samchain/econo-pairs-v1 huggingface dataset:
Our economy has been affected by a number of large shocks – to energy prices, the level of VAT, and the value of sterling – which have caused prices to increase. Some of these shocks were not predictable in advance. And even if they were, trying to use monetary policy to offset short-run movements in inflation is likely to have amplified output volatility. 9  Another defining feature of this recession is that it has been very deep. If companies are already down to their core customer base, cutting prices may generate little additional demand. Put more formally, as output fell, the demand curve faced by some companies may have become increasingly inelastic, thus reducing their incentive to cut their margins. See Bils (1989) and Ravn et al (2006) for examples of pricing models that incorporate such customer behaviour. 6  BIS Review 122/2010  But that does not mean that we should not learn from the behaviour of inflation. My current assessment is that changes in the structure of the economy, the nature of the financial crisis, and the different role played by policy all affected the behaviour of inflation during the downturn. And it is important that we learn from those developments to help set policy in the future. Conclusion So what are the implications for policy? Surely with inflation above target and expected to remain so for some time, the natural thing is to begin to reduce the degree of monetary stimulus?

Neither the EU, nor, as a matter of fact, Switzerland can be interested in such a development. Like any other country in Europe, Switzerland has a vital interest in EMU becoming a success. Switzerland’s economy is closely linked to the economy of the EU. High growth in Europe is essential for a sound economic development in Switzerland, whereas a lackluster economic situation in the EU contributes to sluggish economic growth in our country. The success or failure of EMU will thus directly affect our economic well-being. In fact, not only our economic well-being, but also our ability to conduct a relatively autonomous monetary policy will be affected. Market turbulence during the transition period, uncertainties about the future monetary policy of the ECB and unfulfilled expectations about the stability of the new currency and the degree of political independence of the ECB all have the potential to create an upward pressure on the Swiss franc. An appreciating currency would make it more difficult for our export-oriented companies to compete on the world market and would increase the competition faced domestically from abroad. Should the Swiss franc appreciate to an extent that economic activities in Switzerland were severely disrupted, we would have several courses of action open to us. The Swiss National Bank (SNB) could relax monetary policy in an effort to counteract the effects of the strong Swiss franc on the domestic economy. Attractive as this response may be, its major drawback is that we would have to walk a tight rope.
If problems arise in parts of the financial system, operators can find alternative sources of credit. A larger bond market would enhance financial stability. This is also the case in Norway. New investment and risk management instruments Structural changes and strong growth over the past decades have led to more perfect financial markets. This has made the markets more efficient and improved the distribution of resources and risk between operators, sectors and regions, and over time. There is rapid growth in product development in financial markets, and trading in instruments for the transfer of credit risk is rising. Greater focus on risk management by banks and other operators generates demand for these products. The emergence of new instruments is being driven forward by intensified competition, technological developments and new, more risk-based capital adequacy requirements. In many countries, there has been a tendency towards separating those who provide loans and who assess and price the risk, from those who take over the loans and bear the risk. Through securitisation, banks can sell entire loan portfolios to special purpose vehicles that issue bonds that are collateralised by these loans. It is the buyers of these bonds that bear the risk. Such special purpose vehicles are not subject to capital adequacy requirements or supervision. Asset-backed bonds are a similar instrument where bond holders have collateral in loans that banks have transferred to a mortgage company. Mortgage companies are subject to supervision and capital adequacy requirements. Efforts are being made to allow these instruments in Norway.

On its behalf, Eesti Pank has always provided you with the best knowledge at its disposal. I sincerely hope that the constructive cooperation between the Riigikogu and Eesti Pank will continue in the years to come. Thank you for your attention! BIS central bankers’ speeches  3
Looking at these multiple sources of capital, in turn, provides an account of the Industrial Revolution whose genesis differs significantly from the Neo-Classical one. 25 Take human capital accumulation. One measure of that is literacy and numeracy in the population at large. Chart 7 plots the level of adult literacy in a selection of Western Europe countries from the late 15th century. At that time, less than 10% of the population were literate. Measured levels of human capital were miserably low, consistent with subsistence living standards. But in the following three  22  Douglas Allchin describes preternatural phenomena as being “suspended between the mundane and the miraculous”. 23  For example, Romer (1986), Aghion and Howitt (1998) and Acemoglu (2009). 24  Sachs (2014). Sachs also discusses environmental capital. Also see Solow (1956), Becker (1965), Rebelo (1991), Putnam (2000), Romer (1986). 25  For example, Acemoglu and Robinson (2013), Clark (2009). BIS central bankers’ speeches  5  centuries, a transformation took place. Literacy rates in the adult population shot up to around 50% in Western Europe, in some countries higher. In other words, human capital accumulated at real pace prior to the Industrial Revolution. This skills-deepening provided one foundation on which other sources of growth-enriching capital were built – for example intellectual capital, the generation of ideas and innovation. On this interpretation, sociological transformation supported, perhaps preceded, technological transformation. Innovation was an earthly creation, not manna from heaven. Since the Industrial Revolution, levels of educational attainment have continued to rise.

