samchain/econo-pairs-v1 huggingface dataset:
Looking forward, we should remain vigilant ahead of any potential unintended effect of low interest rates on the banking system. My third message is that banks, especially European banks, should step up their efforts to adapt their business models in order to become more profitable. For instance, banks need to improve their efficiency, whether through cost reductions, further consolidation and restructuring, or digitalisation and the adoption of new technologies –all of which are factors rather disconnected from monetary policy. They must also diversify their income sources. As an example of the latter, the successful geographical diversification pursued by some Spanish banks prior to the crisis not only helped them cope with the downturn, but still represents an increasing source of revenues. Banks can also achieve revenue diversification by relying less on net interest income and more on other non-interest income sources. Finally, they should also accelerate the reduction of non-performing loans. -  Excessive risk-taking  Global financial stability is not only threatened by developments in the banking sector. Insofar as non-bank intermediaries are playing an increasingly relevant role in the financial  5  sector, the risks associated with their activities are gradually becoming more systemic. Indeed, the process of bank disintermediation has accelerated in the euro area since the global financial crisis and, today, non-banks have more financial assets than banks. Likewise, around 50% of all cross-border claims in the world now involve a non-bank as a counterpart, while the figure was only about 35% in 2008.

European securitisation issuance (EUR billion)  Source: European Securitisation Forum  9  See “Report of the Financial Stability Forum on Enhancing Market and Institutional Resilience”, FSF, April 2008. 8  BIS Review 68/2008  Chart 2. Funded issuance by collateral (EUR billion; by month)  Source: JP Morgan  Chart 3. European ABS spreads (relative to 3-month Euribor)  Source: JP Morgan  BIS Review 68/2008  9  Chart 4. Evolution of collateral held with the Eurosystem by asset type  Source: ECB  Chart 5. European securitised products: Publicly placed or privately retained? (EUR billion)  Source: Citi. European Secutitised Products. Strategy Analysis. Securitised Products. Europe 7 March 2008. Secondary Source: Bloomberg, International Insider, Informa GM, IFR, Citi. Note: Publicly-placed issuance includes only deals that have been publicly marketed. Private/Retained issuance includes deals that have been privately-placed or retained by the originator. The Private/Retained issuance figures include all such deals to Citi’s knowledge, but may not include such deals where there is no public information available. For some deals priced since August 2007 it has not been clear whether the deal has been fully placed. 10  BIS Review 68/2008
Because of the infamous “long and variable” lags between changes in interest rates and their impact on inflation, the MPC does not yet have much of a track record in terms of inflation outturns. But since the target given to the MPC is for inflation, let me start there. Between June 1997 and March 1999 (the latest month for which inflation has been published) RPIX inflation averaged 2.7%. During that period, inflation ranged from a low of 2.4% to a high of 3.2%. Over the past nine months it has remained within 0.2 percentage points of the target, a remarkable degree of stability. It is most unlikely that inflation can remain, month-by-month, as close to the target as that. Unexpected movements in the exchange rate, oil or other commodity prices, indirect tax rates or a multitude of other influences could all lead to divergences of inflation from target. Because of the lags I mentioned earlier, it would take the MPC some time to bring inflation back to the target level. What matters, however, is not relatively small month-to-month movements in the inflation rate, but the expectation that inflation will average 22% over a number of years. As part of the arrangements for accountability, the Governor, on behalf of the MPC, is required to write an open letter to the Chancellor whenever inflation deviates by more than a percentage point from the target.

