samchain/econo-pairs-v1 huggingface dataset:
In fact, it is difficult to find any newspaper reference at all to macroprudential policy in those years. The opposite is true today. Last year there were over 350 newspaper references in the UK alone. The great financial crisis validated these ideas for many policymakers world-wide. It was clear with hindsight that we had not only mis-estimated the risks in individual institutions. More importantly, we had not really understood the risks created by the dynamics of the system including from outside the core banking system, namely the amplifiers and feedback mechanisms that drove the system down in the same way that they had driven it up. Or the devastating effect all of this would have not just on the financial system but on the broader economy. The dynamics of the system itself create risks and costs that markets and firms do not – and cannot – take fully into account in their decisions and their pricing. For example, in a financial crisis individual banks will try to cut lending – to deleverage – to preserve their funds. But if  1  See Crockett, A (2000) ‘Marrying the micro- and macroprudential dimensions of financial stability, BIS Speeches, 21 September. Also, see Borio, C (2003) “Towards a macroprudential framework for financial supervision and regulation?”, BIS Working Papers, No.128. BIS central bankers’ speeches  3  all banks do that then, as we saw, the economy will suffer which damages all banks. I suspect central banks over the centuries had an intuitive understanding of these risks.

A more restrained approach would be to use countercyclical policy not so much to lean against the cycle but to increase the resilience of the system further by putting in more protection as risks build up in exuberant times. Others remain unconvinced that there is much of a role for time-varying macroprudential policy at all and argue that it is better to bake all the necessary resilience into a very strong standing framework of standards and rules. There is certainly no easy way to estimate where we are in the credit cycle and the impact of macroprudential tools – while there are guides there are no simple rules. Against that background, I want to highlight some of the steps the FPC has taken in this area. First, using macroprudential policy to address changing risks depends upon a clear assessment of risks and of the action necessary to address them. The institutional incentives will inevitably tend to drive macroprudential authorities to the identification of all possible – and if we are not careful, some impossible – risks. Failure to spot a risk is worse than  BIS central bankers’ speeches  5  spotting one too many. The outcome of this dynamic, however, can too easily be a lack of clarity and focus: an assessment that identifies everything but actually identifies nothing. With this in mind, the FPC has changed the structure and content of its bi-annual Financial Stability Report (FSR).
I then want to say something about the importance of personal financial education. There are two distinct parts to the strategy. One involves visits to secondary schools. Below director level, more than 400 people working at the Bank have volunteered as “Ambassadors”, who explain to school pupils what we do and why. People on our policy Committees do the same. It’s now rare that, on one of my regular trips around the country to hear from businesses about what’s going on in the economy, I don’t also make a visit to a local school. In all, we reckon we’ve talked to 12% of the UK’s state secondary schools in the past 18 months alone. 2  All speeches are available online at www.bankofengland.co.uk/news/speeches  2  For our part, we very much enjoy these visits. And the feedback has also been good. Central banks are not often associated with the words “positive”, “appreciated” and “inspiring” so you can imagine how invigorated our Ambassadors are when they hear them. The second strand is a package of online materials – something we’ve named “EconoME” – to help non-specialist teachers of students aged between 11-16 years deliver quality financial education. EconoME comprises three one-hour lessons focussing on financial decision-making and the implications of these decisions on students and the world around them. The resource draws on real-world examples, provided by the Bank of England, which shows how the Bank makes decisions and the practical skills we employ to understand the likely outcomes of those decisions.

