samchain/econo-pairs-v1 huggingface dataset:
What we will have to monitor carefully in the weeks and months to come is whether there is a further strengthening of this pass-through. If, for example, banks start to apply a larger “intermediation wedge” – meaning that at any level of the base rate they demand a higher compensation for the perceived risk they are taking on when lending – then pass-through will become stronger. So, we will be paying close attention to a range of indicators of credit availability and credit pricing, such as the monthly data on money and credit flows, our bank lending survey and our survey on access to finance for small and medium-sized enterprises. While more restrictive credit conditions are part of the mechanism by which our tightening ultimately reins in excess price pressures and brings inflation back to target, we will make sure that the process will be orderly throughout. Conclusion Let me conclude. Voltaire said “Uncertainty is an uncomfortable position. But certainty is an absurd one.” Faced with new and overlapping shocks, we have no choice today but to deal with uncertainty. But the public can be certain about one thing: we will deliver price stability, and bringing inflation back to 2% over the medium term is non-negotiable. We will do so by following a robust strategy that is data-dependent and embeds a readiness to act, but that does not entertain trade-offs around our primary objective.

As the cut-off date for the projection round was in early March, the forecasts do not incorporate the effects of the recent financial market tensions. Those tensions have added new downside risks and have made the risk assessment blurrier. More generally, many of the assumptions in the projections, such as those on fiscal policies and energy and food prices, are volatile. This implies additional uncertainty around the baseline for both growth and inflation. Some of this uncertainty will recede as the fallout from recent events in financial markets becomes clearer. But faced with overlapping shocks and shifting geopolitics, the level of uncertainty will most likely remain high. To confirm the outlook in our projections over time, we therefore also need to look at additional indicators that can be observed in real time. Underlying inflation To that end, the second input we will be drawing on is the dynamics of underlying inflation. Underlying inflation is not a policy target, but measures of underlying inflation can serve as a complementary cross-check of our forecasting process. Underlying inflation is typically quite inertial and therefore gives us an indication about the persistence of inflation into the medium term. We will be looking to see a sustained downward turn in underlying inflation measures to be confident that the inflation path will converge to our target in the medium term. So far, we do not see clear evidence that underlying inflation is trending downwards. In fact, we see two forces pushing underlying inflation in different directions.
Ravi Menon: Whither Asian banking? Opening address by Mr Ravi Menon, Managing Director of the Monetary Authority of Singapore, at the Symposium on Asian Banking and Finance, jointly organised by the MAS and the Federal Reserve Bank of San Francisco, Singapore, 28 May 2015. *  *  *  Dr John Williams, President and CEO, the Federal Reserve Bank of San Francisco, Distinguished guests, colleagues, ladies and gentlemen, Good afternoon. And a warm welcome to Singapore and to the Symposium on Asian Banking and Finance, jointly organised by the MAS and the Federal Reserve Bank of San Francisco. Banking systems have returned to a more stable footing since the Global Financial Crisis. •  Banks are holding larger capital and liquidity buffers than before. •  Their return on equity (ROE) continues to recover. According to a McKinsey survey of the 500 largest banks in the world, their ROE averaged 9.9 percent in the first half of 2014, within a whisker of the long-term average of 10 percent. But these overall numbers mask wide variances in performance across banks and geographies. •  Banks in Emerging Asia report average ROE of about 15%. •  Among advanced economies, US and Canadian banks lead the pack with ROE of over 9%, compared to about 2% for their Western European peers. Asian banks have strengthened their position since the Global Financial Crisis.

This fact, highlighted many years ago by Steve Davis and John Haltiwanger in the US, was no less apparent during the great recession in the UK. Employment fell by over half a million between 2008 and 2010. But even over that period there were over nine million new jobs created, over ten million if you include job-to-job flows. On average, over the past 10 years, gross inflows and outflows into and out of employment have run at an annualised rate of around one sixth of the stock (Chart 1). As I say, this has been long understood. Nor should it be forgotten that, whatever the complicated texture underneath, the aggregate economic data still exhibit significant empirical regularities over the business cycle. Chart 2 is one example. Using annual data during the inflation targeting period, the black line plots annual growth in average earnings, less inflation expectations, against the rate of unemployment. At least until the past couple of years, when AWE growth appeared unusually weak, the fit was pretty good. Higher unemployment has gone hand-in-hand with lower real wage growth. Uncannily, the regression line was pretty much exactly the same as that identified by A.W. Phillips, using data from the classical gold standard period (1870–1913), in the 1958 paper that gave the relationship its name (that regression line is in blue). Yet, from time to time, what happens under the surface has material effects and can distort these aggregate relationships. Today I want to describe one such example, involving compositional shifts in the labour market.
As regards national demand, a moderate slowdown in private consumption may be expected, against the backdrop of smaller increases in employment, following several years of strong growth as a result of pent-up demand during the crisis. Investment in housing will continue to grow notably, boosted by job creation and the availability of credit under favourable conditions. Also, business investment will remain robust, in line with the expected course of final demand, against a background of most notable headway in the ongoing restructuring of corporate balance sheets and of persisting easy financial conditions. Turning to external demand, the cumulative gains in competitiveness that I referred to and the sound outlook for the international economy as a whole and, in particular, for the euro area, are expected to continue making for a dynamic Spanish export performance. Risks This predominantly favourable scenario is subject to various sources of risk. For example, developments on global financial markets. In February we saw how the high valuations attained by certain financial assets can give rise to bouts of price corrections and notable rises in volatility. Any future intensification of these episodes, which to date have originated in US markets, might have adverse consequences for economic activity and for financial stability. 3  Furthermore, it is complicated to anticipate how Brexit, and its consequences in terms of trade in goods and services or in movements of people and capital, will unfold. But, in any event, protracted uncertainty over the final agreement intensifies the risks of an adverse impact on activity.

