samchain/econo-pairs-v1 huggingface dataset:
See, for example, Gordon (2012) and, for a recent survey, Fernald and Inklaar (2022). 12. The model makes the simplifying assumption that households store their wealth by holding bonds and capital via a financial intermediary, but the same mechanism would operate if households held claims on firms directly (for example, equity). The same mechanism also operates in richer models that include additional stores of wealth such as housing (Lisack et al., 2021). 13. Similar points have been made by Lisack et al. (2021), Vlieghe (2021) and Blanchard (2022). On the other hand, Goodhart and Pradhan (2020) argue that the effects of baby boomers retiring could be powerful enough to raise the equilibrium real interest rate. 14. See Bailey et al. (2022) for details. As for the baseline estimate over the 1985-2015 period, the total l ong-run effect is also subject to substantial uncertainty, and ranges between -4.3 and -1.8 percentage points depending on the simulation assumptions. 15. For example Rachel and Smith (2017) estimate a 0.45 percentage point contribution from inequality on the past decline in Global R*, although their analysis suggest that this factor will not push down any further in the future. For the United States, Auclert and Rognlie (2017) find that increased inequality can account for between 0.45 and 0.85 percentage points decline in the real interest rate. See Auclert and Rognlie (2018), Eggertsson et al. (2019), Mian et al. (2021) and Moll et al. (2021) for further discussion of the various mechanisms through which inequality impacts R*. 16.

“Running out of room: revisiting the 3D perspective on low interest rates," Speech by Gertjan Vlieghe at the London School of Economics. Woodford, M. (2003). “Interest and Prices: Foundations of a Theory of Monetary Policy  ”,  Princeton University Press, Princeton (2003). 1. This speech will use a variety of real interest rate estimates, all of which adjust nominal interest rates for expected inflation. 2. For example, some approaches take a ‘longer-run’ perspective, according to which the equilibrium interest rate is the real rate expected to prevail after the economy has adjusted to any cyclical fluctuations (Laubach and Williams, 2003). Other approaches allow for short-term fluctuations in the equilibrium interest rate, defining it as the real rate that would prevail if prices were flexible (Woodford, 2003). 3. See Bank of England (2018) and Bailey et al. (2022). 4. For example, the analysis in Bank of England (2018) assesses that during the global financial crisis, headwinds to demand (including heightened uncertainty and tighter financial conditions) prompted a large fall in the cyclical component that took many years to dissipate. 5. The focus of this speech is on the longer-term structural trends and what might be driving them, for which longer time series of data are preferred. To enable cross-country comparisons, the real rate data are constructed by adjusting market measures of nominal interest rates for inflation. Consistent with the structural model analysis below, the  Page 21 sample is truncated in 2015. Del Negro et al. (2019), Holston et al. (2017) and Hamilton et al.
The system now processes over 4 million payments on average each month, representing roughly 1,000 billion euros daily, of which 43% are cross-border payments. These figures show a significant increase in the use of real-time gross settlements in the EU since the introduction of the euro;  •  the smooth functioning of the entire integrated organisation of the Eurosystem, in which the decision-making centre works in constant contact with the national central banks on the implementation of operations. The reasons for this achievement lie primarily with the in-depth preparatory work conducted over several years by the central banking community and private financial market operators. b/ Second, together with many other factors, this technical and operational success has contributed to the high credibility of the single monetary policy, which is guaranteed, inter alia, by the independence of the European Central Bank and of the national central banks. The Eurosystem has inherited the store of confidence that was built up over several decades by the national central banks in charge of the most reputable currencies. In France for example, the last  BIS Review 11/2001  1  opinion survey indicated that 80% of French citizens trust the Banque de France. And the level of confidence in Spain towards the Banco de Espana, or in the other countries participating in the euro area towards their respective NCB, is certainly as high. Moreover, and contrary to what is often said, the monetary union of Europe is not starting from scratch.

