samchain/econo-pairs-v1 huggingface dataset:
Whilst these may appear to be self-indulgent memories, the comparison of the economy then and now does provide a thoughtful backdrop for what I want to discuss with you this evening. Compared with the economy in the 70s, maybe things aren’t as bad now as we sometimes like to believe! The first topic I want to cover will be what central banks can do to help achieve the holy grail of low inflation, stable growth and full employment. In particular I will take a monetary approach to explaining the issues. Second, I want to talk about the monetary policy decisions facing us right now and explain my own recent voting position. Third, I want to give an update on our latest initiative, the “Funding for Lending Scheme”. Money and the balance sheet of the central bank In the Acknowledgements to his 1988 classic “A Brief History of Time”, Stephen Hawking notes that he was told that each equation he included in the book would halve its sales. He only included one.1 You may be relieved to hear that there are no equations in this talk tonight. But I mention this because I am going to refer regularly to something which has been empirically proven to send some journalists to sleep faster than counting sheep. The Bank of England’s balance sheet. I hope you are all still awake? Good, because the Bank’s balance sheet is actually where all the action is.

I will say more on the causes of deflationary forces a bit later, but this analysis partly explains why the Bank of England has also been engaged on special operations to support the liquidity, funding and capital positions of the banks through,  8  See for example, FR Glahe, (1977) “Macroeconomics Theory and Policy”, 2nd edition, publ: Harcourt Brace Jovanovich. 9  The definition of M4 can be found here: http://www.bankofengland.co.uk/statistics/Pages/iadb/notesiadb/ m4.aspx  4  BIS central bankers’ speeches  respectively, the Special Liquidity Scheme, the Funding for Lending Scheme and the capital recommendations by the FPC. What of our ability to influence credit markets directly? I want to argue that it largely reflects how we go about changing the supply of money. On the one hand, to increase the quantity of money in scale, quickly and safely, it is quite clear that gilts are the best instrument to buy: there is a large market and there is no resultant private sector credit risk taken by the public sector. Many financial instruments tend to be priced by reference to the interest rates on sovereign debt and so changing gilt yields will have effects across sterling markets. In addition to buying gilts to inject money, we can consider two other ways to affect credit markets. First we can buy financial instruments outright. If particular markets have become dysfunctional so that general monetary expansion doesn’t help, relatively small amounts of direct purchases may unblock the relevant markets.
In part, this is due to the differences in character between domestic and foreign savings. Those managing foreign savings are, understandably, much less concerned about the long-term public interest than those managing domestic savings. Foreign savings are also much more sensitive to changes in market sentiment and shifts in domestic policies, and are more prone to reversals. While this imposes greater discipline on local authorities in pursuing prudent macro-economic policies, it also brings much higher volatility in the financial markets, to the extent of possibly creating systemic problems that Asian monetary authorities are ill-equipped to handle. Furthermore, the foreign financial intermediaries are usually large international financial institutions with considerable market power and influence, in terms of the amount they are in a position to mobilise, relative to the size of the domestic financial markets of the emerging economies. This enables them to operate in the market not simply as price takers, but as a “price maker” with the power of pushing prices in a particular direction. The implications for the emerging markets are greater market volatility, greater tendency for overshooting, and consequently, greater challenges in maintaining monetary and financial stability. The problems are more intense for emerging economies with medium-sized financial markets that are large enough to attract foreign capital but not large enough to be immune from the manipulative or speculative plays that are, more often than not, associated with these fund flows.

