samchain/econo-pairs-v1 huggingface dataset:
As oil is a key input to production, this acts like a negative supply shock for the Western economies: it costs firms more to produce the same level of output than before the run up in oil prices. And, like a tax, it acts to redistribute spending power from energy consumers to energy producers. In those circumstances, real-take home pay has to grow more slowly for a while in order to avoid the capital stock shrinking as firms sought to maintain the internationally-determined required rate of return. The role of monetary policy is to facilitate that process, recognising the potential redundancy of some capital resources given higher energy prices, and the upward pressure on real interest rates as households seek to borrow to tide them over the tough times. In other words, in the now standard set up, taking the cost shock on its own, the equilibrating short-term real rate (r star) has risen and the economy’s potential supply (y star) has probably fallen. So, ignoring other developments, policy would have to be tighter than otherwise, even if the direct effects of the cost rise on the price level were accommodated. But, of course, other things have been going on, and it is the net effect for our policy rate that matters. And that involves making a judgment about the tightness of credit conditions. The credit shock and monetary conditions In conducting policy, commentators usually take the short-run nominal interest rate, Bank Rate, as a summary measure of monetary conditions.

Also, we cannot exclude the possibility that we will have to intervene substantially again. From the beginning we made it clear that enforcement of the minimum exchange rate was associated with risks. We are endeavouring to reduce the balance sheet risks through suitable diversification of our foreign currency investment. However, the exchange rate risk on the foreign exchange reserves is based on monetary policy considerations and the SNB is therefore obliged to bear it. My colleague, Fritz Zurbrügg, will talk about the management of the foreign exchange reserves in his remarks. Through its monetary policy, the SNB serves as a buffer for the Swiss economy and cushions the effect of severe shocks. Because it has a long-term focus, it is in a position to carry substantial risks. This means we can react flexibly in exceptional situations in order to fulfil our mandate, which is to ensure price stability while taking due account of economic developments. BIS central bankers’ speeches  3
Employed and persons absent due to illness, 1987:012002:05 Hundreds of persons Seasonally adjusted series expressed as moving three-month average  45000  2400 Absent due to illness (left scale) 2200  44000  Employed (right scale) 2000  43000  1800 42000 1600 41000 1400 40000  1200  39000  1000 800 1987  38000 1989  1991  1993  1995  1997  1999  2001  Source: Statistics Sweden (Labour Force Surveys)  2. Recipients of sickness allowance, 1974-2001  120000  120000 30-89 days  100000  90-364 days  100000  over 364 days  80000  80000  60000  60000  40000  40000  20000  20000  0  0 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000  Source: National Social Insurance Board  BIS Review 40/2002  7  3. Mean working time, 1988:1-2002:1 Percentage 4-quarter change  7  7  6  6  5  5  4  4  3  3  2  2  1  1  0  0  -1  -1  -2  -2  -3  -3  -4  For employees - Labour Force Surveys  -4  -5  For employed - National Accounts  -5  For employed - Labour Force Surveys -6 1988 1989 1990 1991 1992 1994 1995 1996 1997 1998 1999 2001 2002  -6  Source: Statistics Sweden (Labour Force Surveys and National Accounts)  4.

1 1 Autorité de Contrôle Prudentiel et de Résolution (2021), The main results of the 2020 climate pilot exercise 2 3/4  BIS central bankers' speeches  2 2 F. Villeroy de Galhau, « The role of central banks in the greening of the economy », speech, February 11 2021. 3 3 Corporate Sector Purchase Programme 4 4 Pink Floyd, Time, The Dark Side of the Moon  4/4  BIS central bankers' speeches
In the recent period, the Swedish economy has mainly been driven by firm export demand. This has generated healthy profits for companies and higher incomes for employees, and we are now at a stage where domestic demand is expected to take over as the driving force in the economy and employment to rise. But there is a risk that an improvement in the labour market will be held back by structural factors, i.e. that production and the labour market will not adapt quickly enough to changed conditions abroad, which could impair the prospects for a pick-up in domestic demand. In addition, we have recently seen signs of somewhat weaker economic activity than we had previously expected. Should this tendency prove to be more persistent, there is a risk of an economic downturn, with a softer inflation outlook as a consequence. I have previously noted a risk that rising interest rates and falling house prices could lead to unnecessary strains in the real economy in the long run, with a drop in demand as a result. This remains a risk, but in a situation with clearly weakening economic activity it may prove necessary to conduct monetary policy in a more expansionary direction. However, we are currently in a position where the uncertainty regarding what course the developments will take is still considerable. Therefore, we will as usual be monitoring the situation very closely up to the next monetary policy meeting.

