samchain/econo-pairs-v1 huggingface dataset:
2  All speeches are available online at www.bankofengland.co.uk/speeches  2  We’re here today to discuss with you what causes changes in the economy, how they affect people and businesses in Merseyside and across the country and the Bank of England’s role in supporting jobs and growth. The economy matters for everyone and people want to understand it better. Three quarters think there should be better education about the economy and half want a better understanding themselves but virtually no-one – just 1 in 10 – think public figures talk about economics in an accessible way. Today, we are trying to bridge that gap. We are helping to make discussions of the economy more accessible and are launching practical tools that can be used to help educate students, and indeed everyone, about the economy. This is all part of a wider effort to improve our communications. We are doing this to make the Bank more open and accountable. Quite simply, people need to understand our actions and their effects in order to hold us to account. Doing so will also make our policies more effective. Let me give you an example. Our mission was originally set out in 1694 in the Bank’s founding charter. That was to ‘promote the publick Good’ – although that sentiment was contained within a 700 word sentence, hardly clear and transparent communication. And in practice at the time what it meant was raising money to carry on a war against France.

You can take a look at our first example of this – the November Inflation Report –online, at www.inflationreport.co.uk. This afternoon’s event will showcase a selection of the materials we are planning to run alongside these changes in our communications to help explain to people about the Bank’s work. To bring that to life, the first session will kick off with three of my colleagues – Ben, Sam and Jon –explaining to you what the Bank is doing on some topical issues, things that are influencing the Bank’s policies and the role we play in the economy right now. The questions they will answer are:   Why did the Bank change interest rates earlier this month?   What we are doing to keep banks safe? ; and    What are we doing in response to the vote to leave the EU to ensure the Brexit process is as smooth as possible? Through our dialogue with you today, we will enrich our understanding of how we can meet our objective more effectively, and we hope you will gain a better understanding of what the Bank does and how it is going about it. 4  All speeches are available online at www.bankofengland.co.uk/speeches  4  Before handing back to Ranvir, I’d like to thank Speakers for Schools, We Are Futures, Economy.org and Rethinking Economics – the key stakeholders that have helped us with this morning’s events and who have been working with us to develop our educational resources.
As an introduction to this FSR, we are extremely thankful to the roundtable participants that have accepted my invitation: •  A long-standing member of the Federal Reserve board: Governor Tarullo, thank you. It’s a privilege to welcome you today given your active participation and role in setting international financial regulation;  •  A Governor of one of the most advanced central bank in the area of macroprudential policy in Asia: Tae Soo Kang, Deputy Governor of the Bank of Korea, in charge of Financial Stability. •  A very active ambassador for macroprudential policy: José Viñals, Financial counselor and Director of the Monetary and Capital Markets Department of the IMF. •  A distinguished expert on the financial sector worldwide and its regulation: Douglas Elliott from the Brookings Institution. Thank you all for being with us today. As you know, for each issue of our FSR, we always try to pick topics that are both analytically complex and relevant to current policy-making. This is clearly the case with macroprudential policies. Indeed, macroprudential policy is a critical dimension of the public policy response to the crises we have experienced since 2008 and has figured prominently in the lessons we have drawn from them. Let me mention three of these lessons. BIS central bankers’ speeches  1  •  First, the oversight of individual components of the financial system is not enough to preserve financial stability. Having robust financial institutions is a prerequisite for ensuring financial stability but it is not in itself sufficient.