According to the IMF, this effect is estimated to have contributed 1.5-2.0 percentage points per annum to inflation for EU countries catching up on productivity. The recent statistics available for the United States also confirm that wage and salary differentials within the euro area are by no means atypical in a monetary union : for example, in the US the average weekly earnings in the non-durable goods sector stood at USD 546 at the national level, while standing at USD 437 in Mississippi and USD 644 in New Jersey. I am convinced that we can be reasonably confident in the increasing integration of European countries, and in the fact that economic developments are becoming more and more correlated in the area. It has been highlighted, in the academic field, by several empirical investigations that business cycles are becoming more synchronous across Europe. Secondly it has often been questioned whether EMU can be a success without some form of enhanced political union. Certainly, for EMU to function well, all Member States must be aware of the spill-over effects of all their national policies, especially their budgetary policies. In this regard, we are in favour of strong co-ordination between economic policies, while respecting the independence of the Eurosystem. This co-ordination is contained in the Treaty itself, which obliges Member States to treat national economic policies “as a matter of common interest” and subjects them to a multilateral procedure. Even more importantly, the euro zone is not devoid of mechanisms conducive to an appropriate policy mix.
Many other central banks have since followed the Bank of England’s lead, and in the HKMA we have published our own Monetary and Financial Stability Report for several years now. More recently we began an internal Banking Stability Report which aims to provide a macro prudential perspective on trends in the banking system that we can then use to target our on-site bank examinations more effectively. The eventual goal is to try to draw these two reports more closely together and to bring a more forward-looking perspective to our banking supervision work. When central banks make their financial stability analysis public it provides financial system participants with an insight into the central bank’s perception of the vulnerabilities of the system. It enables policymakers to be transparent in their views of where they perceive the risks and vulnerabilities to be. Hopefully, by raising warning flags at a sufficiently early stage – for example if we  BIS Review 106/2006  3  perceive risks in a build up of credit to a particular sector – we can encourage banks to review the risks that they are running and, if necessary, to take action to mitigate those risks. But it is important to be careful how the risks and vulnerabilities are presented. The last thing we want to happen is for the predicted problems to surface because everyone has rushed for the exit at the same time.

It is particularly important that the standards are unambiguous about the values for the industry and its workforce. It would facilitate financial services practitioners to understand and embrace their professional obligations, and be held accountable for their own continuing professional development. Bank Negara Malaysia and the Securities Commission Malaysia believe that with its stature and global complexion, the FSPB is well positioned to lead efforts aimed at raising the bar of  BIS central bankers’ speeches  1  professional and ethical standards including continuous professional development for across the financial services industry, thereby strengthening confidence in the industry and affirming the industry’s commitment to better serve public interest. Its membership of eminent experts and financial practitioners from the United Kingdom, Europe, Australia and Asia provides a valuable global perspective that will enhance the relevance of the standards developed by the FSPB and their universal application. The establishment of FSPB also reflects the advancement and progress of the financial services industry in Malaysia and the vision of its members to embrace and promote globally acceptable and applicable standards of professionalism, human capital development and ethical behaviour that will provide the much needed clarity to the public and the industry on what is expected of financial services practitioners. Indeed, in moving forward, the emphasis on the development of human capital which includes elevating professionalism and ethical behaviour of financial services professionals is paramount. Today, professionalism, ethics and the quality of human capital have become key drivers and enablers of change in the financial services industry.
Local banks recorded average growth in pre-tax profits of 15% per annum in the six years prior to the Asian crisis. Moreover, most banks remained profitable during the crisis itself and all continued to maintain high capital ratios. Financial distress was therefore not a driving force for merger, as it has been in other Asian countries. But there are signs that the consolidation process is gathering pace in Hong Kong. The reasons for this are to some extent the same as those elsewhere. These include increased competition from both domestic and global players, deregulation, the need to invest in new technology and the increased focus, even for family-owned businesses, on generating shareholder value. All this means that the life of a banker in Hong Kong is not an easy one at present. Some of the old certainties are breaking down. The removal of the remaining interest rate controls in a month's time will usher in a new era of full competition on the liabilities side of the balance sheet. While the surplus liquidity in the system may mitigate the immediate impact to some extent, banks will face new challenges on products, pricing, fees and charges, and asset and liability management. This comes on top of the challenges that the banks are already facing to generate new lending business. The residential property market, which has been the mainstay of most of the local banks' business, is currently drifting without clear direction, and mortgage business is still sluggish, as the latest figures for April demonstrated.