Market finance and financial stability: will the stretch cause a strain? Speech given by Alex Brazier, Executive Director for Financial Stability Strategy and Risk, Bank of England  The Brevan Howard Centre for Financial Analysis, Imperial College Business School, London Thursday 1 February 2018  I am grateful to Stephen Burgess, Shibo Feng, Harry Goodacre, Nowrin Hossain, Mike Joyce, Christiane Kneer, Javier Otegui, Liam Crowley-Reidy, Marek Rojicek and Ryland Thomas for their assistance in preparing these remarks. 1  All speeches are available online at www.bankofengland.co.uk/speeches  We’ve now passed the tenth anniversary of the onset of the global financial crisis; a crisis created by a fragile financial system out of a correction in the US housing market. What could have been an economic downturn was turned into a disaster. In this country alone, more than one million people lost their jobs. And the legacy of those effects lives on today in lower levels of national income. Looking back over the decade, the economic cost of the crisis has been equivalent to £ per person in the UK. 1  Such crises should be remembered, and their anniversaries marked, because forgetting them risks repeating them. In this country, Parliament hard wired the memory of the crisis into the institutional fabric. It tasked the Bank of England with meeting a ‘macroprudential’ objective. Cutting through the language of the statute, it is to guard against the financial system disrupting growth of the wider economy; to guard against it turning corrections and downturns into crises and disasters.
In addition, the commitment to refrain from excessive deficits is also a necessary condition for the success of EMU itself. This is the case because if such a deficit occurs in one of the larger euro area members, the inflationary pressures resulting from that deficit could instil an upward bias in ECB interest rates. For accession countries, contained public spending and flexible labour markets are also necessary from the point of view of achieving nominal and real economic convergence. Excessive deficits would not only accentuate inflation differentials, undermining the ability of these countries to fulfil the Maastricht criteria, but could also crowd out private sector investments, delaying progress in structural reforms and convergence in income levels. Given that large deficits and labour market rigidities tend to weaken a country’s ability to achieve both nominal and real economic convergence, policies to address these issues are an integral part of the preparations which accession countries are making in advance of EMU. The rationale behind ERM II ERM II is a fixed exchange rate regime, involving the adoption of a central exchange rate against the euro in agreement with the ECB. This rate is then allowed to fluctuate within specified margins, normally +/- 15%, but narrower bands may be adopted subject to mutual agreement.

In view of the incompatibility of monetary policy autonomy, full capital account liberalisation and a fixed exchange rate, EMU participants have given up independent national monetary polices in favour of the  BIS Review 70/2002  1  free movement of capital and the adoption of a single currency. The main driving force behind this decision was the desire to overcome the obstacles to the completion of the Single Market and to progress towards monetary and, eventually, economic union. A single currency was a logical step in this regard. Given the constraints which the adoption of the single currency entails, the emphasis which the Treaty puts on containing fiscal deficits and on labour mobility is understandable. In this set-up, in fact, the adjustment to asymmetric shocks has to take place through fiscal policy and the labour market. Since labour mobility within the Union is still weak, however, in practice this means that the onus of adjustment falls on fiscal policy. Fiscal consolidation thus remains a necessary precondition for the success of EMU. Indeed, whereas it could be argued that the Stability and Growth Pact precludes fiscal policy from responding to short-term domestic needs, it is equally true that the constraints arising from that Pact are meant to ensure that governments in the euro area have the necessary room for manoeuvre over the medium-term. The presumption here is that by achieving close to balance or surplus positions, governments would be in a better position to deal with normal cyclical fluctuations.
Today we are once again in a situation where such bank support authorities are being established in many parts of the world, including Sweden. We are also facing a period of poorer economic activity. But this time the situation is very different for Sweden. Experience and measures have given resilience The anxiety that has had a stranglehold on the financial markets since the end of September comes from outside this time, not from problems in the Swedish bank sector. Swedish banks have on the whole shown much more responsible credit granting, both compared with the years following credit deregulation and compared with parts of the US mortgage market. The banks have good capital buffers and can manage substantial loan losses, even if they are nevertheless affected by the general mood of distrust on the market. We are also much better equipped in many ways to meet an economic downturn than we were at the beginning of the 1990s. I am thinking here of the effects of the changeover in monetary and fiscal policy after the crisis, and the fact that we now have sound public finances and a substantial surplus on the current account. Although a small, open economy like Sweden’s is never immune to what is happening in the world economy, and particularly to an international financial crisis, we learnt a lot from the difficult years in the 1990s. This applies to the banks as well as to the supervisory authorities and the political system.