Household debt has increased at a faster pace than income in the last ten years. Norges Bank’s calculations indicate that the sharp rise in house prices in recent years may explain a large share of debt growth. Higher house prices have a fairly long-lasting effect on household debt growth. As a result, credit growth will remain high for a fairly long period even though the rise in house prices is expected to slow. Given the assumptions underlying our projections, it is likely that debt will continue to grow at a faster pace than disposable income through the entire projection period. As a result of high credit growth, the household debt burden has increased over the past year. The debt burden is currently record high. Due to unusually low interest rates, the interest burden is, nevertheless, relatively low. A normalisation of interest rates will increase households’ net interest expenses, but according to the projections the interest burden will not be higher than it was at the end of the 1990s. If there are expectations of persistently low interest rates, there is a risk that the debt burden may increase more than assumed in the projections. Net interest expenses will then also be higher than assumed. In addition, households will be vulnerable if unexpected disturbances result in higher than expected interest rates. Challenges ahead Oil gives us an economic base that is not available to many other countries.
Miguel Fernández Ordóñez: Economic forecasts, measures to exit the crisis, and the Spanish financial system Opening address by Mr Miguel Fernández Ordóñez, Governor of the Bank of Spain, of the Cinco Días Series of Conferences, Madrid, 31 March 2009. *  *  *  Thank you very much for calling on me to inaugurate this series of conferences at a time burdened with challenges for economic analysis and economic policy. Given the scope of this conference, I shall address three matters of interest to the media: economic forecasts, the measures needed to exit the crisis and the current situation of the Spanish financial system. Economic forecasting has seen better days. Over the past 20 years, all institutions have been projecting high growth rates for the world economy in view of the benefits arising from increasingly integrated economic systems anchored firmly on free-market principles. Nobody could have conceived systemic market failings on a global scale such as those we are currently witnessing, and which are prompting a spectacular collapse in output and world trade. And right now, in the thick of the crisis, it is still difficult to prepare macroeconomic projections. But it is precisely in these circumstances when we most need such projections which, while they may well contain a large margin of error, are of use to us for assessing the juncture at which economies stand.

This option should become widespread, especially for those companies that have not participated in the negotiation of industry-wide or national agreements. BIS Review 43/2009  3  In addition to containing dismissals, these reforms should check the ongoing closure of firms. We should not lose sight of the fact that companies going to the wall entails sizeable decapitalisation costs. This is because it is companies that build up technological know-how and that have far-reaching knowledge of markets and of customer and supplier relationships. And this without prejudice to lifting administrative obstacles and thus ensuring that firms can be created swiftly and easily, so that when the recovery begins the momentum of demand translates into increases in activity and employment, and does not feed through to price rises. To improve the labour market situation, there is also a pressing need to promote new hiring to the full so that workers who have lost their jobs promptly find a way back into employment, avoiding the prolonged periods of unemployment that had such adverse effects in the past. True, creating new jobs depends above all on companies' expectations improving in respect of the demand for their products. But current hiring arrangements fall short on a series of characteristics which, at times of uncertainty such as at present, have adverse effects on recruitment decisions.
The Federal Reserve is an active participant in international efforts regarding payment systems via the Committee on Payments and Markets Infrastructures (CPMI) at the BIS. The CMPI collects best practices and issues recommendations for managing payments, clearing, and settlement risk across financial market utilities. At present, a high-priority area of study for the CMPI is coordinating the development of 24/365 RTGS systems – like FedNow – globally. Innovation in cross-border settlements will reduce liquidity outlays and settlement risks, leading in turn to cheaper cross-border payments. The New York Innovation Center and Project Cedar In the remainder of my remarks, I'd like to focus on an example of ongoing innovation research that is currently underway at the Federal Reserve Bank of New York. To further enhance our ability to contribute to financial innovation globally, the New York Innovation Center, or NYIC, was established in 2021. The NYIC bridges the worlds of finance, technology, and innovation. Through technical research, experimentation, and prototyping, our team generates insights into high-value central-bank-related opportunities, enabling stakeholders and the central bank community to enhance the functioning of the global financial system. 3/5  BIS - Central bankers' speeches  Project Cedar is the inaugural project of the NYIC and represents the first stage of the NYIC's research efforts into CBDCs, the NYIC's biggest focus area in 2022. A goal of the NYIC is to progress CBDC research with an objective of defining a technical design for a CBDC addressing the wholesale market in the Federal Reserve context.