Under this initiative, four member economies of APEC - China, Thailand, Mexico and the Philippines - have volunteered to receive expert advice through visits from panels of experts. The objective of these visits is to assist the economies in question in identifying potential impediments in their markets and in removing these impediments through specific, achievable and monitored action plans tailored to the individual economy. The programmes under this initiative are making good progress, and, in addition to the panel visits, two policy dialogues have been held to promote understanding and experience-sharing. A second cluster of initiatives, under the ASEAN+3 forum, involves a variety of studies known as the Asian Bond Market Initiative (ABMI) on issues such as new securitised debt instruments, issuance of debt by international financial institutions, regional credit guarantees and enhancement facilities, and the establishment of local and regional credit rating and credit enhancement agencies. The third set of initiatives falls under EMEAP - the Executives’ Meeting of East Asia-Pacific Central Banks - and takes the form of bond funds aimed at channelling a small portion of the very large official reserves held by the Asian economies into the region. The first of these funds - Asian Bond Fund I (ABF1) - was launched in June 2003 and is now fully invested in US dollar-denominated bonds issued by sovereign and quasi-sovereign issuers in the EMEAP economies. The EMEAP Central Banks are currently working on ABF2, which will invest in local currency-denominated Asian bonds.
A recent study by PwC found that investors were most upbeat about emerging cities in the region – such as Bangalore, Mumbai, Manila and Ho Chi Minh City. Rapid urban migration has created strong residential demand in these cities. Logistics and business parks are also thriving on the back of a booming outsourcing industry. The story is similar for infrastructure. Amid government efforts to ramp up infrastructure development, institutional capital has a growing role to play. According to a report by Marsh & McLennan, about 40% of infrastructure projects in emerging Asia are considered bankable. These projects have the necessary conditions to attract sources of funding beyond bankbased finance. While institutional investors have traditionally participated in the secondary market for completed infrastructure, they are increasingly financing construction-phase projects to capture higher risk-adjusted returns. Singapore as a gateway to Asian opportunities Singapore is well-positioned to serve global institutional investors in their steer towards alternatives in Asia. Singapore is a developed pan-Asian asset management centre with a strong pool of global and regional players. Fund managers here have a deep network, are able to readily access deals, and can support Asian companies throughout their life cycle. Eight of the top ten global PE firms have an office in Singapore. So do some of the top global real estate managers. MAS is taking steps to deepen Singapore’s VC and PE ecosystem and enhance the operating environment for VC and PE managers. We will start with simplifying the regulatory framework for VC managers in the next few months.

News conference  Berne, 16 June 2022 Thomas Jordan  Introductory remarks by Thomas Jordan Ladies and gentlemen It is my pleasure to welcome you to the Swiss National Bank’s news conference. In my remarks, I will begin by explaining our monetary policy decision and our assessment of the economic situation. After that, Fritz Zurbrügg will present the key messages from this year’s Financial Stability Report. Andréa Maechler will then comment on the situation on the financial markets and the implementation of monetary policy. We will – as ever – be pleased to take your questions afterwards. Monetary policy decision I will begin with our monetary policy decision. We have decided to tighten our monetary policy and to raise the SNB policy rate and the interest rate on sight deposits at the SNB by half a percentage point to −0.25%. In doing so, we are seeking to counter increased inflationary pressure. The tighter monetary policy is aimed at preventing inflation from spreading more broadly to goods and services in Switzerland. It cannot be ruled out that further increases in the SNB policy rate will be necessary in the foreseeable future to stabilise inflation in the range consistent with price stability over the medium term. To ensure appropriate monetary conditions, we are also willing to be active in the foreign exchange market as necessary. The SNB policy rate change applies from tomorrow, 17 June 2022.
This is why the Banco de España opted, in its publication on 20 April, to prepare several alternative scenarios using different analytical tools.2 In any of the scenarios considered, confinement would translate into a very severe contraction in Spanish GDP in 2020, all the greater the longer the period during which it is necessary to retain the restrictions on economic activity, and with greater risks that the 2  See Banco de España (2020), “Reference macroeconomic scenarios for the Spanish economy after Covid-19”, Analytical Articles, Economic Bulletin, 2/2020. 11  liquidity problems many economic agents are currently facing will lead to situations of insolvency. Looking ahead to next year, these scenarios outline a recovery in activity and employment which, nonetheless, would be insufficient for GDP to attain its pre-COVID-19 trend level. Specifically, in the two scenarios recently published by the Banco de España that seem most realistic at present, having ruled out the third which projected a shorter and more moderate recession, GDP is expected to fall by 9.5% and 12.4%, respectively, in 2020 (and post subsequent increases of 6.1% and 8.5% in 2021).3 The figures in the first of these scenarios do not differ significantly from those reported by other national and supranational institutions, public and private alike. Thus, for example, the Spanish Government, the International Monetary Fund (IMF) and the European Commission have recently projected declines in our economy of 9.2%, 8% and 9.4% for 2020, respectively.