As you remember, around this period of last year, one of the issues that had attracted a lot of public attention was the continued influx of fund flows into the emerging markets including Thailand. But this theme has suddenly changed when the US Federal Reserve signaled in May its intention to scale down, and eventually terminate, its asset purchasing program. The signaling immediately sparked turbulence in capital and currency markets in emerging economies and certainly serves as a recurring reminder that the linkages in the international economy are as psychological as they are mechanical. From June to August, Thailand, like other economies in the region, continued to witness further episodes of outflows as investors continued to reform their expectations towards the exact tapering timeline. 4. In the recent months, turbulence in the markets seems to have somewhat been moderated. This possibly reflects the fact that much has been priced in during the earlier outflow episodes, as well as the fact that it has been clearer to the markets now that any further tapering by the Fed will likely be done in an incremental manner. This is, however, not to say that short-term volatilities are no longer with us. The challenges going forward for policymakers are, therefore, not only to have the right set of policy responses in place to deal with these short-term volatilities, but also to make sure that all the market participants are well prepared for the scenarios that could be expected. 5.
8  BIS Review 103/2009  Figure 13: Interest Rate Developments (Percent) M a r k e t In te r e s t R a te s  26  P o lic y R a te s  24 22 20 18 16 14 12 10  0609  0409  0209  1208  1008  0808  0608  0408  0208  1207  1007  8  Source: ISE, CBRT. Figure 14: Medium-Term Real Interest Rates from the Yield on Government Securities* (Percent) 17 15 13 11 9 7  0709  0609  0509  0409  0309  0209  0109  1208  1108  1008  0908  0808  0708  0608  0508  0408  0308  0208  0108  1207  5  * 2-year real interest rates, calculated using 2-year nominal interest rates from the yield curve and inflation expectations from the CBRT’s Expectations Survey. Source: ISE, CBRT. However, the Central Bank considers that market interest rates do not properly reflect the current stance of the monetary policy and statements, and that yield curves should be more horizontal compared to the current situation (Figure 15). In this regard, the proper monitoring and correct understanding of the monetary policy perspective by economic agents, which I will now go on to explain, bears great significance.

As cumulative inflation during the first half of 2009 has been historically low at 1.83 percent, it is estimated that inflation will rise in the first half of 2010 due to base effects (Figure 26). As the impact of adjustments in taxes and administered prices made for the sake of budget balance will ease, we forecast that inflation will display a downward trend starting from the second half of 2010 and stabilize slightly below the end2011 target of 5.5 percent. It is critical to note that inflation would be less persistent and thus  BIS Review 103/2009  17  the economic recovery would be smoother if economic agents adopt these forecasts as a benchmark in their pricing decisions. I would like to underline that any new data or information regarding the inflation outlook may lead to a change in the monetary policy stance. Therefore, assumptions on future policy rates underlying the inflation forecast should not be perceived as a commitment on behalf of the CBRT. Risks Distinguished Members of the Press, In the last part of my presentation, I would like to mention the risks with respect to the inflation outlook in the upcoming period and give some information pertaining to the probable monetary policy strategy should these risks materialize. As I have mentioned earlier in my speech, despite having partially receded, the risks regarding the global economy are still important for the inflation and monetary policy outlook. In particular, ongoing problems in credit and labor markets pose downside risks on global activity.
The example I choose here is the Single Euro Payments Area, in short SEPA initiative, led by the European Payments Council, which has started officially last month. It is a market-led initiative aiming at removing technical, legal and commercial barriers against smooth cashless cross-border payments in euro. The objective is to make cashless paying with euro as easy, efficient and safe as it is today within one country. This has genuine benefits for consumers, firms and public administrations having to conduct cross-border payments. The launch included both the roll-outs of the SEPA credit transfer system and the SEPA cards framework. The SEPA direct debit system will follow before the end of 2009. The ECB has supported the European Payments Council in a variety of ways. For example, the ECB regularly organised meetings with stakeholders such as end-users, infrastructures providers and card schemes. We have also published a study of SEPA’s potential economic impact, which highlighted, among other things, the room for cost reductions for banks. 6 The ECB is also very active in enhancing knowledge about financial integration. Our research network on “Capital Markets and Financial Integration in Europe” with the Center for Financial Studies at the University of Frankfurt and whose Second Symposium you are currently attending is one good example. A major task of the ECB in this area is also the “Report on Financial Integration in Europe”.

