeches  Chart 1 Total AUM of US insurance companies, pension funds, mutual funds and other funds, 1946 – 2013 ICPFs Mutual funds (a) Other non-property funds  Per cent of GDP 250  Chart 2 Total AUM of UK insurance companies, pension funds and mutual funds, 1980 – 2012 ICPFs  Mutual funds  Per cent of GDP 250  200  46 51 56 61 66 71 76 81 86 91 96 01 06 11  150  150  100  100  50  50  0  Source: US flow of funds  80 83 86 89 92 95 98 01 04 07 10  Chart 3 Relationship between GDP per capita and managed assets  Chart 4 Global assets under management in selected specialised mutual fund types(a) 60,000 50,000 40,000  Emerging market Corporate bond High Yield Mortgage-backed Total Return  $ billions 900  30,000  800 700 600 500 400  20,000  0 100 200 300 AUM of ICPFs and mutual funds as per cent of GDP  0  Source: OECD, ONS, Investment Management Association and Bank calculations  (a) Other non-property funds include closed-end funds, exchange-traded funds and money market mutual funds  GDP per capita, $ current prices  200  300  10,000  200  0  100  Source: OECD Statistical database and Bank calculations.
The authors found that 42% of amounts in the portfolio held by French financial institutions are issued by companies that display a “high” dependency score (>60%) on one or more ecosystem services; this number amounts to 9% when considering “very high” dependency scores (>80%). The main ecosystem services involved were water supply (surface and ground) and regulating services, such as erosion control, flood and storm protection and climate regulation. Page 9 sur 13  To approximate transition risks, the authors measure the biodiversity impact (or footprint) of companies whose securities are held by French financial institutions through their direct activities or their upstream value chains. To do so, they used the MSA.km² metric. The authors estimate that the terrestrial biodiversity footprint of the equity and bond portfolio of French financial institutions at end-2019, cumulated over time, was comparable to the loss of at least 130,000 km² of undisturbed ecosystems surface. This corresponds to the complete artificialisation of 24% of the surface area of metropolitan France. The annual additional impact on terrestrial biodiversity is equivalent to the loss of 4,800km² of ‘untouched’ nature, which corresponds to 14% of the terrestrial area of the Netherlands. Hence, the indirect impact of the French financial system on biodiversity is also material, which makes them vulnerable in the event of a change in the regulations on biodiversity.

Conventional mortgage rates have dropped from around 6 percent in early 2004 to around 5 percent recently. Other factors could also be raising housing’s fundamental value. For example, recent changes in tax laws may be having an effect. In 1998, tax rates on capital gains were lowered and the exemption from capital gains taxation for housing was raised to $ Both of these changes would reduce the potential tax bite from selling one home and buying another. Another development, which may be making housing more like an investment vehicle, is that it’s now easier and cheaper to get at the equity—either through refinancing, which has become a less costly process, or through an equity line of credit. Both of these innovations in mortgage markets make the funds invested in houses more liquid. So there are good reasons to think that fundamental factors have played a role in the unusually high price-to-rent ratio. But the bottom line here is fuzzy. It’s very hard to say how big a role these factors have played, so we don’t know how much remains unexplained. Frankly, even the best available estimates are imprecise, and they don’t definitively answer the question: Is there a bubble, and if there is, how large is it? Given this uncertainty, my focus as a monetary policymaker is on trying to understand what kind of risks a drop in house prices would pose for the economy. One of the classic ways to do this is to ask “What if…?”—in other words, to pose a purely hypothetical question.
The duration of these stops will depend on the COVID-19’s behavior, but in any case, it will take a big toll on second-quarter investment. The baseline scenario assumes that these projects will resume normally towards the third quarter of this year. We must bear in mind that the economy’s performance since last October provides a weak starting point to deal with the COVID-19 emergency. Although the latest IMACEC2 showed a recovery in activity levels— including the February figure (2.7%) we published this morning—the sanitary measures affect more acutely those sectors that had already been hit by the social unrest. Also, household consumption is coming from a significant contraction in the latter part of last year, while investment was sustained by construction and other works, mainly mining projects. In the labor market, the national unemployment rate as reported by the National Statistics Institute for the moving quarter ending in February showed a bigger increase than in previous months, while other indicators point to a marked worsening in employment quality. Particularly striking is that in recent months a large proportion (92%) of the increase in total employment has been in salaried informal jobs, which do not provide the benefits that formal salaried employment does, including paid sick leave (Figure 7). Some financial variables such as the exchange rate, stock prices, and credit growth were also in less favorable levels than they showed at the onset of the social crisis.