Macroprudential policy can also prevent the build-up of asset bubbles in specific sectors in a context of low interest rates. This complementarity should not however jeopardise the independence of central bank monetary policy decision-making. 2  BIS central bankers’ speeches  (ii)  Second, the optimal framework must promote consultation with fiscal authorities in order to ensure the full effectiveness of macroprudential policy measures that are often designed as Pigouvian Taxes generating resource transfers. This requires cooperation and information-sharing among the authorities involved in macroprudential policy decisions. Such as many countries have already adopted, a collegiate macroprudential authority, with a clear division of responsibility between central banks, the ministry of finance, market authorities, and banking supervisors, can ensure this cooperation. I will not dwell further on these topical issues, which am sure will give rise to fascinating discussions. It is my hope that we can collectively contribute to enlighten this policy debate. Let me now give the floor to our panellists. I suggest that we start with Governor Daniel Tarullo, who will give us the vision of the United States on macroprudential issues. BIS central bankers’ speeches  3
In the context of actions taken to support the financial system, the Federal Reserve and other government agencies have provided considerable support to banking organizations and other large systemically important financial institutions. The employees and executives of those institutions have benefitted from our intervention. In a perfect world we would be able to prevent those individuals and institutions from benefitting; we would have a better way to penalize those who acted recklessly. But once the crisis was underway, one goal took precedence: keeping the financial system from collapsing in order to protect the nation from an even deeper and more protracted downturn that would have been more damaging to everyone. The Great Depression represents an important example of the consequences of inaction. Recall that during the Great Depression the unemployment rate rose to 24 percent. It is generally accepted that the authorities at that time, by not responding sooner and more forcefully, contributed greatly to the severity and duration of the Great Depression. In contrast, during this crisis, the Fed and other agencies acted much more aggressively to ward off a total collapse of our financial system – liquidity was restored to markets and the banking system was recapitalized much more quickly. These aggressive actions helped to prevent the type of deep and protracted crisis that occurred during the 1930s. Going forward, the Federal Reserve and other regulators need to move aggressively to change the system so we don’t ever find ourselves in this position again.

This again suggests that there is a role for supervision and regulation in the bubble prevention process. For example, it might be appropriate for the Federal Reserve – working with functional regulators such as the SEC (Securities Exchange Commission) – to monitor and limit the buildup in leverage at the major securities firms and the leverage extended from these firms to their clients and counterparties. Whether there is a role for monetary policy to limit asset bubbles is a more difficult question. On the one hand, monetary policy is a blunt tool for use in preventing bubbles because monetary policy actions also have important consequences for real economic activity, employment and inflation. On the other hand, however, there is evidence that monetary policy does have an impact on desired leverage through its impact on the shape of the yield curve. A tighter monetary policy, by flattening the yield curve, may limit the buildup in leverage. 1 Whether it would be more effective to limit leverage directly by regulatory and supervisory means or via monetary policy is still an open question. But it is becoming increasingly clear that a totally hands off approach is problematic. I also believe we could have done better in our supervision of the large complex commercial banking organizations.
Given how widespread this phenomenon is, and given that it is in some respects independent of domestic conditions and economic policy, there are a number of indications that global factors such as increased cross-border mobility of labour and other production factors, international value chains, and the existence of a large excess labour force in some emerging market economies play an important role in it. An underestimated slack in the labour market is hardly a factor in Iceland, as the labour participation rate is at a historical high and wage rises are substantial. Labour importation and indirect pressures from an unutilised lower-income labour force in other countries have clearly had a dampening effect on wage increases, however. Even so, inflation is low. This is true of 4  other economies as well. But it is less of a puzzle than wage developments in industrialised countries overall: global trends have been favourable to them, as can be seen in improved terms of trade and rising exchange rates. It is well known that this can create conditions where strong GDP growth and sizeable pay rises can coincide for a time with low inflation. And one difference between Iceland and many other industrialised economies is that in other countries there have been concerns that inflation expectations would fall too steeply and become anchored below target. In order to place Iceland in this context, let us look at Chart 4, which gives some relevant metrics for several small and medium-sized inflation-targeting countries.