BIS Review 138/2008  05  06  07  08  09  10  11  12  Sources: Intercontinental Exchange and the Riksbank  15  Falling commodity prices USD, index (2000 = 100)  350  350 Food M etals Other agricultural products Total  300  300  250  250  200  200  150  150  100  100 04  05  06  07  08  Source: The Economist  Weaker krona Trade-weighted exchange rate (TCW), index, 18 November 1992 = 100  138  138 TCW-index  136  136 TCW-forecast M PR 2008:3 TCW-forecast M PR 2008:3  134 132  134 132  130  130  128  128  126  126  124  124  122  122  120  120 04  05  06  07  08  09  10  Note. Broken lines refer to the Riksbank’s forecasts (quarterly data). 16  11  12  Source: The Riksbank  BIS Review 138/2008  Lower growth in the world and in Sweden Annual percentage change, calendar-adjusted data 6  6  Sweden World  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2 -3  -3 1980  1985  1990  1995  2000  2005  2010  Note.
The MPC sees a 50% chance of inflation exceeding its target two years hence. Outside professional forecasters put that probability at just over 40%. Only around a third of companies and a quarter of households expect inflation to be above the target at that point. 9 The balance of risks, as perceived by those setting and receiving wages, is skewed squarely to the downside. That leads naturally to questions of monetary policy strategy. There is clearly a tightrope to walk here: lean too much in an expansionary direction and the inflationary cat is let out of the bag (assuming it isn’t already stuck in the tree with that kite); lean too much in a contractionary direction and the recessionary gorilla is unleashed (ditto). The asymmetric risks posed by the effective lower bound have led some to suggest that the optimal strategy is to leave rates “lower for longer” (Evans et al (2014)). The argument here is that it is better to err on the side of over-stimulating, then course-correcting if need be, than  9  The professional forecasters’ probability is taken from the Bank’s Survey of External Forecasters for 2015 Q2. The company data are from the Deloitte CFO survey for 2015 Q1, and are based on an assumption that half of those companies that report that their two year ahead CPI inflation expectation is in the 1.5–2.5% bucket expect inflation to be above 2%. The household data are derived from the Bank/GfK inflation attitudes survey for 2015 Q2.

Jean-Pierre Danthine: Swiss monetary policy and Target2-Securities Introductory remarks by Mr Jean-Pierre Danthine, Member of the Governing Board of the Swiss National Bank, at the end-of-year media news conference, Zurich, 16 December 2010. *  *  *  My remarks today will focus on three topics. I will start by looking at the situation on the international financial markets. I will then speak about the SNB’s own financial market activities in connection with the two core tasks of monetary policy implementation and foreign exchange reserves management. Finally, I would like to briefly discuss the planned panEuropean securities settlement system, Target2-Securities. International financial markets The situation on the international financial markets reflects the gradual global economic recovery. At the same time, these markets continue to be affected by the fallout from the financial crisis and by doubts as to whether the current global economic recovery will be robust enough to reduce the existing financial imbalances. On the stock markets, volatility has trended downwards over the past half-year, but has remained high. Shares and corporate bonds have benefited from investors’ growing risk appetite, the ongoing expansionary monetary conditions and good corporate results. On the bond markets, by contrast, uncertainty has, if anything, grown. With the global economic recovery, yields on long-term government bonds have picked up from their low levels. In Europe risk premia for heavily indebted sovereigns have risen markedly. The imbalance in many government budgets has taken problematic proportions.
Before 1995, the correlation between GDP and oil prices was –0.4. During the period 1995 to 2004, the correlation stands at +0.3 (see Figure 3). Against this backdrop, economic developments in China play a crucial role. The integration of China into the world economy is likely to be a historic event. Indeed, its long-term economic consequences strike me as comparable to those associated with the integration of the emerging U.S. economy into the world economy at the end of the 19th century. China has become the second largest importer and consumer of oil behind the United States. The longer-term oil demand effect associated with Chinese growth is potentially vast. The fact that China is poor in natural resources undoubtedly strengthens the Chinese authorities’ resolve to avoid any potential energy shortages. The International Energy Agency IEA estimates that global demand for oil will increase by 2.5 million barrels per day or in excess of 3% this year. This represents the highest increase in global demand for oil during the past quarter of a century. Virtually half of that increase in demand can be attributed to the Asian emerging markets with China accounting for over 32% of the additional demand. Needless to say, China is merely at the beginning of its growth dynamic.

Average Inventory  Crude Oil Price (rhs)  Figure 5 Crude grade qualities  Source: JPMorgan Commodities Research, Energy Intelligence Group  BIS Review 69/2004  7  Figure 6 Crude oil futures contract volumes (NYMEX)  60  300'000  50  250'000  40  200'000  30  150'000  20  100'000  10  50'000  0  0  1995  1996  1997  1998  1999  2000  2001  Non-Commercial Long Contracts WTI Crude Oil (USD/ bbl) (lhs)  2002  2003  2004  Non-Commercial Short Contracts  Figure 7 Historical WTI futures price curves 50 45  U S D /b b  40 35 30 25 20 15 0  1  2  3  4  5  6  Y e a rs to e x p iry 2 0 0 4 -1 1 -1 2  8  1 ye a r a g o  3 ye a rs a g o  BIS Review 69/2004  Figure 8 Backwardation O il Spread (Spot - Futures 3M ) in U S D 3.00  2.00  1.00  0.00  -1.00 Spread Poly.
In addition, we calculated on unit labour costs increasing by an average of almost 3 per cent a year in 20072010, to be compared with largely 0 per cent a year in 2002-2006. The high inflation rate could affect wages through demand for compensation for the price increases. However, this does not seem very likely at present. The slowdown in growth and the expected weakening of the labour market are factors that weigh against such a scenario. In addition, we now have three-year agreements in most areas of the labour market which regulate the agreed wage increases. Nor are there, as there were in the 1970s and 1980s and are in some other countries, price guarantees in the agreements that provide automatic  4  BIS Review 100/2008  compensation for price rises. These were abolished in connection with the so-called Rehnberg agreement at the beginning of the 1990s. It is, on the other hand, important that inflation and inflation expectations fall to around 2 per cent ahead of the next round of collective bargaining in 2010. With the current inflation forecasts, average inflation over the three preceding years will then have been over 3 per cent, which may be a problem. However, this would nevertheless mean that real wages prior to tax increase by around 1 per cent a year during the current three-year agreement period. After tax the increase is larger, perhaps 2-3 per cent a year. 3.