Given that wage costs make up a large portion of the food sector’s costs, this difference in itself could explain the difference in prices. Detailed studies show that taxes, labour costs and other economic factors (e.g. GDP per capita and population density) may account for around half of the differences in food prices in Sweden and the EU.6 The other half appears to be largely attributable to lower competition pressures in Sweden than in other countries. That the price differences in relation to EU countries are due in large measure to the relative price competition is reinforced by the fact that there are also large price differences within Sweden, where the differences in wages and other costs between regions are small and the taxes the same. Studies7 show that the prices in the south-east and west of Sweden are around 8 and 5 per cent lower, respectively, than in the eastern part of the country. The prices in Greater Stockholm are some 6 per cent higher than those in the Greater Gothenburg area. This reflects the differences in shop structure in various parts of the country, with a much larger market share for low-price chains and other chain stores than for the three major players in southern and western Sweden than in eastern Sweden.
What has been true for Nestlé, Novartis or Swatch - to name just a few - is also valid for the banks: in today’s competitive marketplace, only the fittest will survive, some of them even becoming global players in the process. b)  Professional skills  Secondly, our finance industry has access to a pool of well-educated, highly-skilled, multilingual, and service-oriented workers who are very familiar with international financial markets. Private banking has a long tradition in Switzerland, and financial advisory services to foreign clients have been a part of the Swiss banking business for generations, literally. c)  Efficient financial infrastructure  Thirdly, besides the availability of a highly professional staff, there is the outstanding efficiency of Switzerland’s financial infrastructure. I am referring here to the so-called “Swiss value chain” which comprises a full set of settlement and payment systems, with their individual parts harmonised in an optimum way. The entire facility consists of a trading platform, a payment-against-delivery system, and a central payment system. A fourth component, a central counterparty, is currently being developed. It might be due to their long tradition of watchmaking that the Swiss have developed a skill to build and interconnect sophisticated settlements systems. In 1987, the Swiss National Bank launched the Swiss Interbank Clearing (SIC), the first RTGS system and precursor of many payment systems around the globe. Shortly after, the Swiss Exchange moved from a traditional “à la criée” procedure to an electronic platform including the automatic transfer of securities.

But, as I showed you, the protection of financial privacy is not an obstacle to an efficient fight against money laundering or the financing of terrorism, nor does it hamper fair tax competition with our neighbours if a withholding tax is implemented along the line of the EU directive. Both the disclosure of certain informations relating to bank clients and the protection of privacy in the financial sphere arise from fundamental ethical convictions that are worth protecting. I am confident that with a frank dialogue and mutual effort to understand each other’s position, the common values of the Swiss and British financial centres will again come to the forefront. In particular, it is our predominant joint interest to see the very demanding standards that we have set for our own financial industry become the world-wide accepted rules. The long history of our financial centres and the large experience of our banking industry should give us a natural leadership role in this respect. BIS Review 13/2002  7
However, the actual trade-off that is struck will be importantly influenced by MPC members’ views of both the nature of the shocks hitting the economy and the transmission mechanism of monetary policy.17  As the remit states: “In exceptional circumstances, shocks to the economy may be particularly large or the effects of shocks may persist over an extended period, or both. In such circumstances, the Monetary Policy Committee is likely to be faced with more significant trade-offs between the speed with which it aims to bring inflation back to the target and the consideration that should be placed on the variability of output.” 17 For more detail, see ‘Lambda’, speech by Mark Carney at the London School of Economics, 16 January 2017. 16  15  All speeches are available online at www.bankofengland.co.uk/news/speeches  15  Charts 10a and 10b demonstrate how the expected trade-off evolved in successive MPC forecasts since the referendum.