Christian Noyer: The ECB is ready to fight deflation Opinion piece by Mr Christian Noyer, Governor of the Bank of France and Chairman of the Board of Directors of the Bank for International Settlements, in Wall Street Journal, 21 November 2013. *  *  *  There is a lot of talk nowadays about the risk of a “lost decade” in the euro zone, with a conjunction of no growth and deflation. Current forecasts point to very low inflation in the foreseeable future. For the euro area as a whole, inflation is projected to remain at around 1.5% in the coming year. However, low inflation is very different from deflation. Deflation is a cumulative process of decreasing prices, wages and output fueled by negative expectations. Deflation is a pernicious spiral. It increases the burden of debt and creates an incentive to defer consumption and investment. Deflation is especially dangerous because once the process becomes entrenched, it becomes very difficult to stop. At the moment there are no signs of general deflation in the euro area and most indicators point to a very low risk. Inflation expectations in particular remain firmly anchored in positive territory and, for the long term, stand at levels close to the European Central Bank’s definition of price stability. As usual, inflation rates vary in the different economies of the euro area. In some peripheral countries, inflation is particularly low.
Contrary to some claims, the outcome was a travesty for democracy and at odds with the will of the people. The referendum in question was initiated by the National Environmental Research Council (NERC) and involved a public ballot to choose a name for the new polar Royal Research Ship. Various options were mooted as suitable candidates, including “Sir David Attenborough” (the famous British naturalist), “Henry Worsley” (the famous British explorer) and “Pingu” (the famous cartoon penguin). The winner of the public ballot was none of these. With almost 80% of the popular vote, “Boaty McBoatface” romped home courtesy of a social media campaign. At that point, NERC jettisoned the will of the people. The ship was named instead “Sir David Attenborough” - though, in a small concession to democracy, its remotely operated sub-sea vehicle was named Boaty McBoatface. This is an object lesson in the perils of public polling for policy purposes. Sometimes, there is madness in crowds. 80  That is not to say, however, that public opinion is always and everywhere mad. In his book Superforecasting, Philip Tetlock uses evidence drawn from a variety of experimental studies to determine the ingredients of a good forecast. 81  He finds that the key lies in diverse perspectives, drawn from amateurs as  well as experts. Often, he finds, there is wisdom in crowds. If harnessed, the wisdom of crowds and of amateurs can improve the forecasting performance of experts.

Notes: Charts show number of mentions per decade  Chart 7: Publications containing ‘central bank communication’ as a percentage of publications containing ‘central bank’ Google Books (LHS) 0.3  Google Scholar (RHS) Per cent  Per cent  1.5  0 2015  0 2008  0.25 2001  0.05 1994  0.5  1987  0.1  1980  0.75  1973  0.15  1966  1  1959  0.2  1952  1.25  1945  0.25  Source: Google Books Corpus, search of http://scholar.google.com on 23/03/2017. Notes: Based on the methodology of Hansen and McMahon (2016). 31  All speeches are available online at www.bankofengland.co.uk/speeches  31  Chart 8A: Word cloud for “labour market” topic  Chart 8B: Fraction of MPC minutes devoted to  in MPC minutes  “labour market” topic Proportion of minutes 0.12 0.1 0.08 0.06 0.04 0.02  1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014  0  Source: Bank of England calculations based on methodology of  Source: Bank of England calculations based on methodology of  Hansen, McMahon and Prat (2014). Hansen, McMahon and Prat (2014). Notes: Each word cloud represents the probability distribution of  Notes: The procedure estimates the allocation of each month’s  words within a given topic; the size of the word indicates its  MPC minutes to a topic which we label “labour market”. The  probability of occurring within that topic. chart shows a three-month moving average.
Credit can be used to finance education, a car and a place to live while we are young and enables us to enjoy the benefits while earning money to pay for them. Over the past century, a modern financial system has evolved that provides ample access to credit. A welldeveloped credit market is an important part of a well-functioning economy. There is another side of the coin: Once we have incurred a debt, it remains with us. The debt must be repaid – with interest. We might say that while credit is an unvarnished good, debt is a necessary evil. Paying for bread already eaten can be tough. When we borrow money, we draw up a repayment plan with the bank. Implicit in this plan are a number of expectations – regarding our future earnings, net worth and interest rates. If these expectations pan out, the plan succeeds. We arrive at the desired outcome. And many times, the future turns out even better than expected. In recent decades, house prices have risen and with them our wealth. Income growth in Norway has been high and has benefited nearly everyone. At the same time, interest rates have fallen to historically low levels. This has made a high debt burden easier to bear. In forming our expectations, we often look in the rear-view mirror. As anyone knows who has driven a car, mirrors are important. But if you only look back in the mirror, you will land in the ditch.