355, November 2011. Borio, Claudio and Haibin Zhu. 2008. Capital regulation, risk-taking and monetary policy: a missing link in the transmission mechanism? Bank for International Settlements. BIS Working Papers. No. 268, December 2008. Brunnermeier, Markus and Lasse Pedersen. 2009. Market liquidity and funding liquidity. The Review of Financial Studies, 22, pp. 2201–2238. Buch, Claudia M., Sandra Eickmeier and Esteban Prieto. 2011. In search for yield? Survey based evidence on bank risk taking. Paper provided by the Deutsche Bundesbank Research Centre. Discussion Paper Series I, Economic Studies, number 2011, 10. Danielsson, Jon, Hyun Song Shin and Jean-Pierre Zigrand. 2011. Endogenous and systemic risk. First version, July 2010. This version, August 2011. Dell’Ariccia, Giovanni, Luc Laeven and Robert Marquez. 2010. Monetary policy, leverage and bank risk-taking. IMF Working Papers 10/276, International Monetary Fund. 1 December 2010. Hott, Christian and Pierre Monnin. 2008. Fundamental real estate prices: an empirical estimation with international data. The Journal of Real Estate Finance and Economics. Springer, vol. 36(4), pp. 427–450, May. Goodfriend, Marvin and Robert G. King. 1997. The new neoclassical synthesis and the role of monetary policy in Ben S. Bernanke and Julio J. Rotemberg, eds., NBER Macroeconomics Annual 1997, Cambridge, Massachussetts, MIT Press, pp. 231–83. Kohn, Donald L. 2007. Financial stability: preventing and managing crises. Speech by the Vice Chairman of the Board of Governors of the Federal Reserve System at the Exchequer Club Luncheon. Washington DC, 21 February, 2007. Morris, Stephen and Hyun Song Shin. 2004. Coordination risk and the price of debt. European Economic Review. Elsevier, vol. 48(1), pp.
This has been the subject of a number of recent empirical studies, which have tended to find productivity to have been a significant factor. 55  A useful starting point is the distribution of wages across our panel of firms (Chart 26). There is some evidence of a widening dispersion in wages across companies over time. The pattern broadly mirrors productivity, with wages among the top 1% of companies rising, except immediately after the financial crisis. At the same time, pay has largely stagnated among as many as three-quarters of the firms in the distribution. By itself, this does not tell us how closely firm-level pay and productivity have been correlated and what contribution productivity may have played in widening the dispersion of wages. 56  While there is an  established literature on the aggregate relationship between productivity and wages, the relationship between firms’ productivity and average pay levels is less certain. Nevertheless, looking at the distributions of pay and productivity, three points stand out (Chart 27). First, labour productivity can explain around 60% of the variation in average pay across firms, controlling for other firm characteristics. On average, firms with 1% higher productivity have 0.2% higher pay. And firms with 1 percentage point faster productivity growth have 0.5 percentage points faster wage growth (Table 4). Productivity dispersion across companies is an important, if by no means the only, driver of wage dispersion across households. Second, the distribution of pay is materially narrower than for productivity.

Rodrigo Vergara: The Monetary Policy Report and the Financial Stability Report Presentation by Mr Rodrigo Vergara, Governor of the Central Bank of Chile, before the Finance Commission of the Honorable Senate of the Republic, Santiago de Chile, 18 December 2012. The Monetary Policy Report of December 2012 and the Financial Stability Report of the second half of 2012 can be found at http://www.bcentral.cl. *  *  *  Introduction Mr. President of the Senate’s Finance Commission, Senator Jose García, senators members of this Commission, ladies and gentlemen, I appreciate your invitation to present our Board’s vision on recent macroeconomic and financial developments, their prospects and implications for monetary and financial policy. This vision is contained in detail in our Monetary Policy Report of December 2012 and our Financial Stability Report of the second half of 2012. The year that is ending has brought good news to our economy. The inflationary fears we expressed early in the year have abated. This year our economy will grow 5.5 percent. Unemployment is low, labor income is growing steadily and consumer and business expectations are optimistic. Investment is high by historic standards. A year ago, when we presented our reports to this Commission, we foresaw that the deepening of the Eurozone crisis at the time could have significant effects on our economy, including a major slowdown during 2012. It did not.
At the same time, financial flows were gradually liberalised and a global financial system emerged, with the active participation of global banks and investment firms. In addition, foreign direct investment inflows have increased tenfold since 1993. The opening up of the current account and the subsequent expansion of trade and financial flows enabled many countries to raise their development status. In this vein, GDP per capita in low and middle income countries doubled in constant terms from 1995 to 2016, while extreme poverty was notably reduced. The Spanish experience since the mid-1980s, when we joined the European Union, constitutes a canonical example of the benefits that the opening up and liberalisation of an economy can bring about in terms of growth and economic modernisation. The need to reform the global governance model However, we should admit that the multilateral system that emerged from Bretton Woods has been sluggish in adapting to a changing world. A world in which emerging economies play a greater role in the global economy than they did in the past. This has undermined some of its legitimacy, causing disaffection among some of its members and impairing the consensus needed for agreements to be reached at international level. The emergence of the global financial crisis in 2008 highlighted the need to rebalance representation on global fora in order for effective concerted action to be achieved.