In the long run, monetary policy can deliver price stability, and in the short run it can also mitigate the effects of shocks and reduce fluctuations in output and employment. But monetary policy cannot have a long-term impact on the real exchange rate. As such, it can do little to mitigate the crowding-out effect of strong growth in a new export sector. If it tried to, the effect would be only temporary, and it would come at the expense of sacrificing the objectives with which monetary policy has been entrusted – objectives that it can achieve. Industrial and fiscal policies can have such a real impact over the long term, however, and it is to them that concerned parties should turn. 9  But it is possible to choose from among various options on the spectrum between a rigid peg and a free-floating exchange rate. And it is possible to adopt another currency, either unilaterally or in bilateral or multilateral cooperation. These were the options explored in the Central Bank’s 2012 report. 4 The conclusion was that a unilateral peg with unrestricted capital flows could run aground, as it did in so many economies after capital movements were liberalised further in the 1980s and 1990s. A firmer peg such as a currency board could pose risks to financial stability, and the same was considered true of unilateral adoption of another currency. It was deemed highly uncertain – and actually unlikely – that bilateral adoption of another currency would be on offer anywhere.
With more demand for liquidity and less supply, the cashproviding banks were able to achieve higher, i.e. less negative, interest rates, which led to an upward drift in SARON, shown by the black line in Chart 4. These upward pressures on SARON and other short-term money market rates, while anticipated, were not desirable from a monetary policy perspective. Since last November, the SNB has conducted a number of operations to keep secured shortterm money market rates close to the SNB policy rate. Between November 2019 and July 2020, and in particular since the end of March, we conducted several fine-tuning operations in the overnight segment of the repo market. These operations are shown as red diamonds in Chart 4. In a fine-tuning operation, the SNB places so-called ‘cash provider quotes’ directly on the repo trading platform, which any repo market participant can then ‘hit’ if they choose to do so. When the SNB offers funds at a particular quote, cash takers have no reason to accept liquidity at a higher – that is, less attractive – interest rate. With these fine-tuning operations, the SNB can cap repo rates and limit upward spikes. Since July, we have further supported the gradual convergence of SARON towards the SNB policy rate by auctioning one-month funds on the repo platform. These auctions are depicted as blue triangles towards the right-hand edge of Chart 4. Unlike fine-tuning operations, with which the SNB caps interest rates, the SNB’s one-month auctions offer liquidity on a medium-term basis.

impose a negative interest rate on banks’ sight deposits held at the SNB if the deposits exceeded a certain exemption threshold. On 15 January 2015, the SNB discontinued the minimum exchange rate relative to the euro and simultaneously lowered the negative interest rate due to take effect on 22 January to −0.75%. Page 6/13  The role of the interest rate on banks’ sight deposits at the SNB In the years leading up to the Global Financial Crisis a so-called structural liquidity deficit prevailed in the banking systems of many countries, including Switzerland. Since the SNB did not pay interest on banks’ sight deposits at the SNB, banks held as little excess liquidity as possible in the form of sight deposits in an environment of positive interest rates. During this period, the SNB steered money market interest rates via the price and quantity of its daily money market operations, which were conducted in the secured segment of the money market in the form of repo transactions. For instance, if the SNB wished to induce a decline in money market rates, it provided more liquidity and reduced its repo rate. This setup changed with the Global Financial Crisis. Many central banks initially responded to the unfolding crisis by lowering policy rates. Subsequently, they launched asset purchase programmes (‘quantitative easing’) or – as was the case with the SNB – conducted foreign exchange market interventions.
Capacity utilisation according to Statistics Sweden and the National Institute of Economic Research, is still at a high level but is moving downwards. The downswing in the  BIS Review 113/2008  3  Swedish economy has come sooner and been more pronounced than was expected only a few months ago. It covers the manufacturing industry as well as the retail and service industries. Households have clearly become more pessimistic, not least with regard to the national economy and the labour market. For example, the survey conducted by the National Institute of Economic Research at the end of 2007 showed that an excess amount of 40 per cent of the households believed that unemployment would be lower in a year's time. Now, however, an excess amount of 50 per cent of the households believes that unemployment will be higher one year ahead. This deterioration in general sentiment has been accompanied by a fall-off in private consumption. This applies mainly to capital goods, which is common at the beginning of an economic downswing. But it is not only private consumption that has declined; investments and exports have also weakened. GDP growth has been revised downwards for both 2008 and 2009, although the forecast predicts a recovery in 2009 in line with developments abroad and it is believed that Sweden's exports will be an import driving force in this context. However, I am far from sure that such an upswing in economic activity will actually take place.