The second broad area of opportunity in a post-LIBOR world comes from the potential for concentrating sterling liquidity into a single interest rate curve referencing compounded overnight SONIA. Today, someone managing a portfolio of sterling interest rate risk can easily find themselves having to deal with multiple different reference curves, each based on a different interest rate index. Figure 3 illustrates five commonly-traded curves (based on SONIA and the one, three, six and twelve month LIBOR fixings) at the start of August 2017 (shortly after Andrew Bailey’s 2017 speech announcing the 2021 deadline for LIBOR transition). Figure 3: Zero coupon swap yield curves (as of 1 August 2017)  Source: Bloomberg data and Bank calculations 7  All speeches are available online at www.bankofengland.co.uk/news/speeches  7  It is challenging enough to manage five or more different interest rate levels. But, to make matters worse, the gaps between these curves – so-called ‘basis’ – can also change quite sharply over time, reflecting variations in the credit premium associated with different lending tenors, structural flows, and other factors. Figure 4 illustrates how the basis between a three year sterling swap referencing the 6 month LIBOR fixing and three swaps referencing 1, 3 and 12 month fixings has moved since 2008. Managing interest rate risk in the presence of such movements is a risky and administratively complex process.
I see little evidence that inflation expectations might generate the start of a wage-price spiral for example. There are, however, immediate downside risks to the growth outlook. Although my central expectation is that the recent weakness will just be a soft patch, I do worry about a more  8  BIS central bankers’ speeches  prolonged weakness in demand, and in particular, consumer spending. That could knock the recovery off course for a sustained period, shifting the balance of risks around medium-term inflation to the downside. With that risk in mind, putting up Bank Rate could be exactly the wrong thing to do at this precise moment. If it further damaged consumer confidence then it could be the marginal factor that makes a soft patch turn into something worse. Of course, at some point, Bank Rate will have to rise: interest rates will need to normalise if, once the spare capacity in the economy has been eliminated, monetary policy is to be consistent with the 2% target. And because of the lengthy lags involved, Bank Rate will need to start the long journey back to more normal settings well before the degree of spare capacity is eliminated. But for now, I believe there remains time to allow the economy to recover before the eventual tightening begins. I am not trying to give any hints today as to exactly when that will be. I honestly don’t know. I can only continue to assess the data and the outlook as it changes, month by month.

Boards of regulated subsidiaries need to be able to take decisions where required to meet their own legal and governance responsibilities or in the interests of the safety and soundness of the subsidiary. But, that does not mean they should operate outside the general governance and objectives of the group to which they belong. Independence in this context is carefully defined and limited. As you will all be aware, we have undertaken significant engagement with the boards of banks and building societies on governance. Through our supervisory work, we are seeing improvement but in our view there is more to do. Board effectiveness will therefore remain a key priority. To conclude, governance matters a lot, I can’t understate that. Effective boards are central to the success of firms and the financial sector, and central to the delivery of our objectives. Thank you. 4  BIS central bankers’ speeches
When serious problems emerge, however, there is a demand for new ideas and new ways of doing things: the status quo becomes unacceptable. Of course, the same scenario has applied to the regulatory framework more broadly. Precrisis, any call for stronger capital and liquidity rules was generally howled down as burdensome and unnecessary. Post-2008, the costs of a weak regulatory framework have been all too obvious and painful for the banking sector, and as a result the demand for new ideas was immediate and forceful. My theme for today is that successful regulatory reform is about ideas and implementation. Certainly, we needed to rethink the regulatory framework in light of what we have learnt from the past five years – the status quo was not acceptable. But if we want to be successful, the Committee also needs to make sure that the ideas we developed into Basel III are truly put into practice. From ideas …. The Basel Committee’s response to the financial crisis was to recognise that policy weaknesses contributed to the excesses that built up in the financial sector. A substantial overhaul was necessary: minor adjustments to the framework were not going to be enough. We needed some big, new far-reaching ideas.