In this case, flexibility means the possibility of third parties voluntarily 5  Garrido, I., P. Moreno and X. Serra (2012), “El FMI y los acuerdos regionales de financiación”, Boletín Económico, March, Banco de España, and (2016), “The new map of international financial institutions”, Economic Bulletin, January, Banco de España. 6 Johannes Linn (2018): “Recent threats to multilateralism”, Global Journal of Emerging Market Economies 9, 86–113. 7 https://www.bundesbank.de/en/press/speeches/policy-evaluation-assessing-the-effects-of-post-crisis-financialsector-reforms-799146 8 https://www.imf.org/en/Publications/Policy-Papers/Issues/2017/07/31/pp073117-collaboration-between-regionalfinancing-arrangements-and-the-imf  6/8  adhering to a plurilateral agreement in due course (making the agreement multilateral in essence), while maintaining peer pressure to avoid free riding.9 Furthermore, the new global governance system should recognise that both regionalism and multilateralism are compatible, as some problems are of a local nature and are better tackled locally. Regionalism and multilateralism are not mutually exclusive. On the contrary, both approaches can support and complement each other, generating synergies that strengthen the global financial safety net. Indeed, bilateral and regional agreements have in many cases brought about improvements in the multilateral trading system. E-commerce is a good example of this.10 In this regard, the European Union, for example, should maintain its proactive approach to preserve the rules-based global trade system.
It would probably be hard to achieve that without influencing domestic credit-supply conditions, in booth the boom and contraction phases. (b)  Possible instruments: capital requirements, risk weights and haircuts  There are two dimensions to pursuing this objective. One is making the system more resilient in the face of severe shocks by acting on its inter-connectedness. The other is seeking to adjust the capital and liquidity resources of the system during the up and downswings of the credit cycle; that is to say, over time. Internally, we refer to these as the “cross-sectional” and “time-series” dimensions. I am going to focus mainly on the latter this evening. Work is already underway in Basel to reduce the pro-cyclical properties of the Second Capital Accord and to encourage dynamic provisioning against expected credit losses. On the face of it, that seems unlikely to be enough to deliver a “dynamic resilience” objective in the terms I have described, as it would not directly address stress scenarios. That is a point of departure for the wider debate on extra instruments. Much of the existing public commentary starts from an assumption that any such instrument should be variation in required minimum capital ratios over the course of the credit cycle. We are currently doubtful about that. But we agree that macroprudential instruments directed broadly at taming the credit cycle will be functions of – dare I say, derivatives of – micro prudential requirements on capital and liquidity.

10 (d)  Leakage  From the outset of this debate, I have stressed the hazards in trying to steer credit growth in a world in which capital can flow freely across borders. Think of a case where the domestic authorities increased the risk weight on mortgage lending. The measure would apply only to banks headquartered here or operating out of a subsidiary. It would not apply to branches of foreign-headquartered banks, still less to pure cross border activity. But it is easy to imagine that, rather than borrowing from UK-domiciled banks, mortgage brokers could arrange for households to borrow from a lender based overseas, or at least with the loan booked overseas. In terms of the accumulation of debt in the sector concerned – in this hypothetical case, housing – there might, after a time, be little or no effect. That would obviously not be great for the risk of default by the borrowing sector concerned. But UK-based banks would have been required to build their defences. That might mean that, other things being equal, if and when the borrowing sector got into difficulty, UK-based banks would be less likely to collapse under the strain of losses. If so, the damage to financial stability would be reduced, and the eventual economic costs might plausibly be lower than otherwise; especially if those UK banks were able to take up some of the slack created by withdrawal of credit supply by foreign banks to sound UK borrowers. It might, though, just be possible to go further.
But then what happened, they did this, and then later on, these institutions were fined billions of dollars by the government. And I guess my question is would you call this nefarious behavior on the part of the government to do this to these companies that basically helped out the government and the FDIC, in taking over these insolvent institutions? President Dudley: Well, I wasn’t part of any of those conversations, so I don’t know what winks or nods were actually exchanged. Look, I think the banks are, people are, managers are big boys and girls. And I think when they were making these transactions, they had the ability to negotiate whatever terms and conditions that they wanted to negotiate. Now, I understand that there’s some bad feelings after the fact, to the extent that the sins of the institutions that were acquired went along with those entities. But it’d be a little bit sad if you can have institutions do lots of bad things and then have them acquired and then have their sins sort of automatically forgiven because they were acquired by another institution. That would be a sort of “get out of jail free” card. And so I’m not sure that’s necessarily the right approach either. 13 / 13  BIS central bankers' speeches