After taking a close look at the foreign exchange space with economists, traders, and market analysts, the NYIC team zeroed in on settlement of foreign exchange spot transactions as a first area of investigation. FX spot transactions are critical in the context of cross-border payments, and serve as a building block for longer, more complex transactions. Traditionally, settlement generally takes two days after a transaction, which leaves some room for improvement. By demonstrating improvements in settlement of FX spot transactions, the NYIC could address settlement time and risk, which would have implications to speed and access for the broader cross-border market. We are not the first to address this topic, of course, but the NYIC wanted to investigate it from the perspective of the Federal Reserve, through the lens of a wholesale CBDC. The NYIC developed a hypothesis that there is a distributed ledger technology solution for wholesale FX settlement that results in instant and atomic settlement in which a wholesale CBDC is the settlement asset. NYIC then built a working prototype and tested it. Results from the experiment indicated that settlement could occur in fewer than 10 seconds on average and that horizontal scaling was possible. This indicates that a modular ecosystem of ledgers has the potential for continued scalability, and that distributed ledger technology could enable settlement times well below the current industry standard of two days, with the added guarantee of atomic settlement.
It will have potential profit and loss, tax and accounting implications on market participants. Migration of legacy contracts and adoption of new documentation involving hundreds of thousands of clients would be another complex exercise. All these 1/4  BIS central bankers' speeches  issues will cut across different segments of the financial market, from derivatives, to bonds, to loans and many others. The implications may also vary greatly across different jurisdictions given the different market structure and legal environment. Therefore, industry associations such as ISDA have an important role to play, in helping to address these wideranging issues with a global and industry-wide perspective. Global banks should take the lead 8. Likewise, international banks, which have operations across many jurisdictions, will be better placed to help shape the path for transition for the banking sector. As we all know, IBORs are used in nearly every aspect of their business – from trading, to risk management, to pricing and valuation. Preparing for the transition means they need to develop the necessary operational and system capability for their global operations, probably dealing with multiple alternative reference rates at the same time. I can see this is a very onerous and resource-intensive process. But then, given the quantity and diversity of financial contracts on their book, and their presence and market knowledge in various jurisdictions, these global banks should be best equipped to take the lead in devising a comprehensive transition plan.

It may be relatively easy to discuss the transition plans with counterparties that are also financial institutions, as everyone is more or less on the same page. But IBORs are also used by banks’ different clients, both corporations and individuals. There is a big gap among these IBOR users on the awareness of the benchmark reform, so the situation becomes less straightforward. 12. Therefore, client education is another vital task. Banks should begin outreach to their clients, and educate them about the benchmark transition early. This could help to minimise misunderstanding and costly litigation in the future. Raising market awareness in Hong Kong 13. Closer to home in Hong Kong, the Treasury Markets Association (TMA) has been working with bank representatives on benchmark reform for many years. More recently it has intensified its reach-out to other sectors. It has set up a Working Group to engage a wider spectrum of stakeholders including accountants, lawyers, bank customers and industry 2/4  BIS central bankers' speeches  associations like ISDA. It is important that different market participants understand what the transition will mean for their business operations and how they should prepare for these changes. The Working Group is now looking at issues like the implications on accounting and the transition of cash products. It will further engage stakeholders to explore means of encouraging the adoption of alternative reference rates in their day-to-day transactions and business activities. 14. At the same time, the HKMA supervisors has also been actively engaging banks.
The message I wish to convey is that banks should persist with their early recognition policy, as this will enable them to continue to fulfil their task of providing funding to the economy. It is important that banks analyse situations individually, distinguishing between temporary and more permanent effects. Automatic reclassifications that result in excessively procyclical behaviour should be avoided. However, above all, banks must be prudent, assessing provisioning needs in accordance with plausible and conservative scenarios for the coming years. In short, especially should the crisis be prolonged, banks must ensure timely and proper recognition of the effective quality impairment of their credit exposures in compliance with the supervisory guidelines. Secondly, I wish to refer to the capital buffers built up and their use during this crisis. As I mentioned earlier, solvency levels are now significantly higher than in the run-up to the global financial crisis. At the start of this crisis, prudential supervisors decided to release many macroprudential buffers – the capital, countercyclical and systemic risk buffers – and, at the same time, the microprudential authority temporarily allowed banks to operate below the level set for certain structural requirements. These decisions sought to help banks continue to provide the financing that households and firms need in such an adverse environment as the present one. Our empirical analysis shows that the use of these buffers will enable banks to provide more funding to the real economy. This in turn has a positive impact on economic growth, encouraging its recovery or moderating its decline.