Inflation was assumed in the main scenario to be in line with the inflation target one and two years ahead, albeit at the lower edge of the interval. The risks we foresaw for Swedish inflation were mainly related to developments in the financial markets and to wage formation. In that situation, we chose to leave the repo rate unchanged and decided to hold an extra monetary policy meeting, which will take place tomorrow. The Municipal Workers' Union's termination in advance of the third year of its collective agreement need not in itself constitute a threat to the inflation target, as long as other groups in the labour market are prepared to stand back in favour ot this union's members. However, if other groups were also to demand higher wages, the inflation target might be threatened. The Riksbank would then be forced to tighten monetary policy by raising the repo rate, which would lead to lower growth and employment. During the past two wage bargaining rounds in 1998 and 2001, the social partners indicated that wage formation had improved. It remains to be seen whether wage formation is now sufficiently flexible to manage the necessary changes in relative wages. Thank you. BIS Review 63/2002  7
Chart 7: Percent of population with at least an undergraduate degree (or equivalent) (2015)  Chart 8: Unemployment rates (2016)  Source: ONS Annual Population Survey; Bank calculations. Source: ONS Labour Market Statistics; Bank calculations. 18  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  18  Chart 9: Youth (16-24) unemployment rates (2016)  Chart 10: Working age mortality rates, males (2014)  Source: ONS Labour Market Statistics; Bank calculations. Source: ONS Mortality Figures for England and Wales, Scotland and Northern Ireland; Bank calculations. Chart 11a: Real GDP per head growth (2008 to 2014)  Chart 11b: Scenario - Real GDP per head growth (2008 to 2014), without monetary stimulus  Source: ONS; Bank calculations. Source: ONS; Bank calculations. Notes: See footnote 16. 19  All speeches are available online at www.bankofengland.co.uk/publications/Pages/speeches/default.aspx  19  Chart 12a: Change in unemployment rates (2008 to 2016)  Chart 12b: Scenario – Change in unemployment (2008 to 2016), without monetary stimulus  Source: ONS Labour Market Statistics; Bank calculations. Source: ONS Labour Market Statistics; Bank calculations. Notes: See footnote 16. Chart 13a: Growth in median net wealth (2006/8 to 2012/4)  Chart 13b: Scenario - Growth in median net wealth (2006/8 to 2012/4), without monetary stimulus  Source: ONS Wealth and Asset Survey; Bank calculations. Source: ONS Wealth and Asset Survey; Bank calculations. Notes: See footnote 16.

We'll do it with the necessary patience – looking at the 2025 horizon for full transmission, with persistence – maintaining restrictive interest rates for long enough, and pragmatism – monitoring actual economic data. But once more, monetary policy cannot be the only game in town. Fiscal policies should adjust and consolidate, first and foremost scrapping energy subsidies as the European Commission rightly advocated yesterday ; wage negotiations and mark-up decisions by firms should incorporate the expected decrease in inflation; and still more, structural reforms are needed more than ever to increase the supply-side capacity and flexibility in Europe and in France.3 And  2/3  BIS - Central bankers' speeches  this is where Capital Markets Union would greatly help to finance investment and innovation, and hence reduce inflation. Let us acknowledge it: if we are lagging behind today in Europe, it's in this domain of supply transformations, and not in monetary policy. 1 Smets and Wouters (2005); see also ECB NAWM model presented in P. Lane's  lecture on 16/02/2023, "The euro area hiking cycle: an interim assessment". 2 Badinger and Schiman (2023), Measuring Monetary Policy in the Euro Area Using  SVARs with Residual Restrictions American Economic Journal: Macroeconomics 2023, 15(2): 279–305, or; see also ECB-BASE model. 3 François Villeroy de Galhau, Letter to the President of the Republic, « How France  and Europe will defeat inflation », April 2023. 3/3  BIS - Central bankers' speeches
In part, this no doubt reflects the fact that the euro is, for the moment, the new kid on the block which everyone wants to meet. But more fundamentally it is a clear vote of confidence in the new currency that such international interest should already be apparent in borrowing and investing in the euro, and in adapting and rebalancing portfolios to take account of this major change in the structure of the capital markets. A hugely important contribution to this process has, of course, been the vast exercise to prepare conventions, processes and systems for the euro, both within firms and in the shared market infrastructure. The scale of work undertaken in all centres – but notably in London, because of London’s pre-eminent position as the international centre for the bond markets – has been immense and I want to pay tribute to the high professionalism with which the preparations and the conversion itself were conducted. People commented on how empty the bars and restaurants were in the City of London over conversion weekend – which is remarkable in itself; but inside and indoors, 30,000 or more people achieved a remarkable feat of engineering, all within the space of a three-day holiday weekend. It may not have been everyone’s preferred way of spending New Year’s Eve, but it was certainly a very productive one. The good news is that everyone can come back and do it again this year for Y2K!