Although London has tremendous critical mass – especially in the crucial area of human capital – one major implication of what I will say in a minute about technological innovation is that certain aspects of financial services – especially trading and settlement – are potentially more geographically mobile now than in the past. We are already in a market where it is possible for a trader in London to deal on a German exchange, call for delivery in Luxembourg and make payment in Paris. So, the advent of the euro is just one factor transforming the environment in which UK based financial services firms must operate. I would now like to talk about a few others. First and foremost, technological advances. Even from just a few years’ perspective it is clear that financial services have been transformed by technological innovation. Arguably we are moving to a world in which more and more trading and settlement processes will use automated, electronic systems. And the pace of change is probably increasing. The LSE moved away from a trading floor in 1986. It has since moved to electronic and largely dematerialised share settlement in CREST in 1996, and to the electronic order book SETS for its largest 100 or so stocks in 1997. Last year LIFFE decided to switch from floor trading to its new electronic CONNECT system. More broadly, electronic trading systems have been, or are being, introduced in a whole range of government bond, repo, Eurobond and foreign exchange markets.
By setting up the Fund – with investment abroad – it became possible for Norway to establish a path for the production of oil and gas that is independent of the profile for petroleum revenue spending. The alternative to a fund would have been to regulate the extraction path by putting a conservative upper limit on annual extraction. The Fund serves as a buffer between wide swings in petroleum revenues and domestic spending. The decisions on annual revenue spending can be made independently of the size of the revenues. As a result, swings in petroleum revenues do not have an automatic impact on the Norwegian economy. The existence of the Fund contributes to stabilising the NOK exchange rate, and countercyclical economic policies are more effective for a country with net foreign assets. The virtues of the fund structure are many. The authorities have established a transparent system for managing government petroleum income as all oil revenues are transferred directly into the Fund. The Norwegian parliament must adopt a resolution on any use of the return or the capital of the Fund. Oil revenues are not earmarked. There is no hidden use of revenues, or any use for special purposes. The Fund is strictly and effectively "out of bounds" to special interests. It is important that this remains a feature in the future. We now have close to fifteen years of a rapidly expanding Fund behind us, and it is becoming more likely that the fund will be a very long-term savings plan.

The HKMA endorsed this consensus and issued a circular in June 2004 requesting banks to implement such security measure by June 2005 for high-risk retail Internet banking transactions (such as fund transfers to non-designated accounts). Two-factor authentication is a security measure recognised by the information security industry to combat Internet banking frauds. In addition to the normal login ID and password, a customer needs a second factor which is in his or her physical possession for additional identity verification. This second factor should be difficult to be stolen together with the customer’s login ID and password by fraudsters over the Internet. We believe that this is an effective way in tackling the latest Internet banking frauds such as fake bank websites, phishing e-mails and Trojan software. We understand that a number of banking supervisors in other financial markets are currently reviewing the implication of the latest Internet banking frauds and consulting their banks in relation to the adoption of two-factor authentication for Internet banking. Hong Kong is one of the first places to offer such security measure to bank customers. So far the implementation of two-factor authentication has been progressing satisfactorily. All banks offering high-risk retail Internet banking transactions will allow customers to apply for two-factor authentication from next month. Individual banks may offer different two-factor authentication methods to customers. Three common methods being adopted by banks in Hong Kong are digital certificate, security token-based one-time password and SMS-based one-time password.
The economic outlook and monetary policy in the euro area I will start by discussing the current state of the euro area economy and the medium-term economic outlook. The performance of the euro area economy this year is characterised by the ongoing recovery of economic activity at a pace somewhat faster than previously envisaged. Inflation, however, has remained above (though relatively close to) 2%. This outcome is not in line with our notion of price stability and is higher than the average inflation expected a year ago for 2004. The sharp rise in oil prices since the beginning of this year, by about 60% (in US dollar terms), has been the main reason for the higher than earlier expected inflation. Let me elaborate a bit on the pace of the economic recovery, the factors that have contributed so far to the pick-up in growth, and the conditions and basic factors that are expected to influence the mediumterm economic prospects. Since the start of the economic recovery in the second half of 2003, we have seen robust growth rates in the first half of 2004, with real GDP increasing by 0.7% and 0.5% in the first and second quarters, respectively. The recovery in growth has so far been driven partly by buoyant external demand and partly by domestic demand. Private consumption increased moderately but investment was subdued. Although short-term indicators have become more mixed over the past couple of months, the underlying determinants of economic activity remain favourable, and growth is expected to continue in 2005.

At the same time, what was presented then was by no means an extremely tight monetary policy – despite the fact that inflation was at its highest in over a decade and inflation expectations were clearly above the target level. As usual we looked both at how inflation and the real economy would develop. And the forecast for the repo rate presented was such that inflation was expected to be back on target within two years and GDP growth was expected to fall initially but to then rise to a good long-term level. We know what happened next; the Lehman Brothers investment bank went bankrupt in midSeptember, the financial markets ground to a halt and this changed the game rules. The circumstances for monetary policy changed and we were given an example of a different decision-making situation where both developments in inflation and developments in the real economy called for the same decision. During the autumn we cut the repo rate in three stages by a total of 2.75 percentage points. This meant a departure from the monetary policy we have normally conducted and which is characterised by more gradual changes in the interest rate. Before I talk about our most recent interest rate decision I shall discuss in slightly more detail how the financial crisis has affected monetary policy and how other measures by the Riksbank have been activated.