samchain/econo-pairs-v1 huggingface dataset:
The age dependency ratio, that is the ratio between people of pensionable age and people of working age, is expected to increase in Sweden from the current level of 30 per cent to 45 per cent by 2050. For Europe as a whole, however, the age dependency ratio is expected to increase from 25 per cent to 52 per cent. At the same time, of all the countries in the OECD only Norway, which is an oil exporter and Switzerland have larger current account surpluses as a percentage of GDP than Sweden. 17 The crisis of the 1990s perhaps meant that the Swedish public accepted the demand for a consolidation of public finances in a different way than in other countries. In many cases, these countries are being forced to conduct similar budget consolidation processes now  16  This is a somewhat controversial claim, however, as future generations can be expected to have higher real incomes due to the growth of productivity in the economy. 17  The National Institute of Economic Research “Sparsamma hushåll har skapat ett stort överskott i den svenska bytesbalansen” (“Thrifty households have created a large surplus in Sweden’s current account”). Article, 2011. 8  BIS central bankers’ speeches  instead. If so, this suggests that the differences in saving compared to other countries will decline in the long term, and thus also the Swedish current account surplus.

In order to cope with this new situation, we have slightly modified our existing framework of inflation targeting by explicitly highlighting the increasing role of financial stability in our objective function. Accordingly, first we have announced the details of our exit strategy from crisis measures in April 2010. As a first step, we have normalized the liquidity support facilities and brought back the TRY reserve requirement ratios to pre-crisis levels of 6 percent. Second, we started to highlight the macro financial risks and contingent policy responses. For example, we have stated through our policy documents that, if divergence in growth rates between domestic and external demand continues in the forthcoming period, and if this pattern of growth coexists with rapid credit expansion and deterioration in the current account balance, it would be necessary to utilize other policy instruments such as reserve requirement ratios and liquidity management facilities more effectively. The primary objective of the CBT is to achieve and maintain price stability. However, the recent crisis has taught us that this single objective may not be enough for attaining macroeconomic and financial stability. In this respect, we reminded the public that financial stability is one of the fundamental duties of the CBT as stipulated in our Law, and we approach financial stability from a macroeconomic perspective. From an emerging market point of view, the concept of “macroprudential” measures may not be the same as it is perceived in advanced economies.
I see it as a “strategic square”, the four parts of the system to be solved for delivering a European strategy: i) Cross border payments shortcomings, ii) BigTech’s global projects in the financial sector (including stablecoins), iii) The developing European Payment Initiative and iv) The potential Central Bank Digital Currency (CBDC). •  Indeed, the current digitalization triggers at least two important risks. o The risk (in red) that BigTechs, leveraging on their global reach, will build private financial 1/3  BIS central bankers' speeches  infrastructures and “monetary” systems, competing with the public monetary sovereignty since they will position themselves as issuers and managers of a universal “currency”. CBDC could then be issued but at the “backend” of this “currency”. o The symmetric risk (in blue) that some jurisdictions judge that the only way to respond to the otherwise overwhelming private payments’ wave would be to issue and spread on a domestic but also a global basis, “their” CBDCs. This could, if not sufficiently coordinated within the global financial community, set precedents as to the features of the CBDCs and their articulation with the private projects, with no say for other central banks. The way forward for Europe (in green) could be different and could rather disseminate central bank money in a retail form with the intermediation of the private sector and ensure interoperability between EPI and other non-European payment solutions. 2.