In our latest assessment this was based on the belief that inflation was somewhat higher than now proves to be the case. But monetary policy does not have such a degree of precision that it can control inflation to a tenth of a degree. And, moreover, inflation in July was high and far above the inflation target even after the downward revision of the figure. In the discussion ahead of the interest rate decision, I and other members of the Executive Board highlighted the weak labour market indicators which uniformly pointed to a weaker development of employment, which is also in line with the Riksbank's forecast. After the decision, the Labour Force Survey for August has been presented. This shows that employment increased by a moderate 0.5 per cent on a 12-month basis, which is marginally lower than the Riksbank's forecast. At our September meeting, we had access to the initial version of the National Accounts for the second quarter. These showed that GDP did not increase at all compared to the previous quarter and increased by only 0.7 per cent on a calendar-adjusted12-month basis. Now that the revised version of the National Accounts has been published, we can see that growth in the first two quarters has been marginally adjusted downwards in both cases. This means that growth in the first quarter was 2 per cent on a 12-month basis and with calendar effects taken into account. The corresponding figure for the second quarter was 0.6 per cent.
It is clearly the will of the European people. Only to give you an example of the support of the public opinion for a reliable euro: according to a French poll, 95% of the population was in favour of a euro at least as solid, reliable and strong as our previous “franc fort” national currency;  í  thirdly, the process of economic and financial globalisation, the trend of increase in international trade calls in the long run for increased demand worldwide for official reserves and for highly reliable monetary and financial instruments. This explains why the progressive internationalisation of the euro will, in my eyes, be totally non-confrontational but cooperative. The exchange rate relationships of the euro area vis-à-vis key global currencies As regards the exchange rate relationship vis-à-vis major currencies, I think the best for me would be to reiterate the position of the Eurosystem which has been expressed by Wim Duisenberg in the name of the full body of the Council of Governors of the Eurosystem: “In the view of the Governing Council the major economic factor behind the short-term developments observed in the exchange markets is constituted by cyclical differences between the euro area and the United States, which are expected to diminish over the course of this year and thereafter.

Mario Draghi: Hearing at the Committee on Economic and Monetary Affairs of the European Parliament Introductory statement by Mr Mario Draghi, President of the European Central Bank, at a hearing before the Committee on Economic and Monetary Affairs of the European Parliament, Brussels, 18 February 2013. *  *  *  Madam Chair, Honourable members of the Committee on Economic and Monetary Affairs, It is a pleasure to be back here in Parliament and in front of your Committee for our regular exchange of views. We enter 2013 in a more stable financial environment than in recent years. This has been achieved through concerted reforms by governments and parliaments and decisive actions by European institutions. But considerable further efforts are needed to ensure that Europe continues emerging from the crisis, re-creates confidence among investors and citizens, and re-establishes stability and growth. This house has a key role to play in the reform agenda. I am thinking in particular of the adoption of the legislation for the Single Supervisory Mechanism. This is of crucial importance for progress towards financial union. Today, I will first review economic and monetary developments in the euro area since December. I will then address the two topics that you have selected for our discussion: the impact of a low interest rate environment; and the establishment of a Single Resolution Mechanism.
Domestic inputs, particularly labour, must be competitively priced. And since the cost of labour in Malta is relatively high, we must increase the value of output per employee. Once again, the only way forward is through productivity growth. In this regard, there is much room for improvement. The level of productivity has remained roughly unchanged since 2001, while it is projected to increase at an annual rate of only 1% to 2% in 2007 and 2008. For a country that is highly dependent on exports, this is not good enough when many of our competitors are achieving faster productivity growth. Faced with this situation, we would do well to reflect on the experience of others. In France, a recent McKinsey report showed how industrial productivity gains slowed sharply in the last five years, causing the country to miss the opportunity to create an estimated 700,000 jobs. As for the reasons, a report by the Camdessus expert group in 2005 identified two major obstacles to growth: first, not enough people work, and those who do work, do not work long enough, due in part to the introduction of a 35-hour working week; second, the heavy State has become a costly drag on the economy. Malta faces a similar predicament for much the same reasons.

Bank supervisors cannot prevent all fraud or illegal conduct or forestall all undesirable behavior in large, complex financial institutions. But we can help create more  BIS central bankers’ speeches  5  resilient, less complex, and better managed organizations that promote, rather than undermine, financial stability. V.  Conclusion  The Federal Reserve will continue to improve its supervision and regulation of financial institutions. We understand the risks of doing our job poorly and of becoming too close to the firms we supervise. We work hard to avoid these risks and to be as fair, conscientious, and effective as possible. Of course, we are not perfect. We cannot catch or correct every error by a financial institution, and we sometimes make mistakes. But in my view, a good measure of the effectiveness of supervision is the improved strength and stability of banks since the financial crisis. Thanks in part to enhanced supervision and regulation, banks “have the ability to meet their financial obligations and continue to make a broad variety of financial products and services available to households and businesses even in times of economic difficulty.”12 I can promise you that we will always strive to improve and that we will work hard to earn and retain your trust. I look forward to taking questions. 12  6  Scott G. Alvarez, Regulatory Rulemakings, Testimony before the Committee on Financial Services, United States House of Representatives, April 8, 2014. BIS central bankers’ speeches