They also depend upon other key players like the Ministry of Finance and they depend upon the efficient working of the financial markets. Other preconditions for Inflation Targeting can partly be met by the Bank of Albania. The full implementation of Inflation Targeting can therefore take place ONLY conditionally. One can compare this situation with the tailoring of a suit for a special occasion. Let me make this comparison. One can find a good tailor and ask him to make a suit for a special occasion. All measures can be taken, such as the length of the arms and the length of the legs. The suitable materials can be found. One needs the appropriate fabric, in the appropriate color. Upon all these preconditions of (1) the good tailor (2) the precise measures (3) suitable materials, the tailor can start the tailoring of the suit. But, there is still no guarantee that the suit will fit you perfect. Or, it may happen that you look appealing in the tailor-shop, but not at the day of the special occasion. For instance, the temperature may have fallen so that you need an additional coat, or even a different fabric. Or, the environment of the special occasion may make you look overdressed. You tried to make it perfect, but the environment is lagging behind. Factors that you could not influence yourself can make you look different from how you had wished to look with the new suit.
The Supervisory Board’s decisions are finally submitted, by means of a non-objection procedure, to the Governing Council of the ECB, which is ultimately responsible for their adoption. As regards actions relating to less significant institutions, which the Banco de España supervises directly, the procedures and reports have been progressively aligned with ECB practices, a process that will continue going forward. Finally, and in the same direction of improving our institutional governance, my intention is to continue to foster the collegiate functioning of our governing bodies, and to strengthen the functioning of our committees. There I shall finish and now I remain at the disposal of the House for any questions or clarifications. 13  ANNEX 1 The Banco de España’s participation in the Eurosystem  1 Participation in the European System of Central Banks  1.1 The Eurosystem The Eurosystem is the monetary authority of the euro area and is made up of the European Central Bank (ECB) and the national central banks (NCBs) of the Member States whose currency is the euro, one of which is the Banco de España.1 The primary objective of the Eurosystem is to maintain price stability in accordance with Article 127(1) of the Treaty on the Functioning of the European Union (TFEU). According to this article, the Eurosystem shall also support the general economic policies in the Union. To pursue the fundamental objective of price stability, the Eurosystem has the basic function of defining and implementing the monetary policy.

ensuring price stability. Three main arguments are generally put forward to support this view: -  The first is that central banks have only one instrument at their disposal, i.e. the interest rate, and that this instrument, by virtue of Tinbergen’s Principle, can only be assigned to a single objective, that of price stability. Other means – particularly regulatory or prudential measures – would be better suited to and more effective in ensuring financial stability. But the current crisis demonstrates that central banks actually have several instruments at their disposal. Indeed, liquidity management in periods of financial turmoil needs to be separated from the issue of the monetary policy stance. To put it more clearly, the monetary policy stance simply consists in setting key interest rates at a level consistent with the central bank’s macroeconomic objectives, whilst liquidity management aims to enable the money market, and financial markets in general, to function “normally” so that monetary policy impulses may be efficiently transmitted to the rest of the economy. -  The second argument is policy-based in nature and postulates that monetary stability is a necessary and sufficient prerequisite for ensuring financial stability. The latter would then be a welcome consequence of the implementation of an inflation targeting strategy, which consists in only responding to shocks that have a lasting impact on medium-term price stability.
BIS Review 7/2010  3  FOCUS: This problem will become even bigger if other countries – such as Bulgaria or Romania – introduce the euro. Trichet: Other European Union countries are indeed committed to joining the euro area. But only when the time is right. As you know, there are strict criteria governing the introduction of the euro, and these must be met in full. And they have to be met not just at a particular moment in time, but on a sustainable basis. The ECB is and will remain extremely vigilant in this respect. FOCUS: But what if new member countries doctor their figures – as Greece did – and trick their way into the euro area? Trichet: Let me be very clear on this. Never again will we accept budget figures that do not reflect the facts. Appropriate auditing must always be possible. As early as next month the European Commission will make proposals that will dramatically improve the relevant framework. This is absolutely critical. FOCUS: Your job and the crisis are both very demanding. Do you have the opportunity at all to see colleagues outside of work? Trichet: Yes, certainly. And that’s important, too, as the high level of mutual trust that exists within the ECB, between the members of the Executive Board and the Governing Council, is in my view absolutely fundamental. FOCUS: Is Frankfurt a good location for meetings outside of your official schedule? Trichet: I think so.

They know that a loss of monetary credibility would be damaging. FOCUS: Nevertheless, if the excessively lax monetary policy in the United States were actually the reason why you needed to raise interest rates in Europe, you would be unable to do so without the US central bank following suit. Trichet: Let me repeat myself. Every central bank has its own responsibilities – in its own economy, with its own particular features, its own different structures and its own different shocks to cope with – and will take the necessary action. I have no doubt that the Federal Reserve, too, is committed to maintaining price stability. FOCUS: Is there some kind of tacit agreement to raise interest rates only jointly? In an interview on CNN, you recently answered the question as to whether the ECB would raise interest rates unilaterally even before the Federal Reserve did so by saying, “I trust that it will also be done on the other side of the Atlantic” (and on the other side of the Channel, i.e. by the Bank of England). Trichet: We all have our own responsibilities, which do not call for the same decisions at the same point in time. I have always said that central banks are united in purpose: the delivery of price stability in their own economies. FOCUS: A basic principle applies to central banks: they take away the punch bowl just as the party gets going. In other words, they increase interest rates. The Federal Reserve did the opposite.