So there is a lot you can feel positive about in the past year’s achievements and in the start you have made to 1999. But, looking ahead, the world prospect remains uncertain. Notably, the emerging markets crisis has had an immense impact on international financial flows, and the economic adjustments that those shifts will bring in their wake are likely to have important impacts on the bond markets and on your business activity. As a measure of the impact of the emerging markets turbulence, the Institute of International Finance recently published data which show that total net private capital flows to the emerging markets (broadly defined) fell from some $ billion in 1996 to around $ billion last year. Within this, nonbank lending and portfolio equity inflows also fell back by around $ billion (to around $ billion). Although direct investment in the emerging market countries held up pretty well (at around $ billion), and despite a big increase of nearly $ billion in official lending, there was a sudden huge decline in the overall availability of finance to the emerging market economies. And that left many of them with sharply weakening exchange rates, and little choice but to contract their domestic economies. The immediate international priority last year was to contain the financial contagion – and there was some progress in this direction following the initial shocks in Asia.
For a long time, the Riksbank, for example, based its forecasts on the assumption that the policy rate, that is the repo rate, would remain unchanged during the forecast period. Some central banks base their forecasts on both a constant interest rate and a constant exchange rate, which are often completely unrealistic assumptions. In such cases, the forecasts for inflation and the real economy are of course not the best forecasts. For a while, the Riksbank instead used the assumption that the repo rate would follow the market's expectations regarding the development of the repo rate. Although this is a more realistic assumption, it is not necessarily the same as the Riksbank's best forecast. These difficulties no longer apply to the Riksbank's forecasts as, since February 2007, the forecasts are based on the Riksbank's best forecast for the repo rate. In order to arrive at a fair comparison of the forecasts of various analysts, we should also take into account the fact that the forecasts are made at different times and are therefore based on different quantities of information. A forecaster that, for example, always publishes its forecasts later than other analysts has generally speaking more information on the economic situation when the forecasts are made. A comparison of the accuracy of the forecasts should therefore make adjustments for the forecasts being made at different times. Such a forecast comparison is included in the material for the evaluation of monetary policy in the period 2006-2008 that the Riksbank published a month ago.

Evidently the supervisor’s aim must be to ensure that the banking sector is a fortress against the storm and not an added problem that we have to face at the worst time imaginable. 1  Recently, it has been frequently said that the banking sector is in much better shape than it was before the previous crisis. This will allow it to become part of the solution. In any event, crises are, by definition, periods of transition and COVID-19, despite its specific features, will be no exception. I believe this crisis will serve as a catalyst which will speed up many of the trends that we have already seen and discussed on many occasions at our meetings. First, as regards the importance of digitalisation. Second, in respect of the need to gain in efficiency and cut costs. Also, naturally, as regards the criticality of good governance and risk control, underpinned by the best international practices which will allow institutions to react appropriately to such changing circumstances. And, above all, regarding having a sound and sustainable business model for the medium and long term. We do not know what the future holds for us, but what we do know is that the better prepared we are, the better we will fare. Before I conclude, let me apologise for not having made the most of this address to introduce a supervisory “wedge”.
But it is only in recent years that researchers have managed to incorporate banking behaviour and economic policy in a dynamic general equilibrium model. These are the same type of models we use in the conduct of monetary policy. These models are also useful for macroprudential policy because we must understand both what is happening in the financial system and the real economy – simultaneously. Important advances have been made in modelling systemic risk and how various instruments can be used. This will help us in our thinking – for example in distinguishing between credit growth that is good and credit growth that is bad. So, even though theory lags behind reality to some extent, it is useful. Perhaps we can draw a parallel to Isaac Newton. The force of gravity as a phenomenon was hardly unknown before he formulated his theories, but they nevertheless proved to be very useful. A number of macroprudential instruments can be applied. In Norway, Finanstilsynet (Financial Supervisory Authority of Norway) has tightened the guidelines for sound residential mortgage lending. The risk weights for the capital banks must hold for residential mortgage loans have been adjusted upwards. Liquidity buffer requirements for banks are in the pipeline and stable funding and leverage ratio requirements will be introduced. The Ministry of Finance has implemented a systemic risk buffer for banks and the biggest banks are required to hold additional capital. Norges Bank gives advice to the Ministry of Finance on the size of the countercyclical capital buffer for banks.