This entails assessing the solvency of the resulting institution, analysing the impact on overall financial stability and overseeing the execution of the merger to ensure that the potential synergies are indeed harnessed. Transnational European mergers would be particularly positive. They would deepen the Banking Union, reduce the sovereign-bank risk nexus, and provide greater potential for diversification. They would also help establish broader customer bases, so that the cost of investment in technology could be more widely distributed, although the immediate impact on cost-cutting would be more limited. In this respect, the ECB Guide on the supervisory approach to consolidation in the banking sector aims precisely to provide the market with greater predictability of supervisory actions, to help banks design merger plans that are sound from a prudential standpoint and ensure that the resulting institution has a business plan that, when executed correctly, will add value. However, banks should also seek to enhance their efficiency by improving the use they make of the information they hold. This requires significant investment in digitalisation and also the incorporation of new data processing technologies to allow them to change their business model while controlling their risk profile. And this is why it is so important that the “quick fix” has brought European prudential regulations on this kind of investment much closer in line with those already in place in the United States and Switzerland.
These vulnerabilities have the potential to amplify procyclicality in the financial system, drain liquidity at a time when it is most needed and, ultimately, set in motion real-financial feedback loops that threaten the stability of our economies. The decisive policy actions taken by central banks in the spring helped stabilise financial markets by alleviating liquidity stress across a broad range of market segments and by strengthening the risk absorption capacity of market participants. Looking forward, however, our regulatory landscape needs to better reflect the fact that credit intermediation increasingly takes place outside the banking sector. The current policy framework needs to be developed further with a view to strengthening the ability of authorities to limit the build-up of systemic risk in the non-bank financial sector and curb stress if and when it arises. Thank you. [1] Recent research also suggests that the marginal contribution of market-based finance to economic growth may rise as countries become richer. See Langfield, S. and Pagano, M. (2016), “Bank bias in Europe: effects on systemic risk and growth”, Economic Policy, Vol. 31, No 85, pp. 51-106; and Demirgüç-Kunt, A., Feyen, E. and Levine, R. (2013), “  The Evolving Importance of Banks and Securities Markets”, World Bank Economic Review, Vol. 27, No 3, pp. 476-490. [2] de Guindos, L., Panetta, F. and Schnabel, I. (2020), “Europe needs a fully fledged capital markets union – now more than ever”, The ECB Blog, 2 September. [3] Greenspan, A.

Over the same period, core CPI inflation has fallen from average annual rates of over 6% to 2%. One important sign of underlying change is that the volatility of economic fluctuations has declined since the mid-1980s, evidenced by the fact that there has been only one recession in the United States in the past 17 years. Improved macroeconomic policy management and such positive supply factors as generally lower commodity prices certainly have contributed to the strong performance of the US economy in recent years. Also critical has been the emergence of new technologies, specifically the adoption of “just-in-time” inventory systems, which we copied from Japan. Research at the Federal Reserve Bank of New York suggests that these new inventory systems have helped account for a significant reduction in the magnitude of inventory swings and hence less volatile growth of the US economy. The spate of recent announcements of new resource management systems by auto companies, retailers, and others suggests that we have not yet exhausted the potential benefits from such inventory and production systems. These inventory and production management techniques are just one aspect of the most significant factor that has characterized the improved performance of the US economy, which is non-farm business productivity growth. As I have noted, this had averaged about 1½% a year over the previous 20 years, but since 1995 has improved steadily.