Much of this credit was used to buy houses and property prices began to soar. …because of overly expansionary monetary policy? There is a debate as to the role of monetary policy in creating this situation. The debate has mainly concerned claims that the US central bank had held interest rates too low for a number of years prior to the crisis. But other central banks, such as the European Central Bank, also held interest rates low during this period. It is not entirely clear what role monetary policy played – and plays in general – for the development of property prices and for risk propensity among economic agents. This is a subject that will probably continue to be discussed. However, on the basis of the information available at the time, there was no obvious reason for conducting another monetary policy than the one that was actually conducted. In the United States, for example, there was justified concern that the country might suffer the same deflation problems as Japan, and many other countries also perceived the threat of deflation as something to be taken very seriously. …as a result of a global savings glut? But there was also another and probably more important factor contributing to the low interest rates. Since the end of the 1990s the emerging economies in Asia, particularly China, and in the Middle East had experienced large current account surpluses, particularly in relation to the United States, but also to other western countries.
For example, understanding supply and demand factors affecting the MBS market is essential in helping to ensure that operations can be executed smoothly. In addition, MBS have an embedded prepayment option, which affects the risk and prepayment characteristics of these securities, and consequently the way in which purchases of these securities influence policy objectives and the Federal Reserve’s balance sheet over time. The scope of the Desk’s market expertise has had to expand in ways beyond supporting new modes of operation. As the financial crisis revealed the importance of maintaining a wide range of financial market knowledge, Desk staff covered a broader set of financial markets and instruments compared to the pre-crisis period. We also more explicitly focused on linkages between markets and underlying, longer-term trends that could present financial stability risks in the future. With the expansion of monetary policy into less conventional territory, our analysis of monetary policy expectations had to evolve as well, as evidenced by an increasingly comprehensive survey of primary dealer economists each FOMC cycle4. Lastly, our own internal analytical capabilities have also deepened, for instance with the creation of a portfolio analytics unit to better assess the risks and outlook associated with the Federal Reserve’s expanded asset holdings.5 I anticipate that as the economic and policy environment changes, the Desk’s interactions with the market will continue to evolve, both in terms of its operational capabilities and the focus of its market monitoring and analytical responsibilities needed to support Federal Reserve operations and the information needs of policymakers.

The positive movements in household savings contributed to the growth of the lending activity, so according to the latest available data as of September 2017, loans increased by 4.3% on an annual basis, with a solvency that is almost twice as high as the statutory levels and volume of liquidity that enables optimal day-to-day operation. It is also worth noting that in spite of the political environment, the deposit growth and the trust in banks have been achieved in the environment of historically lowest interest rates, both on the financial markets in the euro area and on the domestic interbank market. Also, allow me to mention that in the forthcoming medium-term period, the deposit market will urge banks to make even greater efforts to modernize and increase their offer. We live in times of global digitalization, great advancements in information technology and its daily use in the financial sector. Innovation and application of modern technologies globally put competitive pressure on the traditional forms of banking, and encourage banks to constantly adapt, be proactive and inventive, and by changing their business models to new phenomena and conditions, ensure their market success. Such processes will inevitably touch the bank operations in the Republic of Macedonia. In perspective, the use of modern technologies will not only affect the market performance of banks, but will probably change radically their relationship with depositors and other clients.
Thus, I conclude that the risk that inflation could significantly exceed our 2 percent objective is quite low over the next few years, even if the economy were to strengthen considerably. 4  BIS central bankers’ speeches  With inflation well below its longer-run goal and high unemployment, the FOMC decided at its March meeting to maintain a “highly accommodative” policy stance: a federal funds rate in a range of 0 to 25 basis points with forward guidance based on economic thresholds. Moreover, to support a stronger economic recovery, the FOMC is purchasing long-term Treasury securities at a rate of $ billion per month and agency mortgage-backed securities (MBS) at a rate of $ billion per month, and will continue purchasing assets until it sees substantial improvement in the outlook for the labor market, conditional on ongoing assessment of benefits and costs. Combined, these actions are intended to ease financial conditions and thereby help to establish a self-sustaining economic expansion. As I stated in my recent Economic Club speech, the benefits of our asset purchases – as reflected in improving financial conditions and the quickening pace of interest-sensitive spending such as that on consumer durable goods, housing, and capital goods – exceeds the costs. Furthermore, the labor market outlook has yet to show substantial improvement. Consequently, I see the current pace of asset purchases as appropriate. At some point, I expect that I will see sufficient evidence of improved economic momentum to lead me to favor gradually dialing back the pace of asset purchases.