Haga clic aquí para escribir texto. 01.03.2018  Developments in the economic situation Asociación Española de Directivos, Santa Cruz de Tenerife Luis M. Linde Governor  Introduction Let me begin by thanking the Tenerife Asociación Española de Directivos for their kind invitation to me to join you today. The European environment I shall devote my address to the current situation of the Spanish economy. I will begin by highlighting the favourable cyclical juncture at which the euro area – the economic environment closest to us – stands. The upturn in which the euro area economy is immersed may be classified as robust and dynamic, and extensive to all productive sectors and countries. The euro area economy began to show signs of strength in the closing months of 2016, and these stepped up in the second half of last year. As a result, GDP at the close of 2017 was growing at 2.7%, a rate not seen since the start of monetary union and one significantly above what was expected a year earlier. These figures comfortably exceed the potential GDP growth estimates for the area as a whole and thus contribute to erasing the negative output gap generated by the crisis. One of the characteristics of the current expansionary phase is its intensity in terms of job creation, meaning that the euro area as a whole has now exceeded pre-crisis occupation levels. Wage restraint and the reforms carried out in some countries have been conducive to the vigorous response by employment to economic growth.
This is done by mapping from ratings to the yields paid on banks’ bonds; 6 and by then scaling the yield difference by the value of each banks’ ratings-sensitive liabilities. 7 The resulting money amount is an estimate of the reduction in banks’ funding costs which arises from the perceived government subsidy. Table 4 shows the estimated value of that subsidy for the same sample of UK and global banks, again between 2007 and 2009. For UK banks, the average annual subsidy for the top five banks over these years was over £ billion – roughly equal to UK banks’ annual profits prior to the crisis. At the height of the crisis, the subsidy was larger still. For the sample of global banks, the average annual subsidy for the top five banks was just less than $ billion per year. These are not small sums. Table 4 also splits UK banks and building societies into “Big 5”, “medium” and “small” buckets. As might be expected, the large banks account for over 90% of the total implied subsidy. On these metrics, the too-big-to-fail problem results in a real and on-going cost to the taxpayer and a real and on-going windfall for the banks. If it were ever possible to mint a coin big enough, these would be the two sides of it. These results are no more than illustrative – for example, they make no allowance for subsidies arising on retail deposits. Nonetheless, studies using different methods have found similarly-sized subsidies.