But it’s also clear that a significant speed bump in transition is uncertainty about how the switch to new rates will be treated under the huge range of existing regulations that weren’t written with this kind of event in mind. The official sector must pave the way for transition by eliminating that uncertainty. Paving over the speed bumps, if you will. Since my last speech about LIBOR, the official sector has worked closely with the ARRC and others to provide clear guidance and offer the prospect of relief from existing rules. There is a final rule on swap margins for legacy swaps that transition away from LIBOR,16 a proposed CFPB rule on transitioning consumer credit,17 accounting guidance from the FASB and the SEC,18 tax guidance from the IRS,19 and relief from the CFTC.20 The Federal Housing Finance Administration has taken a number of actions, including prohibiting the Federal Home Loan Banks from entering into LIBOR transactions or investments.21 Fannie Mae and Freddie Mac will stop accepting LIBOR-based ARMs by the end of this year22 and have created new ARM products indexed to the 30-day SOFR average.23 The supervisory agencies have also eliminated uncertainty about what stance they will be taking on LIBOR transition in their supervisory and examination work—they’ve said very clearly they’ll be focusing on it, and every supervised firm needs to focus on it too.
Furthermore, the euro area also has the problem that there is a large spread in inflation between the peripheral countries and the countries at the centre. In striving for an inflation rate of less than, but close to, 2% in the medium term in the entire euro area, the ECB is trying to prevent inflation in the central countries from being pushed down towards zero, or even below zero, for any length of time. In Switzerland, this problem does not exist as only inflation measured in Switzerland is relevant for our monetary policy. BIS Review 27/2003  3  Additional agreement between the Federal Department of Finance and the SNB on the distribution of profits on the free assets At yesterday’s meeting the Bank Council of the National Bank agreed to an additional agreement between the Federal Department of Finance and the Swiss National Bank on the distribution of profits on the free assets (income on reinvested proceeds from gold sales). The profit distribution of the National Bank will thus increase by Sfr 300 million to a total of Sfr 2.8 billion (for the financial year 2003) in spring 2004. In 2005 and 2006, it will be gradually raised up to Sfr 3 billion. The National Bank’s profit distribution has so far not taken account of this income on reinvested gold proceeds.

One of the first priorities of the Supervisory Board has been to promote integration through harmonized implementation of Options and National Discretions (ONDs), thereby evening the level playing field in the euro area. Regarding liquidity requirements, the Single Supervisory Board can grant waivers at national as well as cross-border level on a case-by-case basis. In the current institutional context, where the free flow of liquidity within the same banking group but across border could be impeded, a prudent supervisory approach has led the ECB’s Supervisory Board to still maintain a floor on the liquidity requirements of significant subsidiaries. Overall, the banking landscape still resembles too much a collection of banking systems highly exposed to their domestic economies, with limited cross-border private risk-sharing. At the same time, one should recognise that the Banking Union is both an objective and a process of fundamental structural changes in the euro area’s financial architecture. The next steps are 1/2  BIS central bankers' speeches  clearly set out in the ECOFIN roadmap to complete the Banking Union. It is now urgent to agree on an ambitious timetable for its implementation. 2/2  BIS central bankers' speeches
Management of the Petroleum Fund The Petroleum Fund is currently one of the world’s largest institutional investors, on a par with the largest pension fund in the US and the largest European fund. With the rate of growth that can be expected, the Petroleum Fund will be larger than these two funds in the next year or two. Norges Bank manages the Petroleum Fund on behalf of the Ministry of Finance. This is a challenging task that has been given high priority within the Bank. We have established what we believe is a professional management organisation. Performance is measured against the benchmark portfolio defined by the Ministry of Finance and the results are published in a quarterly report. So far, Norges Bank has achieved an excess return every year. Management costs have been low. In terms of net earnings, Norges Bank has added close to NOK 15bn to the Fund. The total return for the Fund is largely determined by the benchmark portfolio. Since 1997, the real return has averaged 4.2 per cent. Of this, 0.4 percentage point can be attributed to active management, for which Norges Bank is responsible. The Fund has become a large investor in international equity markets. Norges Bank recently established a group dedicated to actively supporting best practice corporate governance in companies where the Fund has ownership interests. Norges Bank already makes extensive use of its voting rights and has voted in about 17 000 cases this year.

I had the privilege of hearing General Michael Hayden, former head of the NSA and CIA, address a payments symposium hosted by the Federal Reserve Bank of Chicago a few years ago. In that venue, General Hayden spoke of the tectonic shifts affecting the global landscape, and their prospective impact on cyber, terror, and geopolitical threats. His basic message, in two parts: keep your seat belts on, it promises to be a volatile century (yes, century); and when it comes to our critical financial market infrastructure being subject to attack, it is not a matter of “if” but “when". Responding to the current threat environment represents the challenge of our generation; these are days of preparation. I will posit that a fundamental distinction exists between cyber resiliency and traditional resiliency: what works for us in conventional resiliency scenarios, namely the automatic and instantaneous replication of data, works against us in cyber scenarios, reflecting risks that a pernicious malware, or a severe data corruption, or even an application failure propagates itself across primary, secondary, and tertiary operating sites, rendering a systemic infrastructure functionally inoperable. In other venues we have therefore elaborated upon the need for a new paradigm for resiliency, one that endeavors to mate traditional precepts of geographic dispersion of infrastructure and human capital with new realities compelling technological diversity, and a platform for recovery, should the core of a financial market infrastructure become corrupted.