The increase in payroll tax rates, the rise in high income tax rates, the increase in taxes associated with the Affordable Care Act, and the sequester will result in fiscal drag of about 1¾ percentage points of GDP in 2013, an unusually large amount of fiscal restraint when the economy doesn’t have strong forward momentum and unemployment is still elevated. In terms of the labor market, we have seen only a moderate improvement in labor market conditions over the past six months or so. After an encouraging pick up in the pace of job creation around the turn of the year, the employment report for March showed a gain of only 88,000 jobs. While I don’t want to read too much into a single month’s data, this underscores the need to wait and see how the economy develops before declaring victory prematurely. I’d note that we saw similar slowdowns in job creation in 2011 and 2012 after pickups in the job creation rate and this, along with the large amount of fiscal restraint hitting the economy now, makes me more cautious. Since September, payroll employment has increased an average of 188,000 per month, compared with an average of 172,000 per month over the previous two years. The unemployment rate has declined from a peak of 10 percent in October 2009 to 7.6 percent in March; however, much of the decrease is due to a fall in the number of people actively looking for a job.
It is difficult to estimate how the impact of a change in interest rate on growth and inflation will differ at different points in time and in different countries, but the attempts to do so indicate major differences. Given the fact that the composition of households' financial portfolios, their method of financing their accommodation, the significance of bank lending for corporate investments and the formulation of regulations and taxes differ substantially between different periods in time and different countries, this is hardly surprising. As I pointed out earlier, inflation expectations probably also play an important role in price setting. It therefore seems reasonable to assume that the exchange between interest rates and inflation is less in countries where monetary policy has been aimed at stabilising inflation expectations than in countries, and points in time, with large fluctuations in the inflation rate. There is also a monetary policy interest in being familiar with the banks' methods for credit assessment, to aid forward-looking assessments of growth under the assumption of unchanged monetary policy. When the Riksbank makes decisions on the formulation of monetary policy, these are based on, for instance, assessments of how households and companies will react to rising prices on shares and property. One important condition for enabling optimism regarding future growth and increase in wealth to be converted into consumption and investment is that this can be financed. This is where the banks' assessment of credit risks comes in.

After an assessment has been thoroughly debated in the Committee, the final assessment becomes public.7 The assessments, and the publication of the results, have proved to be a powerful tool. To date, more than 200 adjustments have been made by member jurisdictions in response to findings raised by the assessment teams. In addition, the process has also generated a positive feedback loop, meaning that the lessons learnt from assessments are used to improve and clarify the standards. So far, the assessments have concentrated on the capital framework, but from 2015 onwards the scope of this work will widen further to include the implementation of the liquidity coverage ratio and the SIB-requirements. However, for the new, stricter requirements to bring the benefits we are aiming for, it is important that they be properly reflected, not only in national legislation, but also at the level of individual banks. To use an analogy of car safety, if we are now providing banks with air bags, in the form of higher capital requirements, it is important that those air bags are actually activated in case of an accident. For this to happen, the sensors need to be functioning and well-calibrated. For banks, this means that risk weights need to signal appropriately the risks that individual banks actually face. This aspect is captured in the Committee’s thematic assessments. To put it simply, in these assessments we examined whether the banks’ risk-weighted assets could be trusted.
Charles L Evans: Monetary goals and strategy Speech by Mr Charles L Evans, President of the Federal Reserve Bank of Chicago, at the Annual Hyman P Minsky Conference on the State of the US and World Economies, Washington, DC, 9 April 2014. *  *  *  Accompanying charts can also be found on the Federal Reserve Bank of Chicago’s website. Introduction Thank you Dimitri. Before proceeding with my comments today, I need to remind you that the views I express are my own and are not necessarily shared by my colleagues on the Federal Open Market Committee (FOMC) or within the Federal Reserve System. The U.S. Congress created the Federal Reserve System 100 years ago, largely as a way to provide an elastic currency that could mitigate the banking panics and other disruptions that impaired economic activity and contributed to deflations in the late 1800s and early 1900s. That mission has evolved into what is now known as our dual mandate – the Federal Reserve’s directive to help foster conditions that achieve both stable prices and maximum employment. Over the Fed’s 100 year history, three major historical episodes continue to provide lessons for today (chart 1). First, in the 1930s, the U.S. economy experienced a severe credit contraction and deflation during the Great Depression. Milton Friedman and Anna Schwartz argued persuasively that inept monetary policy failed to combat these destructive deflationary forces.