Price stability is essential for sustained economic prosperity, and we are strongly committed to using our tools as needed to achieve our price stability and maximum employment goals. 1 International Monetary Fund, Database of Fiscal Policy Responses to COVID-19,  October 2021. 2 Olivier Armantier, Fatima Boumahdi, Leo Goldman, Gizem Koar, Jessica Lu, Giorgio  Topa, and Wilbert van der Klaauw, "Have Consumers' Long-Run Inflation Expectations Become Un-Anchored?," Federal Reserve Bank of New York Liberty Street Economics, September 24, 2021; Olivier Armantier, Leo Goldman, Gizem Koar, Giorgio Topa, Wilbert van der Klaauw, and John C. Williams, "What Are Consumers' Inflation Expectations Telling Us Today?," Federal Reserve Bank of New York Liberty Street Economics, February 14, 2022. 3 Olivier Armantier, Leo Goldman, Gizem Koar, Giorgio Topa, Wilbert van der Klaauw,  and John C. Williams, "What Are Consumers' Inflation Expectations Telling Us Today?," Federal Reserve Bank of New York Liberty Street Economics, February 14, 2022. 4 Board of Governors of the Federal Reserve System, Federal Reserve Issues FOMC  Statement, March 16, 2022. 5 Board of Governors of the Federal Reserve System, Summary of Economic  Projections, March 16, 2022. 4/5  BIS - Central bankers' speeches  6 Board of Governors of the Federal Reserve System, Principles for Reducing the Size  of the Federal Reserve's Balance Sheet, January 26, 2022. 5/5  BIS - Central bankers' speeches
The Malta Stock Exchange has gained 32% since the beginning of the year, while the property market continued to perform buoyantly. A higher level of wealth positively affects consumption and general consumer confidence. On other fronts, however, Malta can position itself better to reap more benefits from this unprecedented scenario of accommodative monetary policy, particularly in the area of access to finance. As just mentioned, the ECB’s monetary policy has enabled significant reductions in lending rates across the euro area. Bank lending rates in Malta did go down but still remain higher than in other euro area countries, as shown in Chart 8. 6  BIS central bankers’ speeches  Chart 8 Bank lending rates and ECB rates  The transmission of central bank policy rates to retail bank rates is an essential condition for the monetary policy transmission mechanism. This is especially important in Malta where the predominant types of businesses are SMEs, which use banks as a main source of financing. In fact, although Malta outperformed the euro area on the main macroeconomic indicators, credit to the non-financial corporate sector has remained subdued, although this partly reflects deleveraging in certain sectors, particularly in construction and real estate. Apart from the impaired transmission of ECB policy rates to retail rates, charges and commissions of commercial banks are found to be relatively high.

Josef Bonnici: Strengthening economic resilience Address by Professor Josef Bonnici, Governor of the Central Bank of Malta, at the Annual Dinner of the Institute of Financial Services, Saint Julian’s, 20 November 2015. *  *  *  Honourable Minister, members of the Institute, distinguished guests, I would like to thank the President and Committee of ifs Malta for once again organising this Annual Dinner and giving me the opportunity to share my thoughts with such a distinguished audience. Mr President, I am pleased to hear you speak about the Institute’s commitment towards raising the standards of financial services education, as this is exactly what we need for our dynamic financial sector to remain successful and a key contributor to our economic development. Over the years, the Central Bank of Malta has worked closely with the Institute, and more recently participated in the successful ifs Annual Conference on The Future of Pensions. This national conference acted as a catalyst to rekindle the debate on private pensions in Malta. I commend the Institute for this important initiative. I wish you success in all the Institute’s future endeavours. Introduction The current international economic environment poses a number of key challenges, including the weak recovery in the euro area, the slowdown in emerging economies, the enduring geopolitical tensions, and possible spill-overs from the US monetary policy that could affect financial conditions on a global scale. Clearly, our economy is not immune from developments beyond our shores.