Each has a potentially important bearing on systemic resilience and hence on the social benefits of restrictions. (a)  Modularity  In 1973, Nobel-prizing winning economist Robert Merton showed that the value of a portfolio of options is at least as great as the value of an option on the portfolio. 15 On the face of it, this seems to fly in the face of modern portfolio theory, of which Merton himself was of course one of the key architects. Whatever happened to the benefits of portfolio diversification? The answer can be found in an unlikely source – Al’Qaeda. Although the precise organisational form of Al’Qaeda is not known with certainty, two structural characteristics are clear. First, it operates not as a centralised, integrated organisation but rather as a highly decentralised and loose network of small terrorist cells. Second, as events have shown, Al’Qaeda has exhibited considerable systemic resilience in the face of repeated and on-going attempts to bring about its collapse. These two characteristics are closely connected. A series of decentralised cells, loosely bonded, make infiltration of the entire Al’Qaeda network extremely unlikely. If any one cell is incapacitated, the likelihood of this undermining the operations of other cells is severely reduced. That, of course, is precisely why Al’Qaeda has chosen this organisational form. 15  6  Merton (1973). BIS Review 40/2010  Al’Qaeda is a prime example of modularity and its effects in strengthening systemic resilience.
These involve granting differential voting rights to different classes of shares. This too, in some respects, is back to the future. It has echoes of the restricted or graduated shareholder rights models seen over a century ago. Dual class listings remain common practice in a number of countries today, especially in emerging markets. Interestingly, however, there have also been some signs of dual class shares recently playing a greater role in the US. A number of recent high profile US company IPOs, such as Facebook and Google, have issued dual class stock. 25  See Carney (2014). 26  See also Mayer (2013). 14  BIS central bankers’ speeches  These laws and emerging practices are in their early throes and are not uncontentious, especially among institutional shareholders. Nonetheless, they are symptomatic of a common desire to strengthen long-term investors’ hand in the oversight of companies. If these initiatives grew in prominence, they would begin to address some of the short-term and risk-shifting problems embedded in the current corporate governance model. Corporate governance If alterations to the balance of shareholder rights are increasingly under debate, the same is not true of the rights of creditors and other stakeholders. In principle, the case for recognising explicitly these broader interests seems sound enough. In a recent paper, I considered the risk-shifting problem within companies and various solutions to it (Haldane, Richardson and Willison (forthcoming)). The most effective was simply to alter the objectives of the company to reflect creditor, as well as shareholder, interests.

Among the households of people employed in industries less affected by the pandemic, saving by that half of households with least saving is higher: up to 40% of their annual income. 3  Taking as an indicator of financial vulnerability of the firm the ratio between its debt and its assets (net of non-interestbearing debt), and for the vulnerability threshold a value for this ratio of 75%. 4  See P. Hernández de Cos (2021): "The challenges to the banking sector a year after the outbreak of the COVID-19 pandemic", Speech at the Observatorio de las Finanzas event organised by El Español/Invertia. 2  With a view to the future, the development of various vaccines and the start of their roll-out to the population has allowed us to discern a horizon in which this crisis is resolved. Yet uncertainty remains high, especially that arising from the course of the pandemic and the vaccination process, and the consequences of the crisis on the productive system and on agents’ behaviour. Against this background, the projections presented last Tuesday by the Banco de España continue to complement the baseline scenario with another two alternatives, with different assumptions about how the main areas of uncertainty will evolve.5 The first point of uncertainty evidently pertains to the epidemiological situation.
The paradox of the present scenario is that the banking system, whose objectives should be to intermediate credits and hedge against risks, seemingly concealed the risks in a complex web of derivatives (and notes) thanks to regulations that didn't measure up to the challenge. Another aggravating circumstance is the transition of the bank-based financial system to a system based on tradable, short-run-debt certificates. This scheme opens the door to a bank run that differs from the old ones where customers stood in line to withdraw their deposits. The recent incorporation of safety-net policies for institutions (Primary Dealer Lending and bankarization of investment banks) and securities (guarantees to Money Market Mutual Funds), are the offspring of this change in the financial system. The lessons learned in the 1920s, which led to the creation of the Fed is being "relearned" now. It is worth recalling that before the Fed came to life, the United States endured a major banking system crisis every three years (Gorton, 1988). World inflation and growth China’s sustained growth for many years already has been at the core of the world economy’s evolution. The Chinese incorporation to the global world was great news, because it brought with it economic growth and low prices. The continuous migration of millions of people from the countryside to the city boosted world output. They not only could produce at lower prices but they also were the cause of the increase in savings in that country.

5  For example, O’Hara (2004). 4  BIS central bankers’ speeches  Frictions in pricing arise from the process of matching buyers and sellers. Here, the role of market-makers is key. The market-maker faces two types of problem. One is an inventorymanagement problem – how much stock to hold and at what price to buy and sell. The market-maker earns a bid-ask spread in return for solving this problem since they bear the risk that their inventory loses value. 6 Market-makers face a second, information-management problem. This arises from the possibility of trading with someone better informed about true prices than themselves – an adverse selection risk. Again, the market-maker earns a bid-ask spread to protect against this informational risk. 7 The bid-ask spread, then, is the market-makers’ insurance premium. It provides protection against risks from a depreciating or mis-priced inventory. As such, it also proxies the “liquidity” of the market – that is, its ability to absorb buy and sell orders and execute them without an impact on price. A wider bid-ask spread implies greater risk in the sense of the market’s ability to absorb volume without affecting prices. This basic framework can be used to assess the impact of the changing trading topology on systemic risk, moving from analysing market microstructure to market macrostructure. Take the effects of fragmentation. That heightens competition among trading platforms, offering differing execution options and wider access to participants. This would tend to attract liquidity providers, including cross-market arbitraging HFT.
In Norway, this resulted in a period of low nominal interest rates set by the government authorities, direct regulation of credit through quotas set out in a separate credit budget, channelling of loans for special purposes via state banks, regulation of cross-border capital movements, a fixed but adjustable krone and occasionally the use of price and wage regulation. For a period, regulation and fine-tuning seemed to be having the intended effect. But in the 1970s, inflation got out of control in Norway and in a number of other countries. The Norwegian economy experienced a price/wage spiral. Although the krone was devalued several times in the 10-year period from 1976 to 1986 in pace with high price and wage inflation, this was nonetheless not sufficient to prevent a decline in the manufacturing sector. In 1980, Odd Aukrust, Head of Research in Statistics Norway, stated the following with regard to developments in the Norwegian economy: "Unfortunately there is even less reason for optimism this time. It seems that competitiveness in Norwegian manufacturing will deteriorate in the year ahead. The main problem is that no one can control price  4  See Ecklund (2008), p.120. BIS Review 111/2008  3  developments. With annual inflation at approximately 10 per cent, no one dares to invest in measures that could stop this price carousel.” 5 High inflation showed that the economic policy framework was not functioning as intended, and the importance of providing the economy with a nominal anchor became evident.