After all, notice that the red and green regions of the bull’seye chart show modest inflation above 2 percent is much more acceptable than even 6 percent unemployment. The FOMC should be anxious to get to that bull’s-eye region as quickly as feasible given the long slow path to date. The Fed’s reaction function I’ve spoken so far about how we are missing on our policy objectives. Obviously, the aim of policy is to eliminate those misses. How do we hit the bull’s-eye? What do we do 6  BIS central bankers’ speeches  operationally in terms of policy tools? In normal times, the FOMC moves it’s traditional policy tool, the federal funds rate, in order to influence aggregate demand and with it economic growth and inflation and disinflationary pressures. Many economists have studied the relationship between actual Fed actions and sensible, explicit policy rules that might capture the Fed’s policy reaction function (chart 4). Historically, Fed policy moves have been reasonably well described by simple policy rules, particularly the 1999 version of the so-called Taylor rule, 7 that relate the federal funds rate to the differences of output (a proxy for employment) and inflation from their target levels and a constant term that is meant to capture the equilibrium real interest rate and the Fed’s inflation target. However, this rule does not always describe policy well. For example, given judgmental, but reasonable, choices for the Fed’s inflation objective before it adopted a 2 percent objective, the Taylor rule misses during the 1990s are big.
The provision of liquidity had the desired effect of reducing strains in markets, narrowing the dispersion of rates, and keeping the federal funds rate within the target range.5 Moving to more recent events, in March of this year the global spread of the pandemic led to a rapid and massive movement of funds around the world as investors sought to protect themselves from the highly uncertain and darkening economic outlook. These flows threatened to overwhelm the financial system and resulted in intense strain and disruption in short-term funding markets and markets for Treasury securities and agency mortgage-backed securities.6 Measures of market functioning deteriorated to levels near, or in some cases worse than, those we saw at the peak of the 2008 global financial crisis.7 In response to the extraordinary volatility and signs of market disruption caused by the pandemic, the Federal Reserve greatly expanded its repo operations and decisively and immediately began purchasing enormous quantities of U.S. Treasury securities and agency mortgage-backed securities. Our approach was to deliver a rapid and overwhelming response that would give assurance to market participants that liquidity would be there in the coming days and months. These actions, combined with the introduction of emergency lending facilities to provide liquidity to funding and credit markets, proved successful.

John C Williams: A solution to every puzzle Remarks (via videoconference) by Mr John C Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York, at the 2020 US Treasury Market Conference, 29 September 2020. * * * Good morning, everyone, and welcome to the sixth annual U.S. Treasury Market Conference. I wish we were able to meet in person at the New York Fed. But, while the location for this year’s conference may have moved from an auditorium to your living room, the goal remains the same: To bring together market participants and representatives from five public sector bodies—the New York Fed, the Board of Governors, the Treasury, the SEC, and the CFTC. And, the events of the past year make the conversations we will have today all the more valuable and timely. Today, I’d like to begin with stressing the importance of well-functioning financial markets and then look at two recent episodes of volatility and the lessons learned. I’ll close by explaining the Fed’s role to support functioning in this critical part of the financial system. At last year’s conference, I spoke about the transition away from LIBOR.
In my view, we best prepare for the unexpected in two ways: we need to be operationally ready to change course when needed, and we need to remain analytically focused so we know when to recommend to policymakers that they do so. For example, the FOMC has made it clear that it stands ready to resume reinvestment if a material deterioration in the economic outlook were to warrant a sizable reduction in the federal funds rate. The FOMC also indicated that it would be prepared to use its full range of tools, including altering the size and composition of its balance sheet, if future economic conditions were to warrant a more accommodative monetary policy than can be achieved solely by reducing the federal funds rate. Also, unexpected operational demands could emerge from technical developments within the Treasury and agency MBS markets. Even though it is shrinking, the Federal Reserve’s portfolio is and will remain large, and market participants will look to the Federal Reserve to lend out on a collateralized basis some of its holdings of Treasuries and MBS from time to time in order to facilitate settlement, as is done by most other large fixed-income investors.13  Conclusion Let me conclude now by reiterating the message of confidence with which I began my remarks.

When homeowners get a new mortgage with a better interest rate, and pay off their 4/7  BIS central bankers' speeches  old higher rate one in the process, existing agency MBS are paid off more quickly, and replaced with greater issuance of newly-minted agency MBS containing the new, lower-rate loans. The benefit of the FOMC’s redemption cap is that it limits the pace at which securities will flow back into private hands under scenarios in which interest rates fall much more than expected. To illustrate this, projections for agency MBS repayments under a scenario of lower interest rates are shown in Panel 3—as you can see, in this low rate scenario, the caps would still be exceeded even when fully phased in. By providing market participants some certainty that the pace of balance sheet decline will be gradual across economic scenarios, this plan should help mitigate the risk of unexpectedly sharp shifts in asset prices, liquidity, or market functioning should markets begin to put greater weight on lower interest rate scenarios. Indeed, by promoting greater confidence in the stability and liquidity of the Treasury and agency MBS markets across economic outcomes, the FOMC’s plan should result in lower risk and liquidity premia on these assets, relative to normalization plans that do not promote such confidence. Being prepared for the unexpected While I am confident that the FOMC’s plan will work well, there’s always the risk that events unfold differently than expected.