It can also be enhanced to become a multi-currency investment platform to provide a marketplace for local and international investors to invest in real economic activity and projects denominated in various currencies and financed by Islamic banking institutions from different jurisdictions. This will be a first of its kind shared global platform for Islamic finance. In facilitating cross-border transactions, the IAP will also contribute towards drawing new foreign investors while also allowing for participation in the financing of projects outside the country. The IAP, together with the existing components of financial intermediation will form a more complete, and yet mutually complementary financial ecosystem. To ensure its success, there has to be greater awareness and understanding on the key features of the IAP and its embedded mechanisms by all the stakeholders. Of importance is for Islamic banks, investors and entrepreneurs to have a clear understanding on the risk and return relationships that are embedded in the variations of Shariah contracts used in such investment account products. Expectations need to be aligned with the various approaches adopted to managing these relationships according to the contractual and operational requirements. It is also paramount for Islamic banks to uphold the best practices in the conduct of discharging their fiduciary duties and in performing its administration. Of importance is the required due diligence, performance monitoring, suitability assessment and investment management. This would ensure that the IAP is always a trusted medium of investment that is transparent and competitive in providing a seamless experience for investors.
Although this concept is attractive, there are still many concerns from a regulatory point of view. The Fair Value Option may be inappropriately used and may result in unreliable financial information. For example, when a bank applies the Fair Value Option to its liabilities and is downgraded, the yield for its liabilities will increase to reflect the increased risk. Consequently, the mark-to-market value will be lower than the original value, and the gain is recorded as profit. Therefore, it seems unreasonable that banks can record profit in a difficult period by applying the Fair Value Option to their own liabilities. Ladies and Gentlemen, My last point is that Basel II and IFRS will undeniably bring some fundamental changes to the business of banking. First, banks may need to rethink their operations and strategies on account of the expected greater involvement of third parties. The point here is that new regulations allow banks to use financial models to estimate required capital and fair values of assets and liabilities. This means banks can take advantage of the lower capital requirements by offering cheaper or more cost efficient products to their customers. However, to develop financial models requires a certain amount of data and know-how which a single bank may not have. So, to  BIS Review 114/2007  3  overcome this difficulty, banks may have to seek support for additional credit data from peer banks, rating agencies, or the credit bureau. Second, banks must increase their knowledge base regarding risk management techniques, especially on risk modeling.

Similar to many economies in the region, commercial banks in Thailand will start maintaining capital according to Basel II by the end of next year, and by the end of 2009 for banks with the advanced approach. IAS 39, on the other hand, will be fully enforced by the Federation of Accounting Professions in the beginning of 2010. However, the Bank of Thailand has already adopted some parts of IAS 39, namely the impairment of assets since December last year, and we are now considering adjusting the related regulations to be in line with the concept of IAS 39. For Basel II, preparations on the supervision side started a number of years ago. The Bank has set up several internal working groups to study the guidelines and its suitability to the Thai market. Staff were sent abroad for training on Basel II implementation. Experts from other supervisory authorities and consultants were invited to hold seminar and training on the underlying concepts, applications, and supervision issues. The drafting of the Thai version of Basel II has been quite involving. During the drafting, the Bank of Thailand carefully studied other countries guidelines and consulted with other supervisors to gain insights on the suitability of Basel II to the Thai financial system. As a result, we have made some necessary adjustments to the guideline taking into consideration its practicality. Banks in Thailand have been consulted in the process so that the guideline does not impose extra unnecessary burden.
And when achieving the dual mandate called for additional monetary policy accommodation, the FOMC turned to other less conventional approaches, such as large-scale asset purchase programs – what many of you have heard referred to as “QE,” or quantitative easing – and forward guidance about how long the fed funds rate is likely to remain near zero. I believe these efforts have been very beneficial in helping the economy make significant progress and bringing us back closer to our policy goals. Today, with economic conditions much improved, many people are asking when Fed policy will return to normal. That is an excellent question. So in my remarks this morning I will discuss my outlook for the economy and how that outlook and the risks around it shape my views about the appropriate timing and pace of eventual policy normalization. In particular, I expect that there will be further improvements in economic activity over the next three years and that these will be accompanied by additional declines in the unemployment rate toward more normal levels. At the same time, I expect inflation to rise gradually toward the FOMC’s 2 percent target. These forecasts are predicated on maintaining a highly accommodative stance of monetary policy for a considerable time. Indeed, given our recent experience, I feel that before the Fed raises rates, we should have a great deal of confidence that we won’t be forced to backtrack on our moves and face another painful period at the ZLB.

And that, of course, is exactly what we do in fact do - using the vast array of official economic statistics and financial market data, all the publicly available and some private surveys and commentaries, as well as a wealth of anecdotal and structured survey evidence that we collect BIS Review 71/1998  -3-  ourselves, through our 16 non-executive directors, through the frequent visits which MPC members make around the country, and through meetings in London, and through our network of 12 regional, information-gathering and disseminating, agencies with their 7000 industrial contacts throughout the United Kingdom. And we openly display the facts as they are available to us, as well as our analysis and our conclusions, regularly through the publication of the minutes of our monthly meeting and in the quarterly Inflation Report. So when people say to me that the economy is headed for recession, I’m interested in comparing the evidence on which they base their views with our own evidence, and I want to know whether or not they are also saying that they expect us to undershoot the Government’s inflation target. Let’s just for a moment turn down the noise and look at some of the relevant facts as they relate to the economy as a whole. Since the economy started to recover from recession in the spring of 1992 - some 6½ years ago - overall output has grown at an average rate of about 3%.