This was demonstrated by the Phillips curve (named after the economist A.W. Phillips), which showed that low unemployment has historically accompanied high wage growth. In the 1960s, Milton Friedman and Edmund Phelps rejected the idea that this empirical relationship could be used to reduce unemployment in the long term. Any attempt to reduce unemployment would over time only result in higher inflation, without affecting employment and output. A more detailed discussion of these developments in macroeconomic history can be found in Snowdon and Vane (2005). 7  See Schreiner (1982). 4  BIS Review 111/2008  that has now been established should, in addition to directly contributing to stabilising the krone exchange rate, also curb price expectations.” 8 In recognition of this fact, Norges Bank gradually gave greater weight to influencing inflation developments as a prerequisite for a more stable krone exchange rate over time. As stated in an article in the Norwegian daily newspaper Aftenposten in May 1999 9 : “In the discretionary assessments on which monetary policy is based, Norges Bank gives weight to fundamental preconditions for exchange-rate stability over time. Price and cost inflation must be brought down towards the level aimed for by the euro area countries. At the same time the situation must be avoided whereby monetary policy in itself contributes to a downturn with deflation.” The division of responsibility in economic policy was even more clearly defined when the government presented new economic policy guidelines in March 2001.
Monetary policy has little or no ability to influence most of these separate goals in the long term. It is therefore sensible to specify monetary policy’s long-term goals in terms of factors monetary policy can affect. Introducing money into an economy and establishing a credible monetary policy that ensures low and stable inflation will have a positive effect on the real economy. Similarly, monetary policy that ceases to function could result in a dramatic deterioration in welfare, as we have seen on numerous occasions. However, apart from this, monetary policy will not have lasting effects on the growth potential or the level of welfare in the economy. It is the supply of economic resources - labour and  2  BIS Review 49/2002  capital and our ability to utilize them efficiently in production - that is decisive. We cannot use monetary policy to pull ourselves up by our bootstraps. It also seems intuitively unreasonable that it should be possible to influence output potential or average growth in the economy through monetary policy. I think this is fairly obvious if we imagine the effects of monetary policy in a “Robinson and Friday” economy. i)  The long-term objectives of monetary policy  In the long term, monetary policy determines the average level of inflation. Output is determined by the supply of labour, capital and technology and by productivity changes. It is important to stress the essential difference between the target of a high level of economic growth (output target) and the inflation target.

The line in the chart will therefore move further down and to the left with a more credible monetary policy. 3. Norwegian monetary policy and cyclical fluctuations  In the long term, we cannot influence growth potential or prosperity by means of monetary policy - not even in Norway. But we can influence the fluctuations in the economy, the short-term cyclical movements. Norges Bank also takes into account that monetary policy should not cause unreasonably sharp fluctuations in output by setting a relatively long-term horizon for the attainment of the inflation target, and allowing deviations in the intervening period. It would probably be possible by a very aggressive use of instruments to force inflation back to the target within a time frame of 3-4 quarters - perhaps even less if the foreign exchange channel is strong. This would cause very pronounced fluctuations in the real economy, however. In this sense, variations in output enter our “loss function”. The thinking that follows from the theoretical research is to a large degree present in the actual setting of interest rates. For practical purposes, we, and other central banks with inflation targeting, make estimates of future price inflation. Our instruments are oriented in such a way that there are prospects of attaining the inflation target two years ahead. The theoretical literature has given us useful knowledge as to how far forward in time this horizon should be set. The result of using too short a horizon will be considerable instability in output and in nominal and real interest rates.