These frameworks, which have been put in place during the good times, are also being supported by ongoing work, in the area of building a consistent regulatory environment given the increasing presence of Asian banks in each others’ jurisdictions. This is reinforced by cooperation among national supervisors and in the development of arrangements for crossborder resolution. Regional platforms have been established for structured forums for the assessment of risks and vulnerabilities to the region, to increase the prospect for pre-emptive actions to be taken. Collaborative efforts are also ongoing in the area of building regional financial infrastructure, including the financial markets and payment systems to facilitate the efficient intermediation of financial resources in the region. Collaborative efforts are also accorded to the area of anti-money laundering, to ensure the integrity of the increasingly integrated financial systems in Asia. Finally, collaboration has also progressed in the area of capacity building, to strengthen the institutional capability of the central banks in the region to deal with the new challenges of the new environment. Finally, one of the most significant but often under-appreciated trends across most economies in these recent two decades, is the significant rise of inequality within economies. The economic crisis has worsened this trend given the conditions of high unemployment in many parts of the world. In many areas of policy-making, inequality is often not given explicit consideration.
We aim to be forward looking, developing both in developing the regulatory frameworks and in developing public systems and public money necessary so that safe innovation can flourish to the benefit of all. Thank you. I would like to thank the following for their input to and helpful comments on these remarks: Jyoti Shah, Louise Eggett, Laure Fauchet, Morgane Fouche, Adrian Hitchins, Jeremy Leake, Rajan Patel, Rachita Syal and Cormac Sullivan for their assistance preparing these remarks. I would like to thank Andrew Bailey, Charandeep Biling, Sarah Breeden, Emma Butterworth, Victoria Cleland, Philip Evans, John Jackson, Rebecca Maule, Tom Mutton, Sasha Mills and Matthew Osborne, for their helpful comments and suggestions. 1. Key public sector initiatives include the FCA’s regulatory sandbox, the development of Open Banking, the introduction of a mobilisation route for new banks, the forthcoming FMI Sandbox, HMT’s consultation on the regulation of cryptoassets and the provisions in the Government’s recent White Paper on AI Regulation. 2. As measured by investment (Innovate Finance  ). The significance of the UK Fintech Sector has been set out more  widely in detail as part of the Kalifa Review of UK Fintech  (2021). 3. See Bank of England: Quarterly Bulletin 2022Q3. While transactional cash use fell during the COVID-19 pandemic, the value of Bank of England notes in circulation increased as cash holdings were used as a precautionary store of value. 4.

That’s why the FSB is now developing new policies to address liquidity, leverage and securities financing risks in asset management activities. These measures will help ensure asset managers can provide sustainable and reliable financing to EMDEs. That’s why the FSB is working to ensure the central counterparties that support the plumbing of the new system are resilient and can be resolved without disruption to the flow of financing to the real economy. And that’s why FSB members are working to develop more effective macro prudential policies. These will dampen the impact of capital flows on domestic vulnerabilities and allow countries to be more open and connected to global trade and investment. The FSB’s work plan is highly complementary to other G20 priorities in infrastructure, inclusiveness and climate change. A FAIR system is essential if we are to move to a 2 degree world. A FAIR system is critical to achieving the economic and moral imperatives of the SDGs. I look forward to our discussion of how to build such a system to the benefit of all. 15  BIS International Debt Statistics, (all sectors, nationality basis). 16  IMF World Economic Outlook data show that average annual portfolio flows to EMDEs have more than tripled from their average in the decade prior to the crisis to an average of $ billion annually between 2009 and 2015. BIS central bankers’ speeches  5